SC issues guidelines for venture capital companies to register for exempt dealer status

The Securities Commission (SC) today issued a set of guidelines to help venture capital companies register with the SC for the exempt dealer status.

The Guidelines for the Registration of Venture Capital Corporations and Venture Capital Management Corporations (Registration Guidelines) take effect on 1 August 2002. The guidelines and the relevant forms are available. A set of responses to frequently-asked-questions which will be useful reference for venture capital companies is also on the website.

The Securities Industry (Exempt Dealer) Order (No. 2) 2002, gazetted on 1 August 2002, entitles venture capital companies to the exempt dealer status i.e. exempted from the requirement to hold a dealer’s licence under the Securities Industry Act 1983.

In this regard, all venture capital corporations (VCCs) and venture capital management corporations (VCMCs) that are registered with the SC under the Order will be granted the exempt dealer status, subject to the following conditions:

  • In relation to VCC, the exemption only extends to its dealing in unlisted securities; and
  • In relation to VCMC, the exemption extends to its dealings in unlisted securities and listed securities that are acquired or subscribed for prior to the securities being listed, including any interest in respect of those securities, until its disposal.

Under the Guidelines, VCCs/VCMCs are required to submit annual periodic reports to the SC. The collection of information and statistics from these reports will assist the SC in formulating policy decisions and assessing the overall progress of the industry. This would complement the SC’s role in the certification of VCCs for tax exemption purposes.

The introduction of these guidelines are in line with the SC’s efforts to facilitate the development of the venture capital industry to effectively meet the financing needs of emerging high-growth companies in value-added industries through the provision of risk capital, as stated in the Capital Market Masterplan (CMP).

In formulating the Registration Guidelines, the SC has taken into consideration the views, comments and suggestions made by the Malaysian Venture Capital Association (MVCA), and practitioners and professionals within the venture capital industry to ensure a smooth implementation process.

1 August 2002