Key changes to help spur stock market activity

By Jeeva Arulampalam
Published: 2009/05/09

THE revamp of Bursa Malaysia's board structure and release of new guidelines for equity fund-raising will bring key changes in hopes of spurring more activity on the stock market.

For example, the Securities Commission (SC) has reduced approvals needed for corporate proposals for the Main Market.The SC's approval under section 212 of the Capital Market and Services Act is only needed for initial public offerings (IPO), major acquisitions causing a shift in business direction, secondary listings and cross listings, and listings transfer from the ACE Market to the Main Market.

All other equity-based corporate proposals such as private placements of shares, rights offerings and restricted share issuances will no longer require the SC's approval.With the new equity guidelines, companies that want to list on the Main Market under the profit test must now have an uninterrupted aggregate profit after tax of at least RM20 million as opposed to RM30 million previously, for the past three to five years.

Also, there is no longer a minimum issued andpaid-up capital, and underwriting of securities will be made optional.To increase efficiency, the SC will review IPO applications and the prospectus together for Main Market listings, reducing the approval time from 74 working days currently to 60 days.

The equity guidelines also now allow special purpose acquisition companies (SPAC) to list on the Main Market.SPAC are shell companies with no operations but go public with the aim of buying companies or businesses using its IPO proceeds.A SPAC must raise at least RM150 million and at least 90 per cent of the proceeds must be put in a trust account.

These shell companies aim to promote private equity activities and encourage mergers and acquisitions.To attract foreign companies for secondary listing here, quantitative requirements such as a minimum RM1 billion market capitalisation and a minimum RM60 million after-tax profit for the latest fiscal year, have been removed.The full revised guidelines and listing rules are on the websites of the SC and Bursa Malaysia.