With the release of the "Guidelines on Electronic Prospectuses and Internet Securities Application" by the Securities Commission (SC) today, companies are now able to take advantage of the Internet as an added avenue for more efficient fundraising.
Before the release of the guidelines, investors can apply for shares either using paper-based forms or through Automated Teller Machines. With the guidelines, investors will also enjoy electronic access to prospectuses and the easy option of applying for IPOs online. Investors can apply online for IPOs of public companies, including closed-end funds, and units in property trust funds, provided the promoters offer them electronically.
The SC has also issued "Investing Online" as a short guide for investors. The two documents are available in the SC website.
SC Chairman Datuk Ali Abdul Kadir said the move complements the shorter "time-to-market" for Initial Public Offerings (IPOs) announced recently.
"The electronic way enhances fundraising and investment efficiency. Market players must continuously assess and take advantage of the convenience and opportunities offered by technology," he said.
"As we said in the Capital Market Masterplan, the fundamental principles of capital market regulation remain, regardless of medium of operation. We have committed to capital market regulation being technology-neutral, and we will facilitate innovation," he said.
With the facilitative move, the companies can promote their IPOs by posting their electronic prospectuses and application forms on websites, and distribute them electronically. However, the actual application forms to be used by investors must go through "application providers" such as dealers, banks and merchant banks, as currently practised for paper-based documents.
The SC developed the guidelines based on recommendations from its consultation paper on "Framework for the Implementation of Electronic Commerce in the Capital Market" and that in the CMP, aimed at enhancing the use of technology to increase fundraising efficiency.
The SC had studied the models adopted by Australia, Hong Kong and Singapore, and had extensive consultation with local market participants. The guidelines is the culmination of collaboration between the SC, market institutions, the issuing houses, financial institutions and stockbrokers.
Datuk Ali advised investors to understand the prospectus prior to making an investment decision and to make an effort to ascertain the authenticity of offers made through the Internet, and if such offers have been approved by the authorities.
The Kuala Lumpur Stock Exchange (KLSE) will also continue to post electronic prospectuses and application forms of companies seeking listing on the KLSE to ensure that the public-at-large have continued access to these documents.
The guidelines cover amongst others, system security, permitted enhancements to the electronic prospectus, advertising and promotional materials, access to the electronic prospectus and application form, and reporting to the SC on remedial action in cases of breach of security or systems failure.
For investor protection, an independent system report on the systems and controls must be submitted to the SC prior to the dissemination of the electronic prospectus and provision of Internet securities application. The guidelines also set out other documentation to be submitted to the SC for registration of the paper prospectus, of which the electronic version is deemed a copy.
