11 th ACG Cross Training Seminar 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. Depository Model

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 Page 2 DEPOSITORY MODEL

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 RM50 million and paid up capital of RM25 million  Completed immobilization of all equities & non-equities securities listed on the stock exchange in June 1997 Page 3 DEPOSITORY MODEL

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 Page 4 DEPOSITORY MODEL

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 Page 5 DEPOSITORY MODEL

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 Page 6 DEPOSITORY MODEL

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

Page 8 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 DEPOSITORY MODEL

Page 9 Direct AccountIndirect Account 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. DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT DEPOSITORY MODEL

Page 10 Direct AccountIndirect 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 DIFFERENCES BETWEEN DIRECT & INDIRECT ACCOUNT DEPOSITORY MODEL

Page 11 Direct AccountIndirect 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 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 MERITS OF DIRECT & INDIRECT ACCOUNT DEPOSITORY MODEL

Page 12 Direct AccountIndirect 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 MERITS OF DIRECT & INDIRECT ACCOUNT DEPOSITORY MODEL

Page 13 Direct AccountIndirect 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 DEMERITS OF DIRECT & INDIRECT ACCOUNT DEPOSITORY MODEL

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

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 Page 15 DEPOSITORY MODEL

THANK YOU DEPOSITORY MODEL If you need further information or clarification please contact the following: Zailan Azhar Baharin Bursa Malaysia Berhad 2 nd Floor, Exchange Square Bukit Kewangan Kuala Lumpur Tel: Website :

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

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’S SERVICES DEPOSITORY MODEL

DEPOSITORY’S SERVICES Deposit – Acceptance and Rejection DEPOSITOR DEPOSITORY MODEL

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’S SERVICES DEPOSITORY MODEL

DEPOSITORY’S SERVICES DEPOSITOR Transfer – Acceptance and Rejection DEPOSITORY MODEL

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’S SERVICES DEPOSITORY MODEL

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

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’S SERVICES DEPOSITORY MODEL

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

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’S SERVICES DEPOSITORY MODEL

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

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’S SERVICES DEPOSITORY MODEL