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147 Guidelines for the contents of prospectuses

Guidelines for the contents of prospectuses

Section 39 of the Act provides guidelines for the contents of prospectuses.

Section 39(1) of the Act it is stated that to comply with the requirements of this Act a prospectus –

(a) shall be printed in type of a size not less than the type known as eight point Times unless the Registrar, before the issuing, advertising, circulating or distributing of the prospectus in Malaysia, certifies in writing, that the type and size of letters are legible and satisfactory;

(b) shall be dated and that date shall, unless the contrary is proved, be taken as the date of issue of the prospectus;

(c) shall as to one copy be lodged with the Registrar and shall state that a copy of the prospectus has been so lodged with and registered by the Registrar and shall also state immediately after that statement that the Registrar takes no responsibility as to its contents;

(d) shall subject to Part III of the Fifth Schedule state the matters specified in Part I of that Schedule and set out the reports specified in Part II of the Schedule;

(e) shall, where the persons making any report specified in Part II of that Schedule have made therein, or have, without giving the reasons, indicated therein, any such adjustments as are mentioned in paragraph 31 of that Schedule, have endorsed thereon or attached thereto, a statement by those persons setting out the adjustments and giving the reasons therefore;

(f ) shall contain a statement that no shares or debentures or that no shares and debentures (as the case requires) shall be allotted on the basis of the prospectus later than six months after the date of the issue of the prospectus;

(g) shall, if it contains any statement made by an expert or contains what purports to be a copy of or extract from a report, memorandum or valuation of an expert, state the date on which the statement, report, memorandum or valuation was made and whether or not it was prepared by the expert for incorporation in the prospectus;

(h) shall not contain the name of any person as a trustee for holders of debentures or as an auditor or a banker or an advocate or a stock broker or share broker of the corporation or proposed corporation or for or in relation to the issue or proposed issue of shares or debentures unless that person has consented in writing before the issue of the prospectus to act in that capacity in relation to the prospectus and, in the case of a company or proposed company, a copy verified as prescribed of the consent has been lodged with the Registrar,

(i) shall, where the prospectus offers shares in or debentures of a foreign company incorporated or to be incorporated, in addition contain particulars with respect to –

(i) the instrument constituting or defining the constitution of the company;

(ii) the enactments or provisions having the force of an enactment by or under which the incorporation of the company was effected or is to be effected;

(iii) an address in Malaysia where the instrument, enactments or provisions or certified copies thereof may be inspected;

(iv) the date on which and the place where the company was or is to be incorporated; and

(v) whether the company has established a place of business in Malaysia and, if so, the address of its principal office in Malaysia; and

(j) shall, where the prospectus offers shares, notes or other marketable securities which have been specified by a stock exchange as prescribed securities under section 14 of the Securities Industry (Central Depositories) Act 1991, state that such shares, notes or marketable securities have been so prescribed and that applicants are required to have securities accounts when making their applications.

 

(2) Subparagraph (1)(i)(i), (ii) and (iii) of subsection (1) shall not apply in the case of prospectus issued more than two years after the day on which the company is entitled to commence business and in the application to a foreign company of Part 1 of the Fifth Schedule for the purposes of subsection (1), paragraph 2 of that Part of that Schedule shall have effect as if a reference to that constitution of the company were substituted for the reference to the articles.

 

(3) A condition requiring or binding an applicant for shares in or debentures of a corporation to waive compliance with any requirement of this section, or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus shall be void.

 

(4) Where a prospectus relating to any shares in or debentures of a corporation is issued and the prospectus does not comply with this Act, each director of the corporation and other person responsible for the prospectus shall be guilty of an offence against this Act.

The penalty for an offence against this section is imprisonment for five years or thirty thousand ringgit.

 

(5) In the event of non-compliance with or contravention of any of the requirements set out in this section, a director or other person responsible for the prospectus shall not incur any liability by reason of the non-compliance or contravention, if –

(a) as regards any matter not disclosed, he proves that he was not cognizant thereof;

(b) he proves that the non-compliance or contravention arose from an honest mistake on his part concerning the facts; or

(c) the non-compliance or contravention was in respect of matter which in the opinion of the court dealing with the case was immaterial or was otherwise such as ought, in the opinion of that court, having regard to all the circumstances of the case, reasonably to be excused.

 

(6) In the event of failure to include in a prospectus a statement with respect to the matters specified in paragraph 17 of the Fifth Schedule no director or other person shall incur any liability in respect of the failure unless it is proved that he had knowledge of the matters not disclosed.

 

(7) Nothing in this section shall limit or diminish any liability which any person may incur under any rule of law or any written law or under this Act apart from subsection (4).

 

Section 39B of the Act provides relief from the requirements as to form and contents of a prospectus.

Section 39B(1) further states that without prejudice to subsection 37(2), the Registrar may, on the application in writing by any person referred to under subsection 37(1), make an order relieving him or approving any variation from the requirements of this Act relating to the form and content of a prospectus.

(2) In making an order under subsection (1), the Registrar may impose such terms and conditions as he deems fit.

 

(3) The Registrar shall not make an order under subsection (1) unless he is satisfied, having considered the nature and objectives of the corporation, that –

(a) such relief or variation shall not cause the non-disclosure to the public of information necessary for the assessment of the investment in the shares or debentures of the corporation, as the case may be; and

(b) compliance with the requirements, for which such relief or variation is applied for, would impose unreasonable burden on the applicant.

 

(4) A prospectus shall be deemed to have complied with all the requirements of this Act relating to the form and content of a prospectus if it is issued in compliance with an order made under subsection (1).

Certain advertisements can be deemed to be prospectus. Section 40 (1) of the Act states that every advertisement offering or calling attention to an offer or intended offer of shares in or debentures of a corporation or proposed corporation to the public for subscription or purchase shall be deemed to be a prospectus (and all written laws and rules of law as to the contents of prospectuses and as to liability in respect of statements in and omissions from prospectuses or otherwise relating to prospectuses shall apply and have effect accordingly) if it contains any information or matter other than the following:

(a) the number and description of the shares or debentures concerned;

(b) the name and date of registration of the corporation and its paid up share capital;

(c) a concise statement of the general nature of the main business or proposed main business of the corporation;

(d) the names, addresses and occupations of –

(i) the directors or proposed directors;

(ii) the brokers or underwriters to the issue; and

(iii) in the case of debentures, the trustee for the debenture holders;

(e) the name of the Stock Exchange of which the brokers or underwriters to the issue are members; and

(f ) particulars of the opening and closing dates of the offer and the time and place at which copies of the full prospectus and forms of application for the shares or debentures may be obtained, and unless it states that applications for shares or debentures will proceed only on one of the forms of application referred to in and attached to a printed copy of the prospectus.

(2) No statement that, or to the effect that, the advertisement is not a prospectus shall affect the operation of this section.

 

(3) This section shall apply to advertisements published or disseminated in Malaysia by newspaper, broadcasting, television, cinematograph or any other means whatsoever.

 

(4) Where an advertisement that is deemed to be a prospectus by virtue of subsection (1) does not comply with the requirements of this Act as to prospectuses, the person who published or disseminated the advertisement, and every officer of the corporation concerned, or other person, who knowingly authorized or permitted the publication or dissemination, shall be guilty of an
offence against this Act.

The Penalty for an offence against this section is imprisonment for five years or a fine of one hundred thousand ringgit or both.

 

(5) For the purposes of this section where –

(a) an advertisement offering or calling attention to an offer or intended offer of shares in or debentures of a corporation or proposed corporation to the public for subscription or purchase is published or disseminated;

(b) the person who published or disseminated the advertisement before so doing, obtained a certificate signed by at least two directors of the corporation, or two proposed directors of the proposed corporation, that the proposed advertisement is an advertisement that will not be deemed to be a prospectus by virtue of subsection (1); and

(c) the advertisement is not patently an advertisement that is deemed to be a prospectus by virtue of that subsection, the corporation and each person who signed the certificate shall be deemed to be the persons who published or disseminated the advertisement, but no other person shall be deemed to be such a person.

 

(6) Any person who has obtained a certificate referred to in subsection (5)(b) shall, when so requested by the Registrar forthwith deliver the certificate to the Registrar.

The default penalty for an offence against this section is imprisonment for three years or ten thousand ringgit.

 

(7) Nothing in this section shall limit or diminish any liability which any person may incur under any rule of law or under any provision of this Act apart from this section.

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Guidelines for the contents of prospectuses Copyright © 2011 by Wawasan Open University. All Rights Reserved.

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