Lecture 2 Bursa Malaysia

8/11/2019 Lecture 2 Bursa Malaysia

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Module by: Assoc. Prof. Dr Asmah Laili Hj Yeon

LECTURE 2

BURSA MALAYSIA

COMPANIES COMMISSION


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Overview: Bursa Malaysia

Bursa Malaysia Berhad is an exchange holding company, listed on

the Main Board of Bursa Malaysia Securities. It operate a fullyintegrated exchange, offering the complete range of exchange-related services, including trading, clearing, settlement anddepository services. BM also provide information services related tothe Malaysian securities market.

Established in 1973, Bursa Malaysia today has over 1,000 listed

companies offering a wide range of investment choices to the world.Companies are either listed on Bursa Malaysia Securities MainBoard for larger capitalised companies, the Second Board formedium sized companies or the MESDAQ Market for high growthand technology companies. We also have an offshore market.

In assisting the development of the Malaysian capital market andenhancing global competitiveness, Bursa Malaysia is committed tomaintaining an efficient, secure and active trading market for localand global investors.


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Overview: Bursa Malaysia Bursa Malaysia Group comprises an exchange holding company and various

subsidiaries which own and operate our various businesses. We operate ourbusinesses through the following three (3) business units:

Exchange,Clearing, Settlement and Depository. This unit comprises our three(3) exchanges.

Securities ExchangeThe markets which make up our Securities Exchange are our Main Board,Second Board and MESDAQ Market. This exchange is operated by BursaSecurities.

Derivatives Exchange

Our Derivatives Exchange offers futures and options contracts coveringfinancial, equity and commodity-related instruments. This exchange isoperated by Bursa Derivatives.

Offshore ExchangeOur Offshore Exchange is an international offshore financial exchange basedin Labuan, Malaysias international offshore financial center. This exchange isoperated by Labuan International Financial Exchange (LFX).

We offer clearing, settlement and depository services through Bursa Securities

Clearing (our clearing house for our Securities Exchange), Bursa DerivativesClearing (our clearing house for our Derivatives Exchange) and Bursa Depository(the central depository for securities listed on our Securities Exchange

Information Services. We compile and disseminate comprehensive marketinformation, both real time and historical, and develop and market information

products and services.

Group Business Development. The business of the group is supported bymarket development and promotional efforts undertaken by Group Business

Development.


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Overview: Bursa Malaysia

Vision

TO BE THE PREFERRED PARTNER IN ASIAFOR FUND-RAISING, TRADING AND

INVESTMENT. Mission

AS THE PREFERRED PARTNER, BURSAMALAYSIA OFFERS A FAIR AND ORDERLY

MARKET THAT IS EASILY ACCESSIBLE WITHDIVERSE AND INNOVATIVE PRODUCTS ANDSERVICES.


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REGULATORY STRUCTURE


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Buying & Selling Shares

You must open a CDS Account & a Trading Account at astock-broking company.

The main contact person at the stockbrocking companyis your remisier.

To buy shares, you must have sufficient funds to coverthe cost of the shares as well as the transaction costs.

Your CDS account will be credited with the sharesbought. All payments must be settled by 12.30 pm onT+3.


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Buying & Selling Shares To sell shares, you must already have the shares in your CDS

account.

Your CDS account will be debited and you will receive payments by12.30 pm on T+3.

Orders are matched electronically through the Bursa Malaysia's

trading system - there is no manual intervention in the process.

Your remisier will confirm your order after it has been matched.

The day on which shares are bought/ sold is known as T-day.

A contract note will be sent to you by your stockbroking company.Confirm that all details such as company name,cost of the sharesand transaction costs are correct and keep this document carefully.


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Equities

Equitiesoffer considerable potential for capital

growth and are long term risk investments. Itinvolves company shares which represents part

ownership by the investor in a particular

company. Ownership of equities will often entitle

the investor to a portion of the company's profitsthrough dividends.


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Share Capital

A share is a security which represents a portion

of the owner's capital in a business.

Shareholders are the owners of the business

and share the success or failure of the business.The performance of the business can often be

measured by the amount of dividends

shareholders receive and by the price of the

share, quoted on the stock market. (Shares arealso commonly referred to as stock).


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Types of shares

The different types of shares which are traded on BursaMalaysia include:

Ordinary Shares

Also called equity shares, this is the risk capital of a

company. Ordinary shares give holders the rights ofownershipin the company, such as the right to share inthe profits, the right to vote in general meetings and toelect and dismiss directors. Obligations of ownership arealso conferred and this may result in the loss of aninvestor's money if the company is unsuccessful.

Ordinary shares usually form the bulk of a company'scapital and have no special rights over other shares. Inthe event of liquidation, ordinary shares rank after allother liabilities of the company.


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Types of shares Preference Shares

These are shares which carry the right to dividend (normally fixed) which ranks forpayment before that of ordinary shareholders. Preference shares may be

preferred also as regards to distribution of assets upon dissolution of thecompany.

Preference shares generally carry no voting rights, but voting rights may be madecontingent upon failure to pay dividends on preference shares for a certain periodof time.

There are various types of preference shares:

Participating preference sharesare entitled to participate in the profitsbeyond the fixed dividends, by way of an additional fluctuating dividend if thecompany is successful.

Cumulative preference sharesare preference shares which, apart fromhaving a preferential right to receive a fixed dividend ahead of ordinaryshares, also carry the right of any arrears of the preference dividends whichmay have built up.

Non-cumulative preference sharesare preference shares which are not

entitled to any arrears in dividends. Redeemable preference sharesmay be redeemed by the company at a

stated redemption price on advance notice of a period of time. It is usual toset a redemption price above the par value to compensate the owner for theinvoluntary loss of his investment.

Convertible preference sharesare preference shares which carry the rightto be made convertible, at the option of the holder, into another class ofshares, normally into ordinary shares.


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Derivatives

Derivatives are financial instruments used to manage one'sexposure to today's volatile markets. A derivative product's valuedepends upon and is derived from an underlying instrument, suchas commodity prices, interest rates, indices, and share prices.

Derivative instruments can be traded in an organised exchange orover-the-counter (OTC). Futures and options are essentiallyelementary derivative products mostly traded on exchanges. Afutures contract is an agreement between two parties to buy or sellthe underlying instrument at a specific time in the future for aspecific price determined today.

An option however, provides the holder/buyer the right, but not theobligation, to purchase or sell a certain quantity of the underlyinginstrument at a stipulated price within a specific time period bypaying a premium.


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Derivatives

The following 9 products are currently traded on the Exchange:

KLCI (FKLI) Futures

KLCI (OKLI) Options

3 Mth Month Kuala Lumpur Interbank Offered Rate interest rate(FKB3) Futures

Crude Palm Oil (FCPO) Futures

3-Year Malaysian Government Securities (FMG3) Futures

5-Year Malaysian Government Securities (FMG5) Futures

10-Year Malaysian Government Securities (FMGA) Futures

Crude Palm Kernel Oil (FPKO) Futures

Single Stock Futures (SSFs) Ethylene OTC Futures Contract
http://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-klci-futures.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-klci-options.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-interbank-offer.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-interbank-offer.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-fcpo.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG3.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG5.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMGA.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-palm-kernel.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-ssfs.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-otc.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-otc.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-otc.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-ssfs.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-ssfs.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-palm-kernel.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-palm-kernel.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMGA.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMGA.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMGA.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMGA.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG5.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG5.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG5.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG5.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG3.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG3.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG3.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-government-securitiesFMG3.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-fcpo.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-fcpo.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-interbank-offer.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-interbank-offer.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-interbank-offer.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-klci-options.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-klci-options.htmlhttp://www.klse.com.my/website/bm/products_and_services/derivative_resources/derivatives-klci-futures.html


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Companies Commission

COMPANIES COMMISSION OF

MALAYSIA ACT 2001

(ACT 614)


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Establishment of the

Commission Section 3..

(1) A body corporate by the name of "Companies Commission of Malaysia"is established.

(2) The Commission shall have perpetual succession and a common seal.

(3) The Commission may sue and be sued in its name.

(4) Subject to and for the purposes of this Act, the Commission may, uponsuch terms as the Commission deems fit

(a) enter into contracts; (b) acquire, purchase, take, hold and enjoy movable

and immovable property of every description; and (c) convey, assign, surrender, yield up, charge, mortgage, demise, reassign,

transfer, or otherwise dispose of, or deal with, any movable or immovableproperty or any interest in such property vested in the Commission.


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Membership of the Commission

Section 6..

(1) The Commission shall consist of the following members whoshall be appointed by the Minister:

(a) a Chairman; (b) the Chief Executive Officer; and

(c) not less than five and not more than seven other persons, threeof whom shall be from the public service.

(2) The members appointed under paragraph (1)(c) other than those

who are from the public service shall be qualified persons as definedin the Legal Profession Act 1976 [Act 166] or persons who possessrelevant knowledge or experience in commercial or companymatters.


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Tenure of office

Section 7..

Subject to such conditions as may be specified

in his instrument of appointment, a member ofthe Commission shall, unless he sooner resignsor vacates his office or his appointment issooner revoked, hold office for a term notexceeding three years and is eligible for

reappointment.


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Revocation and resignation

Section 8..

(1) The appointment of any member of the

Commission may, at any time, be revoked by theMinister without assigning any reason for therevocation.

(2) A member may resign his office by giving

notice in writing to the Minister.


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Vacation of office

Section 9..

The office of a member of the Commission shall be vacated

(a) if he dies; (b) if he has been convicted of any offence andsentenced to imprisonment for a term of not less than four months;

(c) if he becomes a bankrupt;

(d) if he is of unsound mind or is otherwise incapable of discharginghis duties; or

(e) if he absents himself from three consecutive meetings of theCommission without the leave of the Chairman or, in the case of theChairman, without the leave of the Minister.


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The Chief Executive Officer and

Directors Section 11..

(1) The Minister shall appoint

(a) a person who is a qualified person as defined in the Legal Profession Act 1976 orwho possesses relevant knowledge or experience in commercial or company mattersto be the Chief Executive Officer of the Commission; and

(b) two persons, who shall be known as Directors, to be deputies to the ChiefExecutive Officer,

on such terms and conditions as the Minister may determine, for the properadministration of this Act and the laws specified in the First Schedule, and mayrevoke the appointment of any person so appointed without assigning any reason forthe revocation.

(2) The Chief Executive Officer shall be responsible for the day-to-day administrationof the Commission.

(3) The Directors shall be subject to the direction and control of the Chief ExecutiveOfficer and they may perform all the duties of the Chief Executive Officer under thisAct and the laws specified in the First Schedule as may be specified by the ChiefExecutive Officer.

(4) In the event that the Chief Executive Officer is temporarily unable to perform hisduties due to illness or any other cause, either of the Directors may attend anymeeting of the Commission or any committee in his place.


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Disclosure of interest

Section 15..

(1) A member of the Commission or any committee who has or acquires adirect or indirect interest by himself, a member of his family or his associatein relation to any matter under discussion by the Commission or committeeshall disclose to the Commission or committee, as the case may be, the fact

of his interest and its nature.

(2) A disclosure under subsection (1) shall be recorded in the minutes of themeeting of the Commission or committee, as the case may be, in which thematter is discussed and, after the disclosure, the member

(a) shall be disregarded for the purpose of constituting a quorum of themeeting of the Commission or committee, as the case may be; and

(b) shall not take part in or be present during any discussion or decision ofthe Commission or committee, as the case may be,

when the matter is discussed or decided upon.


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(3) Any member of the Commission or committee whofails to disclose his interest as required under subsection(1) commits an offence and shall be liable on convictionto a fine not exceeding one hundred thousand ringgit or

to imprisonment for a term not exceeding three years orto both.

(4) No act or proceeding of the Commission orcommittee shall be invalidated on the ground that any

member of the Commission or committee hascontravened the provisions of this section.


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(a) "a member of his family", in relation to a member ofthe Commission or a committee, includes

(i) his spouse; (ii) his parent (including a parent of his

spouse) ; (iii) his child (including an adopted child or stepchild) ;

(iv) his brother or sister (including a brother or sister ofhis spouse) ; and

(v) a spouse of his child, brother and sister; and


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(b) "associate", in relation to a member of the Commission or acommittee, means

(i) any person who is a nominee or an employee of such member;(ii) any firm of which such member or any nominee of his is apartner;

(iii) a partner of such member; (iv) a trustee of a trust under which such member or a member of his

family is a beneficiary; or

(v) any corporation within the meaning of the Companies Act 1965,of which such member or any nominee of his or a member of hisfamily is a director or has a controlling interest or shares to the totalvalue of not less than thirty percent of the total issued capital of thecorporation.


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Functions of the Commission

Section 17..The functions of the Commission shall be

(a) to ensure that the provisions of this Act and the lawsspecified in the First Schedule are administered,

enforced, given effect to, carried out and complied with; (b) to act as agent of the Government and to provide

services in administering, collecting and enforcingpayment of prescribed fees or any other charges underthe laws specified in the First Schedule;

(c) to regulate matters relating to corporations,companies and businesses in relation to the lawsspecified in the First Schedule;


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Functions of the Commission (d) to encourage and promote proper conduct amongst directors,

secretaries, managers and other officers of a corporation, and self-regulation by corporations, companies, businesses, industry groupsand professional bodies in the corporate sector in order to ensurethat all corporate and business activities are conducted inaccordance with established norms of good corporate governance;

(e) to enhance and promote the supply of corporate informationunder any laws specified in the First Schedule and to create anddevelop a facility whereby any corporate information received by, orfiled or lodged with, the Commission may be analysed and suppliedto the public;

(f) to carry out research and commission studies on any matterrelating to corporate and business activities;

(g) to advise the Minister generally on matters relating tocorporations, companies and businesses in relation to the lawsspecified in the First Schedule; and

(h) to carry out all such activities and do all such things as arenecessary or advantageous and proper for the administration of theCommission, or for such other purpose as may be directed by theMinister.


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Powers of the Commission

Section 18..

(1) The Commission shall have the powerto do all things necessary or expedient for

or in connection with the performance of

its functions.


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(a) to utilize all the property of the Commission, movable and immovable, insuch manner as the Commission may think expedient including the raisingof loans by mortgaging such property;

(b) to impose fees or charges for services rendered by the Commission asmay be prescribed by the Minister by regulations made under section 40;

(c) to appoint such agents, experts or consultants as it deems fit to assistthe Commission in the exercise of its functions;

(d) to grant loans to employees of the Commission for such purposes asmay be approved by the Minister;

(e) to formulate and implement human resource development and fundingand co-operation programmes for the proper and effective performance ofits functions;


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(f) to co-operate with any corporate body

or government agency for the purpose of

performing the Commission's functions;

and

(g) to do anything incidental to any of its

functions and powers.


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(3) The Commission shall have all such powersas may be necessary for or in connection with,or reasonably incidental to, the performance ofits functions under the laws specified in the First

Schedule.

(4) For the avoidance of doubt it is declared thatthe powers of the Commission shall not includethe powers of the Chief Executive Officer as

provided in the laws specified in the FirstSchedule.


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The Commission may establish

committees

Section 19..

(1) The Commission may establish suchcommittees as it considers necessary or

expedient to assist it in the performance of

its functions under this Act.


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Delegation of the Commission's

functions or powers Section 20..

(1) The Commission may delegate any of its functions or powers toany committee established under section 19 as it may deemnecessary or desirable.

(2) Any function or power delegated under this section

(a) may be so delegated subject to such conditions or restrictions asthe Commission may either generally or specifically impose; and (b)shall be exercised by the committee in the name and on behalf ofthe Commission.

(3) A delegation under this section shall not preclude theCommission itself from performing or exercising at any time any ofthe functions or powers so delegated.

Lecture 2 Bursa Malaysia

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