The move towards promoting the listing of foreign companies on the Kuala Lumpur Stock Exchange is consistent with the objective of developing Kuala Lumpur as a regional financial centre. It will also encourage the development of the financial services industry in Malaysia and thus contribute to the Government's objective and commitment to promote the growth of the services sector of the economy.
At the phase one stage, only foreign-based companies with substantial Malaysian interests will be allowed to list under these guidelines. The scope of foreign companies which are able to list on the Kuala Lumpur Stock Exchange will gradually be widened in subsequent phases at the appropriate time. Only quality foreign listings will be accepted. In addition, in considering these listings, consistency with government objectives and national economic interests will be expected. The listings will be denominated in ringgit and only primary listings will be allowed. The listings will be expected to meet with the high standards of disclosure expected of companies listed on the Main Board of the Kuala Lumpur Stock Exchange.
Special Bumiputera ownership requirements will apply to foreign-based companies. The Bumiputera ownership requirements will be based on a percentage of the public shareholding spread which is to be allocated by the relevant agencies. However, at all times, the Malaysian-based assets of these companies, if any, must continue to comply with existing requirements.
These guidelines have been formulated after consultations with the various regulatory agencies and industry groups.
GUIDELINES
Nature of companiesAn Applicant must be a public company either incorporated in Malaysia or in a jurisdiction other than Malaysia. In either case, it must have substantial Malaysian interests, and substantial foreign assets and operations. An Applicant must also be seeking a primary listing on the Kuala Lumpur Stock Exchange.
An Applicant is considered to have "substantial Malaysian interests" where:
- more than 50% of the issued and paid-up capital of the company is beneficially held by Malaysian shareholders resident in Malaysia having management control; or
- the single largest shareholder of the company is Malaysian and resident in Malaysia, having management control, and beneficially holding not less than 33% of the issued and paid-up capital of the company,
at the point of application to offer securities under these guidelines.
The Applicant is considered to have "substantial foreign assets and operations" where:
- more than 50% of the total tangible assets of the company is situated outside of Malaysia based on the audited accounts for each of the past 3 financial years;
- the after-tax profits of the company from assets or operations held outside of Malaysia are in excess of 50% of its total after-tax profits based on the latest audited accounts for a full financial year; and
- the aggregate of the after-tax profits of the company from assets or operations held outside of Malaysia for the past 3 financial years is in excess of 50% of the aggregate of its after-tax profits based on the audited accounts for that period,
at the point of application to offer securities under these guidelines.
Minimum paid up capital
In this area an Applicant must meet similar requirements to that of Main Board companies. It must have an issued and paid-up share capital of not less than RM50 million or its equivalent.
Minimum track record
The Applicant must have either:-
- a track record of 3 years and have achieved an aggregate after-tax profit of not less than RM25 million or its equivalent over the past 3 years. In addition, the Applicant must have achieved an after-tax profit of at least RM4 million or its equivalent for each of the past 3 years; or
- a track record of 5 years and have achieved an aggregate after-tax profit of not less than RM25 million or its equivalent over the past 5 years. In addition, the Applicant must have achieved an after-tax profit of at least RM2 million or its equivalent per annum for each of the past 5 years.
Shareholding spread
What is applicable to Main Board companies will similarly be applied to foreign- based companies.
Promoters
The Malaysian promoters of the Applicant are required to have management control and hold no less than 33% of the issued and paid-up capital of the Applicant at the time of listing. All promoters are subject to a moratorium of one year on their respective shareholdings from the date of admission to the Kuala Lumpur Stock Exchange. Thereafter, they may sell up to a maximum of 50% per annum on a straight line basis of their respective shareholdings at the time of the listing.
Accounting standards
An Applicant which is incorporated in a jurisdiction other than Malaysia must prepare its financial statements and reports in accordance with approved accounting standards applied in Malaysia or International Accounting Standards. A domestic professional accountant must confirm whether or not the accounts prepared by the Applicant comply with International Accounting Standards or Malaysian Accounting Standards.
The accounting standards applicable in the Applicant's country of incorporation may be acceptable to the Securities Commission under certain strict conditions and if so, additionally, the reporting accountant must prepare a summary highlighting material differences between the Applicant's accounts and the accounts which would have been prepared under approved accounting standards applied in Malaysia. The reporting accountant must also provide reconciliations of the after-tax profits and shareholders' funds as reported in the Applicant's audited financial statements to the corresponding figures had approved accounting standards in Malaysia been applied.
Additional disclosure
The guidelines also provide for additional disclosure requirements for foreign based-companies, given that there will be special considerations and risks attached to a company which is subject to a legal and regulatory environment that may differ from that prevailing in Malaysia. An Applicant which is incorporated in a jurisdiction other than Malaysia must also submit sufficient information to the Commission in order for it to evaluate if that jurisdiction has standards equivalent to those in Malaysia with respect to corporate governance, shareholder and minority interests protection, disclosure standards and the regulation of take-overs and mergers.
Other criteria
The Applicant must also establish a share transfer or share registration office in Malaysia, and it must have been registered with the Registrar of Companies under Division 2 Part XI of the Companies Act 1965.
Effective date
These guidelines shall be effective immediately.
