KUALA LUMPUR: Unlisted public companies (UPCs) seeking to raise funds from retail investors have bern urged to comply with the Capital Markets and Services Act 2007 (CMSA) and relevant guidelines.
The Securities Commission (SC) said it had received an increasing number of queries and complaints pertaining to UPCs offering their shares, including preference shares, to both retail and sophisticated investors.
In certain cases, the SC said the shares were marketed or offered through phone calls, followed by one-on-one meetings with agents of the UPC.
"The CMSA requires a prospectus to be issued when shares of a UPC are offered to retail investors. The prospectus will also need to be registered with the SC," SC said in a statement today.
SC said UPCs were not required to issue a prospectus only when the shares are issued wholly to sophisticated investors described or set out under Schedules six and seven of the CMSA.
"Sophisticated investors include high net worth individuals (with net asset threshold of RM3 million, excluding the value of primary residence), high net worth entities and accredited investors."
The SC said UPCs offering shares to retail investors without a prospectus was a serious breach under the CMSA.
A person found liable may be punished with a fine not exceeding RM10 million or imprisonment not exceeding ten years, or both.
While the CMSA does not mandate the issuance of an information memorandum (IM), the SC said UPCs that issue an IM for offering of their shares to sophisticated investors are required to deposit the said IM with the SC.
"UPCs are also expected to make clear in the IM that while the IM is deposited with the SC, the SC's approval is not required for the offering of the shares referred to in the IM."
SC said UPCs have the duty to provide all relevant information to investors, including sophisticated investors, to enable them to make an informed assessment, including the merits of investing in the shares of the UPCs and the extent of the risks involved.
Before investing in shares of a UPC, SC said investors should ask for and review the contents of the registered prospectus or IM to understand the nature and risks of their investment, especially how their investments will be utilised by the UPC.
Investors should also conduct their own research and where necessary, seek professional advice. UPCs can refer to the Prospectus Guidelines for the required information that must be included in a UPC prospectus for the purpose of registration with the SC.