SC Issues Guidelines on Advertising in Relation to Offer of Securities

Kuala Lumpur, 18 September 2000

The Securities Commission (SC) wishes to announce the issuance of its Guidelines on Advertising in relation to issues, offers or invitations to subscribe for or purchase, securities.

In particular, the Guidelines deal with pre-prospectus advertisements and post-prospectus advertisements and seek to clarify some of the exceptions to the advertising restrictions which are contained in section 50 of the Securities Commission Act 1993 (SCA).

These guidelines are issued by the SC in response to feedback from issuers and their advisers and is intended to facilitate the carrying out of certain preparatory work associated with a proposed offer. The SC has consulted the Association of Merchant Banks in Malaysia in formulating these Guidelines.

Currently, the provisions relating to restrictions in advertising are set out in section 50 of the SCA. These pre-prospectus restrictions essentially require that the SC's prior consent be obtained before any information can be disseminated in relation to any proposed offer of securities. These restrictions seek to ensure that the prospectus which provides a balanced presentation of information required by investors, is the primary basis of investment decisions. This is because pre-prospectus advertising campaigns could cause investment decisions to be made before a prospectus is available. Once an investment decision is made, the influence of a subsequent prospectus is diminished.

The SC recognises the need for issuers to be able to carry out the ordinary preparatory work associated with a proposed offer of securities in the following cases:
Announcement by underwriters upon being given the mandate by issuers to act as underwriters of the proposed issue;
Announcements made on the joint signing of underwriting agreements; and
Concise statements.
It is not intended for such pre-prospectus restrictions to limit the free flow of non-promotional information that is disseminated to raise public awareness of a proposed offer of securities. Therefore, as far as pre-prospectus advertising is concerned, issuers are allowed to carry out some limited preparatory work in the form of presentations, announcements upon being given the mandate to act as underwriters, announcements made on the joint signing of underwriting agreements and certain concise statements, without having to seek the SC's prior consent. However, the conditions set out in the SC's Guidelines on Advertising in relation to the carrying out of these activities must be complied with.

In regard to post-prospectus advertising, any information that is disseminated after the registration of a prospectus is allowed as long as the information is contained in the prospectus. In addition, announcements by merchant bankers or issuers as to whether the issue was under-subscribed or over-subscribed and the extent of such under-subscription or over-subscription is allowed without the need for SC's prior consent.

These conditions are set out in the SC's Guidelines on Advertising. These guidelines are available here.


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