Securitisation 2025

MALAYSIA Trends and Developments Contributed by: Dilys Tan, Adnan Sundra & Low

visory expectations of licensed financial institu - tions relating to securitisation exposures and to be read together with: • the Capital Adequacy Framework (Capital Components); • the Capital Adequacy Framework for Islamic Banks (Capital Components); • the Capital Adequacy Framework (Risk- Weighted Assets); and • the Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets). The Current Legal Framework for Securitisation Transactions The Lodge and Launch framework On 9 March 2015, the SC issued the Guidelines on Unlisted Capital Market Products under the Lodge and Launch framework (the “LOLA Guide - lines”), whereupon issuances of unlisted capital market products (which would include ABS) to sophisticated investors in Malaysia and persons outside Malaysia no longer required the SC’s pri - or approval, authorisation or recognition under Section 212 of the Capital Markets and Services Act 2007 (CMSA), provided that all applicable requirements under the LOLA Guidelines were complied with. To that end, the LOLA Guide - lines supersede the ABS Guidelines, the PDS Guidelines and the Sukuk Guidelines in relation to the making-available of unlisted capital mar - ket products in Malaysia. Since the introduction of the LOLA Guidelines, all unlisted ABS only required the issuer to lodge with the SC (via its online submission system) the required information and documents pri - or to the launch of such unlisted ABS (ie, the making-available, offering for subscription or purchase, or the issuance, of an invitation to subscribe for or purchase). Under the Lodge and Launch framework, the time to market for

unlisted capital market products is shortened as such products are capable of being launched the moment the required information and docu - ments are lodged with the SC. Pursuant to the LOLA Guidelines, a lodged product must be issued within 90 business days from the date of lodgement. The requirement for the first issu - ance to take place within 90 business days from the date of lodgement was extended from its original 60 business days on 20 March 2020, following the Movement Control Order imposed by the government of Malaysia in response to the COVID-19 pandemic. The Islamic Capital Market Products and Services Guidelines In addition to complying with the requirements under the LOLA Guidelines, any proposals for the issuance of unlisted asset-backed sukuk would also need to comply with the Guidelines on Islamic Capital Market Products and Services (the “ICMPS Guidelines”) issued by the SC on 28 November 2022. The ICMPS Guidelines consoli - date all the existing Shariah requirements previ - ously set out in various guidelines issued by the SC, with the aim of providing a single point of reference for those offering or intending to offer Islamic capital market products and services. Pursuant to the ICMPS Guidelines, the Shari - ah structure of the asset-backed sukuk would require the prior endorsement of the SC’s Sha - riah Advisory Council before it may be lodged with the SC. The prior endorsement is obtained by submitting information and documents (as specified in the ICMPS Guidelines) to the Islamic Capital Markets Development of the SC at least ten business days before the intended lodgement date. Additionally, the assets to be securitised under the securitisation transaction must be Shariah-compliant and approved by the Shariah adviser appointed for such transaction.

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