Kuala Lumpur, 12 November 2008
Enhanced Bumi allocation process to improve time-to-market of IPOs
Following the announcement made by the Deputy Prime Minister and Finance Minister of Malaysia YAB Dato’ Sri Najib Tun Abdul Razak on the enhanced Bumiputera allocation process at a press conference held at the Securities Commission (SC) today, the SC would like to provide additional information on the measures announced.
The SC has made continuous improvements on the approval process on listing applications to ensure that Malaysia remains competitive as a listing destination. The new announcement by the Deputy Prime Minister will further enhance the efficiency of this process whilst ensuring that the Bumiputra equity conditions imposed on domestic companies as part of the listing conditions remain in line with the overall objective of the NDP. Besides creating greater certainty and significantly shortening the time to listing, this step will enable wider participation by the general Bumiputera public in the initial public offering (IPO) process.
Under the revised process, domestic companies seeking listing will still have to comply with the NDP requirement of 30% Bumiputera equity participation, and will continue to make their shares available to MITI-approved Bumiputera institutions and investors. However where there are any unsubscribed shares, these shares will now be able to be made available for application by the wider Bumiputera public as part of the IPO balloting process. Companies will be deemed to have complied with the Bumiputera equity requirements once they have completed this process.
Consistent with this, domestic companies which have already been listed but have not met the 30% Bumiputera equity requirement due to their inability to attract Bumiputera investors at the point of listing will also be deemed to have complied with NDP conditions on Bumiputera ownership. These companies, despite the various extensions of time granted, have not been able to attract Bumiputera investors to subscribe to their shares due to the lack of interest as their share prices have fallen below IPO prices and, in some cases, below par value. Bumiputera investors can now have the option to purchase these shares from the market at a lower price.
As is the case currently, for subsequent fund-raising exercises involving placements or offers to the public that result in dilution of the Bumiputera equity ownership, the company will be required to issue sufficient shares to reinstate the Bumiputera equity ownership to the level that existed at the time of the fund-raising exercise.
The above flexibilities do not exempt companies from having to comply with any Bumiputera equity requirements imposed by the relevant Ministries as part of their licensing conditions.
The existing policy of not imposing any Bumiputra equity conditions on foreign companies seeking listing on Bursa Malaysia will be maintained. This is to ensure that a conducive environment prevails in order to attract companies which are operating outside Malaysia and which have the option of seeking listing in other countries.