The SC Guidelines on Offer of Shares by Unlisted Public Companies to Sophisticated Investors
14 July 2021
On 5 July 2021, the Securities Commission Malaysia (“SC
”) issued the Guidelines on Offer of Shares by Unlisted Public Companies to Sophisticated Investors
”). The Guidelines are accompanied by a set of FAQs
issued on the same day by the SC. The Guidelines will be effective on 1 August 2021
According to a media release
issued by the SC on 5 July 2021, “[t
]he Guidelines aim to safeguard investors’ interest in the wake of increased queries and complaints received by the SC on offering of shares by unlisted public companies (UPCs), marketed through phone calls, seminars, video recording via social media or unlicensed agents, to both sophisticated and non-sophisticated investors.
The SC added that the Guidelines set out the obligations of an unlisted public company (“UPC
”) when offering shares to sophisticated investors in Malaysia.
Obligations in relation to an offering
A UPC that seeks to offer shares to sophisticated investors in Malaysia must comply with the following:
- Any information memorandum issued in respect of an offer of its shares must comply with the requirements set out in the Guidelines, the Capital Markets and Services Act 2007 (“CMSA”) and any other guidelines issued by the SC (including a disclaimer set out in paragraph 5.02 of the Guidelines);
- If a UPC appoints an agent to promote or market the shares, it must ensure that the agent holds a Capital Markets Services Licence under the CMSA for the regulated activity of dealing in securities; and
- A UPC and persons acting on its behalf must take reasonable steps to verify that any prospective investor is a sophisticated investor prior to approaching the investor for the offering of the UPC’s shares.
For the purposes of the Guidelines:
” refers to any person who (a) falls within any of the categories of investors set out in Part I of Schedules 6 and 7 of the CMSA;1
or (b) acquires shares pursuant to a private placement where the consideration for the acquisition is not less than RM250,000 or its equivalent in foreign currencies for each transaction whether such amount is paid for in cash or otherwise.
” in relation to any shares in a UPC, includes the issuance of such shares, the making available of, offering for subscription or purchase of, or issuance of an invitation to subscribe for or purchase of such shares.
A UPC must submit to the SC:
- a post-issuance notification in the form set out in Appendix 1 of the Guidelines (“post-issuance notification”) no later than seven days after the commencement of the offering; and
- a quarterly report in the form set out in Appendix 2 of the Guidelines (“post-issuance update report”) no later than seven days after the end of each quarter of its financial year, as long as the offering is ongoing; and
- such other information as may be required by the SC.
In addition, a UPC must:
- ensure that all statements and information submitted to the SC are true, not misleading and do not contain material omission;
- immediately make a revision to the post-issuance notification and/or post-issuance update report upon becoming aware of any change or a likelihood of any change that may render any information submitted to the SC to be false, misleading or contain any material omission; and
- submit to the SC any revision to the post-issuance notification and/or post-issuance update report made by the UPC.
The post-issuance obligations set out above apply regardless of whether a UPC has issued an information memorandum in connection with its offering.
Exemption and variation
The SC may, upon application and in appropriate circumstances, grant an exemption from or variation to the requirements of the Guidelines if it is satisfied that: (a) such variation is not contrary to the intended purpose of the relevant requirements in the Guidelines; or (b) there are mitigating factors, which justify the said exemption or variation.
The Guidelines are welcome as they provide clear guidance to UPCs as to their obligations when they propose to offer shares to sophisticated investors in Malaysia.
Alert prepared by Phua Pao Yii (Partner), Kok Chee Kheong (Partner) and Vanessa Ho (Associate) of the Corporate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such.
Part I of Schedules 6 and 7 of the CMSA sets out 16 types of sophisticated investors under three categories, namely “accredited investors
”, “high-net worth entities
” and “high-net worth individuals
”. These schedules can be accessed here