Ð‗к˝ņŊŁũņРŲĠŪijŪij˝ņįОď (Ð.ņ.˝.

) Ð‗к˝ņŁũņŲĠŪijŪij˝ņď (Ð ņ ˝ )
Securities and Exchange Commission of Cambodia (SECC)

˝ЊşĆ řеЮ‗ЧũŁũ◦Бĩ⅝ũņŲĠŪij ⅝ Р Ū ЮĝŪĮйŬď₧şŪ˝˝ņįОď Securities Market Development in Cambodia p
Dr. D HUOT PUM Deputy Director General FIC, April 07, 2011

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Table of Contents
Background of Securities Market Development in Cambodia 2. Conduct and Organization of the SECC
1.
2.1. Board of Directors 2.2. Mandate of the SECC 2.3. Organizational Chart of the SECC 2.2. Daily Technical Team y

3.

Current Status of Securities Market Development
3.1. Main Players 3.1.1. Securities Regulator ii l 3.1.2. Securities Investors 3.1.3. Securities Issuers 3.1.4. Securities Intermediaries: Securities firms and Securities representatives

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Table of Contents
3.1.5. Operator of Securities Market 3.1.6. Operator of Clearance and Settlement Facility p y 3.1.7. Operator of Securities Depository 3.2. Other Players 3.2.1. Cash Settlement A 3 2 1 C h S ttl t Agent t 3.2.2. Securities Registrar g 3.2.3. Transfer Agent 3.2.4. Paying Agent 3.2.5. Professional Accounting Firms and External Auditors 3.2.6. 3 2 6 Asset Valuation Firms and Professional Valuators 3.2.7. Credit Rating Agent

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Background of Securities Market Development in Cambodia 2001 2006 2007 4 • Vision and Financial Sector Development p Plan for 2001-2010 • Financial Sector Development Strategies for 2006-2015 (Updated from FSDP 2001-2010) • Jan 10: Law on Government Securities .1.

Background of Securities Market Development in Cambodia 2007 2008 2009 5 • Oct 19: Law on the Issuance and Trading of Nong Government Securities • Jul 23: Anukret on the Conduct and Organization of the Securities and Exchange Commission of Cambodia • Apr 08: Anukret on the Implementation of the Law on p p the Issuance and Trading of Non-Government Securities .1.

Background of Securities Market Development in Cambodia 2009 2009 2010 6 • Nov 18: Prakas on Licensing of Securities Firms and Securities g Representatives • Dec 01: Prakas on the Grant of approval to the Operator of Securities market. • Jan 15: Prakas on public Issuance of Equity Securities Securities. the Operator of Clearance and Settlement facility and the Operator of Securities Depository. .1.

a clearance and settlement facility and a securities depositories.1. Background of Securities Market Development in Cambodia 2010 2010 2010 7 • Jan 15: Prakas on Corporate Governance for listed J p Companies. • Mar 18: Prakas on the Prime Principle of the operating rule of a securities market. . • Mar 18: Prakas on Accreditation of Professional Accounting Firm providing professional Services in the Securities Sector.

1. and Paying Agent. Securities Transfer Agent. 2010 8 • Nov 02: License given to 7 Securities Underwriters. Background of Securities Market Development in Cambodia 2010 2010 • Jun 28: Prakas on Accreditation to the Cash Settlement Agent. and 2 Investment Advisory Firms under the presidency of the Chairman of the SECC. 4 Securities Brokers. . • Jun 30: Prakas on the Registration of Securities Registrar. 2 Securities Dealers.

• D 15 P k on Corporate Governance for li t d public Dec 15: Prakas C t G f listed bli enterprise. paying agents ( 3 ) • Professional accounting firms and independent auditors providing professional services in the securities sector (3) 2011 9 . transfer agents. • Securities registrars. operator of a clearing and settlement facility. Background of Securities Market Development in Cambodia 2010 2010 •Dec 15: Prakas on Accreditation of Valuation Company Providing Services in Securities Sector Sector.1. • Feb 28: • grant approval to the operator of a securities market. and the operator of a securities depository (CSX) • Cash settlement agents (3 Banks) agents.

2. Daily Technical Team 10 . M d t of th SECC 2 2 Mandate f the 2.1. Board of Directors 2. Conduct and Organization of the SECC 2.2.3.2. Organizational Chart of the SECC 2.

Representative from MEF 01 2.1. 11 . Representative from MoJ 01 5. Director General of the SECC 01 7. Representative f 3 R t ti from M C MoC 01 4.2. Board of Directors  Chairperson of SECC shall be the Minister of Economy and Finance. Independent Experts in securities 02 Who are neutral in their positions and shall be selected and proposed by the Ministry of Economy and Finance. Fi  SECC members shall consist of the eight (08) following members: 1. Representative from NBC 01 3. Representative from Cabinet of Council of Ministers 01 6.

which consists of a Chairperson and 08 (eight) members which shall be appointed by Prime Minister (Anukret) (Anukret).  SECC members may be discharged or transferred from the y g positions prior to the expiry of their appointment.  SECC members may be reappointed at the request of the Chairperson of the SECC after their term of appointment has expired. 12 . Mandate of the SECC  SEEC shall be established under the Law of the Issuance and Trading of Non-Government Securities.2.2.  SECC Members shall have mandate of 05 (five) years.

3. Organizational Chart of the SECC 13 .2.

Internal Audit Unit Internal Audit Unit Internal Audit 1 Internal Audit 2 14 .

rules and regulations. justification improvement if mistakes found found. g p  To examine credibility of information.Functions of Internal Audit Unit  To review duties. administration and other operation of the SECC. program and operation of the SECC within convenient period to define the implementation in line with the plan. legal procedure and to propose for justification. activities. 15 . data. plan. and strategies to make report on those information and data in decent period. job assignment and supervision pursuant to policies. guidelines and procedure of the SECC.  To define suitability and efficiency of internal controlling system of accounting.  To examine the applicable system to measure fairness in accordance with policies. SECC and in line with the SECC objective objective.

Securities Market Development. Dep Legal Affairs 16 . Research.2. Securities Market Supervision Dep.4. p Administration and Finance Dep. Training. Securities Issuance Supervision Dep. Daily Technical Team Director General Deputy Di t D t Director General Deputy Director General Deputy Director D t Di t General Dep. and International Relations Dep. Securities Intermediaries Supervision Dep.

and International Relations p . Securities Market Development. Department of Securities Market Supervision p p 4. Department of Securities Intermediaries Supervision 6. Training. Department of Legal Affairs p g 17 . Department of Research.Departments of the SECC 1. Department of Securities Issuance Supervision 3. Department of Administration and Finance p 2. 5.

1. Department of Administration and Finance Department of Administration and Finance Administration and Personnel Division Accounting and Finance Division Information Technology g Management Division 18 .4.2.

g p 19 .1. to manage and recruit personnel p .4.2. Department of Administration and Finance  To prepare the plan and budget for SECC  To handle administrative affairs  To arrange protocol affairs  To communicate with public and private institution  To formulate policies.

2.4. Department of Securities Issuance Supervision Department of Securities Issuance Supervision Securities Issuance and Disclosure Division Corporate Governance Division Accounting Supervision Division 20 .2.

supplementary disclosure. replacement disclosure documents. supplementary disclosure document. and other public issuing firm.2. disclosure documents.2.4. Department of Securities Issuance Supervision  To formulate condition for granting approval to firm going public  To formulate condition relating to governance and supervision of public issuing f firm  To examine routinely the enforcement of condition to governance and supervision of public issuing firm  To examine implementation of Cambodia Accounting and auditing standard of public issuing firm (IFRS)  To examine and make recommendations on the public issuing firm g  To review and make recommendations on registration statement. replacement disclosure documents and other statement relation securities b business  To register disclosure documents. 21 .

2.4.3. Department of Securities Market Supervision

Department of Securities market Supervision

Operator of Securities market Division

Operator of Clearance and y Settlement facility Division

Securities Depository Supervision Division

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2.4.3. Department of Securities Market Supervision
 To formulate regulation of or conduction for granting an

approval as operator f review and approval f l t for i d l from th DG of th the f the SECC  To review recommendation on application for approval as pp pp operator  To supervise and monitor provision of trading system and other operation of securities market operator ti f iti kt t  To supervise and monitor provision of clearing and settlement facility operator y p  To supervise and monitor operations of securities depositaries  To conduct on-site inspection of the operators.
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2.4.4. Department of Research, Training, Securities Market Development and International Relations p
Department of R D f Reserch, training, Securities market h i i S ii k Development and International Relations

Research and Development Division

Training and Public Education Division

International Relations Division

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Training.4. Department of Research.2. Securities Market Development and International Relations p  To conduct studies and research on strategies for developing securities market in the kingdom of Cambodia g  To study and research for development of legal infrastructure and regulations relating to supervision and development of securities i d i i industry  To evaluate and make recommendation on new financial instruments prior to introducing into the market p g  To formulate strategies to promote firm going public  To develop training program for the general public and market participants  To communicate with regional and international securities regulation 25 .4.

5.2. Department of Securities Intermediaries Supervision p Department of Securities Intermadiaries Supervision Coordination and License Division On site Division Off site Division 26 .4.

27 .5. investment advisors.  To conduct on-site inspection as necessary of the operation of the securities firms.4.2. Department of Securities Intermediaries Supervision  To formulate regulation or condition for granting license to securities firm and securities representatives. and submit to DG of SECC for review of and approval.  To review and make recommendation on application for license for operating securities firms  To supervise and monitor the operation of securities firm and p p securities representatives.

2.4.6. Department of Legal Affairs Department of Legal Affairs E f t d Legal l Enforcement and L Division Dispute Resolution Division Investigation Division 28 .

6. o e e e op t e secu t es industry  To enforce the implementation of laws. in order to develop the securities a a u es a egu at o .2. rules and regulation relating to y securities industry  To receive any lawsuit and investigate related to illegal or abnormal issuing and trading securities in both primary and secondary market  To examine and make recommendations in order to take fine measures against the person who has contravened any provision of law and other regulation relating the securities industry 29 .4. Department of Legal Affairs  To examine and make recommendation on operating rules of the operators (CSX)  To examine and make recommendation on operating rules requested by CSX  To develop necessary rule and regulation and propose for amendment to law and rules and regulation.

Securities Clearance and Settlement facility. and y Securities depository -Securities Dealers/ Brokers -Investment Advisors INVESTORS 30 .CSX: Operators of Securities Market. Current Status of Securities Market Development Securities and Exchange Commission of Cambodia (SECC) Main Players Other Players -Securities Registrar -Securities Transfer Agent -Securities P i A S i i Paying Agent -Cash Settlement Agent -Professional Accounting Firm and External Auditor -Asset Valuation Company -Credit Rating Agency? -Law Firms? a s? Primary Market -Securities Issuer Securities -Securities Underwriter Secondary Market .3.

7. Main Players 3.1.3. Securities Issuers 3. Securities Regulator 3. Operator of Securities Market 3. Operator of Securities Depository 31 . Securities Investors 3. Securities Intermediaries 3.1.1.1.1.1.5.1.4.1.6.2. Operator of Clearance and Settlement Facility 3.3.1.

1.3. 32 . Controlling. Supervising. and Developing the securities sector in Cambodia. Securities Regulator Securities and E h g Exchange Commission of Cambodia (Ð‗к˝ņŊŁũņРŲĠŪij˝ņįОď / SECC) Government body responsible for regulating.1.

Securities Investors Securities Investors: 1. Individual Investors .Bu side and sell side Buy (Secondary Market) 33 .2.3.Sources of Funds . Institutional Investors 2.1.

3.Issue securities to sell to the public 34 . .1.Companies which need funds for business expansion.3. Securities Issuers Securities Issuers (PLCs or Permitted Entities) .

000 (five billion Riels ≈1.  Issue size shall not be less than 20 % of shareholders’ equity at the latest balance sheet (shareholders’ equity < KHR 20.000. 35 .000 (twenty billion Riels ≈ 5 million USD)) and.000 (twenty billion riels ≈ 5 million USD) or more).000.3.000.25 million USD) at the date of filing the application.  Issue size shall not b l i h ll be less than 15 % of shareholder’s equity at h f h h ld ’ i the latest balance sheet (shareholders’ equity is > KHR 20.1. Securities Issuers o  To make a public offering shall fulfill the following requirements: Shareholders’ equity shall not be less than KHR 5.000 (five hundreds million riels ≈ 125.000 USD) for the latest full financial year prior to the date of logging application.000.000.3.000.  Net profit shall not be less than KHR 500.000.

Securities Issuers      Aggregate net profit shall not be less than KHR 1. 11 & 13).1. CEO and CFO on disclosure. 36 . Fully responsible for accuracy. Anukret: Art.000. adequacy and reliability of information containing in the disclosure document (as well as securities firm and any expert). y p ).3. 9.000 (one billion ≈ 250.000. 12. Obtain eligible listing from the CSX Approval from the SECC and register the disclosure documents with the SECC (Law: Art.000 USD) for the latest 3 financial years prior to the date of filing application. Have the signature of the Chairman of Board of Directors.3. Directors. 10.

Possible for Foreigners to b P ibl f F i be ID: requiring of working experiences in Cambodia at least 06 months prior nomination CG of SOEs Composition of the B d not C ii f h Board: more than 07 members according to the law on the General Statute of Public Enterprises.3. 37 .1.3. At least one ID and one nonexecutive director as representative of the private share. Securities Issuers CG of PLCs Composition of the B d at C ii f h Board: least 05 and not more than 15 members.holders. At least 1/5 independent directors (ID).

Risk management committee Risk management committee for public listed company/listed public enterprise with assets of KHR 200.000 (200 billion riels ≈ 50 million USD) and over.000 (200 billion riels≈ 50 million USD).000. CG of SOEs Audit committee. committee may be carried out by the Audit Committee.000.1. 38 . may consider to establish Risk management committee if necessary. the duties of the risk management guided by the SECC. 200. Nomination committee and others. Risk management committee. The public listed company/listed public enterprise with assets of less than KHR 200 000 000 000 enterprise.000.000. The public listed company has asset less than KHR The Board can establish a nomination committee 200.000.000.000 (200 billion riels≈ 50 million and other committees if necessary and must be USD).3.3. Securities Issuers CG of PLCs Audit committee.

Issuer Appoints underwriter (licensed securities firms) Issuer Applies for listing g eligibility at CSX CSX approves for listing eligibility Issuer Applies for Public offer at SECC Issuer seeks the approval from the SECC with regards to the IPO team SECC Approves in principle Process of Issuing Equity Securities Issuer applies for official listing Issuer opens for securities subscription Issuer prepares and submits term of sales Securities trading 39 SECC registers disclosure di l documents .

Securities Intermediaries  Securities firm Conduct the following securities g Business : Securities underwriting business g Securities Dealing business Securities Broker business Investment advisory business 40 .4.3.1.

3.4.1. Securities Intermediaries Securities Firms and Securities Representatives (02 November 2010) (0 ove be 0 0) Underwrting business Dealing business Brokerage Business 7 firms licensed 2 firms licensed Investment Advisory Firms Requirements 2 firms licensed 4 firms licensed Capital Human Resources Others 41 .

5 million) 300 million riels Investment Advisor 400 million riels (~ USD 100.Licensed Adviser 80 million riels (≈  USD 20. Securities Intermediaries Capital Securities Requirements Underwriter Minimum Capital 40 billion riels (≈ USD 10 million) 2 billion riels Securities Dealer 25 billion riels (≈ USD 6 25 ≈   6.3.000) Securities Bond 4 billion riels 2.25 million) 1. but: -Proper location with Proper equipped office .1.25 billion riels Securities Broker 6 billion riels (≈ USD 1 5 1.000) Net Capital Non required.5 billion riels 1 billion riels 42 .4.

4.1. Securities Intermediaries Human Resources  CEO and director or partner  Head of securities representatives  Head of operations C Compliance officer li ffi  Other qualified staff Other Requirements  Physical facilities  A 3-year business plan  Comply with requirements for risk management and i d internal controls l l  A risk management plan  Satisfy other requirements y q stipulated 43 .3.

S ii b d i i 44 .5.3. * Supervising members and participants. * Monitoring securities trading and reporting to the SECC. Operators of Securities Market Operator of Securities Market (CSX) * Place where securities can be bought or sold.1. * Providing trading platform and market g gp data.

45 .3. .Giving order to Cash Settlement Agent to settle cash from buyer to seller g p y .Checking securities of sellers (available securities for sale). Operators of Clearance and Settlement Facility Operator of Securities Clearance and Settlement facility (CSX) .Informing Securities depository about the securities traded.Checking cash of buyers (available fund for purchasing) -T Transferring the ownership of securities from seller to f i th hi f iti f ll t buyer.1. .6.

* Changing the ownership of securities holders after settlement (updating the securities holders' book) .3. Operator of Securities Depository Operator of Securities Depository (CSX) * Safe-keeping of securities. 46 .1.7. * Depositing and withdrawing of securities.

Requirement for Operators Grant of Approval to Operators  Operator of Securities market Requirements  Operator of Clearance and Settlement facility  Operator of Securities Depository p p y Capital Human Resources Others 47 .

48 .Requirement for Operators Operator of securities Operator of clearance Operator of securities market and settlement depositories facility A company incorporated and registered in Cambodia (Law on Commercial Enterprises or Law on the General Statute of Public Enterprises) Capital is not less than KHR 40 billion (≈ 10 (≈ 10 million USD) Capital is not less than KHR 20 billion (≈ 5 (≈ 5 million USD) Capital is not less than KHR 20 billion (≈ 5 (≈ 5 million USD) • Appropriate Systems and Mechanisms for conducting its proposed operations • Systems for back-up: safe and efficient for conducting its operations Human resources with qualification and experience appropriate to their respective work.

3.5. Asset Valuation Firms and Professional Valuators 3.2. Paying Agent 3.6.2.2.7.4.2. Transfer Agent 3. Cash Settlement Agent 3.2. Credit Rating Agent 49 .1.2.2. Other Players 3.2.2. Professional Accounting Firms and External Auditors 3. Securities Registrar 3.3.

3. Cash Settlement Agent Cash Settlement S ttl t Agent (ļ˝İũ◦РĈij (ļ˝сİũ◦Ĉijс Ė ⅜şсŪģ˝сĵ˝с ĮĕċĕЕ₣ņРŲĠŪij) Įњĕĕ₣ņŲĠŪij) • Licensed Commercial Bank • Accredited by the SECC for providing Cash settlement services in the securities sector. 50 .2.1.

3. Cash Settlement Agent Grand of Accreditation to the cash settlement agent (ŷЋŔĠĕĠŪij◦◦УŲ⅜Ų l ( ŷŔĠĕĠŪij◦◦Ų⅜Ųс ň ð ļ˝сİũ◦РĈijс⅜şсŪģ˝сĵ˝сĮњĕċĕЕ₣ņРŲĠŪij): 28 Ė Feb 2011 Requirements Capital Human Resources Others  Acleda Bank Plc  Canadia Bank Plc  Bank for development of Cambodia Plc 51 .2.1.

2. Transfer Agents 3. Securities R i t 322 S iti Registrar g 3.Contractual Agents of Issuer 3.2.2.2.4. Paying Agent 52 .3.

Tricor Securities Plc.Contractual Agents of Issuer Grand of Accreditation to the agent ( ŷŔĠĕĠŪij◦◦Ų⅜Ųсļ˝сİũĠŃЊ ņРŲĠŪij (ŷЋŔĠĕĠŪij◦◦УŲ⅜Ųļ˝İũĠŃą ŁņŲĠŪij ň ð Ė ļ˝сİũşНйĠŃą БЮĩĀũņРŲĠŪij ĕЊ₣ļ˝сİũ◦РĈijс): 28 Ė Ė Feb 2011 Requirements Capital Human Resources u a esou ces Others Securities Registrar. Plc. Sacombank Securities Plc. Transfer Agent. Paying Agent Accredited entities: Acleda Bank . .) 53 ..

Register all subscription done through Underwriter by checking corresponding amount to the subscribed securities Verifying Subscription: Securities and Money. through Underwriter g p g . and balloting Over-Subscription Pro-rata allotment Under-Subscription Underwriter -Register successful subscription -Notification successful transaction and deposition d iti Securities deposition Central Depository Bondholder/ Shareholders 54 Statement to Shareholders on securities deposition . Securities Registrar (ļ˝сİũĠŃą ЊŁņРŲĠŪij) Ė .2.3.2.Giving Subscription forms to Subscribers .

3.2.3. Transfer Agents (ļ˝сİũşНйĠŃą ЮĩĀũņРŲĠŪij) Ė Б Securities Depository Record of Depository— File of shareholder/bondholder P i file. -Processing fil -Updating shareholders’ book and bondholders’ book Provide updated shareholders’ book and bondholders’ book as requested Notification of Corporate Actions Issuer Investors 55 .

 Interest. or  (Dividend Interest or Principal) Payment through issuer’s  account as authorized Issuer Account Issuer Designated Account Bondholder/ Shareholders 56 . Paying Agents Transfer Agent or Bondholders book (ļ˝сİũ◦РĈijс) Ė Updated Shareholders book Calculating paying amount  (Dividend.2.3.4.

• Provide reliable statement of accounts. g p indicating the true financial position • Safety from exploited by the management 57 .2.3. Professional Accounting Firms and External Auditors Professional Accounting Firm and External Auditor • Accredited by the SECC for providing audit services for issuers and other players in the market • Ensure that the issuer and other players in the market is using fair accounting standards and policies prescribed by law and regulations.5.

3. Professional Accounting Firms and External Auditors Grand of Accreditation to the Professional Accounting Firm and External Auditor ( ŷЋŔĠĕĠŪij◦◦УŲ⅜Ųс ň ð Ū˝Оņ΅пНĕÐ‗ЮĕŎŏĄеĜŀ ĕЊ₣₤ŷĕ˝ũυ˝ŬŏĩʼnŲс Ћ Ю₤ǻЮĝ˝₣ŷ₤њŎņŲĠŪij): 28 Feb 2011 Ю₤ǻЮĝ˝ĖО₣ ŷ₤ŎņРŲĠŪij): Requirements Capital p Human Resources Others  PWC  KPMG  BDO 58 .5.2.

Asset Valuation Firms and Professional Valuators Asset Valuation Company and Independent Valuer • Accredited by the SECC for valuation of the assets of the issuers and other players i the markets l in h k • Ensure that the issuer and other players’ assets do not overstate in the financial statements f l • Affirm the accuracy of valuation of the assets in according to applicable guideline and valuation standards d l d l d d 59 .6.3.2.

7.3. system capacity p y and contingency g y arrangements 60 .2. Credit Rating Agent? Credit g Rating Agent • Accredited by the SECC for providing credit rating services for issuers f i • Provide reliable securities rating services and maintain its credit rating operations and facilities with adequate security.

Summary: Securities Transaction Flows 61 .

kh 62 .secc.gov.₤РņΒũÐН‗şеЮĵйŁũ е Ŏ˝şijʼn◦˝Ţ˝с⅜Ġс Ŏ˝şЊij◦Н˝Ţ˝⅜Ġ ʼn www.

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