Extension of Incentives for Mergers of Banking Institutions
On 1st July 2000, with the coming
into effect of the Securities Commission (Amendment) Act 2000, the Securities Commission
(SC) has become the single regulator for all fund raising activities. The SC is now
the approving and registering authority for prospectuses in respect of all securities
other than securities issued by unlisted recreational clubs.
The SC has issued guidelines and regulations to deal with difference types and forms
of securities, both in debt and equity market to meet with the rapid development
and diversification of securities that are available in the Malaysian market.
The following are the guidelines and regulations issued by the SC :-
´ Code of Conduct for Market Institutions;
´ Policy Framework for Stockbroking Industry Consolidation and Reduction of Transaction
´ Amendments to the Policies and Guidelines on Issue/Offer of Securities;
´ Guidelines for Public Offerings of Securities of Infrastructure Project Companies
and MESDAQÝs Listing Rules;
´ Guidelines on Offering of Private Debt Securities;
´ Guidelines on Prospectus Content for Debentures;
´ Securities Commission (Shelf Registration Scheme for Debentures) Regulations 2000;
´ Guidelines on Minimum Content Requirement for Trust Deeds;
´ Guidelines on Prospectuses for Equity and Equity-link Issues;
´ Revised Guidelines for Establishment of Foreign Fund Management Companies;
´ Guidelines on Advertising.
With the Securities Commission (Amendment) Act 2000 in place, the Securities Commission
(Unit Trust Scheme) Regulation 1996 have been repealed. In addition, the SC has issued
several Practice Notes in relation to unit trust schemes which aim to provide further
protection to the investors and ensure adequate disclosure and appropriate procedures
are taken in the operation of unit trust funds. The Practice Notes issued are as
´ Practice Note 11 - Minimum Convenant Requirements and Procedures for Registration
and Lodgement of Deeds of Unit Trust Funds;
´ Practice Note 12 - Prospectus Guidelines for Unit Trust Funds;
´ Practice Note 13 - Guidelines on Unit Trust Advertisements and Promotional Materials;
´ Practice Note 14 - Amendments to the Guidelines on Unit Trust Funds with the coming
into force of the Securities Commission (Amendment) Act 2000;
´ Practice Note 15 - Policy on Distribution of Returns for Unit Trust Scheme.
2. Employees Provident Fund
The Employees Provident Fund
(Amendment) Act 2000 amended the definition of wages in Section 2 of the Employee
Provident Fund Act, 1991 (EPF Act) by inserting the word ýcommissionţ. The amendment
would mean that commission should be treated as part of wages of an employee under
Section 55 of the EPF Act is amended to clarify that a member of the Fund who has
attained the age of 55 years has the choice of withdrawing all the amount standing
to his credit as a lump sum or of withdrawing only the dividend on the amount standing
to his credit.
The new Section 58A of the EPF Act forbids a member of the Fund from utilizing any
amount withdrawn from the fund for a purpose other than the purpose for which withdrawal
was authorized. Where the amount withdrawn is not utilized for the purposes for which
the withdrawal was authorized, the amount shall be returned to the Fund within 6
months from the date of withdrawal.
A new Part VI A enables a member of the Fund to utilize the amount standing to his
credit to take up an insurance policy under the annuity scheme through the insurance
companies approved by the Minister.
Part VII A of the EPF Act was introduced and applies to each member of the Fund who
is not a Malaysian citizen who is liable to contribute or elects to contribute on
or after 1st August 1998.
Under paragraph 70B of Part VII A, the liability of an employee who is not a Malaysian
citizen and of each employer to an employee who is not a Malaysian citizen to contribute
shall cease for the last 2 months before the expiry of the employeesÝ employment
pass or for the last 2 months before the expiry of any extended period of the employeesÝ
Under paragraph 70C of Part VII A, the Board may authorize the withdrawal of all
amount standing to the credit of a member of the Fund who is not a Malaysian citizen
upon any terms and conditions as may be prescribed by the Board if the Board is satisfied
a. the member of the Fund has died;
b. the member of the Fund is physically or mentally incapacitated from engaging in
c. the member of the Fund is about to leave Malaysia and has no intention of returning
The above provisions are effective from 1st July 2000.
3. Extension of Incentives for Mergers of Banking Institutions
Bank Negara Malaysia announced
on 31st July 2000 the GovernmentÝs decision that the tax incentives, granted pursuant
to the merger programme for domestic banking institutions, which comprise exemption
from stamp duty, real property gains tax as well as the tax credit on 50% of the
accumulated losses of banking institutions which are to be acquired, has been extended
to 31st August 2000.
The aforesaid tax incentives are only available to banking institutions which have
signed sale and purchase agreements or conditional sale and purchase agreements on
or before 31st August 2000. Furthermore, all relevant merger proposals should be
fully completed and implemented by the deadline of 31st December 2000.
A service brought
to you by MIR Communications Sdn Bhd in cooperation with
Deloitte KassimChan Tax Services Sdn Bhd and Deloitte Touche Tohmatsu Tax Services
© October 2000