SC releases performance data on corporate proposal processing – part of continuing efforts to enhance efficiency, effectiveness and transparency


The Securities Commission (SC) today released detailed information on corporate proposals processed by the regulator for the first half of 2006, with additional information and data on the SC’s performance, as part of its overall and continuing efforts at enhancing efficiency, effectiveness and transparency.


SC Chairman Dato’ Zarinah Anwar said, “We are committed to continuous improvement of the delivery of regulatory services to the market. By publishing detailed information on our performance, the SC wants to further enhance transparency and accountability in the discharge of our regulatory functions. This follows on from the implementation of various organisational change management initiatives to enhance effectiveness, productivity and delivery time in achieving our regulatory objectives.”


“We hope that these efforts will translate into clearer benefits for all capital market participants, such as certainty of dealing with the SC, faster decisions, shorter time to market and quality services,” she noted.


As at 30 June 2006 there were 248 corporate submissions with the SC of which 173 were received for the first six months of 2006 and 75 were brought forward from 2005. The 75 submissions brought forward from 2005 were part of a backlog accumulated from the SC having to first process 72 outstanding MESDAQ listing applications transferred to the SC in 2005 when the SC took over the processing function from Bursa. [See Tables 1, 2 and 3 for detailed breakdown of status of the submissions.]

Of the 173 applications received in the first half of 2006, 21 were appeal cases, 5 have been withdrawn or returned and 52 submissions are pending consideration. 95 applications were considered of which 81% were processed and decided within the timelines stipulated [see Table 4]. Of the 52 submissions pending consideration, all except 3, are within their respective timelines [see Table 5].


In all rejection cases, the reasons for the rejections were clearly communicated to the applicants and their advisers through formal letters and post-decision meetings with the SC. Among the main reasons for the rejections were concerns on corporate governance and failure of the applicants to demonstrate future sustainability of the business.


The SC considers corporate submissions under two approaches. The assessment approach involves a focused review of the suitability of corporate proposals, and is adopted for major transactions such as new listing applications, reverse take-overs, back-door listings and corporate proposals by distressed listed companies, where the qualitative aspects of the proposal will be evaluated. Under the declaratory approach, decisions are made based on applicants’ declared compliance with prescribed regulatory standards. Examples of such submissions include rights issues, private placements, share splits and private debt securities issues. The timelines run from the date full and complete submissions are received until the date decision letters are issued.


As part of its continuous improvement efforts, the SC will increase pre and post submission consultations with applicants and their advisers, an initiative started at the beginning of 2006. The SC also intends to publish IPO application rejection reasons on its website soon, to further enhance transparency of the SC’s decision making as well as to serve as a guide for future applicants and their advisers.


In addition to the corporate submissions mentioned above, the SC also considered 240 other applications up to 30 June 2006. These include revisions to and appeals against terms and conditions of approval, extension of implementation time and applications for lifting of moratorium.


Dato’ Zarinah stressed, “The release of this information, I hope, will provide the market with a better understanding of the SC’s timelines and enable applicants and their advisers to better manage their expectations. We are committed towards enhancing our performance standards and will continue to engage with our stakeholders to intensify these improvement efforts.”


Capital market statistics released by the SC now contain expanded information on processing, approvals and rejections of submissions, including timing and reasons. In addition to these scorecard indicators, the periodic quarterly statistics of submissions approved by the SC for the second quarter of 2006 were also reported.


The full series of capital market statistics released by the SC today is set out below.


CAPITAL MARKET STATISTICS
SC Scorecard 1H 2006
&
Statistics of Submissions Approved by SC Q2 2006


A. Corporate Submissions to the SC – 1H 2006


Table 1: Status of Submissions as at 30 June 2006























Total


Submissions brought forward (as at 1 January 2006)


75


Submissions received for the year (up to 30 June 2006)


173


Total submissions


248


Less submissions considered/withdrawn/returned during the year


  (196)


Submissions pending consideration as at 30 June 2006


52


Table 2: Submissions Considered/Withdrawn/Returned as at 30 June 2006





























































Type of Proposals


Approved


Rejected1


Deferred


Withdrawn/Returned


Total


Initial public offering


18


282


1


4


51


Restructuring



53




5


Acquisition


13


2




15


Capital raising4


27




1


28


Private debt securities


47


1



3


51


Others5


37


5



4


46


Total


142


41


1


12


196


















1  In all rejection cases, reasons for rejection were clearly communicated to applicants and advisers through formal decision letters followed up by post-decision meetings with SC.
Among main reasons were concerns on corporate governance of promoters and directors, and failure of applicants to demonstrate future sustainability of business.
3 Main reason was submissions not comprehensive enough to address distressed financial position of ailing listed companies.
4     Includes equity issues, private placements and restricted issues.
5  Includes transfers to Main Board, disposals of assets, issues of warrants and corporate exercises by unlisted companies.


Table 3: Average Processing Time for Submissions Considered/Withdrawn/Returned, 1 January-30 June 2006





























































Submissions


Submissions
considered/withdrawn/returned


Average time from submission to decision4


Brought forward from 20051

   

   Assessment approach


37


6.6 months


   Declaratory approach


31


52 days


Sub-total2


68

 
     

Received in 2006

   

   Assessment approach


23


2.7 months


   Declaratory approach


72


21 days


Sub-total3


95

 

   Appeal cases


21

 

   Withdrawn/returned


12

 
     

Total


196

 














1   Submissions brought forward from 2005 were part of a backlog from having to first process 72 outstanding MESDAQ listing applications transferred to SC on 1 January 2005, when SC took over the processing function from Bursa Malaysia.
2    Excludes 7 withdrawn/returned submissions.
3 Excludes 5 withdrawn/returned submissions.
From date of receipt of complete submission to date of decision letter.


Table 4: Processing Turnaround Time for Corporate Submissions Considered,
1 January-30 June 2006

























Submissions considered in 20061


Within
time charter2


Exceeds
time charter3


Total


   Assessment approach


19


4


23


   Declaratory approach


58


14


72


Total


77


18


95












1   Excludes appeal cases and submissions brought forward from 2005.
SC time charter is 3 months for submissions under the assessment approach and 21 and 14 working days for equity and private debt securities respectively under the declaratory approach, computed from date of receipt of complete submission to date of decision letter.
3  Main reason being applicants and advisers’ delayed replies to SC queries.


Table 5: Submissions Pending Consideration as at 30 June 2006

























Submissions


Within
time charter1


Exceeds
time charter2


Total


   Assessment approach


24



24


   Declaratory approach


25


3


28


Total


49


3


52









SC time charter is 3 months for submissions under the assessment approach and 21 and 14 working days for equity and private debt securities respectively under the declaratory approach, computed from date of receipt of complete submission to date of decision letter.
2 Submissions subject to issues of major concerns or investigation.


B. Statistics of Submissions Approved by SC — Q2 2006


i) Corporate Proposals


Table 6: Number of Corporate Proposals Approved





















































 

Number of Corporate Proposals Approved


Type


Q2
2006


Q1
2006


1H
2006


1H
2005


New listings


3


15


18


48


Capital-raising exercises 1


39


35


74


98


Acquisitions


6


7


13


11


Restructuring 2





1


Share splits





8


Others 3


24


13


37


22


Total


72


70


142


188












1   Includes equity issues, private placements, restricted issues, issues of debt securities and Redeemable Convertible Unsecured Loan Stocks (RCULS).
2 Includes debt restructurings.
3 Includes transfers to Main Board, disposals of assets, issues of warrants and corporate exercises by unlisted companies.


ii)        Private Debt Securities


Table 7: Approved RM-denominated PDS Issues







































 

Q2 2006


Q1 2006


Q2 2005


No. of issues


Size of issues (RM’mil)


No. of issues


Size of issues (RM’mil)


No. of issues


Size of issues (RM’mil)


Conventional


151


10,600.500


10


3,385.30


152


3,482.05


Islamic


16


4,376.874


16


11,557.00


183


13,345.00

Total

31


14,977.374


26


14,942.30


33


16,827.05












1 Includes two ABS issue amounting to RM1.5 billion.
2 Includes two ABS issues amounting to RM1.6 billion.
3 Includes one Islamic securities issue by a Multilateral Development Bank amounting to RM2 billion.


Table 8: Foreign Currency-denominated PDS Issues by Malaysian Issuers









































 

Q2 2006


Q1 2006


Q2 2005


No. of issues


Size of issues (USD’mil)


No. of issues


Size of issues (USD’mil)


No. of issues


Size of issues (USD’mil)


Conventional


1


400.00




2


600.00


Islamic







Total

1


400.00




2


600.00



Table 9: Foreign Currency-denominated PDS Offer by Foreign Corporation









































 

Q2 2006


Q1 2006


Q2 2005


No. of offers


Size of offers (USD’mil)


No. of offers


Size of offers (USD’mil)


No. of offers


Size of offers (USD’mil)


Conventional




1


6,500.001


1


1,500.00


Islamic


1


200.00




1


1,000.00

Total

1


200.00


1


6,500.00


2


2,500.00


1 Offer in Malaysia was part of a global offering.


Table 10:       Approved PDS Issues by Cagamas Berhad









































 

Q2 2006


Q1 2006


Q2 2005


No. of issues


Size of issues (RM’mil)


No. of issues


Size of issues (RM’mil)


No. of issues


Size of issues (RM’mil)


Conventional


6


2,395.00


6


1,285.00


5


780.00


Islamic


2


300.00


8


2,200.00


2


200.00

Total

8


2,695.00


14


3,485.00


7


980.00


Table 11:Number and Size of Approved Programme Issuance of Structured Products









































 

Q2 2006


Q1 2006


Q2 2005


No. of issues


Size of issues (RM’mil)


No. of issues


Size of issues (RM’mil)


No. of issues


Size of issues (RM’mil)


Conventional




3


2,390.00


5


6,299.90


Islamic


1


1,800.00





Total

1


1,800.00


3


2,390.00


5


6,299.90


iii)       Take-Overs & Mergers


Table 12: Number of Approved Submissions Relating to the Malaysian Code on Take-overs and Mergers
































Type


Number of Submissions Approved


Q2   2006


Q1 2006


Q2   2005


Clearance of offer document


6


4


3


Application for waiver from mandatory – offer obligation


16


11


11


Other


48


31


21

Total

70


46


35



iv) Unit Trust & Other Collective Investment Schemes


Table 13: Number of Submissions Relating to Unit Trust and Other Collective Investment Schemes Approved











































 

Number of Submissions Approved


Type


Q2
2006


Q1
2006


Q1 – Q2
2006


Q1 – Q2
2005


Establishment of new funds


20


17


37


30


Increase in fund size


21


14


35


26


Exemption/variation from Guidelines1


3


3


6


4


Other applications 2


33


27


60


58


Total


77


61


138


118









1 Excludes applications submitted through establishment of new schemes.
2 Includes applications for extension of time, change of trustee, revaluation of property, investment in foreign market, and renewal of registration of trustee.


SECURITIES COMMISSION