Aside from the Companies Act 1965, the primary laws governing the regulation of securities and futures in Malaysia are the Securities Industry Act 1983, the Securities Commission Act 1993 and the Futures Industry Act 1993. The term ‘securities laws’ is defined in the Securities Commission Act as meaning these Acts as well as the Securities Industry (Central Depositories) Act 1991: section 2. References to these laws also include references to any regulations, rules, orders, notifications and other subsidiary legislation made under them: section 2A, Securities Commission Act.
The Securities Industry Act , which is formed on the provisions and structure of the Australian Corporations Law and the Hong Kong Securities and Futures Commission, is part of the securities regulation regime, which administers the issuance, distribution and trading of securities in Malaysia. The basic objective of setting up the Commission was to put in place a central authority to implement and oversee the regulatory framework for trade in securities and futures . The duty for regulatory oversight of trading in securities rests with the Securities Commission established under the Securities Commission Act (SCA).
Prior to 1993, there was no single government body that was given the responsibility for overseeing the development of the Malaysian capital market . The securities industry in Malaysia was then regulated by a number of bodies such as the Capital Issues Committee, the Panel of Takeovers and Mergers, the Registrar, Foreign Investment Committee, Ministry of International Trade and Industry (MITI) and Bank Negara Malaysia (BNM/Central Bank). As of March 1, 1993, the securities industry entered into a new era with the formation of a wholly new centralized regulatory body called the Securities Commission (the Commission) when the SCA was brought into force. With the formation of the Commission, the Capital Issues Committee and the Panel of Takeovers and Mergers were disbanded and their functions taken over by the Commission. Meanwhile, the functions of the Registrar in regulating the securities industry have diminished considerably though the position of Foreign Investment Committee is retained.
The need to set up a single regulatory body in the securities industry was recognised by the government in 1991 when it published the Sixth Malaysian Plan which stated that:
In order to meet the demand of the increasingly sophisticated securities industry, government will consider establishment of a single regulatory body to promote development of capital market. Proposed commission will be given responsibility to streamline regulations of securities market and to speed up processing of application and approvals for transactions .
The Commission’s Objective and Characteristics
The Commission’s mission statement is to ‘promote and maintain fair, efficient, secure and transparent securities and futures markets and to facilitate the orderly development of an innovative and competitive capital market ’.
The Commission is a self-funding statutory body with investigative and enforcement powers. Funds are derived from a levy that is imposed on transactions and filing fees . It reports to the Minister of Finance and public accountability of this body is satisfied via the annual report it prepares and tables to the Parliament.
In February 2001, the Commission released a Capital Market Masterplan (CMP). This is a comprehensive plan that charts the capital market with a blueprint for growth, strategic positioning and development for the next decade. The CMP prioritises the immediate needs of the capital market and charts its direction and long-term growth in anticipation of global developments to its environment.
The Securities Commission is a creature of statute with perpetual succession and which may be sued in its own corporate name. The membership of the Securities...