SSM Interest Scheme Registration Requirements

In this article, we examine the key requirements for registering an Interest Scheme, including the applicable financial thresholds and circumstances in which the Companies Commission of Malaysia (SSM) may exercise flexibility in assessing compliance.

An interest scheme registered under the Interest Schemes Act 2016 with SSM is subject to a comprehensive regulatory framework designed to protect investors and promote responsible fundraising activities. Before a scheme may be registered, the proposed management company must demonstrate that it possesses sufficient financial resources, operational capability, and managerial expertise to administer the scheme in a sustainable and effective manner.

Rather than focusing solely on the proposed scheme structure, SSM also evaluates the management company itself. This includes its shareholding structure, capital adequacy, profitability, business track record and the experience of its management team.

There are three categories of interest scheme: Small Scheme, Premium Scheme and Foreign Scheme. While all three are subject to the same regulatory framework, the applicable capital requirements differ depending on the type and proposed fund size of the scheme. For the purpose of this article, we focus our discussion on the key requirements applicable to Small Schemes and Premium Schemes. Foreign schemes will be discussed in a separate article.

Key Eligibility Requirements

To be eligible for registration, a proposed management company must satisfy several regulatory requirements relating to its shareholding structure, financial standing, profitability, operational experience and management capability.

Corporate Structure

For an application to register a Small Scheme or a Premium Scheme, the management company must satisfy the following corporate structure requirements:

Types of Schemes	Types of Company
Small Scheme	A private company or public company limited by shares, incorporated under the Companies Act 2016, which satisfies the prevailing definition of a Small and Medium Enterprise (SME) issued by SME Corporation Malaysia.
Premium Scheme	A public company limited by shares incorporated under the Companies Act 2016.

In addition, the management company must have a shareholding structure in which a majority of its shareholders are Malaysians.

Capital Requirements

The minimum paid-up capital varies according to the category of the interest scheme.

Types of Schemes	Fund Size	Minimum Paid-up Capital
Small Scheme	RM1 million to RM10 million	RM500,000
Premium Scheme	Above RM10 million to RM50 million	RM1 million
	Above RM50 million to RM100 million	RM2 million
	Above RM100 million	RM5 million

These capital requirements are intended to ensure that the management company possesses sufficient financial capacity to administer the scheme effectively.

Profit Test

SSM also considers the financial performance of the management company when assessing an application.

Generally, the management company is expected to demonstrate:

1. A consistent profit track record: It should have recorded profit after tax for at least four (4) consecutive years immediately before the application, based on its audited financial statements lodged with SSM;
2. Relevant sources of profit: The profits should come from business activities that are relevant to the proposed scheme; and
3. Future financial viability: It should provide a profit forecast covering at least four (4) years to show that the proposed scheme is commercially viable and capable of being sustained.

Taken together, these requirements allow SSM to assess not only the management company’s financial track record, but also whether the proposed scheme has a sound financial footing and is capable of being sustained over the longer term.

Operating History and Management Capability

Apart from financial performance, SSM also considers whether the management company has the necessary experience and operational capability to successfully manage the proposed scheme.

Generally, the management company is expected to have a good track record of at least five years in carrying on a business of the same nature as the proposed scheme. This allows SSM to assess whether the management company has the relevant industry experience, expertise and operational capabilities to operate and manage the scheme.

Alternative Assessment Criteria

Although the eligibility requirements are generally expected to be met, SSM may consider applications that do not strictly comply with certain requirements, provided that the applicant is able to demonstrate equivalent financial strength or business capability.

Alternative to the Profit Test

Where the management company is unable to satisfy the profit test, approval may be considered if any one of the following criteria is met:

1. The management company’s holding company:
   1. is able to fulfil the profit requirements over the profit track record period; and
   2. has common controlling shareholders with the management company.

Or

2. At least one corporation within the group (excluding the holding company):
   1. is able to fulfil the profit requirements over the profit track record period;
   2. is involved in the same core business; and
   3. has common controlling shareholders with the management company.

Or

3. If neither the management company nor any of the companies within its group is able to fulfil the profit requirements, approval may be considered if the management company:
   1. falls within one of the categories described below:
      • Serves to promote or is aligned with the national economic agenda to drive domestic economy in economic growth areas identified by the Government under the Economic Transformation Plan (ETP) in particular the EPP partners or participating companies.
      • Has achieved certification from related agencies in areas like innovation, halal development, ICT, green technology, renewable and clean energy and sustainable development. Examples are Bio Nexus status, 1‑innoCERT, MSC status companies.
      • Serves to promote or is aligned with initiatives to promote linkage between university and industry to increase market driven collaborations in R&D, product commercialisation, consultancy, industrial training and job placements.
      • Serves to promote or is aligned with Government led policies to increase Bumiputera equity participation, or support the Bumiputera agendas like entrepreneur development, mentorship programme, industrial training and Bumiputera recruitment policy.
   2. a detailed turnaround plan to return to profitability level;
   3. a detailed profit forecast; and
   4. proof of healthy cash flow.

Alternative to the Operating History Requirement

Where the management company does not have the required five-year operating history, SSM may nevertheless consider the application if there is at least one (1) member of the management team who has over five (5) years of experience, expertise in managing companies and deep industry knowledge of the related business.

Final Remarks

Whether an interest scheme may be registered under the Interest Schemes Act 2016 depends not only on the merits of the proposed scheme, but also on the strength and suitability of the applicant. In assessing an application, SSM will consider matters such as the applicant’s corporate structure, paid-up capital, profitability and operating track record.

These requirements are not necessarily applied rigidly. Where the applicant is unable to satisfy the prescribed profit or operating history requirements, SSM may nevertheless consider other indicators of financial strength and business capability, including the track record of its holding company or group, the experience of its management team, or the extent to which the proposed scheme supports relevant economic initiatives.

Business owners should therefore assess the eligibility of the proposed management company at an early stage and identify the basis on which the application will be made. The relevant supporting documents should also be prepared in advance to substantiate that basis and minimise potential delays during the application process.