The Securities Commission Malaysia (SC) is the sole regulatory body for the authorisation of the establishment of unit trust funds, including the approval of the fund’s management company and trustee. Authorisation of a unit trust fund would allow the making available, offering for subscription or purchase, or issuing an invitation to subscribe for or purchase unit trust funds in Malaysia. Pre-consultations are encouraged to discuss issues pertaining to the establishment of the new fund. The broad issues that may be discussed include:

  • Novel products
  • Implementation issues
  • Regulatory issues.

The SC adopts a declaratory approach in approving the fund, the appointment of the management company and the appointment of the trustee. Under the “disclosure-based regulation” regime, strong emphasis is given to ensuring full and adequate disclosures of the fund in the fund’s prospectus to assist prospective investors in making informed decisions in respect of their investments. In determining the relevant information to be disclosed in the prospectus, the SC will take into account amongst others, the following:

  • Nature of the fund
  • The persons likely to consider acquiring units of the fund
  • A degree of knowledge amongst professional advisers with whom investors are reasonably expected to consult
  • The risk profile of the fund to ascertain if there are appropriate risk disclosures to match the risk appetite of the potential investor.

If the disclosure on the fund’s information is satisfactory, the SC will register the prospectus and deed of the fund within 21 calendar days (excluding public holidays) from the date of submission.
The SC also monitors the eligibility criteria of the management company, in particular its local equity content.

Where certain functions of the management company are delegated in relation to the proposed fund, the management company must ensure that the delegation of function complies with the Guidelines on Outsourcing for Capital Market Intermediaries.

As part of our business process, the SC always engages with relevant stakeholders e.g. ministries/government agencies and industry associations to ensure that there is thorough, consistent, transparent, efficient and timely delivery of our services to the market. In this regard, the SC will continuously monitor and regulate the players in the industry to ensure compliance with the guidelines and securities laws.