The Securities Commission Malaysia (SC) is the sole regulatory body for the authorisation of unit trust funds. Any person who intends to make available, offer for subscription or purchase, or issue an invitation to subscribe for or purchase unit trust funds in Malaysia is required to obtain the SC’s authorisation for the unit trust fund. Additionally, the SC’s approval is also required for the appointment of the management company and the trustee for the unit trust fund.
Generally, pre-submission consultations are encouraged to discuss matters pertaining to the proposed establishment of the new unit trust fund. For certain matters, consultations with the SC are required prior to the submission of the application for the SC’s authorisation, including the following:
- Investment in derivatives (other than for the sole purpose of hedging);
- Investment in ‘other assets’ as defined in the SC’s Guidelines on Unit Trust Funds (Guidelines), which includes digital assets;
- Intention to undertake securities lending, sale and repurchase transactions, or reverse repurchase transactions;
- If the proposed unit trust fund has novel (new) feature, which includes employing method of calculating performance fee other the methods provided in the Guidelines); and
- Regulatory issues.
The SC adopts a declaratory approach in authorising a unit trust fund and in approving the appointment of the management company. Under the “disclosure-based regulation” regime, emphasis is given to compliance with the relevant guidelines and securities laws as well as ensuring adequate disclosures of the unit trust fund in the prospectus to assist prospective investors in making informed decision. In determining the relevant information to be disclosed in the prospectus, the SC will take into account amongst others, the following:
- Investments and features of the unit trust fund;
- Risks associated with the unit trust fund’s investments or features; and.
- A degree of knowledge amongst professional advisers with whom investors are reasonably expected to consult.
Depending on the features of unit trust fund, the fund may be authorised under the following processes:
- Standard authorisation process; and
- Expedited authorisation process.
If the information submitted is complete and satisfactory, the SC will:
- authorise the unit trust fund;
- register the deed; and
- register the prospectus,
within 21 calendar days (excluding public holidays), for an application under the standard authorisation process, or within 10 business days for an application under the expedited authorisation process, from the date of complete submission.
