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Proposed Amendments to the Main Market Listing Requirements in relation to Listed Real Estate Investment Trusts and Exchange-Traded Funds with Waqf feature

28 October 2022

On 19 October 2022, Bursa Malaysia Berhad (“Bursa”) issued their Consultation Paper No. 3 of 2022 (“CP3/22”) seeking public feedback on the proposed amendments to the Main Market Listing Requirements (“Main LR”) in relation to listed real estate investment trusts (“REITs”) and exchange-traded funds (“ETFs”) with waqf1 feature (“Proposed Waqf Amendments”).
 
The Securities Commission Malaysia (“SC”) pursuant to its Islamic Fund and Wealth Management Blueprint launched in 2017, has introduced in 2020, the waqf-featured fund framework for unit trust and wholesale funds in the SC Guidelines on Unit Trust Funds and SC Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework respectively.
 
Bursa and SC are proposing to extend the waqf framework to include other capital market instruments, namely REITs and ETFs and for this purpose, SC will be issuing a guideline setting out the requirements of the waqf-featured fund framework for Islamic collective investment schemes such as REITs and ETFs.
 
Bursa, meanwhile, are proposing the Proposed Waqf Amendments which entail enhancements to the post listing disclosure framework for listed REITs and ETFs under the Main LR to facilitate the offering of such funds with waqf feature.
 
Bursa believes that the Proposed Waqf Amendments would, inter alia, “(a) promote transparency through enhanced disclosures in immediate announcements and periodic reports; and (b) broaden the range of Islamic capital market products which support socio-economic development, greater public good and wealth distribution, in the Malaysia capital market.”
 
The key amendments proposed by Bursa are as follows: 
  1. enhancing the immediate announcement requirement by requiring disclosure of changes to the waqf arrangements to promote greater transparency on specific key matters in a timely manner; 

  2. enhancing contents of periodic reports to facilitate access to meaningful and value-add information by unit holders such as requiring disclosure of: 
  • the breakdown of the distribution of waqf recipients and unit holders on an interim basis; and 

  • the name of the waqf recipient and how investors can obtain more information on the waqf recipient and progress of the waqf initiatives on an annual basis; 
  1. enhancing the contents of the distribution statement of a REIT to provide unit holders comprehensive insight into their distribution entitlement by including the net amount per unit recommended to be distributed to unit holders and waqf recipient respectively; and 

  2. making other consequential changes for clarity, consistency and certainty. 
The Proposed Waqf Amendments are discussed in greater detail in Part D of the CP3/22 and the full text of the Proposed Waqf Amendments is provided in Annexure B of the CP3/22.
 
Bursa invites comments and feedback on the Proposed Waqf Amendments from the public before the close of the consultation period on 30 November 2022. Bursa will submit the Proposed Waqf Amendments to the SC for approval after receipt of comments pursuant to the CP3/22 and making the relevant changes, where appropriate to the Proposed Waqf Amendments.
 
Alert by Sharifah Shafika Alsagoff (Partner) and Hafidah Aman Hashim (Partner) of the Islamic Finance Practice of Skrine.
 
 
1 Waqf is an Islamic endowment typically linked with social development and public good objectives.

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.

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