Prospectus Guidelines issued by SC (August 2009)

Information Summary, Investor warning Details of Offering Risk Factors Information about Corporation and Group Information on Shareholders, Promoters,

Directors, Senior Management Approval and Conditions Related Party Transactions / Conflict of

Interests

Prospectus Guidelines issued by SC (August 2009)

Financial Reports Accountants Report Experts Report Director’s Report Consents Documents Available for Information

Companies Act 1965

Sec 46 Companies Act – civil liability for misstatements in prospectus

Director, promoter or any other person authorized to issue prospectus shall be liable to any person for any loss or damage suffered as a result of any untrue statement or for any wilful non-disclosure in the prospectus

Companies Act 1965

Sec 47 – Criminal Liability for misstatements in prospectus

Any person who authorized or caused the issue of the prospectus where there was any untrue statement or material wilful non-disclosure

Liable to five years imprisonment or fine of RM100,000 or both.

Equity Guidelines issued by SC – August 2009

Sec 1.01 - The SC will consider the following proposals -

(a) Issues and offerings of equity securities;

(b) Listings of corporations and quotations of securities on the main market of Bursa Malaysia Securities Bhd (Bursa Securities) (Main Market);

Equity Guidelines

Paragraph 1.06

The principles are premised on the provision of investor protection and maintenance of investor confidence, as well as the need to protect the reputation and integrity of the capital market. The principles include the following:

(a) Issuers must be suitable for listing and have minimum standards of quality, size, operations, and management experience and expertise;

Equity Guidelines

Para 1.06

(b) Issuers and their advisers must make timely disclosure of material information and ensure the accuracy and completeness of such information to enable investors to make an informed assessment of the issuer, the proposals and the securities being offered;

(c) Issuers and their directors, officers and advisers must maintain the highest standards of corporate governance, integrity, accountability and responsibility;

Equity Guidelines

Para 1.06

(d) Directors of an issuer must act in the interests of shareholders as a whole, particularly where a related party has material interest in a transaction entered into by the issuer;

(e) All holders of securities must be treated fairly and equitably and must be consulted on matters of significance; and

(f) Proposals undertaken by issuers must not undermine public interests.

Bursa Malaysia Listing Requirements – Chap 6

Rule 6.03 - A listed issuer must not issue any shares if the nominal value of those shares, when aggregated with the nominal value of any such shares issued during the preceding 12 months, exceeds 10% of the nominal value of the issued and paid-up capital of the listed issuer

Bursa Malaysia Listing Requirements – Chap 6

Rule 6.06 - A listed issuer must ensure that it or any of its subsidiaries does not issue shares or other convertible securities to the following persons unless shareholders in general meeting have approved the specific allotment to be made to such persons:

(a) a director, major shareholder or chief executive of the listed issuer or a holding company of the listed issuer); or

(b) a person connected with an interested director, interested major shareholder or interested chief executive

Allotment

Sec 48 – Prohibition of allotment unless minimum subscription received

No allotment shall be made of any shares Offered to the public or offered for

subscription or purchase or where an invitation to subscribe for or purchase shares unless the minimum subscription has been subscribed and the sum payable for the subscription has been received.

Underwriting

Underwriting is the arranging for a firm / corporate body (the managing underwriter) to subscribe whether absolutely or conditionally for the shares or procure or agree to procure subscription for the shares about to be issued / offered

Usually, the managing underwriter is a investment bank (who will arrange sub-underwriting – which may be issuing houses, other investment banks, stockbrokers)

Underwriting

Purpose of underwriting

Usually there will be an underwriting agreement entered into to provide for the rate of commission and the various aspects of the underwriting

Underwriting and Commission

Sec 58 of the CA - A company may pay a commission to any person in consideration of the underwriting if –

(a)- the payment is authorized by the articles

(b)- the commission does not exceed 10% of the price at which the shares are issued

(c)- the number of shares agreed to be underwritten has been disclosed

Questions and Answers

Flotation

Question What is the responsibility for negligent

misstatements in respect of prospectus and who are liable for these?

Answer 236 of the CMSA 2007 - the prospectus

must contain all such information that investors and their professional advisers would need for the purpose of making an informed assessment in relation to the assets and liabilities, financial position, profits and losses and prospects of the issuer

Flotation

236 of the CMSA, e.g. directors, promoters, and advisers have the primary obligation for the content of prospectuses.

Section 246 of the CMSA imposes criminal liability for false or misleading statements or material omissions in the prospectus.

Duty on promoters or directors of the corporation or any other person who is a party to the preparation of the prospectus or any of its relevant portions

Flotation

Question Omega Berhad wishes to issue shares to

one of its major shareholder. What are the approvals required?

Answer S. 132D of the CA- in respect of issuance

of shares by directors, approval of the company in general meeting is required

Rule 6.06 of the BMLR – approval of the shareholders in general meeting.

End ofChapter 4 (File 2)

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