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Bursa Malaysia Berhad (“Bursa Malaysia” or “the Exchange”) today published a consultation paper seeking public feedback on the proposals to enhance the attractiveness and competitiveness of Bursa Malaysia as a destination for capital raising and investment in relation to Collective Investment Schemes (“CIS”).
The Exchange has undertaken a holistic review of the regulatory framework under the Main Market Listing Requirements governing the post listing obligations of all collective investment schemes, such as Real Estate Investment Trusts (“REITs”), Exchange Traded Funds (“ETFs”) and closed-end funds (“CEF”) with the aim of improving the quality of disclosures, strengthening unit holders’ protection and facilitating greater operational efficiency and flexibility for the CIS.
Key proposals in the consultation paper include, among others, promoting the Exchange as a one stop centre for all the secondary fund-raising by listed issuers, as the Exchange will be the single approving authority for all new issues of securities by CIS post listing, except for debt securities. This will result in shorter time-to-market and lower cost of regulation.
Datuk Seri Tajuddin Atan, Chief Executive Officer of Bursa Malaysia said, “The review is part of Bursa Malaysia’s ongoing market development initiatives to expand the depth and breadth of our capital market by providing attractive diversified investment options to our investors. The review will ensure a conducive post listing regulatory framework governing the CIS, for both issuers and investors. The proposed streamlining of the regulatory functions between the Securities Commission and the Exchange will promote greater market efficiency and business efficacy, improve the time-to-market especially in secondary fund raisings and thus, enable our CIS to become more competitive.”
The review undertaken by the Exchange is also aimed at equipping investors with meaningful information which are specific and relevant to each CIS. This will serve to facilitate better understanding of risk, reward and potential of CIS, thereby aiding investors in making informed investment decisions. Examples include the enhanced management discussion and analysts or performance review of the CIS. Through this, investors will be provided with greater clarity on the performance of the CIS which in turn, facilitates informed decisions by investors.
Additionally, the Exchange also proposes to strengthen key aspects of investor protection of CIS. Presently only related party transactions and disposal of real estate exceeding 50% of the REIT’s total asset value will require unit holders’ approval. Under this review, unit holders of REITs will be empowered with similar rights as shareholders of listed corporations entering into related party transactions and non-related party transactions, as their approval will be required if the prescribed materiality threshold is triggered. In addition, unit holders’ rights will be further safeguarded through the proposed appointment of an independent adviser to advise minority shareholders in the case of a related party transactions.
Lastly, the Exchange is also proposing various liberalisations which are aimed at easing regulatory burden and promoting business efficacy, where appropriate. Examples are allowing REITs to seek a mandate instead of specific unit holders’ approval for related party transactions entered into on a recurring basis and which are necessary for the day-to-day operations of the REIT, and making underwriting arrangement in a rights issue by REIT optional instead of mandatory.
The public consultation paper is available on the Bursa Malaysia website at www.bursamalaysia.com. The public and market participants are encouraged to respond to the consultation paper by completing and submitting the Table of Comments attached to the consultation paper by 19 September 2016 (Monday).
