Capital Markets and Services (Amendment) Act 2015

This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette, and the Minister may appoint different dates for the coming into operation of—

by substituting for the words “Securities Commission

Act 1993” wherever appearing the words “Securities

Commission Malaysia Act 1993”; and

in the national language text, by substituting for the words “pihak berkuasa menyelia” wherever appearing the words “pihak berkuasa penyeliaan”.

Amendment of section 2

in the definition of “licensed bank”, by substituting for the words “Banking and Financial Institutions Act 1989

[Act 372]” the words “Financial Services Act 2013

[Act 758]”;

in the definition of “Bank Negara”, by substituting for the words “Central Bank of Malaysia Act 1958

[Act 519]” the words “Central Bank of Malaysia Act 2009 [Act 701]”;

in the definition of “Shariah Advisory Council”, by substituting for the words “section 316a” the words “the

Securities Commission Malaysia Act 1993 [Act 498]”;

by inserting after the definition of “public interest directors”

the following definition:

‘ “recognized market” means a stock market or a derivatives market operated or maintained by an operator registered under section 34;’;

by substituting for the definition of “officer” the following definition:

‘ “officer” has the meaning assigned to it in the

Securities Commission Malaysia Act 1993;’;

in the definition of “Chairman”, by substituting for the words “paragraph 4(1)(a)” the words “paragraph 4(2)(a)”;

Capital Markets and Services (Amendment)

by inserting after the definition of “financial planning”

the following definition:

‘ “foreign supervisory authority” means a foreign authority or any other person which exercises functions corresponding to the functions of the Commission under the securities law;’;

by substituting for the definition of “Commission” the following definition:

‘ “Commission” means the Securities Commission

Malaysia established under the Securities Commission

Malaysia Act 1993;’;

in the definition of “Deputy Chief Executive”, by substituting for the words “paragraph 4(1)(aa)” the words “paragraph 4(2)(b)”; and

by deleting the definition of “Islamic capital market business or transaction”.

Amendment of section 5

in the shoulder note, by substituting for the words

“securities and derivatives” the words “securities, derivatives and capital market products”;

by substituting for subsection (1) the following subsection:

“(1)  Notwithstanding the definition of “securities”,

“derivatives”, “Islamic securities” or “Islamic derivatives”

under this Act and “interest” as defined in subsection 84(1)

of the Companies Act 1965, the Minister may, on the recommendation of the Commission, by order published in the Gazette, prescribe any instrument or product or class of instruments or products to be—

securities;

derivatives;

capital market products;

Islamic securities;

Islamic derivatives; or

Islamic capital market products, for the purposes of the securities laws.”; and

by substituting for subsection (3) the following subsection:

“(3)  In a prescription made under subsection (1) or

in respect of securities, derivatives, capital market products, Islamic securities, Islamic derivatives, or

Islamic capital market products, the Minister may—

by substituting for subsection (1) the following subsection:

“(1)  A person shall not establish, operate or maintain, or assist in establishing, operating or maintaining, or hold himself out as providing, operating or maintaining, a stock market or derivatives market that is not—

a stock market of a stock exchange;

a derivatives market of a derivatives exchange;

a stock market of an exchange holding company that is itself approved as a stock exchange;

a derivatives market of an exchange holding company that is itself approved as a derivatives exchange;

a recognized market;

an exempt stock market; or

an exempt derivatives market.”;

by deleting subsection (2); and

in subsection (5), by deleting the words “or (2)”.

any rights to be conferred on a stock exchange, a derivatives exchange or an approved clearing house in relation to securities or derivatives, as the case may be, under this Act or its rules;

any rights to be conferred on a party to a securities or derivative entered into on a stock market of a stock exchange, a derivatives market of a derivatives exchange, an exempt stock market, an exempt derivatives market or such other market as approved under this Act or the rules of a stock exchange, a derivatives exchange or an approved clearing house, as the case may be; or

anything done or omitted to be done under or in relation to a securities or derivative entered into on a stock market of a stock exchange, a derivatives market of a derivatives exchange, an exempt stock market, an exempt derivatives market or such other market as approved under this Act, as the case may be.

Power of Commission to appoint statutory manager 40d.  (1)  Without prejudice to any provision in this Part, for the purposes of mitigating and managing systemic risk in the capital market or where the Commission considers it is—

in the public interest;

for the protection of investors;

for the proper regulation of a relevant person; or

necessary in the exercise of its powers under section 30, the Commission may appoint a statutory manager.

The Commission may—

Where the Commission has appointed a statutory manager under subsection (2), the Commission may make all or any of the following orders in writing to—

Every such exercise, performance and discharge of such powers, duties and functions by the statutory manager under subsection (2) shall be as valid and effectual as if it were an exercise, performance and discharge by the relevant person.

The Commission may, during the period an order under this section is in force, suspend the functions, rights and privileges of any directors, chief executive officer or senior officer of the relevant person, and for such period, as the Commission may determine.

Where an order is made under this section, the

Commission shall, as soon as may be practicable, give a copy of the order, to the principal officer of the relevant person to which the order relates and to such members of the governing body thereof, if any, as the Commission may consider appropriate in the circumstances.

Where an order has been made under this section, the Commission shall cause the order to be published in at least one national language daily newspaper and one English language daily newspaper.

An order made under this section takes effect on the date specified in the order.

Assistance and access to information, etc.

an agreement with a netting provision, in respect of one or more securities borrowing and lending transactions; or

an agreement specified by the Commission to be a qualified capital market agreement for the purposes of this Part;

“netting provision” means a contractual provision which provides that when the events specified by the parties under a qualified capital market agreement occur, two or more debts, claims or obligations can be set-off against each other or be converted into a net debt, claim or obligation and includes close-out netting arrangement;

“securities borrowing and lending” means an arrangement where any securities borrowing and lending transaction is entered into, other than—

transactions entered into between the approved clearing house and participants that is done in accordance with the rules of the approved clearing house; and

transactions in respect of unlisted debt securities effected under the Real Time Electronic Transfer of Funds and Securities (RENTAS) system.

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19

Enforceability of rights under netting provision 57b.  (1)  The rights of the parties under a netting provision shall not be stayed, avoided or otherwise limited by the commencement of any other proceeding which has the effect of assuming control or managing the business, affairs and properties to which a party may be subject.

The netting provision of a qualified capital market agreement under subsection (1) shall be enforceable in accordance with its terms.

Application of this Part 57c.  No provision in securities laws or in any other written law, including any written law relating to the management of systemic risk or promoting financial stability, whether enacted before or after the commencement of this Act, shall limit, restrict or otherwise affect the operations of Subdivisions 6

and 7 of this Part.”.

the agent engages in any conduct, makes any representation or acts within his authority; and

such conduct, representation or act is carried out in the course of the business for which the principal is licensed.

For the purposes of subsection (1), a principal shall not be entitled to rely on any arrangement, agreement or contract entered into—

A principal shall not be liable for the act of its representative if the representative has ceased to be a representative of the principal and the principal has taken all reasonable steps to inform, or bring to the knowledge of clients of the fact of such cessation.

For the purposes of this section, “principal” means a holder of a Capital Market Services Licence.”.

he had made all enquiries as were reasonable in the circumstances; and

after making such enquiries, he had reasonable grounds to believe and did believe until the time of the making of the statement or provision of the information that—

the statement or information was true and not misleading; or

an insider—

acquired or agreed to acquire securities; or

an insider communicated information referred to in subsection 188(1) to another person, in contravention of subsection 188(3), and such securities were permitted to be traded on a stock market of a stock exchange, then, whether or not the insider had been charged with an offence in respect of the contravention or whether or not the contravention had been proved in a prosecution, the Commission may, if the

Commission considers that it is in the public interest to do so, by civil action, take any or both of the following actions, against the insider:

recover an amount equal to three times the amount being the difference between the price at which the securities were acquired or agreed to be acquired, by the insider or the other person, and the price at which they would have been likely to have been acquired at the time of the acquisition or agreement, as the case may be, if the information had been generally available;

claim civil penalty in such amount as the court considers appropriate having regard to the seriousness of the contravention, being an amount not more than one million ringgit.

Where—

in subsection (1)—

by inserting after the definition of “offeror” the following definition:

‘ “prescribed institution” has the meaning assigned to it in the Development Financial

Institutions Act 2002 [Act 618];’;

by inserting after the definition of “acquirer” the following definition:

‘ “close relative” means a mother, father, child, brother, sister, an adopted child or a step child;’;

a corporation listed on a stock exchange;

a public company as may be specified by the Commission; or

any other entity as may be specified by the

Commission;’;

in the definition of “take-over offer”—

in paragraph (b), by substituting for the words “as defined in the Code;” the words

“; or”;

in paragraph (c), by substituting for the words

“; or” a full stop; and

by deleting paragraph (d);

in subsection (3)—

in paragraph (b), by substituting for the words

“parent, child, brother or sister” the words “close relative”;

by substituting for the words “parent, child, brother or sister” the words “close relative”;

and

by deleting the word “and” appearing at the end of the paragraph;

a person, other than a licensed bank or a prescribed institution, who, directly or indirectly, provides finance or financial assistance, in connection with an acquisition of voting shares or voting rights, with a person who receives such finance or financial assistance.”;

by inserting after subsection (3) the following subsection:

“(3a)  In relation to a take-over offer of an entity other than a corporation or a public company, the

Commission may specify persons who may be presumed to be persons acting in concert.”; and

by inserting after subsection (5) the following subsection:

“(6)

For the purposes of sections 222, 223 and 224—

“dissenting shareholder” includes any shareholder and convertible securities holder, who has not accepted a take-over offer and any shareholder who has failed or refused to transfer shares to an acquirer in accordance with a take-over offer;

“convertible securities” means securities such as warrants, options and other securities that are issued by the offeree which are capable of being converted into new voting shares of the offeree;

“share” means a voting share, in a company, or a unit in an entity specified by the Commission, and includes convertible securities as if those securities were shares of a separate class of a company and any reference to a holder of shares, and to shares being allotted, is to be read accordingly.”.

Amendment of section 217

in the shoulder note, by substituting for the words “and

Mergers” the words “, Mergers and Compulsory

Acquisition”;

Capital Markets and Services (Amendment)

by substituting for subsection (3) the following subsection:

“(3)  The Code shall contain principles governing take-over offer, merger or compulsory acquisition.”;

by substituting for subsection (4) the following subsection:

“(4)  The Commission shall administer the Code and may do all such things as may be necessary or expedient to give full effect to the provisions of this Division and the Code and without limiting the generality of the foregoing, may—

issue rulings—

to interpret this Division and the Code;

enquire into any matter relating to any take-over offer, merger or compulsory acquisition whether potential or otherwise, and for this purpose, may issue public statements as the

Commission thinks fit with respect thereto.”;

and

by deleting subsection (5).

Amendment of section 218

by substituting for the shoulder note the following shoulder note:

“Compliance with Code, guidelines, directions, practice notes and rulings”;

in subsection (1), by substituting for the words “and any ruling made under subsection 217(4)” the words “, guidelines, directions, practice notes and any ruling issued by the Commission”;

by substituting for subsection (2) the following subsection:

“(2)  Subject to section 219, an acquirer who has obtained control in a company shall make a take-over offer for the remaining voting shares in accordance with the provisions of the Code, guidelines, directions, practice notes and any ruling issued by the Commission.”;

and

by substituting for subsection (3) the following subsection:

“(3)  Subject to section 219, an acquirer who has obtained control shall not acquire any additional voting shares in that company except in accordance with the provisions of the Code, guidelines, directions, practice notes and any ruling issued by the Commission.”.

Where the Commission is of the opinion that the whole or any part of the costs and expenses of an independent adviser, person or body of persons appointed by the Commission under

Capital Markets and Services (Amendment)

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this section should be borne by the offeree concerned, the

Commission may, by order in writing, direct the offeree to pay a specified amount, being the whole or part of such costs and expenses, within the time and in the manner specified.

Where an offeree has failed to comply with an order of the Commission under subsection (2), the amount specified in the order may be sued for and recovered by the Commission in a court as a debt due to the Commission.

Powers of independent adviser appointed by

Commission 218b.  An independent adviser or such other person appointed by the Commission under section 218a, shall have all such powers as may be necessary for or in connection with, or reasonably incidental to, the performance of his functions.

Prohibition against communication of certain matters by independent advisers and employees 218c.  Except for the purpose of carrying into effect the provisions of this Act, or so far as may be required for the purpose of any proceedings, civil or criminal, an independent adviser or such other person appointed by the Commission under section 218a and an employee of such independent adviser or other person shall not communicate any matter, which may come to his knowledge in the performance of his duties to any person other than the Commission, or any other person specified by the Commission and, in the case of an employee, to any person other than the independent adviser by whom he is employed.

Access to books, accounts and records, etc.

by substituting for the words “Subject to subsection 217(5), the Commission” the words “The Commission”; and

by substituting for the words “and any ruling made under subsection 217(4)” the words “, guidelines, directions, practice notes and any ruling issued by the

Commission”.

Amendment of section 220

by substituting for the shoulder note the following shoulder note:

“Action by Commission in cases of non-compliance with Code, guidelines, directions, practice notes and rulings”;

in subsection (1)—

by substituting for the words “or the Code, or any ruling made under subsection 217(4)” the words

“, the Code, guidelines, directions, practice notes or any ruling issued by the Commission”;

by substituting for paragraph (e) the following paragraph:

“(e) where the person in breach is a listed corporation, require the stock exchange—

to suspend trading in the securities of the corporation;

in subsection (3), by inserting after the word “Code” the words “, guidelines, directions, practice notes”;

by inserting after subsection (8) the following subsection:

“(8a) Where a person has failed to comply with any direction issued under subsection (1), the Commission may deprive such person from any capital market services by requiring a licensed person, registered person or capital market service provider not to act or continue to act for such person, for any period as may be determined by the Commission.”; and

in subsection (9)—

in the definition of “breach”, by substituting for the words “Part or the Code or any ruling made under subsection 217(4)” the words “Division, the

Code, guidelines, directions, practice notes or any ruling issued by the Commission”; and

in subsection (1), by deleting the words “under this Division or the Code”; and

by substituting for subsection (3) the following subsection:

“(3)  A person who contravenes subsection (1) commits an offence and shall, on conviction, be punished with imprisonment for a term not exceeding ten years and shall also be liable to a fine not exceeding three million ringgit.”.

Capital Markets and Services (Amendment)

33

Amendment of section 222

by substituting for subsection (1) the following subsection:

“(1)  Where an offeror—

has made a take-over offer for all the shares or all the shares in any particular class in an offeree; and

has received acceptances of not less than nine-tenths in the nominal value of the offer shares, the offeror may, within four months of the date of the take-over offer, acquire the remaining shares or remaining shares in any particular class in the offeree, by issuing a notice in the form or manner specified by the Commission to such effect, to all dissenting shareholders provided that the notice—

is issued within two months from the date of achieving the conditions under paragraphs (a)

and (b); and

is accompanied by a copy of a statutory declaration by the offeror that the conditions for the giving of the notice are satisfied.”;

by inserting after subsection (1) the following subsection:

“(1a)  For the purpose of paragraph (1)(b), the acceptances shall not include shares already held at the date of the take-over offer by the offeror or persons acting in concert.”;

by substituting for subsection (2) the following subsection:

“(2)  Where an offeror has given notice to any dissenting shareholder under subsection (1), the dissenting shareholder may, by demand in writing, within one month from the date of such notice, require the offeror to provide in writing the names and addresses of all other dissenting shareholders as shown in the register of members, and the offeror may only acquire the shares of the dissenting shareholders after fourteen days from the posting of those names and addresses to the dissenting shareholder.”; and

by substituting for subsection (3) the following subsection:

“(3)  Upon the giving of the notice and statutory declaration under subsection (1), the offeror shall in accordance with subsection (7) acquire those shares on the terms of the take-over offer or, if the take-over offer contained two or more alternative sets of terms, on the terms which were specified in the take-over offer as being applicable to the dissenting shareholders.”.

in the shoulder note, by inserting after the words “misleading statement in” the words “disclosure document or”;

by substituting for subsection (1) the following subsection:

“(1)  A person who acquires, subscribes for or purchases securities and suffers loss or damage as a result of any statement or information contained in any disclosure document or prospectus that is false

Capital Markets and Services (Amendment)

35

or misleading, or from which there is a material omission, may recover the amount of loss or damage from all or any of the persons set out in the following paragraphs:

the issuer and each director of the issuer at the time of the issue of the disclosure document or prospectus;

a person who consented or caused himself to be named and was named in the disclosure document or prospectus given to an investor as a director or as having agreed to become a director either immediately or after an interval of time;

a promoter, for any loss or damage arising from the disclosure document or prospectus or any relevant portion of the disclosure document or prospectus in respect of which he was a party to the preparation thereof;

a person other than the issuer, who was responsible for preparing the disclosure document or prospectus, or responsible for conducting the due diligence of the information or statement contained in the disclosure document or prospectus, by whatever name called and may include the principal adviser or lead arranger;

a person named in the disclosure document or prospectus with his consent, as having made a statement, that was included in the disclosure document or prospectus or on which a statement made in the disclosure document or prospectus was based, for any loss or damage caused by the inclusion of the statement in the disclosure document or prospectus;

a person named in the disclosure document or prospectus with his consent as a stockbroker, sharebroker, underwriter, auditor, banker or advocate of the issuer in relation to the issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, securities and who had made a statement that was included in the disclosure document or prospectus or on which a statement made in the disclosure document or prospectus was based, for any loss or damage caused by the inclusion of the statement in the disclosure document or prospectus; or

a person who authorized or caused the issue of any disclosure document or prospectus in contravention of section 246, for any loss or damage caused by such contravention.”;

and

by inserting after subsection (3) the following subsection:

“(4)  For the purposes of paragraph (1)(d), where a person who was responsible for preparing the disclosure document or prospectus, or for conducting the due diligence of the information or statement contained in the disclosure document or prospectus is an individual acting on behalf of his principal, the loss or damage may only be recoverable from the principal.”.

by substituting for paragraph (1)(a) the following paragraph:

“(a) shall lodge with the Commission the annual report of the business trust within four months after the end of each financial year of the business trust; and”; and

by substituting for subsection (3) the following subsection:

“(3) A trustee-manager shall—

send to every unit holder without charge a copy of the document referred to in paragraph (1)(a) within four months after the end of each financial year of the business trust; and

if a unit holder requests for any additional copies of the document referred to in paragraph (1)(a), send to the unit holder the document requested for within two months after the request is received and upon payment of a reasonable sum as may be determined by the trustee-manager.”.

the statement or information was true and not misleading;

the omission was not material;

there was no material omission; or

the conduct in question was not misleading or deceptive.”.

Amendment of section 273

in paragraph (1)(a), by substituting for the words “or an information memorandum” the words “, an information memorandum or a disclosure document”; and

in subsection (2), by substituting for the words “approved under section 214 or authorized or recognized by the

Commission under section 256c” the words “approved under section 214, authorized or recognized by the

Commission under section 256c or lodged with the

Commission”.

Capital Markets and Services (Amendment)

39

by substituting for paragraph (1)(a) the following paragraph:

“(a) shall lodge with the Commission the annual report of a unit trust scheme or a prescribed investment scheme within two months after the end of each financial year of the unit trust scheme or prescribed investment scheme; and”; and

in subsection (3)—

in paragraph (a), by substituting for the words

“subparagraph (1)(a)(i)” the words “paragraph (1)

”; and

a copy of its audited annual accounts; and

its interim and periodic financial reports, at the same time such documents are submitted, announced or made available to the exchange.”.

in subparagraph (1)(b)(ii), by substituting for the words

“written notice, guidelines” the words “written notice, direction, guideline or practice note”;

in the proviso to subparagraph (1)(b), by substituting for the words “written notice, guidelines” the words “written notice, direction, guideline, practice note”;

in paragraph (3)(a), by substituting for the words “written notice, condition” the words “written notice, direction, practice note, condition”; and

in paragraph (3)(b), by substituting for the words “five hundred thousand” the words “one million”.

Amendment of section 355

in subparagraph (1)(b)(ii), by substituting for the words

“written notice, guidelines” the words “written notice, direction, guideline or practice note”;

in the proviso to subparagraph (1)(b), by substituting for the words “written notice, guidelines” the words “written notice, direction, guideline, practice note”;

in paragraph (3)(b), by substituting for the words “written notice, condition” the words “written notice, direction, practice note, condition”; and

in paragraph (3)(c), by substituting for the words “five hundred thousand” the words “one million”.

Amendment of section 356

in paragraph (1)(a), by substituting for the words “written notice, guidelines” the words “written notice, direction, guideline, practice note”;

in paragraph (2)(a), by substituting for the words “any guidelines, written notice” the words “written notice, direction, guideline, practice note”; and

in paragraph (2)(b), by substituting for the words “five hundred thousand” the words “one million”.

The Capital Markets and Services (Prescription of Islamic

Securities) Order 2012 [P.U. (A) 478/2012] and the Capital

Markets and Services (Prescription of Capital Market Product)

(Islamic Capital Market Product) Order 2012 [P.U. (A) 479/2012]

are revoked with effect from the effective date.

nothing in this Act shall affect any person’s liability to be prosecuted or punished for any offence or breach committed under the principal Act before the effective date or any proceeding brought, sentence imposed or action taken before the effective date in respect of such offence or breach; and

any right, privilege, obligation or liability acquired, accrued or incurred before the effective date or any legal proceedings, remedy or investigation in respect of such right, privilege, obligation or liability shall not be affected by this Act and shall continue to remain in force as if this Act had not been enacted.

In respect of Islamic securities, Islamic derivatives or

Islamic capital market products prescribed under the Capital Markets and Services (Prescription of Islamic Securities) Order 2012 and the Capital Markets and Services (Prescription of Capital Market

Product) (Islamic Capital Market Product) Order 2012—

In respect of the continuance of other rights and liabilities—

Any condition or restriction imposed on such electronic facility shall be deemed to be a condition or restriction to its registration under subsection 34(1) as introduced by this Act.

Unless otherwise notified in writing by the Commission, an application for registration as an electronic facility that is pending immediately before the effective date shall be deemed to be an application for a registration as a recognized market operator.

KUALA LUMPUR