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Disclosure Requirements
Shareholdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organizations for this market, within the time-frame required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.

Shareholdings of 5% and above
A person (including a corporate) is a substantial shareholder if that person holds no less than 5% of the aggregate of the nominal amounts of all the voting shares of the company. A person who has substantial shareholding in a company must give notice to the company, using Forms 29A-C (under Section 69 Companies Act 1965) within seven days of becoming a substantial shareholder. A copy of the notice shall be served to the Bursa Securities as defined in the Securities Industry Act 1983 and the SC as defined in the Securities Commission Act 1993.

Under the Securities Industry (Reporting of Substantial Shareholding) Regulations 1998, there is a penalty of MYR1,000,000 and a default penalty of MYR50,000 per day.

Shareholdings of 15% and above
The prior approval of the Foreign Investment Committee’s is required for any proposed acquisition of 15% or more of the voting power by any one foreign interest or associated group, or by foreign interests, in the aggregate of 30% or more of the voting power of a Malaysian company or business.

Shareholdings of 33% and above
A mandatory offer shall be extended to shareholders with voting rights by:
any person or persons acting in concert with that person who acquire(s) shares which carry more than 33% of the voting rights of a company or who hold(s) between 33% and 50% of the voting rights or any person acting in concert with that person, acquires in any 12-month period additional shares with 2% voting rights; failing which the SC’s approval is required. (Rule 34.1 of the Malaysian Code on Take-Overs and Mergers.)

Buy-ins are automatically initiated by Bursa Malaysia Securities Clearing Sdn Bhd on T+3. If the buy-in is not successful on T+3, ten additional bids will be added to the buy-in price on T+4.

The defaulting (selling) broker must cover the entire cost which includes: the additional bids above the last traded price of the previous day, as well as covering the Bursa Malaysia commission charge, brokerage fees and stamp duties.

For SSTS instruments, if the delivery of securities is not made within one business day following the value date, the buyer has the right to execute a buy-in. The buyer advises the seller of the buy-in price via telephone with confirmation sent in writing. Nevertheless, buy-ins are usually not initiated. Counterparties tend to settle the difference through a claim process or enter into a new contract.

Compensation Fund

* Bursa Securities Compensation Fund
* Bursa Depository Compensation Fund
* Bursa Malaysia’s Clearing Guarantee Fund

Bursa Securities Compensation Fund
Bursa Securities maintains a compensation fund, as required by Section 61 (1) of the Securities Industry Act 1983, which replaced the previously known fidelity fund.

The purpose of the fund is to compensate persons who suffer monetary loss due to defalcation or fraudulent misuse of monies or other property by a director, officer, employee or representative of a stockbroking firm.

Claims can also be made due to the insolvency of a Bursa Securities member-company and loss suffered in respect of monies or other properties that was, in connection with the company’s dealing in securities, entrusted to or received by the company or by a director, officer, employee or representative of the company for or on behalf of the persons suffering the loss or another person or because the company was trustee of the monies of the property.

Bursa Depository Compensation Fund
The Bursa Malaysia Depository Sdn Bhd (Bursa Depository) has its own compensation fund to meet claims from investors who suffer losses arising out of its own staff’s infidelity, professional negligence, and computer crimes, which is limited to MYR100,000 per claim. All authorized depository agents and authorized direct members are required to have sufficient insurance covers and indemnify Bursa Depository against any losses as a result of negligence at their end.

This compensation fund is separate from the compensation fund operated by the Bursa Securities.

Clearing Guarantee Fund (CGF)
The Clearing Guarantee Fund (CGF) provides guaranteed support for settlement of trades when there is a payment or delivery default by local stockbrokers, it was established on July 1, 2006.

The fund, which consists of a pool of assets such as cash, bank guarantees and other financial resources, enables the Clearing House to deal with potentially large credit and/or liquidity risks that may arise when a local stockbroker defaults on its payment or delivery obligation on any settlement day.
Based on a risk-based model that has been benchmarked against its peers, the quantum of the CGF is set at MYR100 million.

Anti-Money Laundering
The above is governed under the Malaysian Anti-Money Laundering Act 2001.

The major provisions in the Act covers criminalizing money laundering, imposing obligations of customer identification, record-keeping and reporting of suspicious transactions by reporting institutions, allowing for the seizing, freezing and forfeiture of properties that are proceeds of money laundering activities.

The Financial Intelligence Unit in Bank Negara Malaysia (the central bank), is empowered to collect, analyze and disseminate information on suspicious, large and unusual transactions.