Guidelines for the Offering, Marketing and Distribution of Foreign Funds

1. What are the key amendments to the Guidelines for the Offering, Marketing and Distribution of Foreign Funds (OMD Guidelines)?
  • Expansion of Chapter 3 (Permitted Foreign Funds)
    Expanded by inserting a new Clause 3.03 to provide for foreign funds which are not recognised funds from a recognised jurisdiction.
    This new Clause 3.03 makes reference to a new Appendix 2 which sets out:

    (i) the type of foreign funds which may be considered (currently, ETF and CEF); and
    (ii) the minimum criteria for such foreign funds and the parties responsible for such foreign funds.

    This new Clause 3.03 also requires the foreign funds to comply with the relevant regulatory requirements for a comparable product in Malaysia and to ensure investors in Malaysia are accorded equivalent investor protection.

  • Insertion of new Chapter 5 (Offering Document for Permitted Funds under Clause 3.03)
    Stipulates requirements for the contents of offering documents for funds permitted under Clause 3.03 and differentiates from the content requirements for recognised funds from recognised jurisdictions i.e. Chapter 4 (Offering Document for Permitted Funds under Clause 3.01). Effectively requires compliance with all disclosure requirements that are applicable to a fund domiciled and primarily regulated in Malaysia.
  • Insertion of new Chapter 7 (Requirement for a Representative for Listed Funds)
    The provisions for the requirement to appoint a representative for a foreign listed fund currently appear in the Exchange-Traded Funds Guidelines (ETF Guidelines). Those provisions have been adopted in the OMD Guidelines via this Chapter 7 and will apply to all listed foreign funds.
2. To ensure compliance with Clause 3.03(c) of the OMD Guidelines, what are the applicable guidelines and laws that a foreign fund must adhere to?
  A foreign fund would need to comply in substance with the provisions of-

  • the SC’s product guidelines (e.g.Exchange-traded Funds Guidelines, Guidelines for Public Offerings of Securities of Closed-end Funds) and any other ancillary guidelines (e.g. Guidelines on Online Transactions and Activities in relation to Unit Trusts);
  • the SC’s guidelines on disclosures in offering documents (e.g. Prospectus Guidelines for Collective Investment Schemes); and
  • the Capital Markets and Services Act 2007.
3. To ensure compliance with Clause 3.03(d) of the OMD Guidelines, what areas should be covered?
  The areas of investor protection include corporate governance, unitholders/shareholders rights and interests, and takeover matters. The legal and regulatory framework governing the foreign fund should contain provisions on the above areas which are similar to the provisions in the CMSA or the Companies Act 1965 as the case may be, as well as the relevant SC product guidelines. To that end the applicant should appoint appropriate legal counsel to conduct the jurisdictional comparison and submit the same to the SC.

Please note that as and when the relevant laws and guidelines are amended, the SC may seek further confirmation on compliance with specific provisions. Additionally, there may be legal, regulatory or other developments and/or a change in the level of regulatory oversight, supervision, cooperation and assistance of the regulator of the foreign fund and reciprocity accorded to the SC with respect to the foreign fund in question which may result in the SC requiring further assurance of the required level of investor protection.

4. If a foreign fund has been approved under Clause 3.03, can another foreign fund of similar type from the same jurisdiction be deemed approved?
  No. Every application for approval of a foreign fund under Clause 3.03 will be considered based on its merit.