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Brunei: Offshore Business Sectors

Securities Trading

Securities is very widely defined under the Securities Order, 2001 ('SO') which provides a framework for the establishment of a financial exchange or exchanges in Brunei, and for the licensing of "dealers". The latter may, or may not, be members of an exchange licensed under this Order. The terms 'investment adviser' is also very widely defined. No person or company, whether based in Brunei or visiting, may offer any form of financial product or investment in any form of security without holding a license granted under the SO.

The Securities Order is "An Order to make provision with respect to financial exchanges, dealers and other persons providing advice in respect of, managing or dealing in securities, for certain offences relating to securities, and for other purposes connected therewith".

The responsible Minister is the Minister of Finance, and the Order is administered by the Authority appointed by His Majesty the Sultan and Yang Di-Pertuan Negara Brunei Darussalam. The Minister may establish or cause to be established within Brunei Darussalam a body or bodies corporate to be exchanges. An exchange shall, with the approval of the Authority, make rules which provide for the conditions of entry and admission into membership and for the regulation generally of the conduct of trading members in connection with the business of an exchange. The secretary of the exchange shall keep a register of the trading members. The register of trading members shall be made available for inspection at the registered office of an exchange during business hours. An exchange shall provide such assistance to the Authority, as the Authority reasonably requires for the performance of the Authority's functions and duties.

The Minister may by order published in the Gazette require that an exchange shall establish and keep such fidelity fund as he may determine to be administered by the committee on behalf of that exchange. The assets of fidelity fund shall be the property of the exchange but shall be separated from all other property and shall be held in trust for the purposes set out in this Part. Provision is also made for appropriate insurance.

The Authority may, where it appears to be in the interests of Brunei Darussalam, issue directives to an exchange with respect to trading, the manner in which that exchange carries on its business, including the manner of reporting off-market purchases, and any other matter which the Authority considers necessary for the effective administration of this Order and such exchange shall forthwith comply with that directive.

Except as permitted pursuant to the Order, a person shall not carry on the business of a dealer or hold himself out as carrying on such a business unless he is the holder of a dealer's license granted under Part III. A person shall not act as a dealer's representative, who in Part III is referred to as the "representative", unless he is the holder of a dealer's representative's license granted under that Part.

Except as permitted pursuant to the Order, a person shall not act as an investment adviser or hold himself out to be an investment adviser unless he is the holder of an investment adviser's license granted under Part III. A person shall not act as an investment representative, who in this Part is referred to as the "representative", unless he is the holder of an investment representative's license under that Part.

Under the Securities Order, an investment adviser is very widely defined, and includes all persons (including companies) who in or from within Brunei Darussalam carry on the business of advising others concerning securities or of investments or of investments or portfolio management. Also included are those who as part of a regular business issue or promulgate analyses or reports concerning securities. Certain institutions are exempted, for example licensed banks, registered newspapers and licensed broadcasters. In the latter two cases it is giving of advice, which is relevant.



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