SC encourages Malaysian businesses abroad and foreign corporations with Malaysian operations to list on KLSE


SC encourages Malaysian businesses abroad and foreign companies with Malaysian operations to list on KLSE

Successful Malaysian-owned companies with foreign operations, and quality foreign corporations operating in Malaysia, can now list on the Kuala Lumpur Stock Exchange (KLSE) with the introduction of the revised listing policy by the Securities Commission (SC) today.


The new policy is embodied in Guidance Note 7A and Guidance Note 7B under the SC’s Policies and Guidelines on Issue/Offer of Securities (Issues Guidelines). The guidance notes are effective immediately.


With the liberalisation, Malaysia now welcomes the following types of companies to list on the KLSE (see also Table 1 below):















(a) Malaysian-incorporated companies with substantial operations abroad and controlled/owned by Malaysians;
(b) Foreign-incorporated companies with substantial operations abroad and controlled/owned by Malaysians;
(c) Foreign-incorporated companies with substantial operations in Malaysia and controlled/owned by Malaysians; and
(d) Foreign-incorporated companies with substantial operations in Malaysia and controlled/owned by foreigners.

All other qualitative and quantitative requirements for listing apply to these companies.


“This is recognition for Malaysians who have made good overseas. The new flexibility allows Malaysian-owned companies who are successful overseas to further expand operations by accessing capital back home. This is regardless of whether they have been incorporated locally or abroad. We should be proud of their success, and the Malaysian capital market should be open to them to make them grow stronger,” said SC Chairman Datuk Ali Abdul Kadir.


Aside from recognising and bringing back Malaysian successes, the new policy is a major liberalisation as it opens the doors to foreign-incorporated companies which are controlled by foreigners but operate locally.


“This is in addition to locally-incorporated, foreign-owned companies operating in Malaysia which can already list on the KLSE,” he said.


“The listing of these new types of companies will increase the diversity and quality of companies listed on the KLSE and also expand the range of investment opportunities for investors,” he said.


The policy is in line with Recommendation 22 of the Capital Market Masterplan, which recommends the widening of the breadth of listings in the Malaysian equity market to include listings by foreign companies in a gradual and carefully-managed manner. In formulating the new policy, the SC had sought and received valuable feedback from various industry bodies and government agencies.


“We want KLSE to retain its standing as a premium market. We want strong, quality companies, and therefore foreign corporations can only list on the Main Board. Further, to ensure integrity and a level playing field, foreign corporations applying for listing must be incorporated in jurisdictions which have comparable corporate laws and enforcement.


“Equally important is we want to ensure that the listing of foreign companies, in raising capital from Malaysians, will also benefit Malaysians,” Datuk Ali said.


“Foreign companies applying for listing on the KLSE must demonstrate that their listing will benefit Malaysia. In a situation where such benefit may not be so tangible, the company should then provide a steady income stream for its Malaysian shareholders through dividends,” he said.


The companies must also get the approval of Bank Negara Malaysia, where applicable, for the use of proceeds from the issue/offering of securities.


Guidance Note 7A contains requirements relating to the listing of foreign corporations on the KLSE while Guidance Note 7B contains the requirements for the listing of companies with foreign-based operations. Both the guidance notes will replace the suspended “Guidelines for The Public Offering of Securities of Foreign-Based Companies With Listing and Quotation on the Kuala Lumpur Stock Exchange” and the existing paragraphs 7.13 and 7.14 of Chapter 7 of the Issues Guidelines. The guidance notes and the Issues Guidelines are available here.


Prior to this, a company applying for listing on the KLSE must be Malaysian-incorporated and must have the majority of its operations in Malaysia. The companies can be either controlled/owned by Malaysians or foreigners.


Table 1:
New types of companies which are allowed to list under Guidance Notes 7A and 7B



























































Type of company


Jurisdiction of incorporation


Location of assets/ substantial operations


Control/ownership of corporation


Applicability of guidance notes


Malaysia


Foreign


Malaysia


Foreign


Malaysians


Foreigners


Guidance Note 7A


Guidance Note 7B


(a)






(b)







(c)






(d)








SECURITIES COMMISSION
19 September 2003