Securities Commission Malaysia’s Relief Measures for Capital Market Participants in Malaysia in light of the ongoing Movement Control Order
Following the introduction of the Movement Control Order (“MCO”) that took effect on 18 March 2020 and which has now been extended to 28 April 2020 (“Restricted Period”), the Securities Commission Malaysia (“SC”) has taken various steps to provide guidance, relief and clarity to capital market participants. In this regard, the SC has emphasized that the capital market, as a critical component of Malaysia’s financial sector, will operate as usual during the Restricted Period, with all intermediaries expected to remain open and fully operational. However, it has recognized that to facilitate the nationwide restriction on movement to curb the spread of Covid-19, various accommodations will need to be made. Some of the relief measures are set out below.
- In respect of the timing of annual general meetings (“AGMs”) for listed real estate investment trusts (“REITs”) – a 2-month extension is granted to REITs managers of listed REITs with a financial year-end of 31 December 2019 to hold AGMs by 30 June 2020.
- Greater flexibility for the issuance of quarterly and annual reports of listed corporations. A 1-month extension is granted for issuance of periodic reports –
- for Main and ACE markets on the issuance of quarterly reports and annual reports due on 31 March 2020 and 30 April 2020; and
- for LEAP market on the issuance of semi-annual and annual audited financial statements due on 31 March 2020 and 30 April 2020.
- However, if the preparation of the quarterly reports, annual reports or financial statements is not adversely affected by the MCO and the Covid-19 pandemic, and listed corporations are able to issue the said reports within the prescribed timelines under the Main Market Listing Requirements, ACE Market Listing Requirements or LEAP Market Listing Requirements, they must continue to do so without any undue delay.
- Listed corporations which are affected by the MCO and can only hold their AGMs beyond the prescribed 6-month period as stipulated under the Companies Act 2016 can apply to defer their AGMs with the Companies Commission Malaysia (“SSM”). More information on the deferment can be found at the SSM website.
- Waiver of the SC’s annual licensing fees for 2020 –
- on the core regulated activity of all Capital Markets Services Licence (CMSL) entities with profit before tax of RM5 million or less during the 2019 financial year. A qualifying CMSL entity which has already made the payment prior to this announcement will be offered a credit to offset next year’s licensing fees; and
- for all individual CMSL holders and Capital Markets Services Representative’s Licence (CMSRL) holders. A qualifying CMSRL holder who has already made the payment prior to this announcement will be offered a credit to offset next year’s licensing fees.
- Reduction of the minimum Continuing Professional Education (CPE) requirements to 10 CPE points from the current 20 CPE points effective 1 July 2020 for a period of 12 months for all CMSRL holders and employees of Registered Persons.
- Reduction of the minimum training requirements to three days from the current five days effective 1 July 2020 for a period of 12 months for trading representatives and marketing representatives.
- One-off training subsidy for existing registered firms of Audit Oversight Board (AOB) with fewer than 10 audit partners, up to RM30,000 per firm for Approved Training Programmes conducted by the Malaysian Institute of Certified Public Accountants (MICPA).
- Deferment of regulatory filings and submissions – i.e. extension of deadlines for market participants who are required to comply with regulatory submissions and filings to the SC – see SC Circular to Capital Markets Services Licence Holders dated 20 March 2020 – https://www.sc.com.my/regulation/technical-notes-practice-notes-and-circulars/circular-to-capital-markets-services-licence-holders
- On 26 March 2020, the SC approved measures by Bursa to provide margin financing flexibilities to brokers as follows –
- Brokers may, at their discretion, not make margin calls or impose haircuts on any collateral and securities purchased and carried in margin accounts. They are also empowered to exercise their discretion whether or not to impose force selling measures on clients. Previously, brokers were required to automatically liquidate clients’ margin accounts if the equity in those accounts fell below 130% of the outstanding balance.
- The SC has also approved a broader list of accepted collaterals for margin financing. Brokers can now accept bonds, unit trusts, gold and immovable properties as collateral to maintain their clients’ margin accounts, and value these collaterals accordingly.
- The above measures are effective from 27 March 2020 to 30 September 2020, and are subject to brokers meeting their own capital adequacy ratio and shareholder funds as required by Bursa. They are also expected to exercise discretion in accordance with their own credit risk policies.
This article is intended for general information of the clients of our Firm. It should not be regarded as legal professional advice. If you need advice based on specific facts, please feel free to contact us.
|Ivan Ho Yue Chan
|Jarry Tay Mun Fook