SECURITIES COMMISSION GUIDELINES ON ADVERTISING

Transcription

1 SECURITIES COMMISSION GUIDELINES ON ADVERTISING Purpose The purpose of these guidelines is to set out the policy of the Securities Commission (SC) in respect of advertising in relation to securities offerings which is regulated under section 50 of the Securities Commission Act 1993 (SCA). A. Pre-prospectus advertising 1. Subsection 50(4) of the SCA provides that in relation to pre-prospectus advertising, notices which seek to carry out any of the acts referred to in subsection 50(1) will (a) require the consent of the Commission and (b) be required to contain no more than the following information (i) the name of the issuer of securities; (ii) in the case of a unit trust scheme or prescribed investment scheme, the name of the unit trust scheme or the prescribed investment scheme, and the names of the trustee and the management company in relation to the unit trust scheme or prescribed investment scheme, as the case may be; (iii) a concise statement of the general nature of the main business or undertaking or proposed main business or undertaking of the issuer; (iv) the names, addresses and, where appropriate, occupations of the directors or proposed directors; SECURITIES COMMISSION Page 1 of 7

2 (v) the names and addresses of stockbrokers, sharebrokers, underwriters and principal adviser in relation to the proposed issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, securities; (vi) in the case of debentures, the name and address of the trustee for debenture holders; (vii) a brief description of the listing status of the corporation, unit trust scheme or prescribed investment scheme on any stock exchange or other similar exchange outside Malaysia, or a statement that it is intended to apply for permission to list the corporation, unit trust scheme or prescribed investment scheme on any stock exchange or other similar exchange outside Malaysia but no assurance has been given that the corporation, unit trust scheme or prescribed investment scheme, as the case may be, will be listed; (viii) the fact that a prospectus is in the course of preparation and that an issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, securities is proposed, together with a brief indication of the nature and number of securities and of the possible timing of the issue of the prospectus; (ix) in the case of a unit trust scheme or prescribed investment scheme, a description of the persons from whom the units are available for purchase or subscription; and (x) such other information or matters which the SC may specify in writing 2. These pre-prospectus advertising restrictions essentially require that the SC s consent be obtained before any information can be disseminated in relation to any proposed offering of securities. 3. The restrictions in advertising contained in the SCA seek to ensure that the prospectus is the primary basis of investment decisions. Pre-prospectus advertising campaigns could cause investment decisions to be made before a prospectus is available. Once an investment decision is made, the influence of a subsequent prospectus is diminished. SECURITIES COMMISSION Page 2 of 7

3 4. However, the SC recognises the need for issuers to be able to carry out the ordinary preparatory work associated with a proposed offer of securities in the following cases : Presentations Announcement by underwriters upon being given the mandate by issuers to act as underwriters of the proposed issue Announcements made on the joint signing of underwriting agreements Concise statements 5. In addition, it is not intended for such pre-prospectus restrictions to inhibit the free flow of non-promotional information in order to raise public awareness of a securities offering. 6. In granting SC s blanket consent in relation to the abovementioned activities, it is crucial that these activities should not be conducted in a way that may encourage retail investors to make investment decisions without the benefit of a prospectus. Issuers therefore should not attempt to induce such investors into investing in proposed offers of securities without adequate disclosure being made. For this reason, the prospectus, rather than the advertising campaign of the issuer, should be treated as the source of all relevant information relating to the proposed issue or offer of securities. 7. While subsection 50(4) states that consent of the SC is required for pre-prospectus notices, the consent will be deemed to be given in the situations mentioned in paragraphs 1-4 above where the following conditions are met: SECURITIES COMMISSION Page 3 of 7

4 (a) Presentations i. The presentations, both oral and written, are to be made by the issuer. ii. Any other person (such as the adviser or the lead manager) making the presentation must be authorised by the issuer to conduct the presentation. iii. The relief is not available to licensed dealers, exempt dealers, licensed investment advisers, licensed fund managers, exempt fund managers and their representatives acting on their own behalf. iv. The presentations may be attended only by the categories of persons set out in Schedule 2 of the SCA, members of the press and financial analysts. v. Any written material circulated at these presentations should contain no more than the information set out in subsection 50(4)(b)(i) to (ix) of the SCA. vi. Information provided in oral form may include promoters profiles, history of business, utilisation of funds, statistics about the IPO (including Proforma Net Tangible Assets (NTA), Earnings Per Share (EPS), Price-Earning (PE) ratio etc.) and historical performances of the company for the last five years. (b) Announcements made upon obtaining underwriting mandate i. The persons who can make such announcements are the parties to the underwriting agreement. ii. The announcements should pertain to the agreements which are to be or which have been signed. iii. Any written information relating to the offer should be confined to the information set out in paragraphs 50(4)(b)(i) to (ix) of the SCA. (c) Announcements made upon the joint signing of underwriting agreements i. The persons who can make such announcements are the parties to the agreement. SECURITIES COMMISSION Page 4 of 7

5 ii. The announcements should be confined to the agreements which are to be or which have been signed. iii. Any written information relating to the offer should be confined to the information set out in paragraphs 50(4)(b)(i) to (ix) of the SCA. (d) Concise statements Any notice which refers to a proposed issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, securities which contains no more than the information set out in paragraphs 50(4)(b)(i) to (ix) of the SCA is allowed to be issued and will be deemed to have obtained the prior consent of the SC. B. Post-prospectus advertising 8. In relation to post-prospectus advertising, subsection 50(5) of the SCA allows notices that are issued or published after the registration of a prospectus which - (a) state that a prospectus in relation to any securities has been registered; (b) specifies the date of the prospectus; (c) specifies where a copy of the prospectus can be obtained; (d) states that any issue of securities to which the prospectus relates will only be made on receipt of a form of application referred to in and accompanying a copy of the prospectus; and (e) states such other information or matters which the SC may specify in writing. 9. Any information that is disseminated after the registration of the prospectus is allowed so long as the information is contained in the prospectus. However, the condition is that in the interest of investor protection, an issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase, securities must be accompanied by a prospectus together with a set of the application form to be completed by the investor. SECURITIES COMMISSION Page 5 of 7

6 C. Post balloting speeches 10. As far as post-prospectus advertisements are concerned, announcements by merchant bankers or issuers as to whether the issue was under-subscribed or oversubscribed and the extent of the under-subscription or over-subscription is allowed to be made without having to obtain the SC s prior approval. D. Restrictions in advertising in relation to sophisticated investors 11. As a general rule, section 50 of the SCA which contains restrictions in advertising is not intended to apply to sophisticated investors (please refer to opening words in Schedules 2 and 3 of the SCA). Therefore, issuers may be able to carry out certain activities in preparation for or in view of a placement exercise without being in breach of the advertising restrictions under section 50 of the SCA provided that the the notices are directed towards the persons who are set out in Schedules 2 or Schedule 3 of the SCA. For example, in the case of a bond issue, where the bonds are issued on a when issued basis and the issuer or the adviser/lead manager wants to obtain a certain degree of feedback from potential investors in order to determine the level of pricing or potential investors level of commitment, such an exercise, if directed at Schedule 2 or Schedule 3 categories of investors, will not be regarded as following within the advertising restrictions under section 50 of the SCA. E. Reports that relate to the affairs of listed corporation The restrictions in relation to advertising set out in subsection 50(1) of the SCA do not apply to a number of situations which include those set out in paragraph 50(7)(a) of the SCA which states as follows : SECURITIES COMMISSION Page 6 of 7

7 A report that relates to the affairs of a corporation, a unit trust scheme or a prescribed investment scheme, that is listed on a stock exchange which is or has been published only to that stock exchange by or on behalf of the corporation, unit trust scheme or prescribed investment scheme. Therefore, it should be noted that announcements, reports and notices which are made to the relevant stock exchange in compliance with the listing requirements of such exchange for purposes of dissemination to the public will be regarded as exempt from the advertising restrictions under section 50 of the SCA. 18 September 2000 SECURITIES COMMISSION Page 7 of 7