Regulators Step Up Guidelines On Shares Offered By Unlisted Public Companies

Securities Commission Malaysia (SC) is a statutory body set up to regulate and develop the Malaysian Capital Market.

The Securities Commission Malaysia has issued new Guideline on Offer of Shares by Unlisted Public Companies to Sophisticated Investors that will take effect on 1 August 2021.

The said guidelines is designed to safeguard investors’ interest in the wake of increased queries and complaints received by the regulator 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.

Under the new guidelines, UPCs have certain obligations when offering shares to these investors, including requirements to only appoint entities licensed by the SC, if any agents are engaged to market and promote their shares. These companies also need to ensure that the prospective investor that they approach is a sophisticated investor. In addition, they will need to print a caution statement on the cover page of any information memorandum (IM) issued, to clearly state that while the IM is deposited with the commission, approval is not required for the offering or the IM. They are also required to submit a post-issuance notification to facilitate the regulators to monitor funds raised and utilisation of proceeds.

Sophisticated investors are also reminded to perform their own assessment in respect of the share offerings, as the SC does not review the offering or promotional document issued by the UPCs. UPCs on the other hand are reminded that offering shares to retail investors without a prospectus is a serious breach under the Capital Markets and Services Act 2007. A person found liable may be punished with a fine not exceeding RM10 million or imprisonment not exceeding ten years, or both.

The new Guidelines and its accompanying FAQs can be found on SC website and if members of the public have any enquiries or concerns about any person or company offering any shares in a UPC may contact the the regulator.

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