In recent years, Malaysia has witnessed a significant increase in individuals disseminating stock tips, fund recommendations, and trading signals through social media platforms, Telegram groups, online communities, and subscription-based channels. Many of these activities are conducted without the relevant licence from the Securities Commission Malaysia (“SC”).
For business owners, trainers, influencers, and content creators whose activities touch upon investment-related topics, it is important to understand where the legal boundary lies.
The SC’s Guidance Note on Provision of Investment Advice as revised on 18 July 2024 (“SC’s Guidance Note”) clarifies the regulatory expectations in this area. Notably, the SC emphasises that merely inserting a disclaimer stating that content is “not investment advice” does not exempt a person from the requirement to hold a licence.
When is a License Required for Investment Advice?
According to Schedule 2 of the Capital Markets and Services Act 2007 (“CMSA”), a person is required to be licensed by the SC when the activity fulfils any one of the following:
(a) carrying on a business of advising others concerning securities or derivatives; or
(b) as part of a business, issues or promulgates analyses or reports concerning securities or derivatives.
In assessing whether a person is carrying on a regulated activity, the SC will consider the overall circumstances of a person undertaking the activity. For ease of understanding, the relevant considerations may be viewed in two broad aspects.
First, the nature of the communication itself will be examined. Any communication involving providing recommendations or opinions which are likely to induce a person to take any action or position (e.g. buy, sell or hold) regarding a particular class, sector, or instrument in relation to securities or derivatives, is likely to be considered as “advising others concerning securities or derivatives”.
Second, the SC will consider whether the activity amounts to “carrying on a business.” The SC is more likely to consider that a person is carrying on a business where the activity is conducted in a structured manner with regularity, or where any of the following circumstances are present:
(a) pay-for-advice arrangements;
(b) offering a fee-based subscription to a channel or group, including on social media, which offers investment advice; or
(c) expectation of benefits or gratification, direct or indirectly, from the provision of investment advice.
These factors are not exhaustive, and the SC may consider other relevant circumstances when making its assessment.
Importantly, the mere inclusion of a disclaimer stating that the content does not constitute investment advice does not relieve a person from the requirement to hold a license.
Conclusion
The SC’s Guidance Note underscores that regulatory assessment focuses on the substance of the activity rather than the label attached to it. Where communications involve recommendations or opinions that may induce a person to buy, sell, or hold securities or derivatives, and the activity is conducted in a structured manner or with an expectation of benefit, it may fall within the scope of regulated activities under the CMSA. Accordingly, business owners, trainers, influencers, and content creators should carefully review their activities to ensure they do not inadvertently engage in licensable investment advice, particularly given that a disclaimer alone does not remove the requirement to hold a license. If the activity falls within the scope of regulated investment advice, then the person must obtain the relevant license from the SC.
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Author(s):
Ashley Yeo, Partner
E: ashley@yeoashley.com.my
Clara Ng, Associate
E: clara.ng@yeoashley.com.my
Clarice Tan, Associate
E: clarice.tan@yeoashley.com.my
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This article is intended to provide general information and does not constitute and/or should be relied on as any legal opinion or professional advice. For more information, you may reach out to Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia.
