The new policy is embodied in a set of guidance notes – Guidance Note 7A and Guidance Note 7B under the SC’s Policies and Guidelines on Issue/Offer of Securities (Issues Guidelines). The guidance notes are effective immediately.
With the liberalisation, Malaysia would now welcome the following types of companies to list on the KLSE (see also Table 1 below):-
- Malaysian-incorporated companies with substantial operations abroad and controlled/owned by Malaysians;
- Foreign-incorporated companies with substantial operations abroad and controlled/owned by Malaysians;
- Foreign-incorporated companies with substantial operations in Malaysia and controlled/owned by Malaysians; and
- Foreign-incorporated company with substantial operations in Malaysia and controlled/owned by foreigners.
All other requirements for listing will also apply to these companies.
"We welcome multinational companies and successful locally-owned companies which have been operating overseas to list on the KLSE. The listing of such companies will increase the diversity and quality of companies listed on the KLSE and also expand the range of investment opportunities for investors," said SC Chairman Datuk Ali Abdul Kadir.
The policy is in line with Recommendation 22 of the Capital Market Masterplan, which recommends the widening of the breadth of listings in the Malaysian equity market to include listings by foreign companies in a gradual and carefully-managed manner.
"In formulating the new policy, the SC had sought and received valuable feedback from various industry bodies and government agencies," he said.
Foreign corporations can only list on the Main Board. Furthermore, to ensure integrity and a level playing field, foreign corporations applying for listing must be incorporated in jurisdictions which are acceptable to the SC. This means the companies should be subject to laws and regulations of similar standards as those in Malaysia.
Guidance Note 7A contains requirements relating to the listing of foreign corporations on the KLSE while Guidance Note 7B contains the requirements for the listing of companies with foreign-based operations. Both the guidance notes will replace the suspended 'Guidelines for The Public Offering of Securities of Foreign-Based Companies With Listing and Quotation on the Kuala Lumpur Stock Exchange' and the existing paragraphs 7.13 and 7.14 of Chapter 7 of the Issues Guidelines. The guidance notes and the Issues Guidelines are available on the SC website here.
Datuk Ali said that this latest policy is a progressive step towards the liberalisation of the capital market. Prior to this, a company applying for listing on the KLSE must be Malaysian-incorporated and must have the majority of its operations in Malaysia. The companies can be either controlled/owned by Malaysians or foreigners.
The SC is also considering further liberalisations, such as the listing of a foreign-owned corporation with major foreign operations, but the decision would be dependent on market conditions and the economic environment in the future.
