SC allows flexibilities in listing criteria for Bumi companies

Kuala Lumpur, 27 August 1996

The Securities Commission (SC) has allowed flexibilities in its listing requirements for applications based on proforma accounts for Bumiputera-controlled companies to be grouped together for listing on the Kuala Lumpur Stock Exchange (KLSE).

SC Chairman, Datuk Dr Mohd Munir Abdul Majid said that the relaxation in the requirements was intended to encourage more Bumiputera-controlled companies to be listed on the KLSE.

SC’s Policies and Guidelines on Issue/Offer or Securities provided that where a group of companies is seeking listing on the stock exchange on the basis of the group’s proforma accounts at least one company within the group must fulfill all the applicable listing requirements. However, if no one company qualifies, listing based on the strength of the group’s proforma accounts may be considered provided all companies within the group fulfill the following criteria:

  • ALL companies are involved in the same business activities;
  • ALL companies have common directors; and
  • ALL companies have common shareholders with controlling shareholding on a collective basis

for at least five years for the Main Board and at least three years for the Second Board.

With the flexibilities, a group of Bumiputera-controlled companies applying for listing based on the strength of the group’s proforma accounts would only have to comply with the criterion of being involved in the same business activities and NOT the other two criteria (i.e. of having common directors and common shareholders).

Given such exemptions, the group of Bumiputera controlled companies seeking a listing must fulfill the following :

  • have complementary business activities;
  • have a genuine pooled arrangement;
  • the company which represents a significant contributor to the profits within the proforma group should have been incorporated and have been in business operation for at least five years prior to making submission to the SC;
  • each company to be pooled together must have more than 50 per cent of Bumiputera equity ownership and must have been under the control of the same Bumiputera shareholders with controlling shareholding for at least three years; and
the company used as a listing vehicle must, upon listing, have more than 50 per cent of its equity owned by 
Bumiputera shareholders and be maintained as a Bumiputera-controlled company.

"Bumiputera companies should not have problems meeting these criteria as the companies approved for listing over the past two years have proven that Bumiputera companies can be quite robust upon listing if the right opportunities are presented," said Datuk Munir.

"Between January and July this year, 13 of the 48 companies approved for listing were Bumiputera-controlled companies. For the whole of 1995, 16 of the 62 companies approved for listing by the SC were Bumiputera controlled," he added.

A Bumiputera-controlled company is here defined as a company in which more than 50 per cent of its equity is owned by Bumiputera shareholders/institutions; or in which at least 35 per cent of its equity is owned by Bumiputera shareholders; with a Bumiputera Chairman and CEO/MD, and at least 51 per cent of its Board members comprising Bumiputera individuals.

Although only about 26 per cent of the total in terms of numbers, it is worth nothing Bumiputera overall equity ownership in companies that were approved for listing accounted for 63.5 per cent or RM2.6 billion of the shareholding in 1995 while between January and July 1996, more than RM1.6 billion or 78.5 per cent of the companies’ shareholding at the initial public offering stage was in the hands of Bumiputeras.

While these figures include Government and trust agency ownership, they are significant and have to be sustained in the after market.

"In addition, every time a non-Bumiputera locally incorporated company with Malaysian assets gets listed, 30 per cent of the shareholding is allocated to Bumiputeras," Datuk Munir stated.

With regard to the flexibilities now being accorded, Datuk Munir added, "To assist Bumiputera companies in complying with these criteria, the SC, at its Annual Dialogue with industry last June, instructed the Association of Merchant Banks in Malaysia (AMBM) to be the "clearing house" for Bumiputera companies wishing to pool together to list on the KLSE."

The relaxation in the SC listing guidelines is one of the several measures initiated by the SC to boost Bumiputera participation in the capital market.

"The SC has used its roadshows over the past one year to speak to the Malay Chambers of Commerce in the various states to advise them on how to increase their participation in the capital market of the country.

"In addition, Securities Industry Development Centre (SIDC), the educational arm of the SC, has specific programmes for Bumiputeras such as special Malaysia Futures and Options Registered Representative (MFORR) courses for university students, customising capital market programmes for ITM students, educating lecturers on capital market instruments, assisting lecturers in their research on the capital market, and educating Bumiputera investors and directors by conducting seminars," said Datuk Munir.


Issued by the Corporate Affairs Unit. For further information, please contact Mr Izelan Basar at tel. no. 250 7511 or Ms Mimi Aizah at tel. no. 250 7497.
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