Rationale

The SC recognises that companies seeking to list via initial public offerings (IPOs), raise funds and restructure during the first half of this year had faced difficulties arising from capital market conditions.

As such, the SC decided to accelerate the liberalisation of certain aspects of its guidelines in line with its efforts to shift to a system of disclosure-based regulation in regulating the issue, offer and listing of securities. These flexibilities would allow companies sourcing funds from KLSE to have more options in structuring their corporate proposals and respond more effectively to changing market conditions.

The SC consulted the Association of Merchant Banks in Malaysia in developing the set of flexibilities, and has benchmarked against the practices of other jurisdictions, namely those of Hong Kong, Singapore, United States, United Kingdom and Australia.

The flexibilities are part of measures to make the Malaysian capital market the preferred fund-raising centre for Malaysian companies by enhancing the efficiency of the fund-raising process, as envisioned in the Capital Market Masterplan.

Flexibilities for IPOs

For IPOs, the SC amended the requirements for public offers, placements, underwriting, shareholding spread, retention of reserves and limitations on capital structure. These amendments would allow companies to better structure their IPOs to suit their particular needs. The requirements on the transfer of companies from the Second Board to the Main Board of the KLSE have also been reviewed and amended.

To encourage the consolidation and listing of universal brokers, amendments to the Issues Guidelines relating to the use of proforma accounts have been introduced. Further flexibilities to the requirements for listing by Universal Brokers could, where justified, be considered by the SC.

Flexibilities for fund-raising and restructuring

In respect of fund-raising and restructuring by listed companies, the SC is now extending the flexibilities previously granted to only "rescue cases" (as defined in the Issues Guidelines), such as a less stringent historical profit requirement for assets to be injected, to all distressed listed companies.

The SC has also reduced the post-restructuring net-tangible-asset (NTA) position requirement for distressed listed companies from the previous requirement of at least 50% of the par value of their ordinary shares to 33%. Thus, a wider pool of viable assets can now be injected into distressed listed companies as part of their restructuring schemes.

In addition, all distressed listed companies (and not just restricted to those under the purview of Danaharta Nasional Bhd and the Corporate Debt Restructuring Committee) are allowed to issue convertible securities with nominal values below RM1.00, subject to certain conditions.

With these flexibilities, the SC hopes to see a speedier process of restructuring by distressed listed companies to regularise their financial positions.

In addition, flexibilities are now accorded to the requirements for private placement of securities as well as the underwriting requirement for rights issues, irrespective of whether a listed company is distressed or otherwise.

Click here for a summary of these latest changes and amendments to the Issues Guidelines. The details of the guidelines are available below, under the following headings:-

• Amendments to the Requirements on Initial Public Offerings of Securities on Kuala Lumpur Stock Exchange (pdf);
• Flexibilities for Distressed Listed Companies (pdf);
• Guidelines on Private Placements (pdf); and
• Guidelines on Underwriting (pdf).