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Securities Industry
LAWS OF MALAYSIA
REPRINT
Act 280
SECURITIES INDUSTRY
ACT 1983
Incorporating all amendments up to 1 January 2006
PUBLISHED BY
THE COMMISSIONER OF LAW REVISION, MALAYSIA
UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968
IN COLLABORATION WITH
PERCETAKAN NASIONAL MALAYSIA BHD
2006
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ACT 280
Laws of Malaysia
SECURITIES INDUSTRY ACT 1983
Date of Royal Assent
... ... ... ... ...
9 March 1983
Date of publication in the Gazette ... ...
10 March 1983
PREVIOUS REPRINT
First Reprint
...
...
...
...
...
2001
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LAWS OF MALAYSIA
Act 280
SECURITIES INDUSTRY ACT 1983
ARRANGEMENT OF SECTIONS
PART I
PRELIMINARY
Section
1.
Short title
2.
Interpretation
3.
Associated person
4.
Interest in securities
PART II
CAPITAL ISSUES COMMITTEE
5.
(Deleted)
6.
(Deleted)
PART III
STOCK EXCHANGES AND CLEARING HOUSES
7.
Establishment of stock markets
8.
Power of Minister to approve a stock exchange
8A. Recognized clearing house
8B. Withdrawal of recognition of clearing house
8C. Effect of withdrawal of recognition of clearing house
8D. Appointment of directors of stock exchange and exchange holding
company
9.
Commission to approve amendment to rules of stock exchange
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9A. Commission to approve amendment to rules of recognized clearing
house
9B. Duties of stock exchange
9C. Closure of stock exchange in emergency
9D. Withdrawal of approval of stock exchange
9E. Effect of withdrawal of approval of stock exchange
10.
Exchange holding company, stock exchange and recognized clearing
house to provide assistance to Commission
11.
Powers concerning compliance with the provisions of this Act and rules
of the stock exchange, etc.
11A. Power of Commission to prohibit trading in particular securities
11B. Suspension order relating to stock exchange, recognized clearing house
or central depository
11C. Exchange holding company
11D. Power of Minister to approve an exchange holding company
11E. Annual Regulatory Report on compliance with ongoing requirements
11F. Special report by exchange holding company about compliance with
ongoing requirements
11G. Withdrawal of approval of an exchange holding company
11H. Effect of withdrawal of approval of exchange holding company
11I. Listing of exchange holding company on stock exchange
11J. Duties of an exchange holding company
11K. Risk Management Committee of exchange holding company
11L. Power to issue directions
11M. Restriction on exchange holding company from reducing its shareholding
11N. Disposal and acquisition of assets, etc.
11O. Control in shareholding of exchange holding company
11P. Power of Commission upon contravention of sections 11M, 11N and 11O
PART IV
LICENCES
12.
Dealer's licence
13.
Dealer's representative's licence
14.
Investment adviser's licence
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Section
15.
Investment representative's licence
15A. Fund manager's licence
15B. Fund manager's representative's licence
15C. Contravention of section 12, 13, 14, 15, 15A or 15B
16.
Application for licence or renewal
17.
Grounds for refusal to grant or renew licence
17A. Licensed person to notify Commission of disqualifying event
18.
Grant or renewal of licences
19.
Commission's power to vary licences in certain circumstances
20.
Power of Commission to enquire into securities transactions
20A. Minimum financial requirements
21.
Power of Commission to impose conditions or restrictions on licences
22.
False statements
23.
Deposit to be lodged in respect of dealer's or fund manager's licence
24.
Period of licence
25.
Notification of change in particulars
26.
Register of licence holders
27.
Revocation and suspension of licence
28.
Appeal
28A. Surrender of licence
28B. Powers concerning compliance with conditions of licence, etc., by
licensed persons
PART V
RECORDS
29.
Application of this Part
30.
Register of securities
31.
Notice of particulars to Commission
32.
Defence to prosecution
33.
Production of register
34.
Particulars of financial journalists
35.
Commission may supply copy of the extract of a register
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PART VI
CONDUCT OF SECURITIES BUSINESS
Section
36.
(Deleted)
37.
Certain representation prohibited
38.
Issue of contract notes
39.
Certain persons to disclose certain interests in securities
40.
Dealings as principal
40A. Recommendations by adviser
40B. Duty to furnish Commission with such returns and information as
Commission requires
40C. Additional obligations on licensed persons
41.
Shortselling
PART VII
ACCOUNT AND AUDIT
DIVISION 1
Accounts--Dealers
42.
Application of this Division
43.
Accounts to be kept by dealers
44.
Certain moneys received by dealers to be paid into a trust account
44A. Property other than moneys received by dealers
45.
Purposes for which moneys may be withdrawn from trust account
45A. Dealer to supply copies of entries in books
46.
Moneys in trust accounts not available for payment of debts, etc.
47.
Claims and liens not affected
DIVISION 2
Accounts--Fund Managers
47A. Application of Division
47B. Accounts to be kept by fund manager
47C. Operation of trust account
47D. Client's moneys
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Section
47E. Right to copies of book entries, inspection of contract notes, etc.
47F. Commission's power to transfer client's property and moneys to a trust
company, etc., under certain circumstances
DIVISION 3
Audit
48.
Appointment of auditor
48A. Associates not to be appointed as auditors
49.
Relevant person to lodge auditor's report
50.
Duties of auditor
51.
Duty of relevant person or its directors or officers to furnish information
52.
Power of Commission to appoint independent auditor, etc.
53.
Power of Commission to appoint an independent auditor, etc., upon
application of client
54.
Independent auditor, etc., to report to Commission
55.
Powers of independent auditor, etc.
56.
Prohibition against communication of certain matters by independent
auditor, etc., and employees
57.
Books, accounts and records to be produced upon demand
58.
Penalty for destroying, concealing or altering records or sending records
or other property out of Malaysia
59.
Rights of board of stock exchange to impose obligations on participating
organization
PART VIII
COMPENSATION FUND
60.
Interpretation
61.
Establishment of compensation fund
62.
Moneys constituting compensation fund
63.
Funds to be kept in separate account
64.
Payments out of compensation fund
65.
Accounts of compensation fund
66.
Requirement of relevant stock exchange to pay portion of net income
into compensation fund
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Section
67.
Contributions to compensation fund
68.
Provision where compensation fund exceeds fifty million ringgit
69.
Levy in addition to annual contribution
70.
Power of stock exchange to make advances to compensation fund
71.
Investment of moneys in compensation fund
72.
Application of compensation fund
73.
(Deleted)
74.
(Deleted)
75-77.
(Deleted)
78.
Power of relevant stock exchange to require production of securities
79.
Subrogation of relevant stock exchange to rights and remedies of
claimant upon payment from compensation fund
80.
Payment of claims only from compensation fund
81.
(Deleted)
82.
Power of relevant stock exchange to enter into contract of insurance
83.
Application of insurance moneys
83A. Moneys in compensation fund where relevant stock exchange wound
up
83B. Regulations in respect of compensation fund
PART VIIIA
CAPITAL MARKET DEVELOPMENT FUND
83C. Establishment of Capital Market Development Fund
83D. Assets constituting Fund
83E. Objects of the Fund, etc.
83F. Membership of the Board
83G. Tenure of office
83H. Resignation and revocation of appointment
83I. Vacation of office
83J. Quorum and procedures of meetings
83K. Disclosure of interest
83L. Conservation of the Fund
83M. Financial year
83N. Accounts and audit
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Section
83O. Power of Minister in relation to the Board
83P. Dissolution of the Fund
83Q. Power to make regulations
PART IX
TRADING IN SECURITIES
DIVISION 1
Prohibited Conduct
84.
False trading and market rigging transactions
85.
Stock market manipulations
86.
False or misleading statements, etc.
87.
Fraudulently inducing persons to deal in securities
87A. Use of manipulative and deceptive devices
87B. Person or transaction to whom or which sections 84, 85, 86, 87 and
87A do not apply
88.
Dissemination of information about illegal transactions
88A. Civil liability for contravention of sections 84, 85, 86, 87, 87A and 88
88B. Penalty for offence under Division 1
88C. Acts and omission within and outside Malaysia relating to prohibited
conduct under Division 1
DIVISION 2
Insider Trading
89.
Information
89A. Information generally available
89B. Material effect on price or value of securities
89C. Trading in securities
89D. Reference to "procure"
89E. Prohibited conduct of person in possession of inside information
89F. Proof of contravention of section 89E
89G. Secrecy arrangements by corporation
89H. Secrecy agreements by partnerships
89I. Underwriting and sub-underwriting
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Section
89J. Non-application of section 89E to transactions carried out under schemes
of arrangement, etc., under any written law
89K. Exception for corporation with knowledge of its intention
89L. Exception of knowledge of individual's own intentions or activities
89M. Unsolicited transaction by a broker
89N. Exception for redemption of units of a unit trust scheme under
buy-back covenant
89O. Parity of information defence
89P. Acts and omission within and outside Malaysia relating to insider
trading
DIVISION 3
Liability for Unlawful Activity
90.
Civil remedies
90A. Recovery of loss or damages
91.
(Deleted)
92.
Dealer to give priority to client's order
93.
Dealings by employees of holders of licences
PART X
ENFORCEMENT AND INVESTIGATION
DIVISION 1
General
94.
Interpretation
94A. Inspection of books and records of licensee and others
95.
Power of Commission to require production of books
95A. Power to specify form and manner of information, returns or documents
and period for submission
96.
Offences
97.
Privileges
98.
Disclosure to Commission
99.
Investigation of certain matters
99A. Disclosure of information relating to dealing in securities
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Section
99B. Duty of chief executive and directors of listed corporation to disclose
interests in securities
99C. Disqualification of chief executive or director of listed companies
99D. Submission of information
99E. Duties of auditor of listed corporations
99F. Protection for persons against retaliation for reporting to authorities in
specific circumstances
100.
Power of court to make certain orders
100A. Application for winding up
DIVISION 2
(Deleted)
PART XA
MODIFICATIONS TO THE LAW OF INSOLVENCY
AND MISCELLANEOUS PROVISIONS RELATING TO
THE OPERATIONS AND PROCEDURES OF THE
RECOGNIZED CLEARING HOUSE
101.
Interpretation
102.
Default rules
103.
Proceedings of recognized clearing house to take precedence over law
of insolvency
104.
Supplementary provisions as to default proceedings
105.
Duty to report on completion of default proceedings
106.
Net sum payable on completion of default proceedings
107.
Disclaimer of property, rescission of contracts, etc.
108.
Adjustment to prior transactions
109.
Right of relevant office-holder to recover certain amounts arising from
certain transactions
110.
Law of insolvency in other jurisdictions
111.
Participant to be a party to certain transactions as principal
112.
Securities delivered to a recognized clearing house
113.
Securities transfers in settlement
114.
Purchase and sale of securities
115.
Immunity
116.
Preservation of rights, etc.
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Section
117.
Exemption from regulations on reporting of substantial shareholding
and Division 3A of the Companies Act 1965
118119.
(Deleted)
PART XI
GENERAL
120.
Prohibition of use of certain titles
121.
Copy of an entry in the dealer's or fund manager's record as prima
facie evidence of such entry
121A. Decision of Minister to be final
122.
Offences by bodies of persons and by employees and agents
122A. Falsification of records by directors, employees and agents
122B. False reports to Commission, stock exchange or recognized clearing
house
122C. Attempts, abetments and conspiracies
122D. Destruction, concealment, mutilation and alteration of records
123.
General penalty
124.
Compounding of offences
125.
Convicted persons liable to pay compensation
126.
Conduct of prosecution
126A. Indemnity
126B. (Deleted)
126C. Commission may be represented by any officer in civil proceedings
127.
Regulations
128.
Provisions of Act not applicable to Pasaran Saham Bumiputra
PART XII
REPEAL AND TRANSITIONAL PROVISIONS
129.
Repeal
130.
Saving
131.
Continuance of powers, rights, liabilities and duties of the Registrar
132.
Continuance of criminal and civil proceedings in relation to the
Registrar
133.
Continuance of other rights, liabilities, etc., under repealed Act
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Section
134.
Prevention of anomalies
SCHEDULE
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Securities Industry
LAWS OF MALAYSIA
Act 280
SECURITIES INDUSTRY ACT 1983
An Act to make provisions with respect to stock exchanges and
persons dealing in securities, and for certain offences relating to
trading in securities, and for other purposes connected therewith.
[7 July 1983, P.U. (B) 332/1983]
BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan
Agong with the advice and consent of the Dewan Negara and
Dewan Rakyat in Parliament assembled, and by the authority of
the same, as follows:
PART I
PRELIMINARY
Short title
1. (1) This Act may be cited as the Securities Industry Act 1983.
(2) (Deleted by Act A943).
Interpretation
2. (1) In this Act, unless the context otherwise requires--
"accounting records" has the same meaning as is assigned to
that expression in the Companies Act 1965 [Act 125];
"agent", in relation to a dealer, includes a person who is or has
at any time been a banker of the dealer;
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"assets", in relation to the holder of a dealer's licence, means
all the assets of the holder, whether or not used in connection with
a business of dealing in securities;
"auditor" means an approved company auditor within the meaning
of the Companies Act 1965;
"board", in relation to a corporation, means the board of directors
or other governing authority of the corporation;
"books" includes--
(a) a register;
(b) any other record of information;
(c) accounts or accounting records, however compiled, recorded
or stored; and
(d) a document;
"business rules" has the same meaning as is assigned to that
expression in the Futures Industry Act 1993 [Act 499];
"central depository" means a central depository which has been
approved by the Minister under subsection 5(1) of the Securities
Industry (Central Depositories) Act 1991 [Act 453];
"chief executive", in relation to a corporation, means the principal
executive officer of the corporation for the time being, by whatever
name called, and whether or not he is a director;
"clearing house" means a person--
(a) whose activities or objects include the provision of services
for the clearing and settlement of transactions in securities
effected on, or subject to the rules of, the stock exchange;
or
(b) who guarantees the settlement of any such transactions;
"clearing house of an exchange company" has the same meaning
as is assigned to the expression "clearing house" in the Futures
Industry Act 1993;
"Commission" means the Securities Commission established
under the Securities Commission Act 1993 [Act 498];
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"company" has the same meaning as is assigned to that expression
in the Companies Act 1965;
"corporation" has the same meaning as is assigned to that
expression in the Companies Act 1965;
"dealer" means a person who carries on a business of dealing
in securities as a corporation whether or not he carries on any other
business, but does not include an exempt dealer;
"dealer's representative" means a person, by whatever name
described, who is in the employment of, or acting for or by
arrangement with, a dealer, not being an exempt dealer, and performs
for that dealer any of the functions of a dealer other than work
ordinarily performed by accountants, clerks or cashiers;
"dealing in securities" means, whether as principal or agent,--
(a) acquiring, disposing of, subscribing for or underwriting,
securities; or
(b) making or offering to make with any person, or inducing
or attempting to induce any person to enter into or to
offer to enter into--
(i) any agreement for or with a view to acquiring,
disposing of, subscribing for, or underwriting
securities; or
(ii) any agreement, other than a futures contract, the
purpose or avowed purpose of which is to secure
a profit to any of the parties from the yield of
securities or by reference to fluctuations in the
value of securities;
"depository participant" means a person to whom the provisions
of section 9 of the Securities Industry (Central Depositories)
Act 1991 applies;
"director" has the same meaning as is assigned to that expression
in the Companies Act 1965;
"document" has the same meaning as is assigned to that expression
in the Evidence Act 1950 [Act 56];
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"exchange company" has the same meaning as is assigned to
that expression in the Futures Industry Act 1993;
"exchange holding company" means a body corporate that is the
holding company of any stock exchange, recognized clearing house,
exchange company, clearing house of an exchange company or
central depository, and that has been approved as an exchange
holding company under section 11D;
"exempt dealer" means--
(a) a person who carries on a business of dealing in securities
only through the holder of a dealer's licence for his own
account or for its related corporation;
(b) a person who is registered with a body that is approved
by the Commission, and the dealing in securities by such
person is in relation to arranging or offering for the sale
or purchase of, any interest in a unit trust scheme, subject
to any term or condition as may from time to time be
specified by the Commission;
(c) any public statutory corporation constituted under any
written law;
(d) such other person or class of persons as the Minister may
prescribe to be an exempt dealer or exempt dealers subject
to such terms and conditions as the Minister may impose;
or
(e) a licensed fund manager or an exempt fund manager
whose dealing in securities is solely incidental to the
conduct of his business as a fund manager or an exempt
fund manager;
"exempt fund manager" means a person exempted under paragraph
15A(2)(d);
"exempt investment adviser" means a person exempted under
paragraph 14(2)(d);
"exempt stock market" means a stock market which is declared
to be an exempt stock market under paragraph 7(2)(a);
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"fund manager" means a person who under an agreement with
any other person, undertakes on behalf of that person, whether on
a discretionary authority granted by such person or otherwise, the
management of a portfolio of securities (other than any arrangement
made for the purpose, or having the effect, of providing facilities
for the participation of persons as beneficiaries under a trust in
profits or income arising from the trading in futures contracts) for
the purposes of investment;
"fund manager's representative" means a person, by whatever
name described, who is in the employment of, or acting for or by
arrangement with, a fund manager, not being a person described
in subsection 15A(2), and performs for that fund manager any of
the functions of a fund manager other than work ordinarily performed
by accountants, clerks or cashiers;
"futures contract" has the same meaning as is assigned to that
expression in the Futures Industry Act 1993;
"holding company" has the same meaning as is assigned to that
expression in sections 5 and 5A of the Companies Act 1965;
"information service" means--
(a) a broadcasting service;
(b) an interactive or broadcast videotext or teletext service
or other similar service;
(c) an on-line database service or other similar service; or
(d) any other service as may be prescribed by the Commission;
"Investigating Officer" means an Investigating Officer of the
Commission appointed under the Securities Commission Act 1993;
"investment adviser" means a person who--
(a) carries on a business of advising others concerning
securities;
(b) as part of a business, issues or promulgates analyses or
reports concerning securities; or
(ba) carries on a business of analysing the financial
circumstances of another person and provides a plan to
meet that other person's financial needs and objectives,
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including any investment plan in securities, whether or
not a fee is charged in relation thereto,
but the expression does not include--
(c) a licensed bank as defined under the *Banking and Financial
Institutions Act 1989 [Act 372];
(d) an Islamic bank as defined under the Islamic Banking
Act 1983 [Act 276];
(e) a company or society registered under any legislation
relating to insurance;
(f) a company registered under the Trust Companies
Act 1949 [Act 100];
(g) an advocate and solicitor or accountant in practice whose
carrying on of that business is solely incidental to the
practice of his profession; or
(h) (Deleted by Act A1218).
(i) a person who is the proprietor of a newspaper and holder
o f a permit issued under the Printing Presses and
Publications Act 1984 [Act 301] where--
(i) insofar as the newspaper is distributed generally
to the public, it is distributed only to subscribers
for, and purchasers of, the newspaper for value;
(ii) the advice is given or the analyses or reports are
issued or promulgated only through that newspaper;
(iii) t h a t person receives no commission or other
consideration for issuing or promulgating the
analyses or reports; and
(iv) the advice is given and the analyses and reports
are issued or promulgated solely as incidental to
the conduct of that person's business as a newspaper
proprietor;
(j) (Deleted by Act A1218).
"investment representative" means a person, by whatever name
described, who is in the employment of, or acting for or by
arrangement with, an investment adviser who is not a person referred
*NOTE--This Act has replaced the Banking Act 1973 [Act 102]see subsection 128(1) of Act 372.
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to in subsection 14(2), and performs for that investment adviser
any of the functions of an investment adviser other than work
ordinarily performed by accountants, clerks or cashiers;
"licence" means--
(a) a dealer's licence;
(b) a fund manager's licence;
(c) an investment adviser's licence;
(d) a dealer's representative's licence;
(e) a fund manager's representative's licence; or
(f) an investment representative's licence,
granted or renewed under Part IV;
"licensed institution" has the same meaning as is assigned to
that expression in the Banking and Financial Institutions Act 1989;
"licensed person" means a person licensed under Part IV;
"listed", in relation to a security or a corporation, as the case
may be, means such security or corporation whose securities or
any class of its securities having gained admission to be quoted
on a stock market of a stock exchange;
"listing requirements", in relation to a body corporate which
establishes or operates, or proposes to establish or operate, a stock
market of a stock exchange, means the rules governing or relating
to--
(a) the admission to the official list of any body corporate,
government, unincorporate body or any other person for
the purpose of the quotation on the stock market, securities
issued or made available by a body corporate, government,
unincorporate body or any other person or the removal
from that official list and for other purposes; or
(b) the activities or conduct of any body corporate, government,
unincorporate body and any other person who are admitted
to that list,
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whether those rules--
(i) are made by the body corporate or are contained in any
of the constituent documents of the body corporate; or
(ii) are made by another person and adopted by the body
corporate;
"Minister" means the Minister of Finance;
"officer", in relation to a corporation includes--
(a) any director, secretary or employee of the corporation;
(b) a receiver and manager of any part of the undertaking of
the corporation appointed under a power contained in
any instrument; and
(c) any liquidator of a company appointed in a voluntary
winding up,
but does not include--
(d) any receiver who is not also a manager;
(e) any receiver and manager appointed by the Court; or
(f) any liquidator appointed by the Court or by the creditors;
"participant" means a person who, in accordance with the rules
of a recognized clearing house, may participate in one or more of
the services provided by the recognized clearing house for the
clearing and settlement of transactions or trades effected on the
stock market of a stock exchange or subject to the rules of a stock
exchange;
"participating organization" means any person who carries on
the business of dealing in securities and is recognized as a participating
organization by the rules of the stock exchange;
"prescribed" means prescribed by the Minister by or under this
Act or under any regulations made under this Act, and where no
mode is mentioned means prescribed from time to time by order
published in the Gazette, and a power to prescribe includes the
power to prescribe differently for different persons, securities or
transactions, or different classes, categories or descriptions of persons,
securities or transactions;
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"public interest directors", in relation to a stock exchange or an
exchange holding company, means persons who are appointed by
the Minister under section 8D;
"recognized clearing house" means a clearing house which is
declared to be a recognized clearing house under subsection8A(1);
"related corporation", in relation to a corporation, means a
corporation that is related to the first-mentioned corporation by
virtue of section 6 of the Companies Act 1965;
"representative" means a dealer's representative, a fund manager's
representative or an investment representative;
"rules", in relation to--
(a) a stock exchange, means the memorandum of association
and the articles of association, or the rules or directions,
by whatever name called and wherever contained, governing
the membership, management, operations or procedures
of the stock exchange, or the conduct of its participating
organizations and, without limiting the generality of the
foregoing, includes--
(i) rules contained in the memorandum of association
and the articles of association or other constituent
document of the stock exchange;
(ii) rules and procedures governing the quotation of
securities on the stock market of the stock exchange;
(iii) r u l e s to ensure compliance by participating
organizations of any obligations imposed by this
Act or any other written law;
(iv) rules in respect of such other matters as may be
necessary or desirable for the proper and efficient
operation and management of the stock exchange,
including rules specifying fees and charges; and
(v) the listing requirements of the stock exchange;
(b) a clearing house, means the memorandum of association
and the articles of association, or the rules or directions,
by whatever name called and wherever contained, governing
the membership, management, operations or procedures
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of the clearing house and, without limiting the generality
of the foregoing, includes rules and directions relating
to--
(i) the provision of clearing and settlement services,
and the suspension or withdrawal of such services;
(ii) the provision of services other than the services
referred to in subparagraph (i);
(iii) the persons who may participate in one or more
of the services referred to in subparagraph (i) or
(ii);
(iv) the specification of fees and charges; and
(v) the default rules;
(c) a central depository, has the same meaning as is assigned
to that expression in the Securities Industry (Central
Depositories) Act 1991;
(d) an exchange company, has the same meaning as is assigned
to the expression "business rules" in the Futures Industry
Act 1993;
(e) a clearing house of an exchange company, has the same
meaning as is assigned to the expression "business rules"
in the Futures Industry Act 1993; and
(f) an exchange holding company, means the memorandum
and articles of association, including the rules regulating
the activities and conduct of the company in its capacity
as an exchange holding company;
"securities" has the same meaning as is assigned to that expression
in section 2 of the Securities Commission Act 1993;
"securities laws" has the same meaning as is assigned to that
expression in the Securities Commission Act 1993;
"settlement", in relation to a market contract, means the discharge
of the rights and liabilities of the parties to the market contract
whether by performance, compromise or otherwise; and includes
partial settlement effected in accordance with the rules of a recognized
clearing house;
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Securities Industry
"specify", where no mode is mentioned, means specify from
time to time in writing, and a power to specify includes the power
to specify differently for different persons, securities or transactions,
or different classes, categories or descriptions of persons, securities
or transactions;
"stock exchange" means any body corporate which has been
approved by the Minister under subsection 8(2);
"stock market" means a market or other place at which, or a
facility by means of which--
(a) offers to sell, purchases or exchanges of securities are
regularly made or accepted;
(b) offers or invitations that are intended, or may reasonably
be expected, to result, whether directly or indirectly, in
the making or acceptance of offers to sell, purchase or
exchange securities, are regularly made; or
(c) information concerning the prices at which or the
consideration for which, particular persons, or particular
classes of persons, propose, or may reasonably be expected
to sell, purchase or exchange securities is regularly
provided;
"subsidiary" has the same meaning as is assigned to that expression
in section 5 of the Companies Act 1965;
"this Act" includes any subsidiary legislation made under this
Act;
"trust account" means a trust account established under section
44 or 47C;
"unit trust scheme" has the same meaning as is assigned to that
expression in section 2 of the Securities Commission Act 1993;
"voting shares" has the same meaning as is assigned to that
expression in section 4 of the Companies Act 1965.
(2) Regulations may provide that, subject to any terms and
conditions prescribed, all or any of the provisions of this Act--
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(a) shall not have effect in relation to any specified person
or to any person who is a member of a specified class
of persons--
(i) who is or may be a dealer, fund manager or
investment adviser by reason only of his doing
anything which is merely incidental to another
business;
(ii) who does not deal in securities for or on behalf
of any other person; or
(iii) who is a dealer, fund manager or investment adviser
by reason only of the entering into by him of any
specified transaction or class of transactions;
(b) shall not have effect in relation to the representative of
any person referred to in paragraph (a); or
(c) shall have effect in relation to any person referred to in
paragraph (a) or (b) to such extent as is prescribed.
(3) Any reference in this Act to "this Act" or a "securities law"
shall, unless otherwise expressly stated, include a reference to any
regulation, rule, order, notification or other subsidiary legislation
made under this Act or a securities law, as the case may be.
Associated person
3. (1) A reference in this Act to a person associated with another
person shall be construed as a reference to--
(a) where the other person is a body corporate--
(i) a director or secretary of the body corporate;
(ii) a body corporate that is related to the other person;
or
(iii) a director or secretary of such a related body
corporate;
(b) where the matter to which the reference relates is the
extent of a power to exercise, or to control the exercise
of, the voting power attached to voting shares in a body
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corporate, a person with whom the other person has, or
p r o p o s e s to enter into, an agreement, arrangement,
understanding or undertaking, whether formal or informal
and whether express or implied--
(i) by reason of which either of those persons may
exercise, directly or indirectly control the exercise
of, or substantially influence the exercise of, any
voting power attached to a share in the body
corporate;
(ii) with a view to controlling or influencing the
composition of the board of directors, or the conduct
of affairs, of the body corporate; or
(iii) under which either of those persons may acquire
from the other of them shares in the body corporate
or may be required to dispose of such shares in
accordance with the directions of the other of
them;
(c) a person in concert with whom the other person is acting,
or proposes to act, in relation to the matter to which the
reference relates;
(d) where the matter to which the reference relates is a matter
other than the extent of a power to exercise, or to control
the exercise of, the voting power attached to voting shares
in a body corporate--
(i) a person dealing in securities as a sole proprietor
or in partnership with the other person;
(ii) subject to subsection (2), a person who is a partner
of the other person otherwise than as a result of
him dealing in securities in partnership with the
other person;
(iii) a trustee of a trust in relation to which the other
person benefits or is capable of benefiting otherwise
than by reason of transactions entered into in the
ordinary course of business in connection with
the lending of money;
(iv) a person who is a director of a body corporate that
carries on a business of dealing in securities and
of which the other person is also a director; or
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(v) subject to subsection (2), a person who is a director
of a body corporate of which the other person is
a director, not being a body corporate that carries
on a business of dealing in securities;
(e) a person with whom the other person is, by virtue of any
regulation that may be introduced, to be regarded as
associated in respect of the matter to which the reference
relates;
(f) a person with whom the other person is, or proposes to
become, associated, whether formally or informally, in
any other way in respect of the matter to which the
reference relates; or
(g) where the other person has entered into, or proposes to
enter into, a transaction, or has done, or proposes to do,
any other act or thing, with a view to becoming associated
with a person as mentioned in any of the preceding
paragraphs--that last-mentioned person.
(2) Where, in proceedings under this Act, it is alleged that a
person referred to in subparagraph (1)(d)(v) was associated with
another person at a particular time, that person shall be deemed
not to have been so associated in relation to a matter to which the
proceedings relate unless the person alleging the association proves
that the first-mentioned person at that time knew or ought reasonably
to have known the material particulars of that matter.
(3) A person shall not be taken to be associated with another
person by virtue of paragraph (1)(b), (c), (e) or (f) by reason only
that one of those persons furnishes advice to, or acts on behalf of,
the other person in a professional capacity.
Interest in securities
4. (1) Where any property held in trust consists of or includes
securities in which a person knows or has reasonable grounds for
believing that he has an interest, he shall be deemed to have
interest in those securities.
(2) A right does not constitute an interest in a security where--
(a) a right, being a right or an interest described in the
definition of "interest" in section 84 of the Companies
Act 1965, was issued or offered to the public for subscription
or purchase;
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(b) the public was invited to subscribe for or purchase such
a right, and the right was so subscribed for or purchased;
or
(c) such a right is held by the management company and was
issued for the purpose of an offer to the public within the
meaning of section 84 of the Companies Act 1965.
(3) A person shall be deemed to have an interest in a security
where a body corporate has an interest in a security and--
(a) the body corporate is, or its directors are accustomed, or
is under an obligation, whether formal or informal, to act
in accordance with the directions, instructions or wishes
of that person in relation to that security;
(b) that person has a controlling interest in the body corporate;
or
(c) that person, or the associates of that person or that person
and his associates are entitled to exercise or control the
exercise of not less than fifteen percentum of the votes
attached to the voting shares in the body corporate.
(4) For the purposes of paragraph (3)(c), a person is an associate
of another person if the first-mentioned person is--
(a) a corporation which, by virtue of section 6 of the Companies
Act 1965 is deemed to be related to that other person;
(b) a person in accordance with whose directions, instructions
or wishes that other person is accustomed or is under an
obligation, whether formal or informal, to act in relation
to the security referred to in subsection (3);
(c) a person who is accustomed or is under an obligation,
whether formal or informal, to act in accordance with the
directions, instructions or wishes of that other person in
relation to that security;
(d) a body corporate which is, or the directors of which are,
accustomed or under an obligation, whether formal or
i n f o r m a l , to act in accordance with the directions,
instructions or wishes of that other person in relation to
that security; or
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(e) a body corporate in accordance with the directions,
instructions or wishes of which, or of the directors of
which, that other person is accustomed or under an
obligation, whether formal or informal, to act in relation
to that security.
(5) A person shall be deemed to have an interest in a security
in any one or more of the following circumstances where he--
(a) has entered into a contract to purchase a security; or
(b) has a right, otherwise than by reason of having an interest
under a trust, to have a security transferred to himself or
to his order, whether the right is exercisable presently or
in the future and whether on the fulfillment of a condition
or not; or
(c) has the right or power to acquire a security or an interest
in a security, under an option, whether the right or power
is exercisable presently or in the future and whether on
the fulfilment of a condition or not; or
(d) is entitled, otherwise than by reason of his having been
appointed a proxy or representative to vote at a meeting
of members of a corporation or of a class of its members,
to exercise or control the exercise of a right attached to
a security, not being a security of which he is the registered
holder.
(6) A person shall be deemed to have an interest in a security
if that security is held jointly with another person.
(7) For the purpose of determining whether a person has an
interest in a security it is immaterial that the interest cannot be
related to a particular security.
(8) There shall be disregarded--
(a) (Deleted by Act A1040).
(b) an interest in a security of a person whose ordinary business
includes the lending of money if he holds the interest
only by way of security for the purposes of a transaction
entered into in the ordinary course of business in connection
with the lending of money;
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(c) an interest of a person in a security being an interest held
by him by reason of his holding a prescribed office; and
(d) a prescribed interest in a security being an interest of
such person, or of the persons included in such class of
persons, as is prescribed.
(9) An interest in a security shall not be disregarded by reason
only of--
(a) its remoteness;
(b) the manner in which it arose; or
(c) the fact that the exercise of a right conferred by the
interest is, or is capable of being made subject to restraint
or restriction.
PART II
CAPITAL ISSUES COMMITTEE
56.
(Deleted by Act 498).
PART III
STOCK EXCHANGES AND CLEARING HOUSES
Establishment of stock markets
7. (1) A person shall not establish, operate or maintain, or assist
in establishing, operating or maintaining, or hold himself out as
providing, operating or maintaining, a stock market that is not--
(a) a stock market of a stock exchange;
(b) a stock market of an exchange holding company which
is itself approved as a stock exchange; or
(c) an exempt stock market.
(2) The Minister may, by order published in the Gazette,--
(a) declare a particular stock market, or a stock market included
in a particular class of stock markets, to be an exempt
stock market for the purposes of this Act subject to such
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terms and conditions as he thinks reasonable and appropriate
after having regard to, among other things,--
(i) the types of securities traded or to be traded; or
(ii) the types of participants; or
(iii) the types of investors; or
(iv) the volume of trading,
relating to the particular stock market, or stock market
included in the particular class of stock markets; and
(b) revoke any declaration made under paragraph (a) or vary
any term or condition as may be specified in the declaration,
after having regard to, among other things,--
(i) any breach of the terms and conditions specified in
the declaration; or
(ii) such other matters as the Minister thinks fit.
(3) A person who contravenes subsection (1) commits an offence
and is liable on conviction to a fine not exceeding one million
ringgit or to imprisonment for a term not exceeding ten years or
to both.
Power of Minister to approve a stock exchange
8. (1) An application for the approval of a body corporate as a
stock exchange may be made in writing to the Minister.
(2) The Minister may in writing, on the recommendation of the
Commission, approve a body corporate as a stock exchange, subject
to any terms and conditions as he deems fit, if he is satisfied that--
(a) the body corporate will ensure that, as far as is reasonably
practicable, it will operate an orderly and fair market in
relation to securities that are traded through its facilities;
(b) the body corporate will manage any risks associated with
its business and operations prudently;
(c) the body corporate, in discharging its obligations under
paragraph (a), will not act contrary to the public interest
and in particular the interest of investors;
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(d) the body corporate is able to take appropriate action
against its participating organizations and any person to
whom the rules apply for any breach of its rules;
(e) the rules of the body corporate make satisfactory
provision--
(i) for an orderly and fair market in relation to the
securities that are traded through its facilities;
(ii) for the proper regulation and supervision of its
participating organizations;
(iii) for the exclusion of persons who are not of good
character and high business integrity from being
recognized as participating organizations;
(iv) for the expulsion, suspension or disciplining of
participating organizations and any person acting
on behalf of the participating organizations to whom
the rules apply, for conduct that is inconsistent
with just and equitable principles in the transaction
of business or for a contravention of or failure to
comply with the rules of the stock exchange;
(v) with respect to the conditions under which securities
may be listed for trading in the market proposed to
be conducted by the body corporate;
(vi) with respect to the conditions governing dealings
in securities by participating organizations;
(vii) with respect to the class or classes of securities that
may be dealt in by participating organizations; and
(viii) generally for the carrying on of the business of the
proposed stock exchange with due regard to the
need for the protection of investors and public
interest;
(f) the body corporate shall at all times have sufficient financial,
human and other resources to ensure the provision of--
(i) an orderly and fair market in relation to securities
that are traded through its facilities;
(ii) adequate and properly equipped premises for the
conduct of its business;
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(iii) competent personnel for the conduct of its business;
and
(iv) automated systems with adequate capacity, security
arrangements and facilities to meet emergencies;
and
(g) the interest of the public or the proper regulation of the
market will be served by the granting of this approval.
(3) An application for approval under subsection (1) shall be
sent to the Commission, whereupon the Commission shall submit
such application, together with its recommendation, to the Minister.
( 4 ) A n applicant under subsection (1) shall provide such
information as the Minister or the Commission considers necessary
in relation to the application.
(5) Without limiting the generality of the terms and conditions
specified in subsection (2), the Minister may in writing, on the
recommendation of the Commission, amend, revoke or impose
new terms and conditions, if the Minister is satisfied that it is
appropriate to do so for the protection of investors or in the public
interest or for the proper regulation of the stock market.
Recognized clearing house
8A. (1) Where the Commission is satisfied that it is appropriate
to do so in the public interest, or for the proper regulation of
services for the clearing and settlement of transactions in securities,
it may, with the approval of the Minister, by notice published in
the Gazette, declare a clearing house to be a recognized clearing
house for the purposes of this Act subject to such conditions as
the Commission thinks fit.
( 2 ) W h e r e the Commission makes a declaration under
subsection (1) in respect of a clearing house,--
(a) it shall give notice thereof to the clearing house; and
(b) the rules of the clearing house in operation before the
declaration shall continue to have effect unless otherwise
specified, or until such time as may be specified, in the
notice referred to in paragraph (a).
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Withdrawal of recognition of clearing house
8B. (1) The Commission may with approval of the Minister, by
notice published in the Gazette, and by such other means as the
Commission considers appropriate--
(a) withdraw a recognition granted under section 8A to the
clearing house with effect from the date specified in the
notice; or
(b) direct the clearing house to cease to provide or operate
such facilities, or to cease to provide such services, as
are specified in the notice, with effect from the date
specified in the notice.
(2) The Commission shall not withdraw a recognition or issue
a direction under subsection (1) unless the Commission is satisfied
that it is appropriate to do so for the protection of investors or in
the public interest or for the proper regulation of the clearing and
settlement of transactions in securities, where any of the following
circumstances occurs:
(a) the clearing house ceases to provide clearing house
facilities;
(b) the clearing house is being wound up or otherwise dissolved,
whether in Malaysia or elsewhere;
(c) the clearing house has contravened section 9A or any
term or condition of its recognition or is charged with
any offence under any securities laws;
(d) the clearing house has failed to comply with a condition,
requirement or direction given under section 11 or 11L;
(e) any information provided for the purposes of section 8A
was false or misleading in a material particular;
(f) a judgement debt against the clearing house has not been
satisfied in whole or in part;
(g) a receiver, a receiver and manager, or an equivalent person
has been appointed, whether in Malaysia or elsewhere,
in relation to or in respect of any property of the clearing
house;
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(h) the clearing house has, whether in Malaysia or elsewhere,
entered into a compromise or scheme of arrangement
with its creditors, being a compromise or scheme of
arrangement that is still in operation;
(i) the clearing house on its own accord applies to the
Commission to withdraw the recognition as a clearing
house granted to it and the Commission, with the approval
of the Minister, deems it fit to do so.
(3) For the purposes of paragraph (2)(a)