1 Depository Model 6 Bursa Malaysia

1111thth ACG Cross Training Seminar ACG Cross Training Seminar

33rdrd & 4 & 4thth July 2009 July 2009

Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or reproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor the reproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor the

Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.

It is your responsibility to verify any information before using or relying on it.It is your responsibility to verify any information before using or relying on it.

Depository ModelDepository Model

AGENDA

IntroductionIntroduction

Legal FrameworkLegal Framework

Duties of Bursa Malaysia DepositoryDuties of Bursa Malaysia Depository

CDS UsersCDS Users

Account StructureAccount Structure

Difference Between Direct & Indirect CDS AccountDifference Between Direct & Indirect CDS Account

Merits For Direct & Indirect CDS AccountMerits For Direct & Indirect CDS Account

Demerits of Direct & Indirect CDS AccountDemerits of Direct & Indirect CDS Account

Depositories ServicesDepositories Services

DEPOSITORY MODEL

INTRODUCTION

Bursa Malaysia Depository Sdn Bhd was established in April 1990 and commenced operations in November 1992

Wholly-owned subsidiary of Bursa Malaysia Berhad

Authorised capital of RM50 million and paid up capital of RM25 million

Completed immobilization of all equities & non-equities securities listed on the stock exchange in June 1997

DEPOSITORY MODEL

LEGAL FRAMEWORK

Securities Industry (Central Depositories) Act 1991 {SICDA}.

SICDA empowers the Central Depository to draw up the rules of Bursa Malaysia Depository and the issuance of any directions.

Bursa Malaysia Depository Nominess Sdn Bhd is deemed as a bare trustee

Share registrar to issue certificate in the name of Bursa Malaysia Depository Nominees Sdn Bhd

Undeposited securities not to be traded on stock exchange or utilised to settle market trade

DEPOSITORY MODEL

SALIENT FEATURES IN CDS

Account maintained at client level and must be under the Account maintained at client level and must be under the

name of beneficial owner or Authorised Nominees name.name of beneficial owner or Authorised Nominees name.

Account are tagged with Stock Broker where the account was Account are tagged with Stock Broker where the account was

openedopened

Mandatory deposit - Mandatory deposit - 100% immobilisation rate100% immobilisation rate

Transfer of Securities within the “Approved Reasons to Transfer of Securities within the “Approved Reasons to

Transfer”Transfer”

No Withdrawal of securitiesNo Withdrawal of securities

DEPOSITORY MODEL

CDS USERS

Provides depository services to the following users through the Central Depository System (CDS):-

Authorised Depository Agent (ADA)

Authorised Direct Member (ADM)

Issuer

Issuing house

Share registrar

Account holder / depositor

Clearing House

DEPOSITORY MODEL

CDS USERS

DEPOSITORY MODEL

Bursa MalaysiaBursa Malaysia

Securities BerhadSecurities Berhad

Bursa Malaysia Securities Bursa Malaysia Securities Clearing BerhadClearing Berhad

• Record of DepositorsRecord of Depositors

• Corporate ExerciseCorporate Exercise

• Allotment DetailsAllotment Details

• Certificate in the name of Bursa Malaysia Depository Certificate in the name of Bursa Malaysia Depository Nominees Sdn Bhd Nominees Sdn Bhd

ACCOUNT STRUCTURE

Direct Account :

held directly in the name of individual, corporate body, institutional investors and etc.

Indirect Account :

held in the name of nominees where the beneficial owner details are captured

one nominee account one beneficial owner

nominees account can only be opened by Authorised Nominees i.e. bank/ broker/trust companies

Certain relaxation was introduced whereby nominee company can operate omnibus account effective 21 October 2005.

DEPOSITORY MODEL

Direct Account Indirect Account

Account holder open the account with the Brokers i.e. ADA under his name directly

i.e.

John Smith

Depositor open the account with Custodians Bank or Brokers under the name of a nominee company with the depositors as the beneficial owner

i.e.

ABC Nominees (Tempatan) Sdn Bhd

For John Smith

In direct account, the account holder is the owner of the securities in the CDS account. The depositor will be registered as the shareholder

In indirect account, the nominee company is the owner of the securities in the CDS account. The name of the nominee company will be registered as the shareholder.

DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL


Dividend entitlement will be directly mailed to the depositor, while entitlement in shares will be credited directly to the account

Dividend entitlement will be received by the nominee company that in turn will redirect these entitlement to the beneficial owner

Account opened for its own investment and deal with securities using this direct account

Account opened for the following purpose :

1. custodian

2. margin or loan facilities purpose

Requires supporting documents for opening of direct CDS account

Does not require extensive supporting document

The depositor is the operator of the account

The nominee company is the operator of the account

DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL


• Depositors are in a principal relationship with Bursa Depository

• Confidentiality of depositor shareholdings is protected whereby depositor’s share holding is not known to third party

• The ownership of CDS account is transparent

• The asset of depositor and stockbroker i.e. ADA is clearly segregated

• Depositor received his/her annual reports or dividends payout directly from the registrar/issuer

• Lesser documentation to operated such account

• Do not require to be present in person to perform depository transactions

• Cost savings to Bursa Depository arising from the following :

- storage cost due to less documentation to stored

- postage and other related stationeries on mailing of statements/notices as these notifications are send electronically to nominee company

MERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL


• The depositors shareholdings is unaffected in the event the brokers is declared bankrupt

• Depositors received notification directly from Bursa Depository in the event of any changes to its account particulars or movement of securities

• CDS statement of account are issued directly to the depositor

MERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL


• More documentation to operate such account

• To be physically present in person to perform depository related transactions

• Higher operational and maintenance cost for Bursa Depository :

- storage cost for storing documents

- postage and stationeries cost for sending out statements and notices to depositors

• The nominee company is in a principal relationship with Bursa Depository and the beneficial owner details are merely for information

• Depositor shareholding is known to third party

• Depositor do not receive any notification or CDS statement of account directly from Bursa Depository

• Delay in receiving dividend entitlement

• Does not receive notification or annual report directly from the Issuer

DEMERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL


• Incurred additional cost for services Incurred additional cost for services provided by the nominee companyprovided by the nominee company

• Implication to depositor Implication to depositor shareholdings if the nominee shareholdings if the nominee company is declared bankruptcompany is declared bankrupt

• Ownership of account is not very Ownership of account is not very clear.clear.

DEMERITS OF DIRECT & INDIRECT ACCOUNT

DEPOSITORY MODEL

DEPOSITORY’S SERVICES

Core services provided are as follows:-

Account openings

Deposit of securities

Transfer of securities

Withdrawal of securities

Initial Public Offerings (IPOs)

Corporate exercises

DEPOSITORY MODEL

THANK YOUTHANK YOU

DEPOSITORY MODEL

If you need further information or clarification please contact the following:

Zailan Azhar Baharin

Bursa Malaysia Berhad

2nd Floor, Exchange Square

Bukit Kewangan

50200 Kuala Lumpur

Tel: 603-2034 7750

Email: [email protected]

Website : www.bursamalaysia.com

mailto:[email protected]


Opening of Individual & Corporate CDS Accounts

DEPOSITORY MODEL

Account Management

Balance Enquiry , Enquiry by Name, Enquiry by investor’s IDBalance Enquiry , Enquiry by Name, Enquiry by investor’s ID

Updating of CDS Account ParticularsUpdating of CDS Account Particulars

Suspension/Release Suspension of Account, particular stock or Suspension/Release Suspension of Account, particular stock or

certain balances in CDS accountcertain balances in CDS account

Closing of AccountClosing of Account Consolidation of Statement of AccountConsolidation of Statement of Account Inactive / Dormant AccountInactive / Dormant Account Ad-hoc Statement of Account / Monthly StatementAd-hoc Statement of Account / Monthly Statement End of Day Processing will generate notices to be mailed to the End of Day Processing will generate notices to be mailed to the

relevant depositor on changes to their account particulars / relevant depositor on changes to their account particulars / suspension/release suspension / changes in their account statussuspension/release suspension / changes in their account status


DEPOSITORY MODEL


Deposit – Acceptance and Rejection

DEPOSITOR

DEPOSITORY MODEL

Deposit of Securities

Provisional credit is accorded on deposit day itselfProvisional credit is accorded on deposit day itself

Depositor able to utilise the provisional credit for trade settlement Depositor able to utilise the provisional credit for trade settlement

during prescribed period of 1 monthduring prescribed period of 1 month

Registrar will authenticate the certificate deposited and revert to Registrar will authenticate the certificate deposited and revert to

Depository within 7 market daysDepository within 7 market days

End of Day processing will generate notices to depositor in event End of Day processing will generate notices to depositor in event

any deposit is rejectedany deposit is rejected


DEPOSITORY MODEL


DEPOSITOR

DEPOSITOR

Transfer – Acceptance and Rejection

DEPOSITORY MODEL

Transfer of Securities

Transfer of securities is real timeTransfer of securities is real time

Transfer must be within the “Approved Reasons for Transfer”Transfer must be within the “Approved Reasons for Transfer”

Exception reports are generated to monitor transfer in CDSException reports are generated to monitor transfer in CDS

End of Day Processing will generate notices to the relevant transferor’s End of Day Processing will generate notices to the relevant transferor’s

and transferee’s and transferee’s


DEPOSITORY MODEL

Withdrawal of Securities

DEPOSITOR ADA CD Registrar

Withdrawal request

Ack.

Document

Confirmation

Registration

Confirm/Reject

Withdrawal Notice from

Bursa Malaysia Depository Sdn Bhd

Deliver Certificate in depositor’s name


DEPOSITORY MODEL

Withdrawal of Securities

Only permitted for “Delisted” securitiesOnly permitted for “Delisted” securities

Certificate will be issued and mail directly to the depositor within 14 Certificate will be issued and mail directly to the depositor within 14

market days by the share registrarmarket days by the share registrar

End of processing will generate notices to the relevant depositors on the End of processing will generate notices to the relevant depositors on the

successful withdrawal requestsuccessful withdrawal request


DEPOSITORY MODEL


APPLICANTISSUING HOUSE

BURSA DEPOSITORY

Submit application

yes

confirmationmail notice of allotment to successful applicant

Submit detail of successful applicant

Verify details

Credit the applicant’s CDS account

Rectify & Resubmit no

ISSUING HOUSE


DEPOSITORY MODEL


Mandatory to have a CDS account to participate in Initial Public OfferingsMandatory to have a CDS account to participate in Initial Public Offerings

Apply an IPO by completing the prescribed Application Form or via Apply an IPO by completing the prescribed Application Form or via

“Electronic Share Application” (ESA) or via Internet Application“Electronic Share Application” (ESA) or via Internet Application

ESA able to apply via Automated Teller machineESA able to apply via Automated Teller machine

CDS account of successful applicant will be credited 2 market days CDS account of successful applicant will be credited 2 market days

before listingbefore listing


DEPOSITORY MODEL

Corporate Action

SHARE REGISTRAR

BURSA DEPOSITORY

Provide ROD

yes

confirmation

mail notice of allotment to successful applicant

will mail entitlement

i.e. dividend

Verify details

Rectify & Resubmit

no

SHAREHOLDER ACCOUNT HOLDER

Credit into CDS account

for entitlement in shares i.e. Bonus/Rights, submit details to Bursa Depository

SHARE REGISTRAR


DEPOSITORY MODEL

Corporate Action

Bursa Depository provide Record of Depositors (ROD) as at book Bursa Depository provide Record of Depositors (ROD) as at book

closure date of a corporate action to issuer/share registrar to ascertain closure date of a corporate action to issuer/share registrar to ascertain

the entitlement to be distributedthe entitlement to be distributed

All entitlement in shares to be credited to the depositors accountAll entitlement in shares to be credited to the depositors account

Dividend is distributed to share holder by the registrar/issuer by mailing Dividend is distributed to share holder by the registrar/issuer by mailing

to them or crediting their bank accountto them or crediting their bank account


DEPOSITORY MODEL

1 Depository Model 6 Bursa Malaysia

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