Financial strength and new management requisites for PN4 relistings

Delisted PN4 companies seeking relisting on the Kuala Lumpur Stock Exchange (KLSE) must demonstrate that they are financially strong and have identified the causes that led to their past distressed financial state. The companies must also have new dominant shareholders and management.

Delisted PN4 companies seeking relisting on the KLSE must ensure that their assets, including new assets to be injected, are of good quality and would be able to rectify their profitability, cash flow and balance sheet problems.

Towards this end, among the new criteria is that submissions to the Securities Commission (SC) can only be made after independent investigative audits on the previous affairs of the delisted PN4 company are completed.

The SC Chairman, Datuk Ali Abdul Kadir said this today in conjunction with the release of the criteria for delisted PN4 companies to seek relisting on the KLSE. The criteria, which is issued through Guidance Note 6A of the SC’s Policies and Guidelines on Issue/Offer of Securities, are available here. The criteria would ensure that the relisted companies conform to the standards expected from listed companies.

“We want to ensure that the relisted company starts with a clean bill of health and that it will be run by responsible management. As such, we have imposed some additional conditions. For example, we require that the old management, which may have caused all the problems, must go,” said Datuk Ali.

“The chance to re-list would be a new lease of life for the de-listed PN4 companies. It is given following requests from institutional and minority interests as well as industry participants. Those who want to get back on should do so as soon as possible so that shareholders, especially the minority shareholders, can recover the value of their shareholdings,” said the Datuk Ali.

Delisted PN4 companies that submit their applications within 12 months from the date of notification of the KLSE’s decision to de-list the securities of the companies from the Official List of KLSE can seek relisting via introduction and need not make an offering to the general public. They can also list based on the group’s proforma accounts without fulfilling the conditions on common directors and common controlling shareholders. The condition for similar or complementary business, however, must be fulfilled in meeting the historical profit track record requirement for listing.

The SC Chairman said the relaxation of the use of proforma accounts is an attractive flexibility, as it would allow the pooling of assets by white knights to be injected into the delisted PN4 company.

Other existing qualitative and quantitative requirements for new listing of companies remain applicable and must be met.
Datuk Ali stressed that the SC will continue to pursue enforcement actions against the directors and management of PN4 companies who have mismanaged their companies even if they are de-listed.

Pursuant to the Securities Commission Act 1993, corporate proposals and securities transactions involving de-listed PN4 companies, such as the issue/offer of securities, or take-overs and mergers, continue to be subject to the SC’s regulatory requirements unless expressly exempted under the Act.

18 June 2003