The Securities Commission (SC) today issued a set of new and revised guidelines as part of its efforts to create a more competitive capital market environment through the liberalisation of fund-raising requirements and raising standards of advisory and due diligence conduct by market intermediaries.

The new guidelines, which will take effect on 1 February 2008, are:

(i) Guidelines on the Offering of Equity and Equity-Linked Securities; (pdf - 1.38MB)
(ii) Guidelines on the Offering of Equity and Equity-Linked Securities for the MESDAQ Market; (pdf - 2.14MB)
(iii) Guidelines on Principal Advisers for Corporate Proposals; and (pdf - 1.27MB)
(iv) Guidelines on Due Diligence Conduct for Corporate Proposals. (pdf - 1.29KB)
In addition, the Prospectus Guidelines has been revised with the inclusion of enhanced disclosure requirements with respect to financial information.

These guidelines give effect to the package of liberalisation policies announced by the SC Chairman Dato’ Zarinah Anwar on 12 December 2007, to facilitate corporate expansion and boost the attractiveness of Malaysia as a preferred listing destination.

Liberalisation of fund-raising requirements

To strengthen the positioning of Bursa Malaysia as a preferred market for fund-raising by both domestic and foreign companies, the new Guidelines on the Offering of Equity and Equity-Linked Securities and Guidelines on the Offering of Equity and Equity-Linked Securities for the MESDAQ Market (Equity Guidelines) introduced several liberalisation measures which have been benchmarked against international best practices.

The Equity Guidelines replace both the existing Policies and Guidelines on Issue/Offer of Securities and the Guidelines for I nitial Public Offerings and Listings on the MESDAQ Market.

Under the Equity Guidelines, companies with foreign-based assets/operations are now subject to the same listing criteria as companies with domestic operations, while property development companies seeking listing are no longer required to have a minimum land bank of 500 acres.

In addition, significant acquisition of assets that are used for existing core business of the company is no longer subject to the SC’s approval unless such acquisition is satisfied by an issue of securities. Further, MESDAQ-listed companies are now permitted to undertake acquisitions resulting in significant changes in their business direction.

The Equity Guidelines also removed the mandatory requirements for submissions of financial forecasts, except for distressed listed companies.

To complement this, Chapter 13 of the existing Prospectus Guidelines was revised to enhance the financial disclosures required, in particular, the scope and extent of the Management’s Discussion and Analysis (MD&A) of financial performance and prospects.

Among others, companies are now required to provide in their prospectus or other offering documents, detailed analysis of the company’s historical performance, including causes of material changes for each year, discussion of factors and trends that are expected to have a material effect on the company’s financial condition, and an in-depth discussion of the companies’ results of operations, liquidity and capital resources.

Higher standards of market conduct

In tandem with the liberalisation of the fund-raising requirements, the SC has also taken measures to strengthen investor protection by promoting higher standards of conduct by market intermediaries. 

To further enhance the quality of services provided by principal advisers, the SC has introduced the Guidelines on Principal Advisers for Corporate Proposals (Advisers Guidelines). These guidelines serve to clarify who can act as principal advisers for the purpose of submitting corporate proposals to the SC. The guidelines further identify the required competency standards for principal advisers when dealing with corporate proposals involving IPOs on Bursa Malaysia, distressed listed companies and significant acquisitions or disposals by listed companies.

Meanwhile, the new Guidelines on Due Diligence Conduct for Corporate Proposals (Due Diligence Guidelines) set out the SC’s expectations on issuers, advisers and experts in their conduct of due diligence to ensure that investors can make informed investment decisions based on sound and accurate information.

Notably, issuers, advisers and experts must responsibly fulfil their roles and be held accountable for disclosures made in corporate proposals and offering documents.

The SC will organise briefing sessions for the industry and relevant capital market participants to facilitate a smooth transition and better understanding of the latest policies and guidelines.

The full set of guidelines and accompanying FAQs can be found at here.