Lesen needed..

Ok I did some reading and came to the conclusion that you CAN do it without a SC licence provided you are doing it by the guidelines set by Schedule 3 of the CMSA.


This is from SC handbook regarding license required for rendering financial services.

2.05 In What Situation Is a Licence Not Required?
(1) In a limited number of situations, persons or entities may engage in a regulated activity without having to hold a licence. These situations are
set out in Schedule 3 of the CMSA. It is important that these activities are carried on within the parameters set out in Schedule 3, such as
being solely incidental to the carrying on of the practice of their profession, or where such activities are being performed solely for the benefit of a related corporation.



The CMSA is the Capital Market & Services Act 2007.

Schedule 3 of the CMSA can be found on page 321 on the CMSA pdf file which you can Google online.

An excerpt:

SCHEDULE 3 [Subsection 58(2)]

Specified persons

1. Any company registered under the Trust Companies Act 1949 whose carrying on of any
regulated activity is solely incidental to its carrying on of the business for which it is
registered under the Trust Companies Act 1949.

2. Any advocate and solicitor as defined under the Legal Profession Act 1976 [Act 166] in
practice whose carrying on of the regulated activity of advising on corporate finance or
financial planning is solely incidental to the practice of his profession.

3. Any accountant who is a member of the institute established under the Accountants
Act 1967 [Act 94] in practice whose carrying on of the regulated activity of advising on
corporate finance or financial planning is solely incidental to the practice of his profession.

4. A valuer as defined under the Valuers, Appraisers and Estate Agents Act 1981 [Act 242]
whose valuation in respect of assets for the purposes of advising on corporate finance is
solely incidental to his practice as a valuer.

5. Any person who is a proprietor of a newspaper and a holder of a permit issued under
the Printing Presses and Publications Act 1984 [Act 301] whose carrying on the regulated
activity of investment advice through the newspaper where–

(a) insofar as the newspaper is distributed generally to the public, it is distributed
only to subscribers for, and purchasers of, the newspaper for value;

(b) the advice is given or the analyses or reports are issued or promulgated only
through that newspaper;

© that person receives no commission or other consideration for issuing or
promulgating the analyses or reports; and

(d) the advice is given and the analyses and reports are issued or promulgated solely
as incidental to the conduct of that person’s business as a newspaper proprietor.

6. Any person who is carrying on the regulated activity of investment advice through the
provision of information service where–

(a) insofar as the information service is distributed generally to the public, it is
distributed only to subscribers for, and purchasers of, the information service for
value;

(b) the advice is given or the analyses or reports are issued or promulgated only
through that information service;

© that person receives no commission or other consideration for issuing or
promulgating the analyses or reports; and

(d) the advice is given and the analyses and reports are issued or promulgated solely
as incidental to the conduct of that person’s business as a information service
proprietor.

7. Any corporation whose carrying on of the regulated activity of fund management is
solely for the benefit of its related corporation.

8. Any corporation whose carrying on of the regulated activity of investment advice is
solely for the benefit of its related corporation.

9. Any corporation whose carrying on the regulated activity of advising on corporate finance
solely for the benefit of any of its related corporation and where the related corporation
is a listed corporation, such advice is not circulated to the shareholders of the related
corporation or otherwise made known to the public.

10. Any person who carries on the regulated activity of dealing in securities for his own
account or for his related corporation through a holder of a Capital Markets Services
Licence who carries on the business of dealing in securities.

11. Any person who trades in futures contracts–

(a) on the person’s own account; or

(b) where such person is a non-resident of Malaysia acting as principal or agent
through the holder of a Capital Markets Services Licence who carries on the
business of trading in futures contracts.

12. An affiliate who trades in futures contracts or enters into a transaction in relation to a
futures contract solely on its own account and who complies with the provisions of the
rules of the futures exchange.

13. A holder of a Capital Markets Services Licence who carries on the business of trading in
futures contracts whose dealing in securities–

(a) relates to a securities which is also a futures contract;

(b) is the direct consequence of trading in a futures contract;

© is in connection with the delivery of a security, within a class of securities which is
the subject of a class of futures contracts, pursuant to–

(i) in the case of an eligible exchange-traded option, the exercise of the option; or

(ii) in the case of an eligible delivery agreement, the agreement itself; or

(d) is in connection with the transfer of securities as collateral or security, or in
realisation of any collateral or security, for obligation under a futures contract.

14. Any public statutory corporation constituted under any written law who carries on the
regulated activity of dealing in securities or fund management.

15. Any stock exchange or exchange holding company where its dealing in securities is
solely incidental to it operating a stock market of a stock exchange.

16. A futures exchange or exchange holding company where the trading in futures contracts
is solely incidental to it operating a futures market of a futures exchange.

17. An approved clearing house or exchange holding company whose dealing in securities
or trading in futures contracts, as the case may be, is solely incidental to it providing
clearing facilities in respect securities or futures contracts, as the case may be.

18. A licensed offshore bank as defined under the Offshore Banking Act 1990 [Act 443], an
offshore company or a foreign offshore company as defined under the Offshore
Companies Act 1990 [Act 441], whose carrying on of the regulated activity of investment
advice to a person who is a non-resident of Malaysia is solely incidental to their offshore
businesses.

19. A receiver, receiver and manager, or liquidator or any other person appointed by a court
whose carrying on a regulated activity is solely incidental to his duties as a receiver,
receiver and manager, liquidator or any court appointed person, as the case may be.

20. A trustee or other person whose carrying on a regulated activity is solely incidental to its
administering a compromise or arrangement between a body corporate and any other
person or persons.

21. An insurance company licensed under the Insurance Act 1996 or a takaful operator
registered under the Takaful Act 1984 whose carrying on of the regulated activity of
fund management is solely incidental to the management and administration of its
insurance or takaful business, as the case may be.


Please be aware that you CAN'T source public funds and give out financial advice for profit without proper license.

So that means you can start a partnership with your friends as listed partners, and invest the capital injected with the intention of benefiting the partnership. Please correct my understanding of this act.

This post has been edited by skiddtrader: Oct 25 2009, 01:16 AM

Must be partnership? Sdn Bhd can't do this?

7. Any corporation whose carrying on of the regulated activity of fund management is
solely for the benefit of its related corporation.

8. Any corporation whose carrying on of the regulated activity of investment advice is
solely for the benefit of its related corporation.

9. Any corporation whose carrying on the regulated activity of advising on corporate finance
solely for the benefit of any of its related corporation and where the related corporation
is a listed corporation, such advice is not circulated to the shareholders of the related
corporation or otherwise made known to the public.

10. Any person who carries on the regulated activity of dealing in securities for his own
account or for his related corporation through a holder of a Capital Markets Services
Licence who carries on the business of dealing in securities.

My laymen understanding is ; say 10 friend set up a company call ABC Sdn Bhd. The 10 friends pool their cash and open CDS accounts via investment bank (example OSK..) under ABC Sdn Bhd then invest in KLSE - might be allowable by law.

But this is my 2 sen tot. Need reconfirm with legal expert.

I think Sdn Bhd also can. But Sdn Bhd is more costly to incorporate and is required by law to have an approved secretary.

Under enterprise whether sole or partnership, less hassle to start and cheaper. But the pros and cons you have to Google as quite some info to understand.

Yes, based on what I understand it is possible and does not break any law as it falls within the CMSA guidelines. But still will need an expert for confirmation.


Edit: Oh yeah, as I was reading about the law and such, came across a law that prevents the registration of any entity with the purpose of kootu collection. You know where some pool of people contribute money every month and each month someone gets the money turn by turn. So it is against the law in Malaysia to form a kootu fund. haha It was kind of funny coz I remember being involve in that before when I was younger among friends.

This post has been edited by skiddtrader: Oct 25 2009, 01:53 AM

Oh ya, those mak cik- mak cik do that in our office. Better inform them this monday that "kutu" is illegal...hahahaha

Most ppl know about this law but as long as there are no high profile ppl in the 'kutu" no action will be taken

This post has been edited by rosdi1: Oct 25 2009, 02:27 PM

Posting deleted for some reasons. Apologize.

This post has been edited by squareasia: Oct 25 2009, 01:44 PM

Yeah I think 'kutu' among friends is ok lar, just that the law prevents people from registering it legally so to prevent court actions in case the agreements to pay whomever goes sour.


Hoping any expert can shed light on the law regarding the partnership investments.

This post has been edited by skiddtrader: Oct 25 2009, 02:51 PM

I tried this few years back.

I got response from SC, which they mentioned that one also need Bank Negara Approval as well.

Hmmm I see, thanks for the experience sharing Zamans98.

So you tried setting up a partnership with other people and investing in stock market using enterprise name is not allowed. Or do you mean setting up enterprise to collect money from other people not in the partnership to invest?

Opening a company, just like US Fund Management corporation, then you earned the management fee of say 5% p.a, gain or losing, still charge client the same.

Then is your company considered an "Investment Holding Company"? Or a "Normal Company"?

Capital/Fund Management company - so you called it as Inv. Hold. Co.. No go for Malaysia. It sucks, right?

Wah but thats a fund management company already getting funds from public and charging them management fees. That would definitely require a license.

It is to protect the interest of public.

If they allow simply anyone can start up a company that collecting fund tha varnish afterwards.

Even it is not alloed, we have plenty of illegal company that are offering so called 'investment fund' around that offering 5% per month return, blar blar invest in forex, gold, blar blar (to fool investors), which in the end of the day, investors will be the victim.
So I can't imagine how the situation will be and how many people money will be conned if authority allow simply.

Still, even it is licensed, like in US, money still vanished, fake investment by top ranked buy in the market. What differs?
Its like having a licensed to carry gun, vs illegal gun usage. Both in the end have the same results if its wrongly used.
Does having a license to carry gun gives the right to kill others, by shielding behind SELF Defense?

I believe many eager to start their own Investment firm, legally, abide all the rules, but Malaysia is still sucks. The agencies just won't give chance to others, scaring not to protect the so called public fund, but to ensure that only certain people and group will have the to run it. Having another competitor means cutting their market lead as well reducing their profit.

In that sense, that's why foreign investment companies rather setup office in Singapore than Malaysia.

License carry gun, you won't able to prevent the abuse of it and somebody being killed because of it.
Without the license to carry gun, it is all over the place, and situation become more fearful.

That's the difference.

Even here we have lot of foumers said some pyramid scheme or con-scheme is true (and rebuff others claims), if we allow investment company can be easily set-up, I can't imagine how many people money will be conned then.

Yes, I partly agree on high restriction of investment firm set up which restrict the alternative and option as well as too protective to existing investment firm especially UT company (which lead to they can charge high service charges of 5%), but think in opposite way, if you were BNM, how can I know you (the person want to setup investment firm) are trustfulness people to run and get public money and won't varnish overnight, you also don't know, right?

Master, that's why we have such thing call insurance protection, just like FDIC in USA. What guarantee that the current UT firms will not vanish with public fund?

What I'm looking for is a mid or small size legally bound Fund Management Company. Give certain restriction, such as value that they can take, say RM100K max per person, or maximum total fund pooled say RM5 million.

Even there are many restriction even in Labuan International Offshore Financial Centre. How to beat singapore then?

Type in google for Labuan International Offshore Financial Centre and you get only 33K return, which only about 0.01% useful info.