The new Capital Market and Services Act 2007 (CMSA) came into force on 28 September 2007. CMSA consolidates the Securities Industry Act 1983, Futures Industry Act 1993 and Part IV of the Securities Commission Act 1993 which deals with issues of securities, takeovers and mergers.

Provisions relating to takeovers and mergers in the CMSA will however come into force only next year with the revised Code on Takeovers and Mergers.

The CMSA aims to strengthen the capital market regulatory framework, improve business efficacy and investor protection.

Under the CMSA, the powers of the Securities Commission of Malaysia (SC) to take civil and administrative action are enhanced by amongst others, allowing it to recover three times the amount of losses through civil action for a broader range of market misconduct, including market manipulation.

The CMSA also enhances investor protection by requiring application of monies of sophisticated investors to be held on trust in fund-raising exercises, extending investor protection provisions to clients of financial institutions and increasing the standards of trustees for debenture holders. 

The efficiency of fund-raising process is also increased under the CMSA as the SC's approval is no longer required for a wider range of corporate proposals including share splits, share consolidations and entitlements with regard to warrants, options or rights.

The CMSA also introduces a single licensing regime whereby capital market intermediaries will now hold a Capital Markets and Services Licence instead of multiple licences. This will save time and reduce administrative and compliance costs.

The changes brought about under the CMSA are welcomed as they represent a step forward for the Malaysian capital market.

Written by Ng Pek Wan
Tay & Partners
6th Floor, Plaza See Hoy Chan
Jalan Raja Chulan
50200 Malaysia
Tel: +603 2050 1888
mail@taypartners.com.my