Guidelines for the Lodge and Launch Framework Revised

The Securities Commission Malaysia (‘SC’) issued the tenth revision of the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (‘Revised Guidelines’) on 30 May 2022. The Revised Guidelines took effect on 1 June 2022.
 
The Revised Guidelines set out the requirements to be complied with for the purposes of making available unlisted capital market products1 to the categories of persons set out in paragraph 1 of Part 1, Schedule 5 of the Capital Markets and Services Act 20072.
 
This article highlights the salient revisions made under the Revised Guidelines to the ninth revision of the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (‘9th Revision’).
 
Corporate bonds and sukuk 
  1. Paragraph 2.11(a) of Part 3 of Section B of the Revised Guidelines states that if the principal terms and conditions of any ringgit-denominated bonds or sukuk that do not require a trust deed allow the issuer of such corporate bonds or sukuk to remedy a default in payment of the principal of or interest/profit/rental on such bonds or sukuk, the period of remedy must not exceed seven business days from the date on which the payment fell due. This clarifies the corresponding provision of the 9th Revision which does not stipulate when the seven days remedy period commences. 

  2. The Revised Guidelines clarify that the lodgement of the executed trust deed with the SC under paragraph 2.14 of Part 3 of Section B is to be effected by the Lodgement Party3 on behalf of the issuer. 

  3. The deadline for submission of a post-issuance notice4 to the SC under paragraph 4.07 of Part 3 of Section B of the Revised Guidelines for all issuances of corporate bonds and sukuk has been extended to seven business days after the end of the month in which the corporate bonds or sukuk were issued. The deadline under the 9th Revision was seven business days from the date of issuance. 

  4. Paragraph 5.08 of Part 3 of Section B of the 9th Revision which requires an issuer to notify the SC of the redemption, in full or in part, of the corporate bonds or sukuk has been amended in two respects under the corresponding paragraph of Part 3 of Section B of the Revised Guidelines: 
  • notification must be given to the SC for (a) partial redemption; (b) early redemption; (c) redemption of perpetual corporate bonds or sukuk where no fixed maturity date has been submitted in the post-issuance notice; and (d) any other redemption occurring on a date other than the maturity date submitted in the post-issuance notice; and 

  • the deadline for notifying the SC is now seven business days after the end of the month in which the corporate bonds or sukuk were redeemed and not seven business days after the redemption date. 
  1. The following provisions have been introduced in Part 3 of Section B of the Revised Guidelines: 
  • paragraph 5.09 which identifies the party who is permitted to be the Responsible Party for submitting the redemption notice; 

  • paragraph 5.10 which requires the Responsible Party responsible for submitting the redemption notice to be specified in the lodgement or the post-issuance notice; and 

  • paragraph 5.11 which requires the Responsible Party who submitted the post-issuance notice to notify the SC as soon as practicable in the event of any change in the maturity date submitted in the post-issuance notice. 
  1. Copies of the announcements made pursuant to paragraphs 6.08(c) and 6.08(d) of Part 3 of Section B of the Revised Guidelines are now required to be made available to the SC upon its request (paragraph 6.08(e) of Part 3 of Section B of the Revised Guidelines). This replaces the requirement under the 9th Revision to provide copies of such announcements to the SC within two business days. 

  2. Paragraph 6.12 of Part 3 of Section B of the Revised Guidelines clarifies that in the event of any upsizing of a debt or sukuk programme, the issuer is required to lodge, through its Lodgement Party, all relevant information and documents with the SC and comply with the relevant requirements under Part 3 of Section B of the Revised Guidelines. 

  3. Where the consent from bondholders or sukukholders is required for any proposed upsizing of a debt or sukuk programme, copies of the announcements made pursuant to paragraphs 6.14(c) or 6.14(d) of Part 3 of Section B of the Revised Guidelines are now required to be made available to the SC upon its request (paragraph 6.14(e) of Part 3 of Section B of the Revised Guidelines). This replaces the requirement under the 9th Revision to provide copies of such announcements to the SC within two business days. 
Asset-backed securities 
  1. The timeframe in paragraph 2.20(a) of Part 4 of Section B of the Revised Guidelines for a Special Purpose Vehicle (SPV) to accept a transfer of the assets or issue asset-backed securities (‘ABS’) has been extended from 60 business days under the 9th Revision to 90 business days from the date on which the securitisation transaction is lodged with the SC. 

  2. It is clarified in Paragraph 3.01 of Part 4 of Section B of the Revised Guidelines that all information and documents relating to an issue of ABS are to be lodged with the SC by the issuer through its Lodgement Party
Convertible notes and Islamic convertible notes to Specific Registered Persons 
  1. The timeframe in paragraph 3.04 of Part 5 of Section B of the Revised Guidelines for the issuance of convertible notes (Eligible CNs) or Islamic convertible notes (Eligible ICNs) has been extended from 60 business days under the 9th Revision to 90 business days from the date of lodgement. 
Transitional provisions 
  1. By way of a transitional provision, paragraph 4.07 of Section D of the Revised Guidelines clarifies that in the event of any upsizing of a debt or sukuk programme previously approved or authorised by the SC, the issuer is required to lodge, through its Lodgement Party, all relevant information and documents with the SC and comply with the relevant requirements under Part 3 of Section B of the Revised Guidelines. 
Article by Kok Chee Kheong (Partner) and Tai Kean Lynn (Associate) of the Corporate Practice of Skrine. 
 

1 Capital market products include (a) wholesale funds; (b) structured products; (c) corporate bonds and sukuk; (d) asset-backed securities; and (e) certain types of convertible notes and Islamic convertible notes to specified registered persons (namely venture capital and private equity corporations and management corporations registered with the SC under the Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations).
2 The categories of persons include sophisticated investors and persons who acquire unlisted capital market product for a consideration of not less than RM250,000 per transaction.
3 See definition of ‘Lodgement Party’ in paragraph 2.01 of Section A and paragraph 4.04 of Part 3 of Section B of the Revised Guidelines.
4 See Section 2 of Part 3 of Lodgement Kit: Unlisted Capital Market Products under the Lodge and Launch Framework (10th Revision dated 30 May 2022).
 

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. For further information, kindly contact skrine@skrine.com.