Kuala Lumpur, 17 November 1998
The recent amendments to the Securities Industry (Central Depositories) Act 1991 require all investors to deposit their share scripts with the Malaysian Central Depository by 1 December 1998. Those who hold 2 per cent or more of voting shares in a company will also now have to declare their interests, following amendments to the Securities Industry (Reporting of Substantial Shareholding) Regulations 1998.
1) Q: How do I open an account with the Malaysian Central Depository Sdn Bhd?A: The easiest way is to approach your nearest broker. The cds account may be opened by a beneficial owner (who is the ultimate owner of the shares) or an authorised nominee (such as a stockbroking company or authorised nominees whom your broker would advise you on). However, where the cds account is opened in the name of an authorised nominee, the account must reflect the name of the beneficial owner which the authorised nominee is acting for.
2) Q: When is the latest date that I can deposit my shares into the central depository?A: Not later than 12 noon on 1 December 1998.
3) Q: Do I need to deposit my loan stocks, warrants and TSRs?A: All securities must be deposited into the central depository including shares, debentures, TSRs, warrants and loan stocks. However, provisions letters of allotment (PALs) that have less than a month to expire would not need to be deposited into the central depository. At the same time, TSRs, convertible loan stocks and warrants that would expire on or before 1 December 1998 would not need to be deposited.
4) Q: What is the deadline for me to open cds account in the name of a beneficial owner or an authorised nominee?A: The deadline is 1 December 1998. Thereafter, any person operating an account which is not in the name of a beneficial owner or an authorised nominee would run the risk of his shares being transferred to the Minister of Finance.
5) Q: What happens if I do not deposit my shares by the 1 December 1998 deadline?A: The share registrars are under a legal obligation to transfer all remaining shares which have not been deposited into a cds account in the name of the Minister of Finance.
6) Q: What would happen to my shares then?A: You are given a six month time frame within which you may lodge an appeal to the Securities Commission stating the reasons for failure or delay in depositing your shares. If the Commission is satisfied with the reasons, the shares may be transferred back into your cds account. Where there is no appeal made within the six month period, the Minister may dispose of the shares and the sale proceeds would be treated as if they are unclaimed monies.
7) Q: How do I make an appeal for failure to deposit shares?A: The SC would be publishing the detailed procedures next week to inform the public on how to go about making an appeal under the law. The contact person and numbers would also be provided.
1) Q: How do I deposit shares of a deceased person where a probate has not been granted?A: Where an application for grant of probate or letter of administration has been made but has not been issued before 1 December 1998, such shares need not be deposited by 1 December provided that the respective share registrar has been given:
- an extracted copy of the death certificate;
- copies of the petition papers (sealed where possible); and
- letter of undertaking from the solicitors or applicant on record that they will regularly update the share registrar of the status of the proceedings
Where no application for grant of probate or letters of administration has been made before 1 December 1998, such shares would be transferred to the Minister of Finance accordingly. However, any person whose securities have been transferred to the Minister of Finance may then appeal to the Commission from 12.30 pm on 1 December 1998 up to 5.00 pm on 1 June 1999.2) Q: What happens if my share certificates or transfer forms are lost?A: A replacement certificate must be obtained from the share registrar. If a replacement certificate is obtained before 1 December 1998, the registered owner may deposit the share into the central depository. If the replacement certificate is issued after 1 December 1998, the shares would be transferred to the Minister of Finance. However, the beneficial owner may apply to the SC between the period from 12.30 pm on 1 December 1998 up to 5.00 pm 1 June 1999 for the shares to be transferred to the beneficial owner should a replacement certificate be released during the same period by the share registrar.3) Q: Do I need to deposit moratorium sharesA: Yes, moratorium shares must be deposited in the name of the registered holder and such shares will then be suspended from trading or transfer.4) Q: What about moratorium shares which have been pledged to third party?A: Where a person other than the registered holder of the moratorium shares seeks to deposit moratorium shares, such person may do so provided that they give a letter of undertaking to the MCD that there will be no change in the beneficial ownership of the shares during the moratorium period and that there will be no sale, transfer or assignment of the moratorium shares by such person without the prior approval of the Commission.
5) Q: What happens to shares which have been pledged to an unauthorised nominee?A: They are given one month from 1/11/98 to transfer the shares to the beneficial owner or an authorised nominee as specified in MCD rules.
1) Q: May I withdraw my shares from my cds account?
A: Withdrawal of shares into scrip form is prohibited, except in limited specified circumstances as provided under the Rules of the Malaysian Central Depository Sdn Bhd. Some examples where withdrawal is allowed include where it is necessary to facilitate share buy back, conversion of debt securities into shares and for company restructuring purposes.
2) Q: What are the restrictions on transfer of shares from one cds account to another cds account?
A: Transfer from one cds account to another cds account within the central depository is currently limited to specified circumstances as provided under the Rules of the Malaysian Central Depository Sdn Bhd. The circumstances are given as follows:-
a. Transmission and transfer of securities pursuant to the provision of any written law or an order of court of competent jurisdiction.
b. Rectification of errors.
- This approved reason only applies to rectification of errors made by the Issuers in relation to initial public offers and corporate exercises, e.g. Bonus Issue, Rights Issue and Conversion of Warrants. Other forms of errors may be considered by MCD on a case-by-case basis.
c. Transfer of securities arising from mortgage, charge or pledge.
This approved reason only applies to securities that are mortgaged, charged or pledged to -
- A licensed institution as defined in the Banking and Financial Institutions Act 1989 (BAFIA) arising from credit facilities granted by that licensed institution;
- A holder of a dealer's license under Section 12(1) of the Securities Industry Act 1983; and
- A developmental financial institution that is a schedule institution under BAFIA in relation to the granting of credit by such institution.
d. General offer pursuant to the Malaysian Code on Take-overs and Mergers 1987 or an acquisition of securities by way of a share swap.
e. Transfer of securities into family member's securities account.This approved reason applies to the transfers between individual's securities accounts, where the transferring and recipient depositors are in one of the following relationships:-
f. Transfer of securities into or from a clearing house's securities account in respect of clearing direct business transactions.
g. Transfer of securities into or from a Principal securities account of a Stockbroking Company from or to a depositor's securities account for settlement of a trade executed on a stock market.
- This approved reason refers to -
- Transfer of securities into a Principal securities account of a Stockbroking Company for settlement of trade executed on a stock market from a depositor's securities account; or- Transfer of securities from a Principal securities account of a Stockbroking Company to a depositor's securities account consequential to settlement of trade executed on a stock market.
h. Transfer of securities into or from a securities account of an authorised nominee holding securities for a collective investment scheme or approved fund.
- This approved reason is to facilitate the transfer of securities into/from the securities account of an authorised nominee holding securities for a collective investment scheme (approved by MOF/SC) arising from a trade:
Examples:
i. Exempt fund manager, trustee or trust corporation holding securities for a unit trustii. Trustee or trust corporation holding securities for a closed end fundiii. Licensed fund manager, trustee or trust corporation holding securities for an approved fundiv. Intra-account transfer.
- This approved reason refers to transfer of securities between securities accounts held by the same beneficial owner, whether individual or corporate body (excluding authorised nominee). Beneficial owner is defined as follows in the SICDA:
"beneficial owner", in relation to deposited securities, means the ultimate owner of the deposited securities who is the person who is entitled to all rights, benefits, powers and privileges and is subject to all liabilities, duties and obligations in respect of, and does not include a nominee of any description.
v. Transfer of securities between securities accounts for the same beneficial owner.This approved reason only applies to transfer of securities between:-
i. This approved reason only applies to transfer of securities between:-Nominee accounts held by the same or different authorised nominees for the same beneficial owner; or
ii. Nominee accounts held by the same or different authorised nominees for the same beneficial owner; or
iii. The individual or corporate securities account held directly by a beneficial owner and a nominee account held by an authorised nominee for the same beneficial owner
1) Q: What are the major changes in the Regulations?
- Prior to 1 November 1998, a person who held more than 5 per cent of the aggregate voting shares in a company was regarded as a substantial shareholder in the company and was required to report the relevant information to the SC. However, with the recent amendments, any person holding more than 2 per cent of the aggregate voting shares in a company is now regarded as a substantial shareholder.
- The recent amendments also require a substantial shareholder to report any acquisition, change or cessation of substantial shareholding to the SC within 7 days of the event as opposed to the 14 day requirement prior to 1 November 1998.
2) Q: If I am a substantial shareholder on behalf of another person, do I need to disclose as a substantial shareholder?
- Yes, any person holding shares as a bare trustee is deemed to be a substantial shareholder under the amended Regulations.
- The bare trustee is under a duty to make a disclosure where the aggregate shareholding being held by the bare trustee is in excess of 2 per cent of the aggregate shareholding in the company.
- The bare trustee is required to indicate in the relevant form that they are holding the shares as nominee or bare trustee.
- The bare trustee is also required to disclose all the details of the beneficial owners for whom they are holding the shares as nominee.
3) Q: What happens if the nominee company who holds my shares in custody has already disclosed my substantial shareholding to the SC? Do I still need to make a disclosure?A: Yes, the obligation to report is applies to both the beneficial owner and the bare trustee.4) Q: If I was a substantial shareholder under the previous regulations, that is my shareholding was and is still 5 per cent or more of the total voting shares of the company, do I still need to disclose under the new regulations?A: No, unless there were any subsequent changes to your shareholding.5) Q: Where should I address the disclosure form to?A: The Director,Issues and Investment Division,Securities Commission,No. 3, Persiaran Bukit Kiara,Bukit Kiara,50490 Kuala Lumpur.Fax: 03-253 2976
SECURITIES COMMISSION MALAYSIA
