Special Address In Conjunction with the Release of New Fund-Raising Framework and Unveiling of New Board Structure
8 May 2009 |  By Y Bhg Dato' Sri Zarinah Anwar, Chairman, Securities Commission Malaysia

Special Address
Y Bhg Dato’ Sri Zarinah Anwar
Chairman, Securities Commission Malaysia

In Conjunction with the Release of New Fund-Raising Framework
and Unveiling of New Board Structure

8 May 2009

Bismillah ir-Rahman ir-Rahim

Yang Berhormat Dato’ Seri Haji Ahmad Husni bin Mohamad Hanadzlah

Minister of Finance II

Yang Amat Berbahagia Tun Mohamed Dzaiddin bin Haji Abdullah

Chairman of Bursa Malaysia

Yang Berbahagia Dato Yusli Yusuf, CEO, Bursa Malaysia

Tan Sri-Tan Sri, Dato-Dato

Distinguished guests,

Members of the media


Ladies and gentlemen,

Good afternoon and welcome to the Securities Commission.


First of all, I would like to thank YB Dato’ Seri Ahmad Husni Hanadzlah for accepting our invitation to be with us today.  YB, we are indeed very honoured by your presence and we heartily congratulate you on your recent appointment. 


This afternoon’s event is truly a significant occasion, marking the transformation of our equity fund-raising framework and the revamping of the board structure of Bursa Malaysia. This  has been the result of a year-long, extensive and holistic review undertaken by the SC and Bursa Malaysia in close consultation with industry and market participants, as part of measures to enhance the efficiency and competitiveness of the equity fund-raising framework in Malaysia, and to position Bursa as an attractive listing platform for both Malaysian and foreign companies.


As announced last year, the transformation of the equity raising regime encompasses a change in the regulatory approach for listings and equity fund-raising, as well as the streamlining of Bursa Malaysia’s current Main and Second Boards into a single unified board, and the revamping and expansion of the current MESDAQ Market into an alternative market that caters to companies from all sectors. 


The regulatory review process that we went through is by far the most robust process that we have undertaken in reviewing our regulatory approach, and will set the benchmark for future reviews of our regulations.  We had established a high-level industry working group, as mentioned by YB Tun, comprising practitioners and experts from a broad spectrum of the capital market to assist us in identifying issues, share ideas, provide inputs and perspectives and serve as a sounding board in our effort to create a more efficient environment for access to capital.  We also undertook extensive research and benchmarking exercises against other jurisdictions in order to ensure that our new regulatory framework is comparable with our peers, as well as being internationally competitive. In addition, we had conducted over 300 brainstorming sessions and interactive focus group discussions with industry practitioners together with Bursa Malaysia.


In early February 2009, the SC and Bursa Malaysia jointly issued public consultation papers to obtain direct feedback from market participants as well as the general public.  The three week public consultation period was in fact extended by a further two weeks at the request of market participants.  The response we received was extremely encouraging both in terms of numbers as well as substantive comments and suggestions in response to the proposed changes.   We were pleased to receive all round positive responses in respect of the broad changes proposed, as well as many constructive comments which we were pleased to take on board.  I am happy to say that the new guidelines for fund-raising and the listing requirements that we are releasing today reflect a careful balance of industry needs and the need to ensure a strong investor protection regime.

Significant reforms and flexibilities in new equity fund-raising framework

Ladies and gentlemen,


Significant reforms and flexibilities have been incorporated in the new regulatory framework. Firstly, the SC’s approval under section 212 of the Capital Market and Services Act will only be required for the following substantive corporate proposals for the unified board:-

  • Initial Public Offerings (“IPOs”);
  • Acquisitions resulting in significant change in business direction;
  • Secondary listings and cross listings; and
  • Transfer of listings from the alternative market to the unified board.

Secondly, there will be a shift of regulatory approach by the SC, from assessing corporate proposals based on business viability, to assessing:

  • Compliance with minimum quantitative requirements;
  • Standards of corporate governance of the issuer and its promoters and directors;
  • Resolution of conflicts-of-interest between the issuer and its promoters and directors; and
  • Preservation of public interest.

All other equity-based corporate proposals such as private placements of shares, rights offerings and restricted share issuances will no longer require the SC’s approval.  However these proposals will still be subject to Bursa’s approval pursuant to the Listing Requirements.

9. I would like to stress that this shift in regulatory approach does not mean any lowering of investor protection standards. The SC will be vetting and registering prospectuses for IPOs and securities offerings to ensure that investors are provided with comprehensive information to enable them to make informed investment decisions.  Amongst others, the prospectus review process will involve a critical review of the disclosures relating to the applicant’s business, financial information, industry dynamics and growth prospects, skills and experience of the management team and various risk factors. 

Thirdly, the MESDAQ Market will be transformed into a sponsor-driven market.  In this regard, companies from various sectors would be allowed to be listed on this alternative market.  The SC’s approval under section 212 of the CMSA will no longer be required thus ensuring certainty of listings, efficiency of process and faster turn-around time.  However, as with listings on the unified board, prospectuses will be critically reviewed by the SC to ensure that investor protection standards are not compromised.  There will be no prescribed minimum operating history or profit track record requirements for entry to the alternative market, as the sponsors will be empowered to assess the suitability of listing applicants.  The current system of requiring the services of a sponsor for a period of at least 3 years is maintained.


Under the new framework, Bursa Malaysia’s role with respect to IPOs will remain, in that listing applications whether for the unified board or the alternative market, will be considered based on compliance with requirements on independent directors and shareholding spread. 

Market-based approach to reap benefits of efficiency and certainty

Ladies and gentlemen,


We believe that the capital market participants in Malaysia are ready for a more market-based regulatory approach. Over the past several years, the SC has put in place various building blocks to enhance the standards of due diligence, disclosure and governance.  It must be emphasised that the objectives of regulation remain the same – to preserve investor confidence and safeguard the stability of the system.  What the new regulatory framework does is to enhance the process and approach towards achieving these regulatory objectives.  This new approach to regulation recognises a new environment in terms of diversity of investors, issuers and instruments, and is premised on stronger regulatory capabilities with more diligent surveillance of the market and greater reliance on enforcement.  It is not about light touch regulation. These listed corporations, corporate finance advisers, auditors and other market players are expected to raise their standard of professionalism. This enable the market to reap the benefits of efficiency and competitiveness while retaining the high levels of investor protection.

Ladies and gentlemen,


To give effect to the new regulatory approach, I am pleased to announce the release of the following guidelines:-

  1. Equity Guidelines;
  2. Principal Adviser Guidelines;
  3. Prospectus Guidelines;
  4. Asset Valuation Guidelines; and
  5. Structured Warrants Guidelines.

Equity Guidelines


Under the new Equity Guidelines, companies seeking listing under the profit track record test, applicants must have an uninterrupted aggregate profit after tax of at least RM20 million over the past 3 to 5 years, with a minimum profit after tax of RM6 million for the year prior to listing.  Applicants wishing to list under the market capitalisation test are required to have a minimum market capitalisation of RM500 million, with no prescribed minimum profit requirement.


Various flexibilities will also be introduced under the new Equity Guidelines: including the removal of the need for minimum issued and paid-up capital. Underwriting of securities offered will also be made optional based on the issuer’s funding needs.  

Special Purpose Acquisition Companies


Embedded in the Equity Guidelines is the introduction of a framework for the listing of Special Purpose Acquisition Companies or “SPACs”.  SPACs are basically companies with no operations that go public with the intention of merging with or acquiring operating companies or businesses with the proceeds of their IPO.  The listing of SPACs on Bursa Malaysia is expected to promote and facilitate private equity activities and encourage corporate mergers and acquisitions.

Ladies and gentlemen,

Shorter time-to-market


The SC recognises the need for the corporate sector to have quick access to capital. Hence, enhancing efficiency and shortening the time-to-market has always been a priority for us, but without compromising investor protection.


Under the new framework, the SC will review IPO applications for the unified board concurrently with the review of the prospectus.  This will reduce the approval time from the current minimum of 74 working days to 60 days.


All the guidelines will take effect on 3 August 2009 except for the Structured Warrants Guidelines which will be effective immediately.

Ladies and gentlemen,


This new regulatory framework marks a milestone in the development of the market for fund-raising in Malaysia, bringing our rules in line with those of the developed markets in the region.  We expect that the new framework as well as the new board structure will enhance the attractiveness of Bursa Malaysia as a listing destination, providing efficient access to capital and investments. 


On that note, let me conclude by thanking YB Dato Seri Ahmad Husni Hanadzlah once again for his presence this afternoon.  My appreciation also to all present.

Thank you

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