Reverse Take-Overs and Back-Door Listings

Kuala Lumpur, 8 April 1995

The Securities Commission (SC) wishes to announce that any restructuring exercise involving an acquisition or disposal of assets (whether or not by way of issue of securities) which results in a very significant change in the business direction of a listed company OR which results in change of dominant shareholder of that listed company shall be subjected to the prior approval of the SC.

2. Additionally, for restructuring exercises which result in a reverse take-over of a listed company or the back-door listing of new assets, the new assets to be acquired by the listed company shall meet the existing criteria of the SC on new listings pertaining to track record requirements. In applying these guidelines, the SC may make exceptions for restructuring exercises which are undertaken for the rescue of listed companies or other ailing corporations in the national interest. Such exemptions may also be extended to privatisation cases which are acceptable to the SC.

3. The existing guidelines pertaining to criteria for reverse take-overs of Second Board companies issued on 28 June 1993 will continue to apply for assessing reverse take-overs of Second Board companies whether or not they are effected by way of issue of securities.

4. A very significant change in the business direction of a listed company is defined as a situation where the net tangible assets value or profit after taxation of the new assets to be injected into the listed company constitutes more than 50% of the total relative consolidated figures of the listed company on completion of the restructuring exercise in question.

5. All announcements to be made pertaining to reverse take-overs and back-door listings shall now include the following information in addition to those presently required under the Listing Requirements of the Kuala Lumpur Stock Exchange:-
  1. A summary of the key audited financial data for the past 5 financial years or since the incorporation of the acquiree companies (if an acquiree company has a business record of less than 5 years). The financial data shall include, but not be limited to, turnover, pretax profit, profit after tax, shareholders funds, total borrowings and return on shareholders funds;
  2. Financial effects on net tangible assets and earnings per share on proforma basis based on the latest audited accounts of the acquiree company and the listed company on completion of the restructuring exercise;
  3. Brief assessment on the outlook of the core business of the new assets to be acquired; and
  4. For assets which do not have any profitability track record (as in privatisation cases), information to be provided shall include, but not be limited to, total cost needed to put on stream the privatised project and the proportion to be assumed/guaranteed by the listed company, when profit contribution will accrue to the listed company as well as the expected internal rate of return together with appropriate assumptions used.
6. The above new requirements are effective from 8 April 1994. However, all proposals of the abovementioned nature that have been announced but are still pending completion should be submitted for the SC's consideration.


Issued by Corporate Affairs Unit. For further information, please contact Ms Nafizah Omar at (603) 2507550 or Mr Izelan Basar at (603)2507511.
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