SC Malaysia revises investment rules

The Securities Commission Malaysia (SC) has improved the VC/PE Guidelines, which govern the registration of management corporations and venture capital and private equity firms. The amendments become effective on November 28. (Monday).

According to a statement released by SC on Tuesday, the improved VC/PE rules aimed to create a more favorable environment and boost the vitality of private markets, particularly in the VC and PE asset classes.

The upgrade, according to SC Chairman Awang Adek Hussin, is the latest step the SC has made to support offering a variety of funding choices for micro, small, and medium-sized firms (MSMEs), particularly start-ups and high-growth enterprises.

To encourage innovation among MSMEs and support Malaysia’s economic growth, he continued, this is crucial.

The amendments, among other things, centered on expanding the investor base and making it possible for more funding to be made readily available, particularly for early-stage start-ups.

The addition of a new minimum investment criteria of MYR250,000 ($56,863) broadens the pool of eligible investors who can invest in VC and PE funds. As a result, more investors, especially angel investors, will be able to combine their capital into VC and PE funds.

The registration standards for both VC and PE businesses are streamlined and made simpler. This is done to promote the establishment of new companies in Malaysia, both domestically and internationally, and to expand the skill pool for professional VC and PE.

Additionally, it mandates that only businesses that manage VC and PE funds must register with the government. As a result, organizations that are solely used as fund vehicles will no longer be required to register in accordance with the VC/PE requirements.

The change also eliminates the cap of 50 investors for VC and PE funds. This is done to account for the industry’s changing needs and the rising usage of various types of arrangements, like limited partnerships.

According to SC, the improved framework completes the range of present incentives for VC investments. These include tax deductions for qualified investments made directly or indirectly through funds into start-ups as well as tax exemptions for qualified VC funds and VC or PE managers.

The SC stated that among other requirements, VC or PE managers must register with the SC and apply for certification in order to be eligible for these incentives.