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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), a clearing house shall
be deemed to have ceased to provide clearing house facilities if
it has ceased to provide such facilities for a period of one month
unless it has obtained the prior approval of the Commission to do
so.
(4) Notwithstanding the withdrawal of a recognition or the issuance
of a direction under subsection (1), the Commission may permit
the clearing house to continue, on or after the date on which the
withdrawal or direction is to take effect, to carry on such activities
affected by the withdrawal or direction as the Commission may
specify in the notice published under that subsection for the purpose
of--
(a) closing down the operations of the clearing house or
ceasing to provide the services specified in the notice; or
(b) protecting the investors or the public interest.
(5) Where the Commission has granted permission to a clearing
house under subsection (4), the clearing house shall not, by reason
of its carrying on the activities in accordance with the permission,
be regarded as having contravened section 8A.
(6) The Commission shall not take any action under subsection
(1) without giving an opportunity to be heard.
Effect of withdrawal of recognition of clearing house
8C.  Any withdrawal of recognition or direction issued under section
8B shall not operate so as to--
(a) avoid or affect any agreement, transaction or arrangement
entered into through the clearing house facilities operated
by the recognized clearing house, whether the agreement,
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transaction or arrangement was entered into before or,
where subsection 8B(4) applies, after the withdrawal of
the recognition or issuance of the direction under section
8B; or
(b) affect any right, obligation or liability arising under such
agreement, transaction or arrangement.
Appointment of directors of stock exchange and exchange holding
company
8  D . ( 1 ) I n relation to an exchange holding company or a
stock exchange other than a stock exchange that is referred to in
subsection (2)--
(a) one third of the number of directors on the board of such
exchange holding company or stock exchange as the case
may be, shall be appointed by the Minister, in consultation
with the Commission, to be public interest directors of
the exchange holding company or stock exchange and,
notwithstanding the provision of any other written law,
such public interest directors so appointed--
(i) shall have the same rights, powers, duties and
obligations, liberties and privileges as any director
of the exchange company or stock exchange; and
(ii) shall hold office for a period specified by the Minister
who may at any time revoke such an appointment;
and
(b) no person other than a public interest director referred to
in paragraph (a) shall accept appointment or election as
a director of the exchange holding company or stock
exchange unless the concurrence of the Commission is
obtained.
(2) Notwithstanding subsection (1), in relation to the board of
a stock exchange that is a subsidiary of an exchange holding
company, no person shall accept appointment or election as a
director of such stock exchange unless the concurrence of the
Commission is obtained.
(3) The Minister shall, in consultation with the Commission,
appoint one person from amongst the public interest directors so
appointed under subsection (1) to be the non-executive Chairman
of the board of the exchange holding company or stock exchange,
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as the case may be, whose remuneration shall be determined by
the board of the exchange holding company, or stock exchange,
as the case may be.
(4) Where the concurrence of the Commission is required under
subsection (1) or (2), the Commission may refuse to concur if--
(a) any proposed director is an undischarged bankrupt, whether
in Malaysia or elsewhere;
(b) a judgement debt against the proposed director has not
been satisfied in whole or in part;
(c) the proposed director has, whether in Malaysia or elsewhere,
entered into a compromise or scheme of arrangement
with his creditors, being a compromise or scheme of
arrangement that is still in operation;
(d) the proposed director--
(i) has been convicted, whether in Malaysia or elsewhere,
of an offence, involving fraud or dishonesty or the
conviction for which involved a finding that he
acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under the securities
laws; or
(e) the Commission is not satisfied that the proposed director
is a person of integrity and is fit and proper to be a
director.
(5) For the purposes of subsection (1)--
(a) the Minister may, on the recommendation of the
Commission, reduce the number of public interest directors
on the board of the exchange holding company or stock
exchange; and
(b) all public interest directors appointed under subsection
(1) shall retire after a term of three years but are eligible
for reappointment.
Commission to approve amendment to rules of stock exchange
9. (1) No amendment to the rules of a stock exchange shall have
effect unless it has been approved by the Commission under
subsection (3).
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(2) Where a stock exchange proposes to make any amendment
to its rules, the stock exchange shall submit to the Commission--
(a) the text of the proposed amendment; and
(b) an explanation of the purpose of the proposed amendment.
(3) The Commission shall, within six weeks after the receipt of
any proposed amendment under subsection (2), give notice in
writing to the stock exchange that it approves or disapproves of
the proposed amendment or any part of the proposed amendment,
as the case may be.
(4) The Commission may, by notice in writing, declare any
class of rules of a stock exchange to be a class of rules whose
amendments do not require the approval of the Commission under
subsection (3), and accordingly, any amendment to the rules of a
stock exchange that belongs to that class shall, subject to subsections
(5) and (6), have effect notwithstanding that they have not been
so approved under subsection (3).
(5) Where the Commission is of the opinion that any amendment
to the rules of a stock exchange made under subsection (4) does
not fall within the class of rules declared by the Commission under
that subsection as not requiring its approval, the Commission may,
after consultation with the stock exchange, require the stock exchange
to submit such amendment for its approval under subsection (3).
(6) Where a rule amended by the stock exchange under subsection
(4) is the subject of a requirement made by the Commission under
subsection (5), such amendment shall cease to have effect from the
date of the Commission making such a requirement or such later
date as the Commission may determine:
Provided that this subsection shall not have effect until a reasonable
time has been given to the stock exchange to notify the persons
affected by such amendment.
(7) Notwithstanding the provisions of this section, the Commission
may, from time to time, after consultation with the stock exchange,
by written notice require the stock exchange to amend the rules
of the stock exchange in such manner and within such period as
may be specified in the notice.
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(8) A stock exchange which fails to comply with subsection (2)
o r which fails to comply with a requirement made under
subsection (5) or a written notice made under subsection (7) commits
an offence.
(9) A notice under this section may be served personally or by
post.
Commission to approve amendment to rules of recognized
clearing house
9A. (1) No amendment to the rules of a recognized clearing house
shall have effect unless it has been approved by the Commission
under subsection (3).
(2) Where a recognized clearing house proposes to make any
amendment to its rules, the recognized clearing house shall submit
to the Commission--
(a) the text of the proposed amendment; and
(b) an explanation of the purpose of the proposed amendment.
(3) The Commission shall, within six weeks after the receipt of
any proposed amendment under subsection (2), give notice in
writing to the recognized clearing house that it approves or
disapproves of the proposed amendment or any part of the proposed
amendment, as the case may be.
(4) The Commission may, by notice in writing, declare any
class of rules of a recognized clearing house, except any default
rules of the clearing house, to be a class of rules whose amendments
do not require the approval of the Commission under subsection
(3), and accordingly, any amendment to the rules of a recognized
clearing house that belongs to that class shall, subject to subsections
(5) and (6), have effect notwithstanding that they have not been
so approved under subsection (3).
(5) Where the Commission is of the opinion that any amendment
to the rules of a recognized clearing house made under subsection
(4) does not fall within the class of rules declared by the Commission
under that subsection as not requiring its approval, the Commission
may, after consultation with the recognized clearing house, require
the recognized clearing house to submit such amendment for its
approval under subsection (3).
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(6) Where a rule amended by the recognized clearing house
under subsection (4) is the subject of a requirement made by the
Commission under subsection (5), such amendment shall cease to
have effect from the date of the Commission making such a
requirement or such later date as the Commission may determine:
Provided that this subsection shall not have effect until a reasonable
time has been given to the recognized clearing house to notify the
persons affected by such amendment.
( 7 ) N o t w i t h s t a n d i n g the provisions of this section, the
Commission may, from time to time, after consultation with the
recognized clearing house, by written notice require the recognized
clearing house to amend the rules of the recognized clearing house
in such manner and within such period as may be specified in the
notice.
(8) A recognized clearing house which fails to comply with
subsection (2) or which fails to comply with a requirement made
under subsection (5) or a written notice made under subsection (7)
commits an offence.
(9) A notice under this section may be served personally or by
post.
Duties of stock exchange
9B. (1) It shall be the duty of the stock exchange to ensure, so far
as may be reasonably practicable, an orderly and fair market in the
securities that are traded through its facilities.
(2) In performing its duty under subsection (1), the stock exchange
shall--
(a) act in the public interest, having particular regard to the
need for the protection of investors; and
(b) ensure that where any interests that it is required to serve
under any law relating to corporations conflict with the
interest referred to in paragraph (a), the latter shall prevail.
(3) It shall be the duty of the stock exchange to take appropriate
action as may be provided for under its rules for the purpose of
monitoring or securing compliance with such rules.
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(4) A stock exchange shall immediately notify the Commission
if it becomes aware of--
(a) any matter which adversely affects, or is likely to adversely
affect, the ability of any participating organization to
meet its obligations in respect of its business of dealing
in securities, including the ability of any participating
organization to comply with the minimum financial
requirements as may be prescribed under this Act; or
(b) any irregularity, breach of any provision of the securities
laws or the rules of the stock exchange or recognized
clearing house, or any other matter which, in the opinion
of the stock exchange, indicates or may indicate, that the
financial standing or financial integrity of any participating
organization or of the chief executive or directors of the
participating organization, as the case may be, is in question
or may reasonably be affected.
(5) Without prejudice to subsection (4), when a stock exchange
expels, or suspends any participating organization, or otherwise
disciplines any of its participating organizations, it shall, within
seven days, give to the Commission in writing the following
particulars:
(a) the name of the member;
(b) the reason for and the nature of the action taken;
(c) the amount of the fine;
(d) the period of suspension, if any; and
(e) any other disciplinary action taken.
(6) A stock exchange shall at all times have sufficient financial,
human and other resources to ensure the provision of--
(a) an orderly and fair market in relation to securities that
are traded through its facilities;
(b) adequate and properly equipped premises for the conduct
of its business;
(c) competent personnel for the conduct of its business; and
(d) automated systems with adequate capacity, security
arrangements and facilities to meet emergencies.
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Closure of stock exchange in emergency
9C. (1) The Minister may direct a stock exchange to close a stock
market of the stock exchange for a period not exceeding five
business days if the Minister is of the opinion that an orderly and
fair market for trading in securities on the stock market is being
or is likely to be prevented because--
(a) an emergency or natural disaster has occurred in Malaysia;
or
(b) there exists an economic or financial crisis or any other
circumstances in Malaysia or elsewhere.
(2) The Minister may extend the closure of the stock market
under subsection (1) for any further periods each not exceeding
five business days.
(3) The Minister shall specify the grounds for the closure in the
direction given under subsection (1) and the grounds for any extension
of closure under subsection (2).
(4) The Minister shall, as soon as may be practicable, give a
copy of the direction under subsection (1) or extension under
subsection (2) to a recognized clearing house and direct the recognized
clearing house to do all that it is reasonably capable of doing to
give effect to the direction under subsection (1) or extension under
subsection (2) while the direction or extension remains in force.
(5) In this section--
"business day" means any day on which there is official trading
on the stock exchange but for the closure;
"fair market" includes but is not limited to a market that reflects
the forces of supply and demand.
Withdrawal of approval of stock exchange
9  D . ( 1 ) T h e Minister may, on the recommendation of the
Commission, by notice published in the Gazette, and by such other
means as the Commission considers appropriate--
(a) withdraw an approval granted under section 8 to the
stock exchange, with effect from the date specified in the
notice; or
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(b) direct the stock exchange 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 Minister shall not withdraw an approval or issue a
d i r e c t i o n under subsection (1) unless the Minister, on the
recommendation of 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 markets in securities, where any of
the following circumstances occurs:
(a) the stock exchange ceases to operate its stock market;
(b) the stock exchange is being wound up or otherwise
dissolved, whether in Malaysia or elsewhere;
(c) the stock exchange has contravened any term or condition
of its approval or is charged with any offence under any
securities laws;
(d) the stock exchange 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 8
was false or misleading in a material particular;
(f) a judgement debt against the stock exchange has not been
satisfied in whole or in part;
(g) a receiver, a receiver and manager, or equivalent person
has been appointed, whether in Malaysia or elsewhere,in
relation to or in respect of any property of the stock
exchange;
(h) the stock exchange 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 stock exchange on its own accord applies to the
Minister to withdraw the approval as a stock exchange
granted to it and the Minister, on the recommendation of
the Commission, deems it fit to do so.
(3) For the purposes of paragraph (2)(a), a stock exchange shall
be deemed to have ceased to operate its stock market if it has
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ceased to operate its stock market for a period of one month unless
it has obtained the prior approval of the Minister to do so.
(4) Notwithstanding the withdrawal of an approval or the issuance
of a direction under subsection (1), the Minister may permit the
stock exchange to continue, on or after the date on which the
withdrawal or direction is to take effect, to carry on such activities
affected by the withdrawal or direction as the Minister may specify
in the notice published under that subsection for the purpose of--
(a) closing down the operations of the stock exchange or
ceasing to provide the services specified in the notice; or
(b) protecting the interest of investors or the public interest.
(5) Where the Minister has granted permission to a stock exchange
under subsection (4), the stock exchange shall not, by reason of
its carrying on the activities in accordance with the permission, be
regarded as having contravened section 7.
(6) The Minister shall not take any action under subsection (1)
without giving an opportunity to be heard.
Effect of withdrawal of approval of stock exchange
9E.  Any withdrawal of approval or direction issued under section
9D shall not operate so as to--
(a) avoid or affect any agreement, transaction or arrangement
entered into on the stock market or operated by the stock
e x c h a n g e , whether the agreement, transaction or
arrangement was entered into before or, where subsection
9D(4) applies, after the withdrawal of the approval or
issuance of the direction under section 9D; or
(b) affect any right, obligation or liability arising under such
agreement, transaction or arrangement.
Exchange holding company, stock exchange and recognized
clearing house to provide assistance to Commission
10. (1) An exchange holding company, a stock exchange or a
recognized clearing house shall provide such assistance to the
Commission, or to a person acting on behalf of or with the authority
of the Commission, as the Commission or such person reasonably
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requires including the furnishing of such returns, and the provision
of such information relating to the operations of the exchange
holding company or stock exchange or recognized clearing house
or in respect of such dealing in securities or any other information
as the Commission or such person may require for the proper
administration of the securities laws.
(2) (Deleted by Act A1017).
(3) (Deleted by Act A1218).
(4) A person acting on behalf of, or authorized by, the Commission
shall be entitled at all reasonable times to full and free access for
any of the purposes of this Act to the trading facility of a stock
market of a stock exchange.
(5) A person who refuses or fails, without lawful excuse, to
allow a person acting on behalf of, or authorized by, the Commission
access in accordance with subsection (4) to the trading facility of
a stock market of a stock exchange commits an offence and is
liable on conviction to a fine not exceeding five hundred thousand
ringgit or to imprisonment for a term not exceeding three years
or to both.
(6) In this section, "trading facility", in relation to a stock
market of a stock exchange, means any place or facility maintained
or provided by a stock exchange for the sale, purchase or exchange
of securities by participating organizations and any other persons.
Powers concerning compliance with the provisions of this Act
and rules of the stock exchange, etc.
11. (1) Where any person fails to comply with, observe, enforce
or give effect to--
(a) the rules of a stock exchange or a recognized clearing
house or rules of a central depository; or
(b) the provisions of this Act other than the provisions of
Part IX,
in circumstances where the person is under an obligation to comply
with, observe, enforce or give effect to such rules or provisions,
that person has committed a breach.
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(2) Without limiting the generality of subsection (1), the following
persons shall be deemed to be under an obligation to comply with,
observe, enforce or give effect to the rules of a stock exchange,
a recognized clearing house or a central depository, to the extent
to which such rules purport to apply in relation to those persons,
or the provisions of this Act other than the provisions of Part IX:
(a) an exchange holding company;
(b) a stock exchange;
(c) a central depository;
(d) a recognized clearing house;
(e) a participant;
(f) a participating organization;
(g) a depository participant;
(h) a corporation that has been admitted to the official list
of a stock exchange and has not been removed from that
official list and a person associated with such corporation;
(i) a person to whom the rules of a stock exchange, a recognized
clearing house or a central depository, as the case may
be, apply;
(j) the directors or officers of the persons referred to in
paragraphs (a) to (h);
(k) the advisers of a corporation referred to in paragraph (h)
in relation to any corporate proposal or transaction; and
(l) any other person on whom an obligation under the
provisions of this Act has been imposed.
(3) If a person has committed a breach and the Commission is
satisfied that it is appropriate in all the circumstances to take
action against that person, the Commission may take any one or
more of the following actions:
(a) direct the person in breach to comply with, observe,
enforce or give effect to such rules or provisions;
(b) impose a penalty in proportion to the severity or gravity
of the breach on the person in breach, but in any event
not exceeding one million ringgit;
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(c) reprimand the person in breach;
(d) require the person in breach to take such steps as the
Commission may direct to remedy the breach or to mitigate
the effect of such breach, including making restitution to
any other person aggrieved by such breach.
(4) The Commission shall not take any action under subsection
(3) without giving an opportunity to be heard.
(5) For the purposes of paragraph (3)(d), in determining whether
or not restitution is to be made by a person in breach, the Commission
shall have regard to--
(a) the profits that have accrued to such person in breach;
or
(b) whether one or more persons have suffered loss or been
otherwise adversely affected as a result of the breach.
(6) Where the Commission takes an action under subsection (3)
against any person other than an exchange holding company, a
stock exchange, a recognized clearing house or a central depository,
the Commission shall serve a written notice on the exchange holding
company, the stock exchange, the recognized clearing house or the
central depository, as the case may be, of the grounds and the
proposed action to be taken by the Commission.
(7) Nothing in this section shall preclude--
(a) the Commission from taking any of the actions that it is
empowered to take under this Act or any securities laws
against the person in breach; and
(b) the exchange holding company, stock exchange, recognized
clearing house or central depository, as the case may be,
from taking any action under the relevant rules.
Power of Commission to prohibit trading in particular securities
11A. (1) Where the Commission is satisfied that it is in the public
interest, or it is appropriate to do so for the protection of investors,
to prohibit the trading of particular securities or a particular class
of securities made available by a corporation on the stock market
of a stock exchange, the Commission may give written notice to
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the stock exchange stating that it is so satisfied and setting out the
reasons for that opinion and the date from which the stock exchange
is to give effect to the notice.
(2) Where the Commission gives a notice to a stock exchange
under subsection (1), the Commission shall at the same time--
(a) send a copy of the notice to the corporation together with
a statement setting out the reasons for the giving of the
notice; and
(b) furnish to the Minister a written report setting out the
reasons for the giving of the notice; and
(c) send a copy of the report to the stock exchange.
(3) Where the Commission gives a notice to a stock exchange
under subsection (1) in relation to the trading of securities of, or
made available by, a corporation, the corporation may in writing
request the Commission to refer the matter to the Minister.
(4) If a request is made under subsection (3), the Commission
shall immediately refer the matter to the Minister, who may, if he
thinks fit,--
(a) direct the Commission to revoke the notice and, if such
a direction is given, the Commission shall immediately
revoke the notice; or
(b) confirm the prohibition imposed by the Commission.
(5) Upon receipt of a written report pursuant to paragraph (2)(b),
the Minister may, if he thinks fit, take any action specified in
paragraph (4)(a) or (b).
(6) A stock exchange shall not permit trading in securities on
a stock market of the stock exchange in contravention of a notice
under subsection (1).
Suspension order relating to stock exchange, recognized clearing
house or central depository
11B. (1) Without prejudice to section 9C, 9D or 11A, where the
Minister is satisfied that it is in the public interest, or it is appropriate
to do so for the protection of investors or for the proper regulation
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of a stock exchange, recognized clearing house or central depository,
the Minister may, on the recommendation of the Commission,
make an order ("suspension order") relating to all or any of the
following:
(a) the functions of the board of the stock exchange, recognized
clearing house or central depository, or any member of
its board;
(b) the functions of any committee (including a sub-committee)
established by a board referred to in paragraph (a); or
(c) the functions of the principal officer, by whatever name
called, who is responsible for the conduct of the business
and operations of the stock exchange, recognized clearing
house or central depository, as the case may be.
(2) For so long as a suspension order is in force, the following
provisions shall apply:
(a) none of the functions to which the order relates shall be
performed by any board, committee or officer thereof;
(b) any function to which paragraph (a) applies may be
performed by such person as shall be specified in the
order in relation to that function; and
(c) a person referred to in paragraph (a) shall not, by act or
omission, either directly or indirectly, affect the manner
in which functions therein referred to are performed unless
the person to perform the functions under paragraph (b)
requests for his assistance.
(3) Subject to subsection (6), a suspension order shall continue
in force for such period, being a period not exceeding six months,
as shall be specified in the order.
(4) A suspension order or any extension thereof under subsection
(6) shall take effect when a copy of the order or notice of the
extension is served under paragraph (7)(a) on the stock exchange,
recognized clearing house or central depository to which the order
relates.
(5) Without prejudice to subsection (4), where a suspension
order is made or such an order is extended under subsection (6),the
Commission shall, where it is practicable to do so, as soon as may
be practicable, give a copy of the order or, as the case may be, the
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notice of its extension, to the principal officer of the stock exchange,
recognized clearing house or central depository to which the order
relates and to such members of the governing body thereof (if any)
as the Commission may consider appropriate in the circumstances.
(6) The Minister may, on the recommendation of the Commission,
extend the period during which a suspension order is to remain in
force for any further periods each not exceeding three months.
(7) Where a suspension order is made or extended under this
section, the Commission shall--
(a) forthwith serve a copy of the order or notice in writing
of the extension on the stock exchange, recognized clearing
house or central depository to which the order relates;
and
(b) cause the suspension order or, as the case may be, the
notice of the extension, to be published in the Gazette.
(8) A person who contravenes or fails to comply with a suspension
order issued under subsection (1) commits an offence and is liable
on conviction to a fine not exceeding five million ringgit or to
imprisonment for a term not exceeding ten years or to both.
(9) For the purposes of this section, "principal officer" includes
a person, by whatever name called, who either individually or
jointly with one or more other persons, is responsible for the
conduct of the business and the administration of the stock exchange,
recognized clearing house or central depository.
Exchange holding company
11C.  No body corporate shall be an exchange holding company
or a holding company of an exchange holding company, unless the
body corporate has been approved as an exchange holding company
under section 11D.
Power of Minister to approve an exchange holding company
11D. (1) An application for approval of a body corporate as an
exchange holding company may be made in writing to the Minister.
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(2) The Minister may in writing, on the recommendation of the
Commission, approve a body corporate as an exchange holding
company, subject to any terms and conditions as he deems fit, if
he is satisfied that it is appropriate to do so--
(a) for the protection of investors;
(b) in the public interest; or
(c) for the proper regulation of a stock market of a stock
exchange.
(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) The Minister may, on the recommendation of the Commission,
impose different conditions or restrictions or give different directions
with respect to different applications for approval as an exchange
holding company.
(6) For the avoidance of doubt--
(a) to the extent that an exchange holding company would
be holding itself out as, or is, providing, operating or
maintaining a stock market of a stock exchange, the
exchange holding company shall obtain an approval in
accordance with section 8;
(b) to the extent that an exchange holding company would
be holding itself out as, or is, establishing or maintaining
a central depository, the exchange holding company shall
obtain an approval in accordance with sections 4 and 5
of the Securities Industry (Central Depositories)Act 1991;
(c) to the extent that an exchange holding company is holding
itself out as, or is, providing clearing and settlement
services of a--
(i) recognized clearing house; or
(ii) clearing house of an exchange company,
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the exchange holding company shall obtain recognition
in accordance with section 8A or approval in accordance
with section 6B of the Futures Industry Act 1993, as the
case may be; and
(d) to the extent that an exchange holding company is holding
itself out as, or is, providing, operating or maintaining
a futures market of an exchange company, the exchange
holding company shall obtain an approval in accordance
with section 4 of the Futures Industry Act 1993.
(7) Notwithstanding the provisions of this Act, the Securities
Industry (Central Depositories) Act 1991 and the Futures Industry
Act 1993, the Minister may, in his discretion, exempt the applicant
from any of the requirements of section 8 of this Act or sections
4 and 5 of the Securities Industry (Central Depositories) Act 1991
or sections 4 and 6B of the Futures Industry Act 1993,as he deems
fit, for the purposes of giving his approval.
(8) Notwithstanding section 8A, the Commission may, with the
approval of the Minister, exempt the applicant from any of the
requirements of section 8A, as it deems fit, for the purpose of
giving recognition to an exchange holding company as a recognized
clearing house.
Annual Regulatory Report on compliance with ongoing
requirements
11E. (1) Within three months after the end of each financial year,
a body corporate that has been approved as a stock exchange or
an exchange holding company shall prepare and submit to the
Commission a regulatory report on the extent to which it has
complied with the requirements under sections 9B and 11J, and its
rules, during the financial year.
(2) The Commission shall forthwith send a copy of the regulatory
report submitted under subsection (1) to the Minister.
(3) For the purposes of subsection (1)--
(a) the Commission may specify that either the stock exchange
or the exchange holding company, or both, shall be required
to submit a regulatory report; and
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(b) the Commission and the stock exchange or the exchange
holding company, as the case may be, may determine
between themselves the scope and content of the regulatory
report.
(4) Upon receipt of the regulatory report under subsection (1),
the Commission may at any other time it deems necessary--
(a) conduct a regulatory audit of a body corporate that has
been approved as a stock exchange or an exchange holding
company, as the case may be, or of both the stock exchange
and exchange holding company;
(b) appoint any independent person to assist the Commission
in a regulatory audit conducted under this subsection;
and
(c) charge the costs related to the conduct of the regulatory
audit to the stock exchange or the exchange holding
company, as the case may be, or both.
(5) The Commission shall as soon as practicable submit to the
Minister a copy of the report of the regulatory audit conducted by
the Commission under subsection (4).
(6) For the purposes of this section--
(a) "regulatory audit" refers to an audit on the extent to
which the stock exchange or exchange holding company,
as the case may be, has complied with its regulatory
responsibilities, duties or functions under this Act, the
rules, and any securities laws; and
(b) "regulatory report" is a report that is submitted under
subsection (1).
Special report by exchange holding company about compliance
with ongoing requirements
11F.  Notwithstanding section 11E, the Minister may, at any time,
require a body corporate that has been approved as a stock exchange,
or an exchange holding company, as the case may be, to prepare
and submit to the Minister a special report on the extent to which
the stock exchange or the exchange holding company, as the case
may be, has complied with the requirements of the securities laws
and rules.
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Withdrawal of approval of an exchange holding company
1 1  G . ( 1 ) T h e Minister may, on the recommendation of the
Commission, by a notice published in the Gazette, and by such
other means as the Commission considers appropriate--
(a) withdraw an approval granted under section 11D to an
exchange holding company, with effect from the date
specified in the notice; or
(b) direct the exchange holding company to cease to provide
or operate such facilities, or provide such services, as are
specified in the notice, with effect from the date specified
in the notice.
(2) The Minister shall not withdraw an approval or issue a
d i r e c t i o n under subsection (1) unless the Minister, on the
recommendation of 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 markets in securities, where any
of the following circumstances occurs:
(a) the exchange holding company ceases to be a holding
company of a stock exchange or an exchange company,
as the case may be;
(b) the exchange holding company is being wound up or
otherwise dissolved, whether in Malaysia or elsewhere;
(c) the exchange holding company has contravened any term
or condition of its approval or is charged with any offence
under any securities laws;
(d) the exchange holding company has failed to comply with
a condition, requirement or direction given under section11
or 11L;
(e) any information provided for the purposes of section 11D
was false or misleading in a material particular; or
(f) an exchange holding company on its own accord applies
to the Minister to withdraw the approval as an exchange
holding company granted to it and the Minister, on the
recommendation of the Commission, deems it fit to do
so.
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(3) Notwithstanding the withdrawal of an approval or the issuance
of a direction under subsection (1) the Minister may permit the
exchange holding company to continue, on or after the date on
which the withdrawal or direction is to take effect, to carry on such
activities affected by the withdrawal or direction as the Minister
may specify in the notice published under that subsection for the
purposes of--
(a) closing down the operations of the exchange holding
company or ceasing to provide the services specified in
the notice; or
(b) protecting investors or the public interest.
(4) Where the Minister has granted permission to an exchange
holding company under subsection (3), the exchange holding company
shall not, by reason of its carrying on the activities in accordance
with the permission, be regarded as having contravened sections
7, 8A and 11C of this Act, sections 3 and 6A of the Futures Industry
A c t 1993 and section 3 of the Securities Industry (Central
Depositories) Act 1991, if applicable.
(5) The Minister shall not take any action under subsection (1)
without giving an opportunity to be heard.
Effect of withdrawal of approval of exchange holding company
11H.  Any withdrawal of an approval or issuance of a direction
under section 11G shall not operate so as to prejudice sections 8C
and 9E of this Act, sections 7B and 7C of the Futures Industry
Act 1993 and section 5B of the Securities Industry (Central
Depositories) Act 1991.
Listing of exchange holding company on stock exchange
11I. (1) Where the approval of the Commission under section 32
of the Securities Commission Act 1993 has been granted for the
securities of an exchange holding company to be listed on a relevant
stock exchange, the exchange holding company shall enter into
such arrangements as the Commission may require--
(a) for dealing with possible conflicts of interest that may
arise from the listing on the relevant stock exchange;
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(b) for the purpose of ensuring the integrity of trading of the
securities of the exchange holding company; and
(c) for the compliance with obligations as a listed corporation
if the exchange holding company was to become a listed
corporation,
a n d the exchange holding company shall comply with such
requirements.
(2) The listing requirements of the relevant stock exchange
shall be deemed to allow the Commission, instead of the relevant
stock exchange, to make decisions and to take action, or to allow
the Commission to require the relevant stock exchange to make
decisions and to take action on the Commission's behalf on--
(a) the admission to or removal of the exchange holding
company from the official list of the relevant stock
exchange;
(b) the stopping or suspension of the securities of the exchange
holding company from being listed on the relevant stock
exchange; and
(c) such other matters as the Commission deems fit for the
purpose of subsection (1).
(3) An arrangement under subsection (1) may provide for the
exchange holding company to pay such fees to the Commission
as the Commission may determine for services provided by the
Commission under the arrangement, or otherwise provided under
or for the purposes of this section.
(4) Without prejudice to section 9, the Commission may, by
notice in writing--
(a) modify the listing requirements of the relevant stock
exchange for the purpose of applying to the listing for
quotation or trading of the securities of the exchange
holding company; and
(b) exempt the exchange holding company from any listing
requirement of the relevant stock exchange.
(5) For the purposes of this section, the "relevant stock exchange"
means the stock exchange of the exchange holding company.
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Duties of an exchange holding company
11J. (1) It shall be the duty of an exchange holding company to
ensure--
(a) in so far as may be reasonably practicable--
(i) an orderly and fair market in relation to securities
that are traded on the market through the facilities
of the stock exchange of the exchange holding
company, or through the facilities of any of its
subsidiaries that is duly approved as a stock exchange,
as the case may be;
(ii) an orderly and fair market for trading in future
contracts on the futures market through the facilities
of the exchange company of the exchange holding
company, or through the facilities of any of its
subsidiaries that is duly approved as an exchange
company, as the case may be;
(iii) that there are orderly dealings in securities deposited
or lodged with a central depository through facilities
of a central depository of the exchange holding
company, or through the facilities of any of its
subsidiaries that is duly approved as a central
depository, as the case may be;
(iv) that there are orderly, clear and efficient clearing
and settlement arrangements for any transaction in
securities cleared or settled through the facilities of
a recognized clearing house of an exchange holding
company, or through the facilities of any of its
subsidiaries that is duly recognized as a clearing
house, as the case may be; and
(v) that there are orderly, clear and efficient clearing
and settlement arrangements for any transaction in
futures contracts cleared or settled through the
facilities of a clearing house for a futures market
of an exchange company, or through the facilities
of any of its subsidiaries that is duly approved as
a clearing house of an exchange company, as the
case may be;
(b) the prudent risk management of its business and operations;
and
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(c) that the stock exchange, recognized clearing house, central
depository, exchange company or clearing house of an
exchange company, as the case may be, comply with any
lawful requirements placed on it under any securities
laws and any other laws applicable to it.
(2) In performing its duty under subsection (1) the exchange
holding company shall--
(a) act in the public interest, having particular regard to the
need for the protection of investors; and
(b) ensure that where its own interest or any interest that it
is required to serve under any law relating to corporations
conflicts with the interest referred to in paragraph (a),
the latter shall prevail.
(3) An exchange holding company shall immediately notify the
Commission if it becomes aware of--
(a) any matter which adversely affects or is likely to adversely
affect--
(i) the ability of the exchange holding company to
meet its obligations in respect of its business as an
exchange holding company, a stock exchange, a
central depository, a recognized clearing house, an
exchange company or a clearing house of an exchange
company, as the case may be, including its ability
to comply with any requirements as maybe specified
by the Commission, if applicable; or
(ii) the ability of any subsidiary of the exchange holding
company to meet its obligations in respect of its
business as a stock exchange, a central depository,
a recognized clearing house, an exchange company
or a clearing house of an exchange company, as the
case may be, including the ability of any such
subsidiary to comply with any requirement as may
be specified by the Commission, if applicable; or
(b) any irregularity, breach of any provision of the securities
laws, the rules of a stock exchange, a recognized clearing
house or a central depository or the business rules of an
exchange company or clearing house of an exchange
company, or any other matter which, in the opinion of
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the exchange holding company, indicates or may indicate,
that the financial standing or financial integrity of any
of its subsidiaries or the chief executive or directors of
such subsidiary, as the case may be, is in question or may
reasonably be affected.
(4) Where an exchange holding company, which itself has been
approved as a stock exchange under section 8, undertakes any
function of a subsidiary that is approved as a stock exchange under
section 8, such exchange holding company shall enter into such
arrangements with the Commission as the Commission may determine
as to how the duties and obligations of the exchange holding
company and such subsidiary, under the securities laws, are satisfied.
(5) Where an exchange holding company which itself has been
approved as a recognized clearing house under section 8A, undertakes
any function of a subsidiary that is approved as a recognized
clearing house under section 8A, such exchange holding company
shall enter into such arrangements with the Commission as the
Commission may determine as to how the duties and obligations
of the exchange holding company and such subsidiary, under the
securities laws, are satisfied.
(6) Where an exchange holding company, which itself has been
approved as a central depository under section 5 of the Securities
Industry (Central Depositories) Act 1991, undertakes any function
of a subsidiary that is approved as a central depository under
section 5 of the Securities Industry (Central Depositories) Act
1991, such exchange holding company shall enter into such
arrangements with the Commission as the Commission may determine
as to how the duties and obligations of the exchange holding
company and such subsidiary, under the securities laws, are satisfied.
(7) Where an exchange holding company, which itself has been
approved as exchange company under section 4 of the Futures
Industry Act 1993, undertakes any function of a subsidiary that is
approved as an exchange company under section 4 of the Futures
Industry Act 1993, such exchange holding company shall enter
into such arrangements with the Commission as the Commission
may determine as to how the duties and obligations of the exchange
holding company and such subsidiary, under the securities laws,
are satisfied.
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(8) Where an exchange holding company, which itself has been
approved as a clearing house under section 6B of the Futures
Industry Act 1993, undertakes any function of a subsidiary that is
approved as a clearing house under section 6B of the Futures
Industry Act 1993, such exchange holding company shall enter
into such arrangements with the Commission, as the Commission
may determine, as to how the duties and obligations of the exchange
holding company and such subsidiary, under the securities laws,
are satisfied.
(9) Where the duties and obligations of a stock exchange, a
recognized clearing house, a central depository, an exchange company
or a clearing house of an exchange company, as the case may be,
are discharged in accordance with the arrangements referred to in
subsection (4), (5), (6), (7) or (8), such duties and obligations shall
be deemed to have been satisfied by both the exchange holding
company and its subsidiary.
(10) Where the rules of a subsidiary of an exchange holding
company which is a stock exchange, a recognized clearing house,
a central depository, an exchange company or clearing house of
an exchange company provide for such subsidiary to take any
action, the exchange holding company shall have the power to take
such action on behalf of the relevant subsidiary.
(11) Nothing in subsection (10) shall preclude a subsidiary of
an exchange holding company which is a stock exchange, a recognized
clearing house, an exchange company, a clearing house of an
exchange company or a central depository from itself taking any
action against any person to whom its rules apply but such subsidiary
shall not take any action under its rules in the event the exchange
holding company takes such action pursuant to subsection (10).
Risk Management Committee of exchange holding company
11K.  An exchange holding company shall establish and maintain
a committee, to be called the Risk Management Committee, to
formulate policies on risk management matters relating to the
activities of the exchange holding company and of its subsidiaries,
and to submit such policies to the board of the exchange holding
company for its consideration.
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Power to issue directions
11L. (1) Where the Commission is satisfied that--
(a) a conflict exists or may come into existence between--
(i) the interest of a body corporate that has been approved
as an exchange holding company, a stock exchange,
a recognized clearing house, an exchange company,
a clearing house of an exchange company, a central
depository, or a relevant body corporate, as the
case may be; and
(ii) the interest of the proper performance of the functions
or duties conferred by this Act or any other law,
on the exchange holding company, stock exchange,
recognized clearing house, exchange company,
clearing house of an exchange company, central
depository or the relevant body corporate, as the
case may be; or
(b) where the Commission is satisfied that such a conflict of
interest has occurred or has existed in circumstances that
make it likely that the conflict of interest will continue
or be repeated,
then the Commission may serve a written notice on the exchange
holding company, stock exchange, recognized clearing house,
exchange company, clearing house of an exchange company, central
depository, or relevant body corporate, as the case may be, stating
the reasons in support of the ground or grounds for the notice and
direct any of the aforementioned persons to forthwith take such
steps as are specified in the notice, including steps in relation to
any of its affairs, business or property for the purposes of remedying
the conflict of interest or the matters occasioning the conflict of
interest.
(2) A notice served under subsection (1) shall take effect
immediately.
(3) A body corporate that has been served with a notice under
subsection (1) shall not without reasonable excuse, fail to comply
with the notice.
(4) A body corporate that has been served with a notice under
subsection (1) may appeal against the notice to the Minister not
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later than fourteen days after the date of service of the notice or
such longer period if any, as the Commission may specify in the
notice, but the notice shall take effect immediately notwithstanding
that the appeal has been or may be made under this subsection.
(5) For the purposes of this section, "relevant body corporate"
means a body corporate of which an exchange holding company
is a shareholder who, either alone or with any associated person
or persons, is entitled to exercise or control the exercise of more
than thirty three per centum of the aggregate of the nominal amount
of all voting shares in the body corporate.
Restriction on exchange holding company from reducing its
sharehoding
11M.  No exchange holding company shall reduce its shareholding
in a stock exchange, a recognized clearing house, an exchange
company, a clearing house of an exchange company or a central
depository, as the case may be, to a level below seventy-five per
centum, or such other percentage as may be prescribed from time
to time by the Minister, of the total issued and paid-up capital in
the stock exchange, recognized clearing house, exchange company,
clearing house of an exchange company or a central depository as
the case may be, without first obtaining the written approval of
the Minister.
Disposal and acquisition of assets, etc.
11N. (1) Without prejudice to section 11M, where--
(a) an exchange holding company;
(b) a stock exchange;
(c) a recognized clearing house;
(d) an exchange company;
(e) a clearing house of an exchange company;
(f) a central depository; or
(g) any other relevant body corporate as defined under
subsection 11L(5),
intends to enter into an agreement or arrangement, to dispose of
or acquire such assets or classes of assets of such value as may
have been specified by the Commission, it shall give the Commission
prior written notification of such intention.
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(2) W h e r e the Commission makes a specification under
subsection (1), it shall have regard to whether the assets referred
to in the specification are integral to the operations of the exchange
holding company, stock exchange, recognized clearing house,
exchange company, clearing house of an exchange company, central
depository, or any other relevant body corporate, as the case may
be, or significant in affecting the business direction of such persons.
Control in shareholding of exchange holding company
11O. (1) Notwithstanding section 11N, no person shall enter into
any agreement or arrangement to acquire any voting shares of an
exchange holding company by which, if the agreement or arrangement
is carried out, he would acquire, together with any other voting
shares of the exchange holding company which were then already
held by him, or by him and by persons acting in concert with him,
voting shares of five per centum or more of the aggregate of the
nominal amount of all the voting shares in the exchange holding
company, without first obtaining the prior written approval of the
Minister.
(2) An application for approval under subsection (1) shall be
made by the person intending to acquire voting shares referred to
therein and shall be sent to the Commission, whereupon the
Commission shall submit such application, together with its
recommendation to the Minister.
(3) The Minister may grant his approval subject to such terms
and conditions, as he deems fit to impose.
(4) For the purposes of this section, in determining whether a
p e r s o n is a person acting in concert with another person,
subsections 33 (2) and (3) of the Securities Commission Act 1993
shall apply.
Power of Commission upon contravention of sections 11M, 11N
and 11O
11P. (1) Notwithstanding any of the provisions in any memorandum
and articles, the Companies Act 1965, or any rule of law, but
subject to the provisions of this Act, where the Commission is
satisfied that any person has contravened the provisions of section
11M, 11N or 11O, it may make a preliminary order in writing,
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imposing one or more of the following prohibitions or restrictions
as may be applicable or appropriate in the circumstances of the
contravention in respect of any shares which are the subject of the
contravention--
(a) prohibit the transfer of, or the carrying out of the agreement
or arrangement to transfer, such voting shares, or, in the
case of unissued shares, prohibit the transfer of, or the
carrying out of the agreement or arrangement to transfer,
the right to be issued with them;
(b) prohibit the exercise of any voting rights in respect of
such shares;
(c) prohibit the issue of any further shares in right of such
shares or in pursuance of any offer made to their holder;
or
(d) except in liquidation, prohibit the payment of any sums
due from the exchange holding company on such shares,
whether in respect of capital or otherwise.
(2) A preliminary order made under subsection (1) shall be
served on the defaulting person as soon as is practicable, and may
be publicised in such manner as the Commission deems fit, if, in
the opinion of the Commission, it needs to be publicised.
(3) A preliminary order shall be binding on the defaulting person,
on any person for the time being holding the voting shares to
which such order applies, and on any other person specified in the
order or to whom the order is directed.
(4) No person shall be given an opportunity to be heard before
the Commission makes a preliminary order under subsection (1)
against him or which affects him in any manner.
(5) Any defaulting person against whom a preliminary order
has been made, or any other person prejudicially affected by such
order, may within fourteen days of the service of the order on the
defaulting person, make representations in writing to the Commission
applying for the setting aside of the order on the ground that he
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had not contravened the provisions in relation to which the order
has been made, or for a modification of the order on the ground
that it would be just and proper to modify it for reasons to be
specified in the representations.
(6) The Commission may, after considering the representations
made under subsection (5), either confirm, revoke, or vary the
preliminary order in such manner as it deems fit.
(7) Where the Commission confirms a preliminary order, it
may make an order to the holder of the shares to which the
preliminary order applies to, directing such holder to dispose of
the shares.
(8) The Commission may give any instruction or direction to
the directors or officers of the exchange holding company, stock
exchange, recognized clearing house, exchange company, clearing
house of an exchange company, central depository or any other
relevant body corporate as defined under subsection 11L(5),as the
case may be, as may be necessary or requisite to give effect to any
order of the Commission under this section, or as may be incidental,
ancillary or consequential to such order.
(9) Any transaction, including any agreement or arrangement in
relation to any shares, which is in contravention of any preliminary
order, or of any order confirmed under subsection(6), or of any
instruction or direction given by the Commission under subsection
(8), shall be void and of no effect.
(10) A person who contravenes any preliminary order, any order
confirmed under subsection (6), or any instruction or direction
given under subsection (8), commits an offence and is liable on
conviction to a fine not exceeding five million ringgit or to
imprisonment for a term not exceeding five years or to both.
(11) The satisfaction of the Commission under subsection (1)
that the provisions of section 11M, 11N or 11O have been contravened
by any person may be arrived at regardless as to whether or not
there is any prosecution of any person for such contravention.
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PART IV
LICENCES
Dealer's licence
12. (1) A person shall not carry on a busin