The Securities Commission Malaysia ("SC") has on 30 May 2022 and 30 June 2022 respectively issued a revised Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework ("LOLA Guidelines"). The amendments to the revised LOLA Guidelines took effect on 1 June 2022 and 30 June 2022 respectively.
In this article, we will be highlighting the key amendments made to the LOLA Guidelines pursuant to the revisions made on 30 May 2022 and 30 June 2022.
30 May 2022 LOLA Guidelines Revisions
Key amendments made to the LOLA Guidelines on 30 May 2022 include those relating to:
- post-issuance submission requirements to SC
- corporate bonds and sukuk
- asset-backed securities
- convertible notes and Islamic convertible notes to specific registered persons
(1) Corporate bonds and sukuk
Period for remedy. Paragraph 2.11 (a) of Part 3 of Section B of the revised LOLA Guidelines provides that where there is a provision under the principal terms and conditions of any ringgit-denominated corporate bonds or sukuk that do not require a trust deed to remedy a default in payment of the principal of, or interest/profit/rental on any of, the corporate bonds or sukuk, the period for remedy must not exceed 7 business days from the date on which the payment becomes due. Prior to the revision, the LOLA Guidelines did not stipulate when the 7 days period commences.
Party responsible to lodge trust deed. It has been clarified in paragraph 2.14 of Part 3 of Section B of the revised LOLA Guidelines that the responsibility to lodge the duly executed trust deed with the SC lies with the Lodgement Party1 on behalf of the issuer.
Change in timeline for the submission of post-issuance notice. As provided under paragraph 4.07 of Part 3 of Section B of the revised LOLA Guidelines, the deadline to submit a post-issuance notice to the SC for all issuances of corporate bonds and sukuk has been extended to no later than 7 business days after the end of the month in which the corporate bonds or sukuk were issued. Prior to the revision, it was 7 business days from the date of issuance of corporate bonds and sukuk.
Change in redemption notice requirements and submission timeline to the SC. Paragraph 5.08 of the pre-revised LOLA Guidelines, an issuer is required to notify the SC of the redemption, in full or in part, of the corporate bonds or sukuk within 7 business days from the date of redemption. However, under the revised LOLA Guidelines, further clarification has been made to such provision whereby:
(i) notification of redemption must be given to the SC for (a) partial redemption; (b) early redemption; (c) redemption of perpetual corporate bonds or sukuk, where no fixed maturity date has been submitted in the post-issuance notice; and (d) any other redemption occurring on a date other than the maturity date submitted in the post-issuance notice; and
(ii) the deadline for notifying the SC is now 7 business days after the end of the month in which the corporate bonds or sukuk were redeemed.
Responsible Party2 for submission of redemption notice. New provisions have been introduced under Part 3 of Section B of the revised LOLA Guidelines to:
(i) reflect the party who is permitted to be the Responsible Party for the purposes of submission of redemption notice3;
(ii) highlight that the Responsible Party for submitting the redemption notice must be specified in the lodgement or the post-issuance notice4; and
(iii) reflect the requirement to notify the SC as soon as practicable if there is a change in the maturity date submitted in the post-issuance notice.5
Availability of copies of announcements. Copies of announcements made pursuant to paragraphs 6.08(c), 6.08(d), 6.14(c) or 6.14(d) of Part 3 of Section B of the revised LOLA Guidelines are required to be made available to the SC only upon its request and not within 2 business days from the date of announcements as required pre revision of the LOLA Guidelines.
Party responsible to lodge information relating to an upsizing of a debt or sukuk programme. It has been amended under the revised LOLA Guidelines that in the event of any upsizing of a debt or sukuk programme, the issuer is required to lodge all relevant information and documents with the SC through its Lodgement Party.6
(2) Asset-Backed Securities ("ABS")
Change in timeframe for SPV to accept transfer of assets or issue ABS. The timeframe in paragraph 2.20(a) of Part 4 of Section B of the revised LOLA Guidelines for a special purpose vehicle ("SPV") to accept a transfer of the assets or issue ABS has been extended from 60 business days to 90 business days from the date on which the securitisation transaction is lodged with the SC.
Lodgement party to lodge information relating to an issue of ABS. Clarification has been made in paragraph 3.01 of Part 4 of Section B of the revised LOLA Guidelines that lodgement of all information and documents relating to an issue of ABS, are to be lodged by the issuer's Lodgement Party.
(3) Convertible Notes and Islamic Convertible Notes to Specific Registered Persons
Change in timeframe for issuance. The timeframe for the issuance of convertible notes or Islamic convertible notes as set out in paragraph 3.04 of Part 5 of Section B of the revised LOLA Guidelines has been extended from 60 business days to 90 business days from the date of lodgement.
(4) Transitional Provisions
Lodgement party to lodge information relating to an upsizing of a debt or sukuk programme previously approved by the SC. Paragraph 4.07 of Section D of the revised LOLA Guidelines clarifies that in the event of any upsizing of a debt or sukuk programme previously approved or authorised by the SC, the issuer is required to lodge, through its Lodgement Party, all relevant information and documents with the SC and comply with the relevant requirements under Part 3 of Section B of the revised LOLA Guidelines.
30 June 2022 LOLA Guidelines Revision
The key amendment to the revision of the LOLA Guidelines as at 30 June 2022 is the insertion of a new Chapter 9 of Part 3 of Section B - Sustainable and Responsible Investment linked (SRI-linked) Sukuk.
The insertion of the chapter 9 also brings about the introduction of the SRI-linked Sukuk Framework ("SRI-linked Sukuk Framework") which sets out, among others, the requirements pertaining to the issuance of an SRI-linked sukuk.
Pursuant to the SRI-linked Sukuk Framework, the proceeds raised by the issuance of SRI-linked sukuk can be utilised for general purpose, subject to the issuer committing to future improvements for sustainability outcomes within a predefined timeline, which will be monitored using key performance indicators.
The SRI-linked Sukuk Framework also provides greater transparency for investors by requiring issuers to appoint an external reviewer before issuance and an independent verifier post-issuance to assess compliance with the framework and the issuer's sustainability performance which can be tracked by investors.
For more details of the requirements for an issuance of an SRI-linked sukuk, please refer to Chapter 9 of Part 3 of Section B of the revised LOLA Guidelines.
The latest version of the LOLA Guidelines can be accessed here.
Footnotes
1 "Lodgement Party" means the Responsible Party specified in paragraph 4.04 of Part 3 of Section B of the revised LOLA Guidelines who is required to lodge the relevant information and documents with the SC.
2 See categories of "Responsible Party" in paragraph 5.09 of Part 3 of Section B of the revised LOLA Guidelines.
3 Paragraph 5.09 of Part 3 of Section B of the revised LOLA Guidelines.
4 Paragraph 5.10 of Part 3 of Section B of the revised LOLA Guidelines.
5 Paragraph 5.11 of Part 3 of Section B of the revised LOLA Guidelines.
6 Paragraph 6.12 of Part 3 of Section B of the revised LOLA Guidelines.
Originally Published 23 July 2022
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