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Islamic finance continues to dominate the market in Malaysia. Practitioners have commented on the government's drive to make the country an international hub for Islamic banking and finance....

Islamic finance continues to dominate the market in Malaysia. Practitioners have commented on the government's drive to make the country an international hub for Islamic banking and finance. One lawyer says: "Vast amounts of money are expected to be invested, and firms are scrambling to get a piece of the pie." Innovative structures have been introduced by firms in the country who have taken a more proactive step in providing guidance on Islamic finance concepts. "There has been an upsurge of work involving Islamic structured finance," says one partner.

Developments in legislation have broadened choices available to investors. The change to Labuan regulations has helped re-establish the region as a viable financial centre. "People are going back there, as channelling funds through entities from there have been made easier," says one practitioner. This change in legislation has been met with approval by banking and finance lawyers, with some firms maintaining outposts in Labuan.

Another trend that has been encouraging for foreign banks was the issuing of more licenses in mid 2010 to five foreign entities, as the central bank looks to liberalise the sector.

There have been rumblings from the Central Bank regarding a review of the regulation of the financial sector, which hopes to provide a more streamlined and clear guideline for work in this area.

While some practitioners note that the capital markets remained slow in the past year, there have been some deals that caught the market's attention, namely the Petronas Chemical Group IPO. "We've seen some listings in the market," says one lawyer, "and there has been an increasing level of interest from foreign companies in the capital markets in the country....

While some practitioners note that the capital markets remained slow in the past year, there have been some deals that caught the market's attention, namely the Petronas Chemical Group IPO. "We've seen some listings in the market," says one lawyer, "and there has been an increasing level of interest from foreign companies in the capital markets in the country." Practitioners note however that there is a need to streamline regulations to meet these needs.

The market continues to be awash with bond issuances, with MTN programmes prevalent in the portfolios of leading law firms in the country. "We've been light on the listing side and equity work," says one partner, "but we're busier than ever on the debt side."

Attention continues to be drawn to sukuk (Islamic bond)issuances and recent developments from the Security Commission of Malaysia on sukuk guidelines are expected to stimulate the market. The guidelines will come into effect in August 2011 and are an attempt to improve the country's regulatory set-up regarding fundraising and product regulation in the private debt securities and sukuk markets. The rules are also intended to increase the efficiency and competitiveness of the sukuk market and to encourage greater cooperation between Islamic capital markets in the Middle East and Asia.

M&A in Malaysia has seen a wave of regulatory change in the last year. The implementation of the Takeover Code in December 2010 and the expected Competition Act coming in 2012 have both been pivotal developments for this area of practice....

M&A in Malaysia has seen a wave of regulatory change in the last year. The implementation of the Takeover Code in December 2010 and the expected Competition Act coming in 2012 have both been pivotal developments for this area of practice. "They're welcome changes to the market," says a lawyer, "but it will require quite some getting used to." Some firms have already made moves to secure in-house specialists in the area of competition law, looking abroad to hire. "We've anticipated this need for competition advice, and have brought in someone who has extensive experience working in competition law in more developed markets abroad," says the managing partner of one firm.

The Takeover Code eliminates a loophole that allowed the take over of a listed company with just a simple majority of shareholders. This development has been met with some relief by practitioners. "These changes in the new takeover regulations require more disclosures by parties looking to buy out listed companies and prohibit certain actions by companies to frustrate takeover bids," says one practitioner.

The Competition Act has two key prohibitions at the moment, which ban anti-competitive agreements and the abuse of dominant positions in the market. At the moment there are no provisions regulating mergers and acquisitions. One lawyer remarks: "The act is intended to create a level playing field for all businesses, thereby inspiring confidence in foreign investors, whilst improving competitiveness of goods and services in Malaysia."