Funding mechanism

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Funding mechanism

  1. 1. Business Funding Mechanism1. Set up a venture fund, a joint initiative with K-Perak, Perak Bio and a private sector.2. Register the venture fund with the Securities Commission of Malaysia, either as a Venture Capital Corporation or Venture Capital Management Company; which refer to “corporations that deal, or manage investment, in securities of venture companies.” The registration requirement are as follows: a. the applicant shall maintain a minimum shareholders’ funds of RM100,000. b. The applicant shall have at least one (1) designated person, who shall be fit and proper for the position. Information on the designated person shall be submitted with the application for registration of the VCC or VCMC. Any change of designated person(s) shall only be made with prior approval of the SC. c. In determining whether a person is fit and proper to be a designated person in accordance with clause 4.B of these Guidelines, regard shall be had to his probity, to his competence and soundness of judgement of fulfilling the responsibilities of a designated person, to the diligence with which he is fulfilling or likely to fulfil those responsibilities, and to whether the interests of customers, if any, are or are likely to be, in any way threatened by his holding of that position. d. The application for registration shall be made to the SC by completing Form 1 entitled “Application for the Registration of Venture Capital Corporations and Venture Capital Management Corporations”, and Form 2 entitled “Application for the Registration of Designated Person(s)/Director(s) of Venture
  2. 2. Capital Corporations and Venture Capital Management Corporations”.e. Upon registration with the SC under these Guidelines, the applicant shall be designated as a VCC or VCMC, depending on the structure and activities of the applicant.f. In relation to corporations registered as a VCC, the activities of dealing in securities are limited to the following: a. the acquisition of, disposition of or subscription for, securities that are not listed on a stock market of a stock exchange; or b. (b) the making or offering to make with any person, or inducing or attempting to induce any person, to enter into or to offer to enter into— (i) an agreement to or with a view to acquire, dispose of or subscribe for securities that are not listed on a stock market of a stock exchange; or (ii) an agreement, other than a futures contract, the purpose or avowed purpose of which is to secure a profit to any of the parties from the yield of securities that are not listed on a stock market of a stock exchange or by reference to fluctuations in the value of such securities.g. In relation to corporations registered as a VCMC, the activities of dealing in securities are limited to the following – (a) prior to the listing of the securities, — (i) the acquisition of, disposition of or subscription for, such securities; or (ii) the making or offering to make with any person, or inducing or attempting to induce any person, to enter into or to offer to enter into— (A) an agreement to or with a view to acquire, dispose of or subscribe for such securities; or (B) an agreement, other than a futures contract, the purpose or avowed purpose of which is to secure a profit to any of the parties from the yield of such securities or by reference to fluctuations in the value of such securities; (b) upon the securities referred to in clause 7.3(a) of these Guidelines being listed,— (i) the disposition of such securities; or (ii) the making or offering to make with any person, or inducing or attempting to induce any person, to enter into or to offer to enter into an agreement for or with a view to dispose of such securities.
  3. 3. Capital raising programmes   Under this Capital Raising Programme, Perak Bio will go through one or several exercises as shown in the above Figure to raise capital in order to finance its operation as a business entity and not anymore as subsidiary of the PSDC. The options include: a. Option1: Private Placement of Perak Bio Shares. Under this Option, Perak Bio will invite private investors to be part of the company by bringing in private investment into the company. The company may issue new shares or PKNP may sell some of the existing shares in Perak Bio. The ultimate aim is for Perak Bio to be properly capitalized to finance its short term and long term activities. In addition to or in the alternative to the above, Perak Bio may issue Loan Stocks such as Irredeemable Convertible Loan Stock (ICUL) in order to raise the funding to meet its annual budgetary requirement and to fund development programmes. The amount of the required capital will be decided in another exercise. It is proposed that PKNP remains as the largest shareholders with a majority member on the Board.
  4. 4. b. Option 2: Under this Option 2, Perak Bio will be transformed into a listing compliant and will go for listing some of its shares in the ACE Counter in the KLSE when the time is suitable for such an exercise. The option is for PKNP to issue new shares in the Perak Bio to be subscribed by the public.    In this regard, the management of Perak Bio will still be in the hands of the PSDC.Nevertheless Perak Bio Board of directors may consist of independent non-executivedirectors and Perak Bio will be subject to the same corporate governance requirement as anyother companies listed on the Bursa Malaysia.In order to carry out the listing exercise, assets and projects will have to be realized andinjected into Perak Bio. The existing assets and the gaps which may assist the listingrequirement are:
  5. 5. c. Option 3: Option 3 involves the initial private placement to private equity and venture capitalists followed by exit in few years time by listing in the stock exchange. 1. In the alternative, Perak Bio transformation may involve the setting up of Special Purpose Vehicle for the purpose of funding the relevant projects in Perak. Perak Bio will be a shareholder of the SPV, by capitalising the lands belonging to Perak Bio, whilst maintaining Perak Bio’s function as implementing agency for the development of biotechnology in the state. This transformation is reflected below:   In the above situation, a group of funders will fund the SPV by cash whilst Perak Bio will invest in the SPV through the capitalisation on the assets. In return the SPV will invest in the industry and centres of excellence in Perak. The industry and the SPV will provide the technology, intellectual property and marketing rights to the SPV to lend more weight to the company. The SPV will then raise more capital through listing in the stock exchange whilst the funder will exit through the selling of its shares and obtaining the return of investment.  

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