SIDC Module 7 key terms

The principal Malaysian statute regulating activities in the capital market, including dealing, advising, fund management and fundraising. It sets out licensing, conduct, disclosure and enforcement requirements administered by the Securities Commission Malaysia.

The statutory regulator responsible for developing and supervising the Malaysian capital market. It licenses intermediaries, approves prospectuses and takeovers, issues guidelines, and enforces securities and derivatives law.

A licence granted by the SC permitting a person to carry on a regulated capital market activity such as dealing in securities, investment advice, fund management or dealing in derivatives. The licence specifies which activities may be conducted.

A personal licence issued by the SC to an individual who performs regulated activities on behalf of a holder of a Capital Markets Services Licence. It is tied to the licensee and to the specific activity.

Standards used by the SC to assess whether a licensee, representative, director or substantial shareholder is suitable, covering honesty, integrity, competence, financial soundness and absence of disqualifying conduct or insolvency.

A disclosure document issued for an offer of securities that must contain information investors need to make an informed decision. In Malaysia it generally requires SC approval and registration with the Companies Commission.

Information that a reasonable investor would consider important in deciding whether to buy, hold or sell securities, or that could affect the price of securities. Listed issuers must disclose it promptly to the market.

The duty of a listed issuer to announce material information to the exchange as soon as practicable, so that all investors have equal access to price-sensitive news and trading occurs on an informed basis.

Trading or tipping in securities while in possession of material non-public information obtained through a connection with the issuer or a special relationship. It is a civil and criminal offence under Malaysian securities law.

Conduct that creates a false or misleading appearance of trading activity or price in securities, such as wash trades, matched orders or false rumours. It is prohibited because it distorts market integrity and harms investors.

Malaysian rules governing acquisitions of control in public companies, requiring fair treatment of shareholders, timely disclosure and, in specified cases, a mandatory general offer to remaining shareholders.

A collective investment scheme in which investors pool money into a fund managed by a licensed fund manager. Units are priced by reference to net asset value, and the scheme is constituted by a deed approved under Malaysian law.

A fund whose units trade on an exchange like shares and generally track an index, commodity or basket of assets. It combines pooled diversification with intraday trading and continuous pricing.

The value of a fund's total assets minus its liabilities, often expressed per unit. It is the reference price for subscriptions and redemptions of collective investment scheme units.

A regulated activity involving managing a portfolio of securities or other assets on behalf of clients under a mandate or scheme. In Malaysia it requires an appropriate Capital Markets Services Licence.

A platform-based method for small and medium enterprises to raise funds by issuing shares to many investors. Malaysian platforms must be registered with the SC and operate within investor limits and disclosure rules.

A platform-based financing model where investors lend money directly to businesses or individuals through an online marketplace. Malaysian P2P operators must be registered with the SC and follow investor protection rules.

The process of determining whether a product or recommendation matches a client's objectives, financial situation, risk tolerance and knowledge. It underpins fair dealing and reduces the risk of mis-selling.

The process of identifying a client, understanding their circumstances and verifying information before providing services. It supports suitability assessment and forms part of anti-money laundering obligations.

Clear communication to a client of the risks associated with a product or transaction, including potential loss of capital and liquidity constraints, so the client can make an informed decision.

Provision of accurate, balanced and timely information about a financial product, including its features, fees, risks and terms, enabling investors to compare options and understand what they are buying.

A situation where personal, financial or firm interests could improperly influence professional judgement or advice. Firms must identify, disclose, manage or avoid such conflicts to protect client interests.

A legal obligation to act in the best interests of another party, placing the client's interests ahead of the adviser's own. It requires loyalty, prudence and avoidance of undisclosed conflicts.

Internal information barriers that prevent confidential or price-sensitive information held by one part of a firm from flowing to other parts, such as between corporate finance and sales teams.

The system of rules, practices and processes by which a company is directed and controlled, covering board responsibilities, accountability to shareholders and protection of stakeholder interests.

A set of principles and practices issued by the SC promoting board leadership, effective oversight, accountability, remuneration transparency and constructive engagement with shareholders. Listed companies must report on its application.

The presence of directors free from relationships that could impair objective judgement. Independent directors are expected to challenge management, oversee conflicts and represent minority shareholder interests.

A board committee, generally chaired by an independent director, that oversees financial reporting, internal controls, risk management and the external and internal audit functions, reporting to the board.

Measures to prevent the laundering of proceeds of crime, including customer due diligence, transaction monitoring, record keeping and reporting of suspicious activity to the competent authority.

The process of identifying customers and beneficial owners, verifying identity using reliable documents, and understanding the purpose and expected nature of the business relationship before and during it.

The identification of the natural persons who ultimately own or control a customer or the funds involved in a transaction, even where shares are held through layers of companies or nominees.

A report filed with the financial intelligence authority when a firm suspects that funds or transactions are linked to crime or terrorism financing. Reporting is mandatory and tipping off the customer is prohibited.

Disclosing to a client or third party that a suspicious transaction report has been or may be made. It is prohibited because it can alert wrongdoers and undermine investigations.

Factors used to assess how a company manages environmental impacts, social relationships and governance quality. They inform risk analysis, stewardship and responsible investment decisions alongside financial factors.

An investment approach that incorporates ESG considerations and active ownership into decisions to improve long-term risk-adjusted returns and align portfolios with sustainability outcomes.

Presenting a product or company as more environmentally or socially responsible than it truly is, through misleading labels, vague claims or selective disclosure. It misleads investors and undermines trust.

The responsible monitoring and engagement by investors with investee companies, including voting and dialogue, to promote sound governance and sustainable long-term value creation.

Planning and arrangements that enable a firm to maintain or restore critical operations during disruption. It covers risk assessment, recovery strategies, testing and communication with clients and regulators.

The risk of loss from inadequate or failed internal processes, people, systems or external events. Firms manage it through controls, segregation of duties, monitoring and business continuity planning.