Securities Commission Malaysia revises LOLA Guidelines to facilitate issue of Private Debt Notes and Islamic Private Debt Notes by Private Companies
20 April 2026
The Securities Commission Malaysia (“SC”) issued the 17th revision of the Guidelines on Unlisted Capital Market Products Under the Lodge and Launch Framework (“LOLA Guidelines”) which came into effect immediately upon its issuance on 30 March 2026.
The revisions to the LOLA Guidelines were made primarily to facilitate the issuance of private debt notes and Islamic private debt notes by private companies. These amendments are explained below.
New definitions
Paragraph 2.01 of Section A of the LOLA Guidelines has been amended to introduce the following definitions:
- “private company” which has the meaning assigned to it in section 2(1) of the Companies Act 2016; and
- “private debt notes and Islamic private debt notes” which means an instrument as described in paragraph 1.01 of Section B, Part 5, of the LOLA Guidelines.
Permitted investors in private debt notes and Islamic private debt notes
Paragraph 1.01 of Section B, Part 5, among others, provides that private debt notes and Islamic private debt notes may be issued or offered by private companies to:
- persons registered with the SC under the Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations;
- private equity or venture capital funds managed by persons registered with the SC under the Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations;
- wholesale funds; or
- fund management companies pursuant to an investment mandate agreed with sophisticated investors,
(collectively “eligible persons”).
The amendment to paragraph 1.01 of Section B, Part 5, significantly liberalises the previous regime which only allowed:
- the issue of convertible notes and convertible Islamic notes; and
- convertible notes and convertible Islamic notes to be issued or offered to persons registered with the SC under the Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations.
Conditions for certain exemptions
To be eligible for exemption from compliance with the requirements under paragraphs 3.04, 3.05, 3.06 and 3.08, Section A, Part 1 and Section B, Part 3 of the LOLA Guidelines
1, the private debt notes and Islamic private debt notes:
- must be issued and offered only to eligible persons;
- must not be tradable;
- must not be transferable except to eligible persons; and
- where relevant, may be convertible into shares of the issuer,
(“
Eligible private debt notes” and “
Eligible Islamic private debt notes”, as applicable).
2
Utilisation of proceeds
A new paragraph 2.03 has been added to Section B, Part 5 of the LOLA Guidelines to require issuers to ensure that the proceeds from the issuance are utilised in accordance with the purposes disclosed to the SC and to the eligible persons.
Lodgement
A new paragraph 3.04A has been added to Section B, Part 5 of the LOLA Guidelines to require the issuer of the Eligible private debt notes or Eligible Islamic private debt notes to furnish the relevant persons registered with the SC under the
Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations or fund management companies with a copy of the lodgement acknowledgement receipt.
Paragraph 3.05 of Section B, Part 5 of the LOLA Guidelines has been amended to clarify that if the Eligible private debt notes or Eligible Islamic private debt notes are not issued within 90 business days from the date of lodgement, the issuer must submit a withdrawal notice to the SC by e-mail within 14 business days from the end of the said 90-business day period.
Powers to issue directives
Three new paragraphs have been inserted into Chapter 1 of Section C of the LOLA Guidelines in relation to directions that may be issued by the SC. These are summarised below:
- paragraph 1.01 – confers power on the SC to issue a direction to a responsible party or any other person, if the SC is satisfied that it is necessary for the protection of (i) market integrity, or (ii) investors, or (iii) the public;
- paragraph 1.02 – a direction so issued may include a direction that a person (i) ceases or refrains from committing an act or pursuing a course of conduct, or (ii) carries out or engages in any act or conduct, or (iii) takes such other action as the SC considers necessary; and
- paragraph 1.03 – a direction so issued must be complied with and the issuance of the direction shall not preclude the SC from exercising any of its powers under the securities laws.
The new provisions in Chapter 1 of Section C of the LOLA Guidelines apply not only to the provisions in the LOLA Guidelines relating to private debt notes and Islamic private debt notes but in relation to the entirety of the LOLA Guidelines.
Comments
The revisions to the LOLA Guidelines are expected to broaden the debt capital market in Malaysia by expanding the types of private debt notes and Islamic private debt notes that may be issued by a private company and the categories of investors who are eligible to invest in such instruments.
Article by Phua Pao Yii (Partner) and Tan Wei Liang (Partner) of the Corporate Practice of Skrine.
1 Paragraphs 3.04, 3.05, 3.06 and 3.08, Section A, Part 1 set out certain obligations of the Responsible Parties and the Lodgement Party and Section B, Part 3 sets out the requirements relating to Corporate Bonds and Sukuk.
2 Paragraph 2.01 of Section B of the LOLA Guidelines.
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