Undercapitalised PLCs Get Final 6 Months to Come Up to Mark

Those that Fail will be Tagged “undercapitalised” on KLSE

Kuala Lumpur, 18 November 2003

Undercapitalised public listed companies (PLCs) will get another six months until 30 June 2004 to increase their paid-up capital to at least RM60million and RM40million for Main Board and Second Board respectively, before they are categorised separately.

The Securities Commission (SC) who announced this today, said another six months was all that was needed for undercapitalised PLCs to put things in order – failing which they will be classified as "Undercapitalised" under a new Kuala Lumpur Stock Exchange (KLSE) sector.

"As of 7 November, we found that 34 of 59 undercapitalised companies are in the process of implementing their restructuring proposals which will increase their paid-up capital size to the minimum level, and we envisage that they will be able to complete their proposals by 30 June 2004", said SC Chairman, Datuk Ali Abdul Kadir. "We want to give them this extra six months to finalise and implement their proposals."

"The market is performing well, and there are no more excuses for these undercapitalised companies. They must make use of this opportunity to catch up with the other PLCs who are benefiting from improved market conditions. This is for their own benefit and they owe it to their investors."

Companies tagged as "Undercapitalised" from 1 July 2004 will only be re-classified under their original sectors once they fully comply with the minimum paid-up capital requirement.

The extension and separate sector classification applies solely to undercapitalised PLCs that are not PN4 companies (companies that have been classified under KLSE’s Practice Note 4). PN4 companies are still subject to their own timeline requirements under KLSE’s Practice Note 4 and are already separately categorised by KLSE.

As at 7 November 2003, there are 88 undercapitalised PLCs (inclusive of 29 undercapitalised companies that are also PN4 companies) representing approximately 10% of the total number of public listed companies. This is a marked improvement from previous years where there were 140 undercapitalised companies as at 29 November 2002 and 228 companies on 26 November 2001. The list of the 59 undercapitalised listed companies (excluding the 29 PN4 companies) is attached in Appendix 1.

Undercapitalised listed companies must continue to keep shareholders and investors informed of their non-compliant status through their quarterly financial results.

The SC had extended the deadline twice prior to this, in 26 November 2001 and 3 December 2002, in light of several factors including weak market conditions which made it difficult for listed companies to undertake capital-raising exercises.


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