KUALA LUMPUR, Malaysia (July 5): The Securities Commission of Malaysia (SC) has announced new guidelines for unlisted public companies (UPCs) to offer shares to sophisticated investors, which will go into effect on August 1, 2021. The SC stated in a statement that the guidelines are intended to protect investors’ interests in the wake of increased inquiries and complaints received by the SC regarding the offering of shares by UPCs to both sophisticated and non-sophisticated investors via phone calls, seminars, video recordings via social media, or unlicensed agents.
“The new guidelines spell out UPCs’ responsibilities when selling shares to sophisticated investors, including the necessity that they use only organizations approved by the SC to market and promote their shares.”
UPCs must also ensure that the prospective investor they approach is a knowledgeable one. In addition, on the cover page of each information memorandum (IM) published, UPCs must print a caution statement stating that, although the IM is deposited with the SC, the offering or the IM does not require approval by the SC. UPCs must also send a post-issuance notification to the SC in order for the SC to track the funds raised and the use of revenues, according to the SC.
It goes on to say that intelligent investors should do their own due diligence on share offerings because the SC does not evaluate offerings or promotional documents provided by UPCs.
The regulator also warned UPCs that issuing shares to retail investors without a prospectus is a significant violation of the Capital Markets and Services Act 2007, which can result in a fine of up to RM10 million or a sentence of up to 10 years in prison, or both./n
