PROSPECTUS

CONT… OF SHARE CAPITAL AND DEBTS

TOPIC 5

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 ISSUES OF SHARES TO THE PUBLIC
• Companies issue shares to raise money from
investors/public, who tend to invest their
money.
• These allow the shareholders a stake in
the company's equity as well as a share in its
profits, in the form of dividends, and the
aptitude to vote at general meetings of
shareholders.
• This is the most common way to issue securities
to the general public. Through an IPO, the
company is able to raise funds/capital.
• The securities are listed on a stock exchange for
trading purposes.
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PROSPECTUS (S152)

1. An offer or invitation 2. An offer or invitation

in respect of shares or to deposit money with
debentures made by an or lend money to a
unlisted recreational corporation as specified
regulates the use of prospectus which is club. in S158 of the Act 2016
applicable to an offer made to public or any
section of the public with regards to:

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 Requirement to Register and
Lodge Prospectus
A prospectus
S154 states that a registered with S154(5) –
prospectus shall the Securities default penalty
REQUIREMENT TO The form is
not be issued, Commission under Convicted -
accompanied with
REGISTER AND circulated or the Capital
a copy of a
imprisonment for
distributed by any Markets and a term not
LODGE PROSPECTUS person UNLESS Services Act 2007
prospectus which
exceeding 5 years
has been
the prospectus shall be lodged OR - fine
registered by the
has first been with the Registrar not exceeding
Registrar
registered by the before the date of RM1 million OR
Registrar issue of the - BOTH.
prospectus.
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 REGISTRATION OF PROSPECTUS
2. The prospectus is submitted to the Registrar together with:

a) a written application for

the registration of the
1. A copy of the prospectus is b) copies of all consents
signed by every director and every prospectus (using
from person named in the
person who is named in the APPLICATION FOR
prospectus
prospectus as a proposed director REGISTRATION OF
of the corporation or by his agent PROSPECTUS)
authorized in writing is lodged
with the Registrar on or before the
date of the issue of the prospectus

c) copies of all material d) An other information or

contract referred to in the documents as may be
prospectus or required by the Registrar
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REFUSAL TO REGISTER A PROSPECTUS
Registrar shall refuse to register a prospectus if :
1) he is of the opinion that the
prospectus contains any
statement or information that
is false or misleading or from
which there is a material
omission.
2) he is of the opinion that the
corporation or the directors of
the corporation making such offer
or invitation is not a fit and
proper person to make such an
issue or invitation to the public,
the Registrar may
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KEEPING OF DOCUMENTS RELATING TO
PROSPECTUS
copy of any consent , material
contract or document referred to in
the prospectus to be deposited –
registered office in M’sia
no registered office in M’sia = the
address specified in the prospectus
for that purpose, within 3 days after
the registration of the prospectus.

Corporation keep a copy of the

documents for a period as may be
specified by the Registrar for
inspection by any person without
charge.

S157(3): default penalty

On conviction: imprisonment for a term not exceeding 3 years 7
OR Fine not exceeding RM250,000
OR BOTH
 INVITATION TO THE PUBLIC TO LEND
MONEY TO OR TO DEPOSIT/INVEST Raising Capital
for Public Co

MONEY WITH A CORPORATION

Raise Capital

• A prospectus is an invitation to the public to deposit money with or lend money to a Prospectus
corporation
• The invitation shall not be issued, circulated or distributed by the corporation UNLESS a Register: ROC &
prospectus has been registered by the Registrar. Sec Comm

• If the corporation has accepted from any person, any money as a deposit or loan upon an
Keep Doc @
invitation – the corporation shall within 2 months after the acceptance of the money, Registered Office
issue to that person a document which acknowledges or evidences or constitutes an
acknowledgement of the indebtedness of the corporation in respect of that deposit or
loan. Invite

S158(1) - default penalty, on conviction – imprisonment not exceeding 5 years w/in 2 mth8-
acknowledgment
OR fine not exceeding RM1 million
OR BOTH
 FORM AND CONTENT OF PROSPECTUS
S159 – every prospectus issued
shall comply with the
requirements relating to the
form and content of a
In the event of non-compliance, a 1. He has no
director or other person responsible
for the prospectus shall not incur knowledge of the
any liability by reason of non-
non-compliance or
compliance or contravention if the
director or other person proves that: contravention
2. The non-compliance or
3. the non-compliance or contravention
is in respect of matter which in the

prospectus as specified in the
1st Schedule of the Act.
contravention arose from opinion of the Court dealing the case is
immaterial or is otherwise in the opinion
an honest mistake on his
of the Court reasonable to be excused
upon considering all the circumstances of
part concerning the facts the case.

S159(2) default penalty

On conviction imprisonment for a term NOT exceeding
5 years
OR fine NOT exceeding RM1 million
OR BOTH
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DEBENTURE

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WHAT IS A DEBENTURE?

https://www.thegazette.co.uk/insolvency/content/
102414#:~:text=A%20debenture%20is%20a%20loan,take
%20security%20for%20their%20loans.
 DEBENTURE S176
Every borrowing
Trustee corporation –
corporation
offers debenture
consent to act asto trustee
the public&
for subscription / purchase in
appointment been made –
M’sia = appointment of trustee
borrowing corporation
corporation as a trustees –
Borrowing corporation
shall allot debenture
debenture holders

Appointment of a Trustee corporation

TRUST DEED
Debenture holders

Obligations of the directors :

 Prepare a report not less than 3 Disqualify if:
months and not more than 6  Shareholder of borrowing
months after the date of prospectus corporation
 Lodge a copy of the report with  Beneficially entitled to money
the Registrar and the trustee owed by the borrowing
within 30 days corporation to the trustee
 Furnish the trustee the particulars corporation
of charge created within 21 days  Guarantor for principal debt
from the date of the creation of secured by the debenture
any charge holders
 Periodic report to the trustee for the  Deemed to be related to the
debenture holders on the progress borrowing corporation
that has been made towards
achieving the purpose or 12
completing the project
 TRUST DEED
Trustee Trustee Debentur
corporation Deed e Holder
Contents:
Duties of Trustee • Limitation on the amount that the
• Assets of borrowing borrowing corporation may
Retirement of borrow
corporation are sufficient to
discharge the principal debts
trustee • Covenants:
• Prospectus is consistent with • conduct its business in a proper
and efficient manner
terms of the trust deed NOTICE OF •
• Borrowing corporation does make available all accounting
APPOINTMENT OF • records for inspection
not commit any breach with
any provisions in the trust deed A SUCCESSOR TO A • debenture holders holding more
• Remedy any breach of trust TRUSTEE than 10% in value of the issued
deed debentures shall summon a 13
meeting to consider the accounts
and balance sheet
THANK YOU…