Securities Law Chapter 4 PDF

SECURITIES LAW CHAPTER 4  At the end of the course, students should be able to: 1. Discuss the Acts and Regulations pertaining to the Securities Industry in Malaysia....

SECURITIES LAW CHAPTER 4  At the end of the course, students should be able to: 1. Discuss the Acts and Regulations pertaining to the Securities Industry in Malaysia. LEARNING 2. Differentiate each Acts and Regulations pertaining to the Securities Industry in Malaysia. OBJECTIVES 3. Explain the laws and regulations governing the operation of the securities industry in Malaysia. 4. Apply the provisions of securities law in discovering market misconduct. SUBTITLE GOES HERE Add a Footer 2  CONTENT Overview of the Acts and Regulations pertaining to the Securities Industry in Malaysia Securities Commission Act 1993 (SCA) Capital Markets and Services Act 2007 (CMSA) Securities Industry (Central Depositories) Act 1991 (SICDA) Companies Act 1965 (CA) Financial Service Act 2013 (FSA) Islamic Financial Service Act 2013 (IFSA) Anti Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) ( Act 613) Anti-Money Laundering Regulator(s) Bank Negara Malaysia Anti Money Laundering Guidelines for Insurance and Banking Industries Securities Commission Anti Money Laundering Guidelines for Capital Markets Intermediaries Add a Footer 3  Securities Commission Act 1993 (SCA) Add a Footer 4 There is hereby established a body corporate by the name of “Securities Commission” with perpetual succession and a common seal, and which may sue and be sued in its corporate name and, subject to and for the purposes of this Act, may enter into contracts and may acquire, purchase, take, hold and enjoy movable and immovable property of every description and may convey, assign, surrender, yield up, charge, mortgage, demise, reassign, transfer or otherwise dispose of, or deal with, any movable or immovable property or any interest vested in the Commission upon such terms as it deems fit. 5  15. Functions Of The 137. General Penalty Commission (1) The Commission shall have the following functions: (1) Any person who contravenes a requirement or any provision of this Act shall be guilty of an offence. (a) to advise the Minister on all matters relating to securities and derivatives industries; (2) Where no penalty is expressly provided for an (b) to regulate all matters relating to securities and offence under this Act, a person who is guilty of the derivatives; offence shall on conviction be punished with a fine not (c) to ensure that the provisions of the securities laws are exceeding one million ringgit or imprisonment for a complied with; term not exceeding five years, or both; and in the case (d) to regulate the take-overs and mergers of companies; of a continuing offence, the offender, in addition to the (e) to promote and regulate all matters relating to fund management, including unit trust schemes; penalty provided in this subsection, shall be punished with a daily fine not exceeding five thousand ringgit for (f) to be responsible for supervising and monitoring the activities of any exchange holding company, exchange, every day during which the offence continues after clearing house and central depository; conviction. (g) to take all reasonable measures to maintain the confidence of investors in the securities and derivatives markets by ensuring adequate protection for such investors; (h) to promote and encourage proper conduct amongst participating organisations, participants, affiliates, depository participants and all licensed or registered persons of an exchange, clearing house and central depository, as the case may be; Add a Footer 6  Capital Markets and Services Act 2007 (CMSA) Add a Footer 7  An Act to consolidate the Securities Industry Act 1983 [Act 280] and Futures Industry Act 1993 [Act 499], to regulate and to provide for matters relating to the activities, markets and intermediaries in the capital markets, and for matters consequential and incidental thereto. 8  182. Penalty for offence under Subdivision 1 A person who contravenes section 175, 176, DIVISION 1 177, 178, 179 or 181 commits an offence and shall be punished on conviction to imprisonment Prohibited Conduct – for a term not exceeding ten years and to a fine Securities of not less than one million ringgit. Subdivision 1 – Offences relating to false trading and market rigging, stock market manipulation, etc. 175. Stock market manipulations 176. Stock market manipulations 177. False or misleading statements, etc. 178. Fraudulently inducing persons to deal in securities 179. Use of manipulative and deceptive devices Add a Footer 9  Securities Industry (Central Depositories) Act 1991 (SICDA) Add a Footer 10 An Act to provide for the regulation of central depositories, and the deposit, holding, withdrawal of, and dealings in, securities deposited therewith and to provide for matters incidental thereto. 11  (2) Subsection (1) shall not apply to – 10 (a) a central depository; 3. R e s t r i c t i o n o n e s t a b l i s h m e n t o f a c e n t r a l (b) the Central Bank of Malaysia; and d e p o s i t o r y. (c) any person exempted by the Minister under section 62A. (1) No person shall establish, maintain, operate or hold himself out as providing, maintaining or operating a system for the central handling of (3) A person who contravenes the provisions of subsection (1) shall securities, whether or not listed on any stock exchange :- be guilty of an offence and shall, on conviction, be liable to a fine not exceeding ten million ringgit or to imprisonment for a term not (a) whereby all such securities are deposited with and held in exceeding ten years or to both. custody by, or registered in the name of, the person or his nominee for the depositors and dealings in respect of those securities are effected by means of entries in accounts without the physical delivery of scrips; or (b) which permits or facilitates the settlement of securities transactions or dealings in securities without the physical delivery of scrips; or (c) to provide other facilities and services incidental thereto. Add a Footer 12  Companies Act 1965 (CA) Add a Footer 13 An Act relating to companies. 14  Subdivision (4)-Offences Section 300. Offences by officers of companies in liquidation. Section 301. Inducement to be appointed liquidator. PART VI - ACCOUNTS AND AUDIT Section 302. Penalty for falsification of books. DIVISION 1 - ACCOUNTS Section 303. Liability where proper accounts not kept. Section 304. Responsibility for fraudulent trading. Section 305. Power of Court to assess damages against delinquent officers, etc. Section 306. Prosecution of delinquent officers and members of company. Section 166A. Compliance with approved accounting standards. Section 167. Accounts to be kept. Section 167A. System of internal control. DIVISION 2 - OFFENCES Section 168. As to accounting periods of companies within the same group. Section 169. Profit and loss account, balance-sheet and directors' report. Section 363. Restriction on offering shares, debentures, etc. for subscription or purchase. Section 169A. Relief from requirements as to form and content of accounts and Section 364. False and misleading statements. reports. Section 364A. False reports. Section 365. Dividends payable from profits only. Section 169B. Power of Registrar to require a statement of valuation of assets. Section 366. Fraudulently inducing persons to invest money. Section 170. Members of company entitled to balance sheet, etc. Section 367. Penalty for improper use of words "Limited" and "Berhad". Section 368. Frauds by officers. Section 171. Penalty. Section 368A. Injunctions Section 368B. Protection to certain officers who make disclosures. Section 369. General penalty provisions. Section 370. Default penalties. Section 371. Proceedings how and when taken. Section 371A. Compounding of offences. Add a Footer 15  Financial Service Act 2013 (FSA) Add a Footer 16  An Act to provide for the regulation and supervision of financial institutions, payment systems and other relevant entities and the oversight of the money market and foreign exchange market TO PROMOTE FINANCIAL STABILITY AND FOR RELATED, CONSEQUENTIAL OR INCIDENTAL MATTERS. 17  Financial Service Act 2013 (FSA) 18 18  248. OFFENCES IN RELATION TO ENTRIES IN DOCUMENTS 7. POWERS AND FUNCTIONS OF BANK (1) No person shall— (1) The Bank shall exercise the powers and perform the functions under this (a) make or cause to be made a false entry; Act in a way which it considers most appropriate for the purpose of meeting (b) omit to make, or cause to be omitted, any entry; or the regulatory objectives of this Act and the Governor shall exercise such powers and perform such functions of the Bank on its behalf. (c) alter, extract, conceal or destroy, or cause to be altered, extracted, concealed or destroyed, any entry, (2) The powers and functions of the Bank under this Act are in addition to, in any book or record, or in any report, slip, statement or other document whatsoever, relating to the and not in derogation of, the powers and functions of the Bank under the business, affairs, transactions, condition, property, Central Bank of Malaysia Act 2009. assets, liabilities or accounts, of an authorized person, a registered person or an operator of a designated (3) The Bank shall, from time to time, keep the Minister informed on matters payment system. relating to the exercise of its powers and performance of its functions under this Act. (2) No person shall evade the provisions of this Act by (4) The Bank may authorize a Deputy Governor or an officer of the Bank to altering, forging, destroying, mutilating, defacing, exercise any of its powers or perform any of its functions under this Act. concealing or removing any document. (5) The Bank may establish and authorize a committee consisting of members as the Bank may determine for the purpose of exercising any of the (3) Any person who contravenes subsection (1) or (2) powers or performing any of the functions of the Bank under this Act. commits an offence and shall, on conviction, be liable to imprisonment for a term not exceeding be liable to imprisonment for a term not exceeding eight years or to a fine not exceeding twenty-five million ringgit or to both. Add a Footer 19  Islamic Financial Service Act 2013 (IFSA) Add a Footer 20 An Act to provide for the regulation and supervision of Islamic financial institutions, payment systems and other relevant entities and the oversight of the Islamic money market and Islamic foreign exchange market to promote financial stability and compliance with Shariah and for related, consequential or incidental matters. 21  Division 4 7. POWERS AND FUNCTIONS Criminal offences OF BANK (1) The Bank shall exercise the powers and perform the functions 258. Where the penalty of under this Act in a way which it considers most appropriate for the purpose of meeting the regulatory objectives of this Act and the imprisonment has been provided for an Governor shall exercise such powers and perform such functions of offence under this Act, such penalty the Bank on its behalf. shall not apply to a body corporate (2) The powers and functions of the Bank under this Act are in convicted of the offence. addition to, and not in derogation of, the powers and functions of the Bank under the Central Bank of Malaysia Act 2009. (3) The Bank shall, from time to time, keep the Minister informed on matters relating to the exercise of its powers and performance of its functions under this Act. (4) The Bank may authorize a Deputy Governor or an officer of the Bank to exercise any of its powers or perform any of its functions under this Act. Add a Footer 22  Anti Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) ( Act 613) Add a Footer 23  14. REPORT BY REPORTING INSTITUTIONS 13. RECORD–KEEPING BY REPORTING A reporting institution shall promptly report to INSTITUTIONS the competent authority any transaction:- (1) A reporting institution shall keep a record of any transaction involving the (a) exceeding such amount as the competent domestic currency or any foreign currency exceeding such amount as the authority may specify; and competent authority may specify. (2) The record referred to in subsection (1) shall be in such form as the (b) where the identity of the persons involved, competent authority may specify. the transaction itself or any other (3) The record referred to in subsection (1) shall include the following information circumstances concerning that transaction for each transaction: gives any officer or employee of the (a) the identity and address of the person in whose name the transaction is reporting institution reason to suspect that conducted; the transaction involves proceeds of an (b) the identity and address of the beneficiary or the person on whose behalf the unlawful activity. transaction is conducted, where applicable; (c) the identity of the accounts affected by the transaction, if any; (d) the type of transaction involved, such as deposit, withdrawal, exchange of currency, cheque cashing, purchase of cashier’s cheques or money orders or other payment or transfer by, through, or to such reporting institution; (e) the identity of the reporting institution where the transaction occurred; and Add a Footer 24  86. GENERAL OFFENCE 31. POWERS OF AN Any person who contravenes:- INVESTIGATING OFFICER (a) any provision of this Act or regulations made under it; or (1) Where an investigating officer is satisfied, or has reason to suspect, that a person has committed an offence under this Act, he (b) any specification or requirement made, or any may, without a search warrant:- order in writing, direction, instruction, or notice given, or any limit, term, condition or restriction (a) enter any premises belonging to or in the possession or control imposed, in the exercise of any power conferred of the person or his employee, and in the case of a body corporate, under or pursuant to any provision of this Act or its director or manager; regulations made under it, commits an offence and (b) search the premises for any property, record, report or shall on conviction, if no penalty is expressly provided document; for the offence under this Act or the regulations, be liable to a fine not exceeding two hundred and fifty (c) inspect, make copies of or take extracts from any record, report thousand ringgit. or document so seized and detained; (d) take possession of, and remove from the premises, any property, record, report or document so seized and detained and detain it for such period as he deems necessary; Add a Footer 25  PART V: SUSPICIOUS TRANSACTIONS PART IV: RETENTION OF RECORDS 11. REPORTING OF SUSPICIOUS TRANSACTIONS 11.1 A reporting institution must clarify the economic 10. RECORD KEEPING background and purpose of any transaction or business 10.1 A reporting institution must keep record of all transactions and relationship if it appears unusual in relation to the reporting ensure they are up to-date and relevant. The records must at least include institution’s knowledge of the customer, or if the economic the following information for each transaction: purpose or legality of the transaction is not immediately clear. Special attention should also be paid to all complex (a) documents relating to the identification of the customer in whose and unusual patterns of transaction. name the account is opened or transaction is executed; (b) the identification of the beneficial owner or the person on whose behalf the account is opened or transaction is executed; 11.2 A reporting institution must also consider whether the transactions involve a number of factors which when taken (c) records of the relevant account pertaining to the transaction executed; together may raise a suspicion that the transactions may be (d) the type and details of transaction involved; connected with certain unlawful activities. (e) the origin and the destination of the funds, where applicable; and (f) such other information as the SC and BNM may specify in writing. Add a Footer 26 THANK YOU 27