Date issued: 1 August 2002
|1.||Why would it be necessary for venture capital corporations (VCC) and venture capital management corporations (VCMC) to obtain the exempt dealer status?|
|The Securities Industry Act 1983 provides that any person who carries on a business of dealing in securities must hold a dealer’s licence, and contravention of this requirement is an offence. The activities of the VCC and VCMC fall within that category. However, recognising that fact that the business philosophy of a VCC and VCMC is different from that of a dealer and its importance in developing the economy has been acknowledged by the Government, the VCC and VCMC are granted the exempt dealer status, subject to them being registered with the SC.|
|2.||What is the objective of having the SC undertake the registration role for the venture capital industry?|
|In terms of providing access for raising funds, venture capital financing is closely intertwined with capital market activities. The additional role entrusted to the SC to register applications of venture capital corporations and venture capital management corporations would be consistent with the SC’s broader effort to develop the capital market. In order to qualify for the exempt dealer status, the corporations must register with the SC, and comply with the provisions of the Guidelines for the Registration of Venture Capital Corporations and Venture Capital Management Corporations (Registration Guidelines). The information gathered from this process would enable the SC to formulate effective policy decisions, and better implement the recommendations of the Capital Market Masterplan (CMP), aimed specifically at facilitating the development and promotion of the venture capital industry.|
|3.||Who should register?|
|All corporations that deal, or manage investment in securities of venture companies or investee companies. The corporations are generally referred to as a venture capital corporation or a venture capital management corporation.|
|4.||What is the difference between VCC and VCMC?|
|A VCC is generally a corporation that has an in-house team to manage its own venture capital fund set-up within the entity. A VCMC is a separate corporation that manages on behalf of a venture capital fund.|
|5.||When should the industry register?|
|A corporation that is already dealing or managing investment in securities of venture companies prior to 1 August 2002, which is the effective date of the Registration Guidelines, must register with the SC within three (3) months from that date.
A corporation that has not started to deal or manage investment in securities of venture companies on or after 1 August 2002 must submit its application for registration to the SC before it commences operation.
|6.||What is the procedure for the registration?|
|Application for registration can be made by completing the following application forms:
Relevant documents as stated in paragraph 6.2 and 6.3 of the Registration Guidelines must be submitted together with the applications forms.
|7.||Are there other relevant forms or documents that should be submitted?|
|Once registered, the VCC and VCMC must submit annual periodic reports in accordance with Form 3 under the Registration Guidelines, entitled ‘Annual Activity Report for Venture Capital Corporations and Venture Capital Management Corporations’. This report must be submitted to the SC within 30 days from each year-end.
In addition, the VCC and VCMC must also submit to the SC its latest audited financial statements, within three months after the close of each financial year.
|8.||To whom should the application be submitted?|
|All application forms, periodic reports and other additional documents as required in the Registration Guidelines must be submitted to the SC at the following address:
The Licensing Department
|9.||Is there any payment required?|
|Currently, no payment is required for the registration of VCCs and VCMCs. However, with the implementation of the Electronic Licensing Application (ELA), scheduled for the first quarter of 2003, a registration fee may be imposed.|
|10.||How long will the registration process take?|
|All applications that are complete upon submission will be processed within two months of receipt of the application.|
|11.||What is the effect of not complying with the Guidelines?|
|Failure to comply with the Registration Guidelines may result in the VCC or VCMC to be de-registered. A VCC and VCMC that is not registered with, or has been de-registered by the SC, would not qualify as an exempt dealer and would be in contravention of the licensing requirement if it continues to deal or manage in securities of venture companies. Under the Securities Industry Act 1983, any person in contravention of the licensing requirement commits an offence and is liable to on conviction to a fine not exceeding RM1million or to imprisonment for a term not exceeding ten years or to both.|
|12.||Who can be referred to should there be further enquiries regarding the Guidelines?|
|Any enquiries regarding the Registration Guidelines can be referred to the Licensing Department at the address and contact number as stated in Question 8, above.|