Capital-Raising - Regulatory Performance and Outcomes

Capital-Raising

Equity
In 2023, equity fundraisings continued to register a higher number of equity applications submitted to the SC, compared to 2022. Out of the 22 equity applications received by the SC in 2023, nine of which were for initial public offerings (IPOs), two in relation to a proposed acquisition resulting in a significant change of business direction or policy, and 11 for transfer of listings to the Main Market of Bursa Malaysia Bhd (Bursa Malaysia)
TABLE 1
Equity applications

No. of applications

2023

2022

Received during the year

22

20

Considered 18 18

Approved 18 16

TABLE 2
Service charter performance – equity applications

Measure

Target
Results

2023
2022

No. of equity applications processed within time charter²

90%

99%
100%

TABLE 3
Equity prospectuses and other documents

Equity applications

2023
2022

Prospectus

6
19

Abridged prospectus 11 15

TOTAL 17 34

Out of the 22 equity applications received by the SC in 2023, nine of which were for initial public offerings (IPOs), two in relation to a proposed acquisition resulting in a significant change of business direction or policy, and 11 for transfer of listings to the Main Market of Bursa Malaysia Bhd (Bursa Malaysia) (Table 1). A further seven applications had been brought forward from 2022 (Table 1A: Refer Detailed Statistics in page 55).

Out of this total, 18 applications were considered while two were withdrawn and nine remained under review as at year-end. On average, five rounds of queries were raised per equity application considered, 99% of which were raised within time charter (Table 2).

The SC also registered 17 equity prospectuses in 2023, comprising six IPO prospectuses and 11 abridged prospectuses in relation to fundraising by listed corporations (Table 3).

No. of applications	2023	2022
Received during the year	22	20
Considered	18	18
Approved	18	16

Measure	Target	Results
No. of equity applications processed within time charter²	90%	99%	100%

Equity applications	2023	2022
Prospectus	6	19
Abridged prospectus	11	15
TOTAL	17	34

In 2023, equity fundraisings continued to register a higher number of equity applications submitted to the SC, compared to 2022. Out of the 22 equity applications received by the SC in 2023, nine of which were for initial public offerings (IPOs), two in relation to a proposed acquisition resulting in a significant change of business direction or policy, and 11 for transfer of listings to the Main Market of Bursa Malaysia Bhd (Bursa Malaysia)

TABLE 4

Corporate bonds and sukuk lodgements

Lodgements during the year	2023	2022
No. of lodgements	64	62

TABLE 5

Corporate bonds and sukuk applications

Applications during the year	2023	2022
No. of applications	2	2
Considered	2	2
Approved	2	2

In 2023, the number of corporate bonds and sukuk lodgements3 remained stable with 64 corporate bonds and sukuk lodgements were made with the SC compared to 62 lodgements in the previous year (Table 4). Sukuk accounted for 67% of the number of lodgements, as well as 57% of the nominal value in relation to ringgitdenominated instruments (sukuk RM98.26 billion; total RM171.26 billion) and 80% of the nominal value for foreign currency-denominated instruments (sukuk US$40.00 billion; total US$50.00 billion) (Table 4A: Refer Detailed Statistics in page 55).

The SC also received two corporate bonds applications with a nominal amount of RM0.22 billion in 2023, compared to two corporate bonds applications with a nominal amount of RM0.37 billion received in 2022 (Table 5). Both applications had been considered and approved as at year-end (Table 5A : Refer Detailed Statistics in page 56).

TABLE 6

Corporate bonds and sukuk related documents

No. of documents	2023	2022
Lodgement of trust deed/supplemental trust deed	107	70
Deposit of information memorandum/ lodgement of disclosure document	62	52
Lodgement of product highlights sheet	3	1
Registration of abridged prospectus	2	-

A total of 174 documents were received in 2023 compared to 123 received in 2022, representing a 41% increase in corporate bonds and sukuk related documents received by the SC (Table 6).

Take-overs and Mergers

TABLE 7

Take-overs, mergers and compulsory acquisitions

Applications and documents considered	2023	2022
Clearance of offer/scheme documents	10	18
Clearance of independent advice circulars (IACs)	13	25
Clearance of whitewash⁴ circulars	4	3
Applications for exemption from mandatory offer obligation	19	11
Other applications	16	20
TOTAL	62	77

TABLE 8

Service charter performance – take-overs and mergers

Measure	Target	Results
Measure	Target	2023	2022
Offer documents cleared within 21 calendar days from receipt of take-over offer notice	100%	100%	100%
IACs for take-over offers cleared within 10 calendar days from offer document dispatch date		100%⁵	100%
Scheme document and independent advice letter for schemes cleared within 35 calendar days from date of announcement by offeree board to table the resolution for the scheme to shareholders for approval		100%	100%⁶

The SC administers the Malaysian Code on Take-overs and Mergers 2016 (Code) and Rules on Take-overs, Mergers and Compulsory Acquisitions (Rules) to ensure that the acquisition of control takes place in an efficient, competitive and informed market. The SC also focuses on the conduct of relevant parties to ensure that shareholders of the offeree company are treated fairly, given the opportunity to decide on the merits of a take-over and are afforded equal treatment by an offeror.

The SC periodically reviews take-over policies to ensure that the requirements provide an orderly framework within which take-overs, mergers and compulsory acquisitions are conducted. To this end, public consultation or engagement with various interest groups are organised to seek feedback.

In 2023, the SC considered a total of 62 applications under the Rules compared to 77 applications in 2022. This was mainly due to the lower number of take-over offers/schemes and exemptions for the mandatory offer obligation pursuant to the whitewash procedures undertaken during the year (Table 7).

The SC cleared 10 offer documents involving a total offer value7 of RM5.53 billion or an average of RM553.43 million per offer. This represented an increase of RM3.43 billion against the previous year (2022: 18 offers with total offer value of RM2.10 billion, averaging RM116.93 million per offer). Three of the 10 offers were undertaken by way of schemes, similar to 2022.

The largest offer in 2023 was by Sime Darby Enterprise Sdn Bhd (a wholly owned subsidiary of Sime Darby Bhd) for the remaining shares in UMW Holdings Bhd. At RM2.27 billion in offer value, it accounted for 41% of the total offer value in 2023. Other notable offers in terms of offer value include the offers by Lembaga Tabung Angkatan Tentera (LTAT) for the remaining shares in Boustead Plantations Bhd at RM1.96 billion and in Boustead Holdings Bhd at RM703.25 million. The remaining offers were significantly smaller and comprised the offers for Ewein Bhd, Cyberjaya Education Bhd (formerly known as Minda Global Bhd), Damansara Holdings Bhd, Systech Bhd and MBf Corporation Bhd, NCB Holdings Bhd and Ajiya Bhd, all of which had offer values below RM100 million each.

Of the 10 offers in 2023, seven were in relation to offeree companies listed on the Main Market, one in relation to an offeree company listed on the ACE Market (Systech Bhd) and two in relation to an unlisted public company (MBf Corporation Bhd and NCB Holdings Bhd). There were fewer privatisation exercises with only three proposed in 2023 (2022: five privatisation exercises). Two of the companies have since been successfully delisted from the stock exchange as at 31 December 2023.

Sector-wise, the consumer products and services sector were the highest in terms of offer value with RM2.34 billion, representing 42% of the total offer value or 20% of the total number of offers and comprised the offers for UMW Holdings Bhd and Cyberjaya Education Bhd (formerly known as Minda Global Bhd). This was followed by the plantation sector with a total offer value of RM1.96 billion, representing 35% of the total offer value or 10% of the total number of offers, and comprised the offer for Boustead Plantations Bhd.

The SC also cleared 13 IACs, nine of which were in relation to take-over offers/schemes and four in relation to exemptions from the mandatory offer obligation pursuant to the whitewash procedures (2022: 25 IACs). Four whitewash circulars were also cleared in relation to exemptions from the mandatory offer obligation (2022: 3 whitewash circulars). Notwithstanding the moderation in take-over and merger activities compared to the preceding year, the number of applications for exemptions from having to undertake a mandatory take-over offer increased from 11 in 2022 to 19 in 2023. Six applications were related to whitewash exemptions while the remaining 13 applications involved acquisitions or transfer of shares within members of a group of persons acting in concert pursuant to succession planning or internal reorganisation exercises.

The SC also considered 16 applications for various matters under the CMSA and the Rules, including applications relating to appointment and/or resignation of directors of the offeree during the offer period and applications for extension of time to meet certain obligations under the Rules.

Whitewash refers to an exemption from mandatory offer obligation arising from the issuance of new securities, granted by the SC subject to fulfilment of the stipulated conditions including approval from independent holders at a general meeting.
Includes one application where extension of time was granted to submit an IAC to the SC and dispatch the same to shareholders.
Includes one application where extension of time was granted to dispatch the circular and independent advice letter for the scheme.

Mitigating Systemic Risks And Promoting Financial Stability

Enhanced Risk Governance Framework

In 2021, the SC-wide risk governance framework was enhanced as part of an overall initiative to have an effective integrated and predictive risk surveillance to maintain regulatory agility.

The structured risk governance framework integrated the wider spectrum of risks such as technology, cyber and conduct risk at the SC’s Systemic Risk Oversight Committee (SROC) and Accounting, Market and Corporate Surveillance Committee (ACMS).

Intensified surveillance

The SC continued to intensify its surveillance of systemic risk to maintain market resilience and stability. Regular SROC engagements were held to deliberate concerns emanating from various segments across the capital market. Domestic equity and bond market, foreign fund flows and trade participation continued to be monitored closely for potential stress points.

In addition, measures and economic stimulus packages introduced by the government to weather the impact of COVID-19, market trading conduct and the financial position of listed companies were among the focus areas for discussion.

Thematic assessments

The SC also conducted thematic assessments covering investors’ fund flows, the position of firms, and policy decisions to ascertain the possible impact on the capital market. In 2021, the SC reviewed and enhanced its crisis indicators on potential emerging risks in the
capital market.

The enhanced crisis indicators provided a reference point for escalation to SROC when the identified indicators and triggers materialised and ensured prompt response to manage and prevent any issues of concern that might lead to a systemic crisis.

Joint regulatory discussions

In 2021, the SC conducted frequent joint regulatory discussions with other authorities such as Bank Negara Malaysia (BNM) and Labuan Financial Services Authority (Labuan FSA) to identify systemic risk concern areas within the financial and capital markets in Malaysia.

Monitoring of various components of the capital market

The SC continued its efforts to undertake a methodological and integrated approach to ensure any potential systemic risk was being monitored, mitigated, or managed. Figure 1 highlights the findings from the following risk assessments on the various components of the capital market.