KUALA LUMPUR (March 28): The Securities Commission Malaysia (SC) has revised its guidelines for the offering of shares by unlisted public companies (UPCs), now requiring consultations with the SC and the appointment of a corporate finance adviser (CFA), among other measures, to enhance investor protection.

The new guidelines replace Guidelines on Offer of Shares by UPCs to Sophisticated Investors, issued in 2021, and are effective Friday, the regulator said in a statement.

The guidelines prescribe minimum content requirements for the information memorandum (IM) and set a validity period of 18 months from the commencement of the offering.

The regulator said the update follows concerns over the quality of information and disclosure standards in the IM to ensure that investors are better informed.

Additionally, the guidelines impose conduct obligations on all parties involved in the offering, including the CFA, the UPCs’ board of directors, and agents appointed to market and promote the shares. These requirements also extend to shariah advisers for the offering of shariah-compliant shares.

The SC also outlined reporting obligations, requiring the quarterly submission of post-issuance update reports and annual verification by an approved company auditor on the actual utilisation of proceeds.

The guidelines outlined the treatment of ongoing offerings initiated before their effective date. According to the SC, a UPC intending to continue offering its shares after the guidelines take effect must immediately halt its ongoing offering and consult with the SC.

Meanwhile, an existing UPC that opts to discontinue its share offering after the guidelines take effect must immediately cease any ongoing offering and assess whether it can uphold the material representations made in the existing IM with the funds raised so far.

According to the SC, there have been instances where UPC shares — meant exclusively for sophisticated investors — were offered to retail investors without a registered prospectus, in violation of securities laws.

“The guidelines are part of the market and regulatory reforms that the SC is undertaking,” the SC said. “In revising the guidelines, the SC has incorporated feedback from engagements with the industry, among others, the CFA”.