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(PETALING JAYA) There may be some changes in store for the Malaysian equity market as the year-long review of the regulatory framework for listings and fund raising has been completed, according to a report in a Malaysian paper.
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After some tweaking following a consultation period that ended last month, the proposals have been finalised, reported StarBiz.
Next week, the Securities Commission (SC) and Bursa Malaysia are expected to unveil a set of new rules that revolve around the merger of the main and second boards. The Mesdaq market too will have an expanded role, as it will be open to all kinds of businesses.
In the consultation papers published in February to seek public feedback on the proposed guidelines and listing requirements, the single board is referred to as the unified board (UB), while the repositioned Mesdaq market is called the New Mesdaq. Their new names will be announced next week as well.
'This shift in the regulatory framework makes capital raising simpler and more efficient for issuers and investors. Also, Bursa needs to keep up with the best practices in other markets,' a source familiar with the revamp process told StarBiz.
'With the UB, investors have a clear choice based on their risk appetite. And if you want to invest in a start-up, you go to the New Mesdaq.'
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Currently, to qualify for a mainboard listing based on its profit track record, a company must have an aggregate after-tax profit of RM30 million (S$12.4 million) or more over three to five financial years, and an after-tax profit of at least RM8 million for the most recent financial year.
For second board aspirants, the minimum aggregate after-tax profit over three to five financial years is RM12 million, while the minimum after-tax profit for the most recent financial year is RM4 million, reported StarBiz.
For the UB's entry requirements, the SC has proposed an aggregate after-tax profit over three to five financial years of RM20 million or more, and an after-tax profit for the most recent financial year of RM6 million or more.
Said the regulator in the consultation paper, 'The new entry requirement under the profit test is now more comparable with other markets in the region and, at the same time, would still allow Bursa to maintain the quality of corporations seeking listing on the UB.'
The SC has also proposed some easing of the rules for those seeking listing via the market capitalisation/profit test route, according to StarBiz.
To allow issuers more flexibility, it has been proposed that underwriting and balloting would be optional in initial public offerings (IPOs).
Another big change is that the SC intends to allow the listing of special-purpose acquisition companies (SPACs) on Bursa. A SPAC is a shell company that has no operations but goes public with the intention of merging with or acquiring operating companies or businesses with the proceeds of its IPO.
The SC will no longer approve IPO applications for the New Mesdaq. However, the regulator will still look out for the interests of investors by continuing to be responsible for the registration of prospectuses.
Under the new rules, a company seeking a listing on the New Mesdaq is only required to appoint a sponsor to submit the prospectus to the SC and to file an application with the exchange. It is therefore the sponsor's duty to assess the suitability of the company.
It is not known when the new rules will take effect but it appears that the authorities are keen to get things going as soon as possible.
Initially, the consultation period had been three weeks but was extended another two weeks to March 15. Even so, there were requests for another extension.
Said the source to StarBiz: 'People wanted more time, but it is felt that the new framework should not be delayed any more.'
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