The Securities Commission of Malaysia (“SC”) has liberalised its regulations in relation to fund management on 8 July 2015 to introduce boutique portfolio management which is a new portfolio management licence category. The SC has since issued its revised Licensing Handbook dated 8 July 2015.
Portfolio fund managers now have the option of applying for either a full-fledged portfolio fund management licence (i.e. a restricted capital markets services licence for fund management to manage a portfolio of securities or derivatives or a combination of both) (“Full-fledged”), or a boutique portfolio management licence (“Boutique”). With the introduction of the Boutique licence, fund managers can now set-up a fund management company with a minimum paid-up capital and minimum shareholders funds of RM50,000, as opposed to a minimum of RM2 million for a Full-fledged licence.
With the revised Licensing Handbook, portfolio fund managers (Full-fledged and Boutique) may also provide investment advice to its clients whereas previously, fund managers were only permitted to provide their clients with research. It is advisable that portfolio fund managers have investment management agreements in place between them and the client if they do decide to offer such services.
Fund managers intending to apply for the Boutique licence must note the following:
(i) the total value of the assets managed by the company is capped at RM750 million;
(ii) they may only deal with Sophisticated Investors; and
(iii) they may only have a maximum of 50 clients, and where such clients are funds or collective investment schemes, the maximum number of such clients is 15.
“Sophisticated Investors” includes accredited investors, high net worth entities/individuals as defined in the Capital Markets and Services Act 2007.
Article Written by:
Yzara Kedung Khoo Hwee Fern