11 th ACG Cross Training Seminar Depository Model

11 th ACG Cross Training Seminar Depository Model 3 rd & 4 th July 2009 Bursa Malaysia and its Group of Companies (“Bursa Malaysia”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation may be used or reproduced in any form without the Bursa Malaysia’s prior written permission. This Presentation is provided for information purposes only. Neither the Bursa Malaysia nor the Presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation. It is your responsibility to verify any information before using or relying on it.

AGENDA § Introduction § Legal Framework § Duties of Bursa Malaysia Depository § CDS Users § Account Structure § Difference Between Direct & Indirect CDS Account § Merits For Direct & Indirect CDS Account § Demerits of Direct & Indirect CDS Account § Depositories Services DEPOSITORY MODEL Page 2

INTRODUCTION § Bursa Malaysia Depository Sdn Bhd was established in April 1990 and commenced operations in November 1992 § Wholly-owned subsidiary of Bursa Malaysia Berhad § Authorised capital of RM 50 million and paid up capital of RM 25 million § Completed immobilization of all equities & non-equities securities listed on the stock exchange in June 1997 DEPOSITORY MODEL Page 3

LEGAL FRAMEWORK § Securities Industry (Central Depositories) Act 1991 {SICDA}. § SICDA empowers the Central Depository to draw up the rules of Bursa Malaysia Depository and the issuance of any directions. § Bursa Malaysia Depository Nominess Sdn Bhd is deemed as a bare trustee § Share registrar to issue certificate in the name of Bursa Malaysia Depository Nominees Sdn Bhd § Undeposited securities not to be traded on stock exchange or utilised to settle market trade DEPOSITORY MODEL Page 4

SALIENT FEATURES IN CDS § Account maintained at client level and must be under the name of beneficial owner or Authorised Nominees name. § Account are tagged with Stock Broker where the account was opened § Mandatory deposit - 100% immobilisation rate § Transfer of Securities within the “Approved Reasons to Transfer” § No Withdrawal of securities DEPOSITORY MODEL Page 5

CDS USERS Provides depository services to the following users through the Central Depository System (CDS): - § Authorised Depository Agent (ADA) § Authorised Direct Member (ADM) § Issuer § Issuing house § Share registrar § Account holder / depositor § Clearing House DEPOSITORY MODEL Page 6

CDS USERS Bursa Malaysia Securities Clearing Berhad Securities Berhad • Record of Depositors • Corporate Exercise • Allotment Details • Certificate in the name of Bursa Malaysia Depository Nominees Sdn Bhd DEPOSITORY MODEL Page 7

ACCOUNT STRUCTURE Direct Account : § held directly in the name of individual, corporate body, institutional investors and etc. Indirect Account : § held in the name of nominees where the beneficial owner details are captured § one nominee account one beneficial owner § nominees account can only be opened by Authorised Nominees i. e. bank/ broker/trust companies § Certain relaxation was introduced whereby nominee company can operate omnibus account effective 21 October 2005. DEPOSITORY MODEL Page 8

DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT Direct Account Indirect Account holder open the account with the Brokers i. e. ADA under his name directly i. e. John Smith Depositor open the account with Custodians Bank or Brokers under the name of a nominee company with the depositors as the beneficial owner i. e. ABC Nominees (Tempatan) Sdn Bhd For John Smith In direct account, the account holder is the owner of the securities in the CDS account. The depositor will be registered as the shareholder In indirect account, the nominee company is the owner of the securities in the CDS account. The name of the nominee company will be registered as the shareholder. DEPOSITORY MODEL Page 9

DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT Direct Account Indirect Account Dividend entitlement will be directly mailed to the depositor, while entitlement in shares will be credited directly to the account Dividend entitlement will be received by the nominee company that in turn will redirect these entitlement to the beneficial owner Account opened for its own investment and deal with securities using this direct account Account opened for the following purpose : 1. custodian 2. margin or loan facilities purpose Requires supporting documents for opening of direct CDS account Does not require extensive supporting document The depositor is the operator of the account The nominee company is the operator of the account DEPOSITORY MODEL Page 10

MERITS OF DIRECT & INDIRECT ACCOUNT Direct Account • Depositors are in a principal relationship with Bursa Depository • Confidentiality of depositor shareholdings is protected whereby depositor’s share holding is not known to third party • The ownership of CDS account is transparent • The asset of depositor and stockbroker i. e. ADA is clearly segregated • Depositor received his/her annual reports or dividends payout directly from the registrar/issuer DEPOSITORY MODEL Indirect Account • Lesser documentation to operated such account • Do not require to be present in person to perform depository transactions • Cost savings to Bursa Depository arising from the following : - storage cost due to less documentation to stored - postage and other related stationeries on mailing of statements/notices as these notifications are send electronically to nominee company Page 11

MERITS OF DIRECT & INDIRECT ACCOUNT Direct Account Indirect Account • The depositors shareholdings is unaffected in the event the brokers is declared bankrupt • Depositors received notification directly from Bursa Depository in the event of any changes to its account particulars or movement of securities • CDS statement of account are issued directly to the depositor DEPOSITORY MODEL Page 12

DEMERITS OF DIRECT & INDIRECT ACCOUNT Direct Account Indirect Account • More documentation to operate such account • To be physically present in person to perform depository related transactions • Higher operational and maintenance cost for Bursa Depository : - storage cost for storing documents - postage and stationeries cost for sending out statements and notices to depositors • The nominee company is in a principal relationship with Bursa Depository and the beneficial owner details are merely for information • Depositor shareholding is known to third party • Depositor do not receive any notification or CDS statement of account directly from Bursa Depository • Delay in receiving dividend entitlement • Does not receive notification or annual report directly from the Issuer DEPOSITORY MODEL Page 13

DEMERITS OF DIRECT & INDIRECT ACCOUNT Direct Account Indirect Account • Incurred additional cost for services provided by the nominee company • Implication to depositor shareholdings if the nominee company is declared bankrupt • Ownership of account is not very clear. DEPOSITORY MODEL Page 14

DEPOSITORY’S SERVICES Core services provided are as follows: - § Account openings § Deposit of securities § Transfer of securities § Withdrawal of securities § Initial Public Offerings (IPOs) § Corporate exercises DEPOSITORY MODEL Page 15

THANK YOU If you need further information or clarification please contact the following: Zailan Azhar Baharin Bursa Malaysia Berhad 2 nd Floor, Exchange Square Bukit Kewangan 50200 Kuala Lumpur Tel: 603 -2034 7750 Email: zailan@bursamalaysia. com Website : www. bursamalaysia. com DEPOSITORY MODEL

DEPOSITORY’S SERVICES Opening of Individual & Corporate CDS Accounts DEPOSITORY MODEL

DEPOSITORY’S SERVICES Account Management § Balance Enquiry , Enquiry by Name, Enquiry by investor’s ID § Updating of CDS Account Particulars § Suspension/Release Suspension of Account, particular stock or certain balances in CDS account § § § Closing of Account Consolidation of Statement of Account Inactive / Dormant Account Ad-hoc Statement of Account / Monthly Statement End of Day Processing will generate notices to be mailed to the relevant depositor on changes to their account particulars / suspension/release suspension / changes in their account status DEPOSITORY MODEL

DEPOSITORY’S SERVICES Deposit – Acceptance and Rejection DEPOSITORY MODEL

DEPOSITORY’S SERVICES Deposit of Securities § Provisional credit is accorded on deposit day itself § Depositor able to utilise the provisional credit for trade settlement during prescribed period of 1 month § Registrar will authenticate the certificate deposited and revert to Depository within 7 market days § End of Day processing will generate notices to depositor in event any deposit is rejected DEPOSITORY MODEL

DEPOSITORY’S SERVICES Transfer – Acceptance and Rejection DEPOSITORY MODEL

DEPOSITORY’S SERVICES Transfer of Securities § Transfer of securities is real time § Transfer must be within the “Approved Reasons for Transfer” § Exception reports are generated to monitor transfer in CDS § End of Day Processing will generate notices to the relevant transferor’s and transferee’s DEPOSITORY MODEL

DEPOSITORY’S SERVICES Withdrawal of Securities Withdrawal request DEPOSITOR Document ADA Ack. Confirm/ Reject CD Confirmation Withdrawal Notice from Bursa Malaysia Depository Sdn Bhd Deliver Certificate in depositor’s name DEPOSITORY MODEL Registration Registrar

DEPOSITORY’S SERVICES Withdrawal of Securities § Only permitted for “Delisted” securities § Certificate will be issued and mail directly to the depositor within 14 market days by the share registrar § End of processing will generate notices to the relevant depositors on the successful withdrawal request DEPOSITORY MODEL

DEPOSITORY’S SERVICES Initial Public Offerings (IPOs) APPLICANT Submit application ISSUING HOUSE Rectify & Resubmit BURSA DEPOSITORY Submit detail of successful applicant no Verify details yes mail notice of allotment to successful applicant DEPOSITORY MODEL ISSUING HOUSE confirmation Credit the applicant’s CDS account

DEPOSITORY’S SERVICES Initial Public Offerings (IPOs) § Mandatory to have a CDS account to participate in Initial Public Offerings § Apply an IPO by completing the prescribed Application Form or via “Electronic Share Application” (ESA) or via Internet Application § ESA able to apply via Automated Teller machine § CDS account of successful applicant will be credited 2 market days before listing DEPOSITORY MODEL

DEPOSITORY’S SERVICES Corporate Action Provide ROD BURSA DEPOSITORY SHARE REGISTRAR will mail entitlement i. e. dividend SHAREHOLDER ACCOUNT HOLDER for entitlement in shares i. e. Bonus/Rights, submit details to Bursa Depository Verify details no Rectify & Resubmit yes Credit into CDS account DEPOSITORY MODEL confirmation SHARE REGISTRAR mail notice of allotment to successful applicant

DEPOSITORY’S SERVICES Corporate Action § Bursa Depository provide Record of Depositors (ROD) as at book closure date of a corporate action to issuer/share registrar to ascertain the entitlement to be distributed § All entitlement in shares to be credited to the depositors account § Dividend is distributed to share holder by the registrar/issuer by mailing to them or crediting their bank account DEPOSITORY MODEL