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Offering of Shares by Unlisted Public Companies

July 2021

by Evelyn Chan Cher Yeen and Loh Su Hean

A. Introduction

The Securities Commission Malaysia (“SC“) has on 5 July 2021 issued the “Guidelines on Offer of Shares by Unlisted Public Companies to Sophisticated Investors” (“Guidelines“), which will take effect from 1 August 2021 (“Effective Date“).

SC’s prior authorisation pursuant to Section 212 of the Capital Markets and Services Act 2007 (“CMSA“) is not required for the offering of shares by an unlisted public company (“UPC“), being a public company, whose shares are not listed and is not seeking for its shares to be listed on the stock market of the stock exchange, solely to the sophisticated investors.

The sophisticated investors as referred to in the Guidelines, are those persons:

  1. falling within any of the categories of investors set out in Part I, Schedule 61 and Part I, Schedule 72 of the CMSA; or
  2. who acquire shares pursuant to a private placement where the consideration for the acquisition is not less than RM250,000 or its equivalent in foreign currencies for each transaction, whether such amount is paid for in cash or otherwise.

B. Summary of the requirements under the Guidelines

Under the Guidelines, the relevant UPC is required to:

(a) if there is an information memorandum (“IM“) relating to its offer of shares to be issued to the sophisticated investors, include the prescribed caution statements highlighted in bold, in the cover page of the IM, emphasising that:

    • the offering may carry higher investment risk;
    • the shares proposed to be issued are less liquid, compared to the listed shares; and
    • the IM is not approved or registered with the SC.

Pursuant to the existing requirements under the CMSA, the issuer shall deposit the IM with

(b) if an agent is appointed to market and promote the offering of its shares, ensure that such agent holds a Capital Markets Services Licence for dealing in securities. The UPC may check against the SC’s Public Register of Licence Holders3 to ascertain the licensing status of the agent;

(c) take reasonable steps to verify that a prospective investor of the shares is indeed a sophisticated investor and, where applicable, to ensure persons acting of its behalf to take such reasonable steps; and

(d) submit to the SC, in the manner stipulated in the Guidelines, the prescribed post- issuance notification no later than 7 days after the commencement of the offering; and a prescribed post-issuance update report no later than 7 days after the end of each quarter of its financial year, as long as the offering is on-going. Any revision to the notification or update to the notification shall also be submitted to the SC.

The Guidelines do not apply retrospectively to the offering of shares by the UPC prior to the Effective Date, unless the offer continues after the Effective Date, and in such case, the UPC is required to submit a post-issuance update report quarterly, as stipulated in paragraph B(d) above. In the case where an IM is issued prior to the Effective Date, the UPC is not required to amend or supplement the existing IM to include the caution statement.

C. Other issues

For offering of shares to the retail investors and/or a combined pool of the retail investors and sophisticated investors (in other words, to the public at large), the SC has also clarified that a UPC is required to issue a prospectus and register the same with the SC in accordance with Section 232 of the CMSA. Contravention of Section 232 of the CMSA is an offence and any person found liable may be punished with a fine not exceeding RM10,000,000 or imprisonment not exceeding 10 years, or both. The prospectus is required to be prepared in line with the Prospectus Guidelines issued by the SC.

D. Penalty

In the event of UPC committed a breach or failed to give effect to the Guidelines, SC is empowered under Section 377 of the CMSA to take any one or more of the actions set out in Sections 354 of the CMSA as it thinks fit against such UPC, for examples, SC may impose a penalty not exceeding RM1,000,000 and reprimand the person in breach.

This material is for general information only and is not intended to provide legal advice. If you have any queries regarding the above, please feel free to contact us at

1 The category of sophisticated investors has recently been amended pursuant to the Capital Markets and Services (Amendments of Schedule 5,6 and 7) Order 2021. For the amended Part I, Schedule 6 of the CMSA, see here

2 The category of sophisticated investors has recently been amended pursuant to the Capital Markets and Services (Amendments of Schedule 5,6 and 7) Order 2021. For the amended Part I, Schedule 7 of the CMSA, see here