CAPITAL MARKETS AND SERVICES ACT 2007

LAWS OF MALAYSIA ONLINE VERSION OF UPDATED TEXT OF REPRINT Act 671 CAPITAL MARKETS AND SERVICES ACT 2007 As at 1 July 2021 2 CAPITAL MARKETS AND SERVICES ACT 2007 Date of Royal Assent … … … 27 July 2007 Date of publication in the Gazette … … … 31 July 2007 Latest amendment made by P.U. (A) 289/2021 which came into operation on … … … 1 July 2021 except subsubparagraphs 1(2)(a) and (b) w.e.f. 1 January 2022 PREVIOUS REPRINTS First Reprint … … … … … 2016 3 LAWS OF MALAYSIA Act 671 CAPITAL MARKETS AND SERVICES ACT 2007 ARRANGEMENT OF SECTIONS PART I PRELIMINARY Section 1. Short title, commencement and application 2. Interpretation 3. Associated person 4. Interest in securities 5. Prescription of securities, derivatives and capital market products 6. Consequences of agreements becoming derivatives PART II SECURITIES AND DERIVATIVES MARKETS Division 1 Markets 7. Establishment of stock markets or derivatives markets Division 2 Market institutions Subdivision 1 — Exchanges and exchange holding company 8. Power of Minister to approve stock exchange or derivatives exchange 4 Laws of Malaysia ACT 671 Section 9. Commission to approve amendment to rules of stock exchange, derivatives exchange or approved clearing house 10. Appointment of directors of exchange holding company, stock exchange and derivatives exchange 11. Duties of exchange 12. Withdrawal of approval of exchange 13. Effect of withdrawal of approval of an exchange Subdivision 2 — Exchange holding company 14. Exchange holding company 15. Power of Minister to approve exchange holding company 16. Annual Regulatory Report on compliance with ongoing requirements 17. Special report by exchange holding company about compliance with ongoing requirements 18. Withdrawal of approval of exchange holding company 19. Effect of withdrawal of approval of exchange holding company 20. Listing of exchange holding company on stock exchange 21. Duties of exchange holding company 22. Risk Management Committee of exchange holding company 23. Restriction on exchange holding company from reducing its shareholding 24. Disposal and acquisition of assets, etc. 25. Control in shareholding of exchange holding company 26. Power to issue directions 27. Closure of stock exchange or derivatives exchange 28. Power of Commission in respect of stock exchange or derivatives exchange 29. Provision of assistance to Commission 30. Suspension order relating to stock exchange, derivatives exchange, approved clearing house or central depository 31. Power of Commission upon contravention of section 23, 24 or 25 Capital Markets and Services 5 Subdivision 3 — General Section 32. (Deleted) 33. (Deleted) Subdivision 4 — Recognized market 34. Recognized market operator 35. Application for registration 36. Duties of recognized market operator 36A. Withdrawal of registration 36B. Change in status Subdivision 5 — Approval of clearing house 37. Establishing or operating a clearing facility 38. Power of Commission to approve clearing house 39. Withdrawal of approval 40. Effect of withdrawal of approval Subdivision 5A — General 40A. Interpretation 40B. Publication of notice of suspension of trading or closure 40C. Rights of stock exchange, derivatives exchange or approved clearing house not to be affected by laws relating to contracts 40D. Power of Commission to appoint statutory manager 40E. Assistance and access to information, etc. 40F. Remuneration, expenses and indemnity of statutory manager 40G. Annual fees payable 40H. Non-application of Companies Act 1965 6 Laws of Malaysia ACT 671 Subdivision 6 — Modifications to the law of insolvency and miscellaneous provisions relating to the operations and procedures of the approved clearing house Section 41. Interpretation 42. Default rules 43. Default proceedings of approved clearing house to take precedence over law of insolvency 44. Supplementary provisions as to default proceedings 45. Duty to report on completion of default proceedings 46. Net sum payable on completion of default proceedings 47. Disclaimer of property, rescission of contracts, etc. 48. Adjustment to prior transactions 49. Right of relevant office-holder to recover certain amounts arising from certain transactions 50. Law of insolvency in other jurisdictions 51. Participant to be a party to certain transactions as principal 52. Securities or derivatives delivered to an approved clearing house 53. Securities transfers in settlement 54. Purchase and sale of securities 55. Immunity 56. Preservation of rights, etc. 57. Exemption from regulations on reporting of substantial shareholding and Division 3A of the Companies Act 1965 Subdivision 7 — Enforceability of netting provisions under qualified capital market agreement 57A. Interpretation 57B. Enforceability of rights under netting provision 57C. Application of this Part Capital Markets and Services 7 PART III CAPITAL MARKETS SERVICES Division 1 Licensing and regulation Section 58. Requirement for Capital Markets Services Licence 59. Requirement for Capital Markets Services Representative’s Licence 59A. Civil liability of principal for acts of representative 60. Application for grant of licence 61. Grant of licence 62. Power of Commission to impose conditions or restrictions on licences 63. Fees 64. Grounds for refusal for the grant of Capital Markets Services Licence 65. Grounds for refusal for the grant of Capital Markets Services Representative’s Licence 66. Power of Commission to enquire into transactions in respect of securities and derivatives 67. Minimum financial requirements 68. (Deleted) 69. Variation or transfer of licence 70. (Deleted) 71. False statements in relation to application for grant or variation of licence 72. Revocation and suspension of licence 73. Effect of revocation, suspension or cessation of licence, etc. 74. Notification of disqualifying event 75. Appointment, election and nomination of directors and chief executive of licensed person, etc. 76. Registered persons 76A. Registration of persons providing capital market services 77. Register of licence holders 8 Laws of Malaysia ACT 671 Section 78. Notification of change of particulars 79. Publication of names and addresses 80. Appeals 81. Surrender of licence Division 2 Records 82. Application of this Division 83. Register of securities 84. Notice of particulars to Commission 85. Defence to a prosecution 86. Production of register 87. Particulars of financial journalists 88. Commission may supply copy of the extract of a register Division 3 Conduct of business Subdivision 1 — General 89. (Deleted) 90. Issue of contract notes 91. Disclosure of certain interests in securities 92. Recommendations by licensed person 92A. Information to be given to a person who invests in capital market product 93. Priority given to client’s order 94. (Deleted) 95. (Deleted) 96. Additional obligations on licensed persons Capital Markets and Services 9 Subdivision 2 — Securities Section 97. Dealings as principal 98. Shortselling Subdivision 3 — Standardized derivatives 99. Trading in standardized derivatives on own account 100. (Deleted) 101. Trading limits in standardized derivatives 102. (Deleted) 103. (Deleted) 104. Sequence of sending and carrying out of orders 105. Trading in standardized derivatives outside Malaysia 106. (Deleted) 107. Failure to comply with sections 99, 101 and 104 Subdivision 4 — Over-the-counter derivatives 107A. Interpretation 107B. Approval of trade repository 107C. Application for granting approval 107D. Withdrawal of approval 107E. Appointment of directors or chief executive officer of an approved trade repository 107F. Duty to maintain secrecy 107G. Permitted disclosure 107H. Powers of Commission to issue directions 107I. Rules of a trade repository 107J. Reporting obligation 10 Laws of Malaysia ACT 671 Division 4 Books, client’s assets protection and audit Subdivision 1 — Books Section 108. Keeping of books and furnishing of returns Subdivision 2 — Treatment of client’s assets in respect of securities 109. Application of this Subdivision 110. Interpretation 111. Certain monies received by holder of Capital Markets Services Licence to be paid into trust account 112. Client’s assets other than monies received by holder of Capital Markets Services Licence 113. Withdrawal of monies from trust account 114. Holder of Capital Markets Services Licence to supply copies of entries in books 115. Claims and liens not affected Subdivision 3 — Treatment of client’s assets in respect of derivatives 116. Application of this Subdivision 117. Interpretation 118. Segregation of client’s assets 119. Monies in segregated account not available for payment of debt, etc. Subdivision 4 — Treatment of client’s assets in respect of fund management 120. Application of this Subdivision 121. Interpretation 122. Operation of trust account 123. Client’s assets 124. Right to copies of book entries, inspection of contract notes, etc Capital Markets and Services 11 Subdivision 5 — Range of actions Commission may take to protect clients under certain circumstances Section 125. Commission’s actions to protect client’s assets, etc. Subdivision 6 — Audit 126. Appointment of auditor 127. Relevant person to lodge auditor’s report 128. Duties of auditor 129. Duty of relevant person or its directors or officers to furnish information 130. Power of Commission to appoint independent auditor, etc. 131. Power of Commission to appoint independent auditor, etc., upon application 132. Independent auditor, etc., to report to Commission 133. Powers of independent auditor appointed by Commission 134. Prohibition against communication of certain matters by independent auditors, etc., and employees 135. Books, accounts and records to be produced upon demand 136. Penalty for destroying, concealing or altering books or sending books or property out of Malaysia 137. Rights of exchange to impose obligations Division 5 Vesting 138. Interpretation 139. Application to court to facilitate agreement or arrangement for transfer of the whole or part of business of licensed person PART IIIA PRIVATE RETIREMENT SCHEME INDUSTRY Division 1 Preliminary 12 Laws of Malaysia ACT 671 Section 139A. Interpretation Division 2 Private retirement scheme Subdivision 1 — Private retirement scheme administrator 139B. Requirement for approval to establish or operate a private retirement scheme administrator 139C. Application for approval 139D. Refusal to approve 139E. Appointment of directors of a private retirement scheme administrator 139F. Withdrawal of approval 139G. Effect of withdrawal 139H. Duties and responsibilities of a private retirement scheme administrator 139I. Terms of reference and rules of a private retirement scheme administrator 139J. Monies received by a private retirement scheme administrator 139K. Accounts and reports in respect of a private retirement scheme administrator 139L. Power of Commission to take action in respect of private retirement scheme administrator 139M. Duty to take reasonable security measures 139N. Duty to maintain secrecy 139O. Permitted disclosure Subdivision 2 — Private retirement scheme provider 139P. Requirement for approval to establish, offer or provide a private retirement scheme 139Q. Application for approval 139R. Refusal to approve 139S. Withdrawal of approval 139T. Effect of withdrawal 139U. Notification of disqualifying event Capital Markets and Services 11 Subdivision 3 — Private retirement scheme Section 139V. Application for approval of a private retirement scheme 139W. Refusal to approve 139X. Withdrawal