Bank Negara Issues Policy Document on Shareholder Suitability for Approved Persons
04 June 2019
Bank Negara Malaysia (‘BNM’) issued a
Policy Document on Shareholder Suitability – Notification and Application Procedures which took effect on 3 June 2019.
The Policy Document applies to a shareholder who holds an aggregate
interest in shares (as set out in Schedule 3 of the Financial Services Act 2013 (“FSA”) or the Islamic Financial Services Act 2013 (“IFSA”)) of
5% or more (“shareholder”) in any of the following (“approved person”) –
- approved insurance brokers;
- approved takaful brokers;
- approved money brokers;
- approved financial advisers; and
- approved Islamic financial advisers'.
Section 97(1) of the FSA and section 109(1) of the IFSA requires a person who has entered into an agreement or arrangement to acquire any interest in shares of an approved person, which, if carried out, would result in such person holding (together with any interest in shares already held by him) an aggregate interest in shares of not less than 5% of the shares of an approved person, to notify Bank Negara Malaysia (“BNM”) in writing of the fact of entering into such agreement or arrangement within the period specified by BNM.
Section 97(2) of the FSA and section 109(2) of the IFSA prohibit a person from entering into any agreement or arrangement for the purpose of acquiring interest in shares of an approved person, if such acquisition will result in a change in control of an approved person, unless such person obtains the prior written approval of BNM upon entering into such agreement or arrangement.
Amongst others, the Policy Document –
- sets a time frame of seven days from the date on which the agreement or arrangement is entered into for a notification to be made to BNM under section 97(1) of the FSA or section 109(1) of the IFSA;
- sets out the factors that BNM will take into consideration in assessing the suitability of the applicant under an application made pursuant to section 97(2) of the FSA or section 109(2) of the IFSA, namely –
- the character and integrity of the applicant, or if the applicant is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good governance and integrity;
- the nature and sufficiency of the financial resources of the applicant to support the operations of the approved person, including the performance of its regulatory and professional obligations;
- the business record and experience of the applicant;
- whether the relationship of the shareholder with the approved person will affect the independent and professional status of an approved person; and
- whether the application will be in the best interest of Malaysia, having regard to —
- the effect of the investment on the level and nature of economic activity in Malaysia, including the effect on productivity, efficiency and quality of financial services;
- the contribution towards enhancing international trade and investment linkages between Malaysia and other countries;
- the effect of the investment on conduct and behaviours that could pose a risk to the financial system; or
- the degree and significance of participation of Malaysians in the financial sector.
- sets out the information and documents to be submitted with the notification or application, as the case may be;
- prohibits a licensed insurer, its shareholders, chief executive office, staff, agents and related companies from being shareholders of an approved insurance broker or an approved financial adviser; and a licensed takaful operator, its shareholders, chief executive office, staff, agents and related companies from being shareholders of an approved takaful broker or an approved Islamic financial adviser;
- states that a shareholder who has notified or obtained approval of BNM under section 97(1) or section 97(2) of the FSA or section 109(1) or section 109(2) of the IFSA must not conduct its affairs in a manner that would cast aspersion on its character, professional integrity and financial standing.