The Securities Commission said there was an increasing number of queries and complaints pertaining to unlisted public companies offering their shares, including preference shares, to both retail and sophisticated investors. KUALA LUMPUR: The Securities Commission has cautioned unlisted public companies (UPCs) they face a fine not exceeding RM10mil if they seek to raise funds from retail investors without a prospectus. In a statement on Tuesday, the Securities Commission said there was an increasing number of queries and complaints pertaining to UPCs offering their shares, including preference shares, to both retail and sophisticated investors. In certain cases, the shares are marketed or offered through phone calls, followed by one-on-one meetings with agents of the UPC. The regulator warned the UPCs seeking to raise funds from the public have to comply with the Capital Markets and Services Act 2007 (CMSA) and relevant guidelines, especially when the offer is made to retail investors. “The SC wishes to remind UPCs that offering of shares to retail investors without a prospectus is a serious breach under the CMSA and a person found liable may be punished with a fine not exceeding RM10mil or imprisonment not exceeding 10 years, or both. “UPCs have the duty to provide all relevant information to investors, including sophisticated investors, to enable them to make an informed assessment, including the merits of investing in the shares of the UPCs and the extent of the risks involved, ” it said. “Before investing in shares of a UPC, investors should ask for and review the contents of the registered prospectus or information memorandum (IM) to understand the nature and risks of their investment, especially how their investments will be utilised by the UPC, ” it said in a statement, adding that they should also conduct their own research and where necessary, seek professional advice. The CMSA requires a prospectus to be issued when shares of a UPC are offered to retail investors. The said prospectus will also need to be registered with the SC. UPCs are not required to issue a prospectus only when the shares are issued wholly to sophisticated investors described or set out under Schedules 6 and 7 of the CMSA. Sophisticated investors include high net worth individuals with a net asset threshold of RM3mil excluding the value of primary residence, high net-worth entities and accredited investors. While the CMSA does not mandate the issuance of an IM, UPCs that issue an IM for offering of their shares to sophisticated investors are required to deposit the said IM with the SC. UPCs are also expected to make clear in the IM that while the IM is deposited with the SC, the SC’s approval is not required for the offering of the shares referred to in the IM. UPCs can refer to the prospectus guidelines for the required information that must be included in a UPC prospectus for the purpose of registration with the SC. Members of the public who have any enquiries or concerns about any person or company offering any shares in a UPC may contact the SC’s Consumers and Investors Department at 03-62048999 or email firstname.lastname@example.org.
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