Disclosure of salient terms of certain contracts is required in prospectuses and circulars to shareholders of public listed companies in Malaysia for specific corporate exercises.

When determining which contract provisions should be included as salient terms, consider the following:

1. Identify Governing Laws

Identify the relevant laws that govern the disclosure of salient terms of contracts. For my practice areas, this typically includes Capital Markets and Services Act 2007, Listing Requirements and Prospectus Guidelines.

2. Circular Disclosure Requirements

The Listing Requirements require circulars to shareholders for certain corporate exercises to include the date, parties, general nature, consideration and mode of satisfaction for material contracts outside ordinary course of business.

3. Prospectus Disclosure Requirements

A prospectus should contain all such information that investors and their professional advisers would reasonably require, and reasonably expect to find in the prospectus, for the purpose of making an informed assessment of:

– the assets and liabilities, financial position, profits and losses and prospects of the issuer;

– the rights attaching to the securities; and

– the merits of investing in the securities and the extent of the risk involved in doing so.

See section 236 of the CMSA on the general duty of disclosure in prospectus.

4. Impact on Decision Making

Consider whether the contract terms could influence shareholders’ voting decisions or investors’ willingness to invest in the issuer’s shares. If so, these terms should be disclosed as salient terms.

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This post first posted on LinkedIn on 13 August 2024.