Malaysia Budget 2001
Malaysia Budget 2001
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OTHER ISSUES

Securities Commission

Employees Provident Fund

Extension of Incentives for Mergers of Banking Institutions



1. Securities Commission

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 Costs;
´ 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Commission (Amendment) Act 2000 in place, the Securities Commission (Unit Trust Scheme) Regulation 1996 have been repealed.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 follows :-

´ 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.

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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 the Act.

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 employment pass.

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 that :-

a. the member of the Fund has died;
b. the member of the Fund is physically or mentally incapacitated from engaging in an employment;

c. the member of the Fund is about to leave Malaysia and has no intention of returning to Malaysia.

The above provisions are effective from 1st July 2000.

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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.

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© October 2000