The Financial Services Commission (FSC) is proposing to ease the burden on “entities”, which issue securities including bonds privately but are now required to meet a level of disclosure the FSC said was “incommensurate with the level of risk to the capital market and investors at large”.
While making it clear that such issuers would still be mandated to notify it of such offers to “ensure appropriate regulatory oversight”, the capital market regulator recommended the facilitation of exemptions “from certain provisions of the Securities Act, Cap 318A, in respect of entities which issue securities by way of private placements”.
Industry stakeholders had up to last Monday to submit their views on the matter to the FSC and a “final proposal” is to be “forwarded to the Minister of Finance for his consideration and determination”.
According to the consultation paper, the proposed exemptions included registration as a reporting issuer, registration of a security, filing and distribution of annual report and financial statements, disclosure and notification of material changes, provisions related to distributions, provisions related to financial statements, and filing of materials provided to securities holders.
“The commission recognises that the existing legislative requirements impose on such issuers, a level of reporting and disclosure that is incommensurate with the level of risk to the capital market and investors at large,” the FSC said.
“In addition, the commission notes the treatment and practices in other jurisdictions regarding private placement transactions and recognises that the establishment of an exemption regime related to private placement transactions would bring the capital market more in line with international practices in this area.”
Under the FSC recommendations, issuers that want to be exempted must show the exemptions “would not prejudice public interest or that of the investing public, or undermine the efficacy and effectiveness of regulation of the entity or entities to which the exemption(s) have been given”.
The offer must also be one made to fewer than 50 individuals. (SC)
