MALAYSIA Law and Practice Contributed by: Dilys Tan, Adnan Sundra & Low
(b) how payments are collected in respect of the assets; (c) the priority of payments to the holders of the ABS of different classes; (d) details of any other arrangements upon which payments to holders of the ABS are dependent; (e) information regarding the accumulation of surpluses in the SPE; and (f) details of any subordinated securities. • Information on credit enhancement, includ - ing an indication of where material potential shortfalls are expected to occur. • Credit rating for the ABS and the definition of such credit rating. • Disclosure of the fees payable by the SPE, including management fees and expenses charged by the servicer. In addition to the above, additional disclosures are required to be made by the principal adviser and originating bank in primary collateralised loan obligation (CLO) transactions, for the pur - pose of enhancing transparency and clarity of information to investors and parties involved in a primary CLO transaction, such as: • the lending policies involved and the extent of terms and conditions that are set on borrow - ers, which can be made on an anonymous and aggregated basis; • the utilisation of proceeds by the borrowers, in amount on a projected or actual basis, where applicable; • the sources of repayment by the borrowers, in percentage; • whether any early repayment or prepayment by the borrowers is permissible, and the terms and conditions for such early repay - ment or prepayment; • the date of repayment by borrowers to the SPV and maturity date of CLOs; and
• the responsibilities of all transaction parties, including the principal adviser, originating bank, solicitor, portfolio manager, trustee and technical adviser (if any). Additionally, the information memorandum must clearly provide that an originator does not in any way stand behind the ABS issued by the SPE, except to the extent specified in the transaction documents and such credit enhancement pro - vided by the originator (if any). If an originator is intending to subscribe for the ABS, the infor - mation memorandum must also clearly disclose this. In addition to the information memorandum, a product highlights sheet is required to be issued by the SPE to investors. Paragraph 1.06 of Part 1 of the Guidelines on Product Highlights Sheet (previously known as the Guidelines on Sales Practices of Unlisted Capital Market Products) issued by the SC (the “PHS Guidelines”) sets out the types of investors for which a product high - lights sheet is applicable. In the case of ABS, a product highlights sheet is required for investors who are: • high net worth entities (unless they have opted out of this); • high net worth individuals; • retail investors; and • a person who acquires the ABS where the consideration is not less than MYR250,000 or its equivalent in foreign currencies for each transaction where such amount is paid for in cash or otherwise. The product highlights sheet must contain clear and concise information, which must not be false or misleading or contain any material omission. The information required to be included in the product highlights sheet includes the following.
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