Unlisted Public Companies (“UPCs”) To Comply With The Securities Commission Malaysia&#82




UPCs

UPCs, in short, are public companies which are not listed in any stock exchange. Although unlisted, UPCs are bound by the Securities Commission Malaysia’s (“SC”) guidelines and securities laws.


Compliance with SC guidelines and securities law

The SC has recently reminded UPCs intending to raise funds from members of the public to comply with the Capital Markets and Services Act 2007 (“CMSA”) and the relevant guidelines, particularly when an offer is made to retail investors.


The SC has stated that there has been an increasing number of queries and complaints regarding UPCs offering their shares, including preference shares, to both retail and sophisticated investors.

When shares of UPCs are offered to retail investors, a prospectus is required to be issued pursuant to the CMSA and thereafter, registered with the SC. The UPC must include all information that are required under the Prospectus Guidelines in the prospectus for the purpose of registration with the SC.


However, UPCs are not required to issue a prospectus when the shares are issued wholly to sophisticated investors as described or set out under Schedules 6 and 7 of the CMSA.


Should UPCs decide to issue an information memorandum (“IM”) for offering their shares to sophisticated investors, they are required to deposit the IM with the SC and also state clearly in the IM that the SC’s approval is not required for the offering of the shares despite it being deposited with the SC.


Penalty

It is a breach of the CMSA if UPCs offer shares to retail investors without a prospectus.

A person found liable for such breach may be punished with a fine not exceeding RM10 million or imprisonment not exceeding ten years, or both.


Conclusion It should be noted by UPCs that they have the duty to provide all the relevant information to investors, including sophisticated investors, to enable them to make an informed assessment, including the merits of investing in the shares of the UPCs and the extent of the risks involved.

Readers can click here for the full announcement by the SC.

February 24, 2021

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