Establishment of Unit Trust Funds

The Securities Commission (SC) is the sole regulatory body for the approval of the establishment of unit trust schemes which involves making available, offer for subscription or purchase, or issue and invitation to subscribe for or purchase unit trusts in Malaysia , including approval of the management company and the trustee. Pre-consultations are encouraged to discuss issues pertaining to the establishment of the new fund. The broad issues that may be discussed include:

• New products in the market
• Practical and implementation issues
• Regulatory issues

The SC adopts a declaratory approach in approving the fund, appointment of the management company and appointment of the trustee. Under the “disclosure-based regulation” regime, strong emphasis is given to ensuring full and adequate disclosures of the fund in the fund's prospectus to assist prospective investors in making informed decisions in respect of their investments. In determining the relevant information to be disclosed in the prospectus, the SC will take into account amongst others, the following:

• Nature of the fund
• The persons likely to consider acquiring units of the fund
• A degree of knowledge amongst professional advisers with whom investors are reasonably expected to consult
• The risk profile of the fund – appropriate risk disclosures are necessary to match the risk appetite of the potential investor

If the disclosure on the fund's information is satisfactory, SC will register the prospectus and deed of the fund within 21 calendar days (excluding public holidays) from the date of submission.

The SC also monitors the eligibility criteria of the management company, in particular the Bumiputera and foreign participation, in accordance with the National Development Policy requirement.

Where certain functions of the management company are delegated in relation to the proposed fund, the management company must ensure that the delegation of function complies with the Guiding principles for Outsourcing of Back Office Functions for Capital Market Intermediaries.

As part of our business process, the SC always engages with relevant stakeholders i.e. principal adviser and ministries/government agencies, to ensure that there is thorough, consistent, transparent, efficient and timely delivery of our services to the market. In this regard, the SC will continuously monitor and regulate the players in the industry to ensure compliance with the guidelines and securities laws.