Recent Developments in Capital Markets' Law and Regulation

Much more is expected to follow in Malaysian Capital Markets Law and Regulation. In September 2007, the Capital Markets And Services Act 2007 ("CMSA") came into force, that is, except for Division 2 of Part VI which regulates Takeovers & Mergers. The old law on Takeovers & Mergers in Division 2 of Part IV of the Securities Commission Act 1993 and The Malaysian Code on Take-overs And Mergers 1998 remains. A new Malaysian Code on Takeovers And Mergers is expected when Division 2 of Part VI of CMSA comes into force. While much is probably being considered for the new Code, Division 2 of Part VI of CMSA already tells us much of what may lie in store. There can be expected, a change in the threshold for mandatory offers. Currently, a person is only required to make a mandatory offer on shares in public companies or private companies subject to the present Code, if he and persons acting in concert acquire more than 33% in such a company. This will change to 30%. The new Code may extend its regulation to other entities including, foreign entities and entities like unit and Real Estate Investment Trusts ("REITS"). It reflects the growing importance for globalisation in Malaysia Capital Markets and the increased introduction of other vehicles as with REITS. The Malaysian Securities Commission's ("SC") new Guidelines on the Offering of Equity and Equity-Linked Securities and Guidelines on the Offering of Equity-Linked Securities for the MESDAQ Market have also rationalized and liberalized some existing regulatory requirements for SC approval.
Companies with foreign based assets and operations now basically follow the same criteria for listing in Malaysia as companies with Malaysian operations. Greater flexibilities are also given to the listing of property development and construction companies, acquisitions involving MESDAQ Market listed companies, the need for financial forecasts and SC approval for acquisitions of significant assets used or core businesses. The SC has also moved to further enhance the standards of conduct. New guidelines were introduced in Guidelines on Principal Advisers for Corporate Proposals and Guidelines on Due Diligence Conduct for Corporate Proposals. A new Stamp Duty Exemption Order has also been introduced. It is to facilitate mergers of companies listed on Bursa Malaysia Securities Berhad. Further enhancements and new regulations can be expected as Malaysia's Capital Markets move to meet an evolving and globalised environment.
This profile was written by Wong Tat Chung, Senior Partner, Wong Beh & Toh
Peti #30, Level 12, West Block Wisma Selangor Dredging, 142-C Jalan Ampang, 50450 Kuala Lumpur,
Malaysia. T: +603 2713 6050 F: +603 2713 6052 E: tc.wong@wongbehtoh.com