SC grants flexibilities for issue of convertible notes to venture capital companies and private equity firms
28 April 2020
The Securities Commission Malaysia (‘SC’) today granted flexibilities for businesses issuing convertible notes to venture capital (‘VC’) and private equity (‘PE’) firms registered with the SC by allowing such issuers to lodge the issuance of their convertible notes directly with the SC without the services of a principal adviser.
The SC also announced that lodgement fees will also be waived to lower the fundraising cost. In addition, the lodgement process has also been simplified via electronic submission of the required information via e-mail.
To implement the aforesaid flexibilities, the SC has amended the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (‘LOLA Framework’), in particular, by introducing a new Part 5 to Section B of the LOLA Framework. Among the criteria to be satisfied for convertible notes to be issued without a principal adviser are –
- the convertible notes must only be issued to, and transferable only between, VC and PE firms registered with the SC;
- the convertible notes must only be convertible into shares of the issuer; and
- the tenure of the convertible notes must not exceed seven years from the date of issuance.
The SC also announced that these flexibilities will also be provided for Islamic convertible notes at a later date.
The summary of the amendments to the LOLA Framework and the updated FAQs issued by the SC are available
here and
here.