Enhanced General Mandate for Pro Rata Rights Issue to Expedite Secondary Fund Raising for Eligible Listed Issuers
10 November 2020   |   Kuala Lumpur

The Securities Commission Malaysia (SC) and Bursa Malaysia (Bursa Malaysia) announced today a temporary relief measure allowing eligible listed issuers to obtain mandated shareholder approval at a general meeting to undertake rights issue exercises.

This temporary flexibility to allow expedited right issue exercises by Public Listed Companies (PLCs) and listed real estate investment trusts (REITs) will be introduced via an enhanced rights issue framework, which allows eligible PLCs and REITs (collectively “eligible listed issuers”) to issue new rights shares or units to their existing securities holders on a pro rata basis, up to 50% of the total number of issued shares or issued units.

The rights issue exercises implemented with mandate obtained under the temporary relief measure are subjected to certain conditions, for example, such rights issue must be a plain vanilla issuance where it can only be utilised for ordinary shares or units and not any other types of securities such as warrant or convertible shares.

Under this expedited process, eligible listed issuers will be granted greater flexibilities to manage market uncertainties while making capital calls, and fast track secondary fundraising, subject to certain safeguards. For instance, the eligible listed issuers must have controlling securities holders[1] who will provide an irrevocable undertaking to subscribe for their full entitlements, with not more than a 30% discount to the theoretical ex-rights price on these newly issued shares or units.

Alongside the broader efforts by the Government to chart the recovery path of the nation, the SC and Bursa Malaysia are continuously exploring ways to make fundraising through the capital market more efficient. As a result of the pandemic and the movement control order (MCO), many listed issuers are facing operational challenges, including raising working capital and repaying bank borrowings. An expedited process for rights issues will enable eligible listed issuers to be more agile as they can raise funds from their existing securities holders in a shorter timeframe to meet their capital and financial needs.

This new general mandate for rights issue is in addition to the enhanced 20% general mandate for the issue of new securities, commonly utilised for private placements. Both relief measures are valid until 31 December 2021.

The SC and Bursa Malaysia will continue to monitor evolving developments in the securities and financial markets which have been affected by domestic and global events, to evaluate and recalibrate measures to support an efficient and resilient market. For a full array of measures to help capital market participants mitigate issues arising from Covid-19, please visit www.sc.com.my/covid-19 and http://bit.ly/Bursa_Directives_Clarifications.

[1] This refers to either the controlling shareholders of the PLCs, or the controlling unit holders of the REITs, which mean any person who is, or a group of persons who together are, entitled to exercise or control the exercise of more than 33% (or such other percentage as may be prescribed in the Take-Overs and Mergers Code as being the level for triggering a mandatory general offer) of the voting shares in a company and voting units in a unit trust scheme, or who is or are in a position to control the composition of a majority of the board of directors of such company.
SC-World Bank-IOSCO Asia Pacific Hub Conference 2019: Enhancing Financial Inclusion through Islamic Finance and FinTech
(From left to right):
  1. Abayomi A. Alawode, Head of Islamic Finance, Finance, Competitiveness and Innovation, The World Bank Group
  2. Datuk Syed Zaid Albar, Chairman of the Securities Commission Malaysia (SC)
  3. Dr. Firas Raad, Country Manager for Malaysia, East Asia and Pacific, The World Bank Group 
  4. Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive of SC
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