Speaking at a media briefing this morning, Selvarany Rasiah, Chief Legal Officer of Bursa Malaysia said that the change in regulatory approach will significantly reduce the time-to- market for issuance of circulars thereby facilitating the expedient completion of corporate proposals by listed companies whilst preserving the standard of disclosure.
"The adoption of this new framework is an integral part of Bursa Securities’ continuous efforts to develop a dynamic and robust capital market.
"Presently, Bursa Securities conducts a complete perusal of circulars issued by listed companies prior to their issuance. Effective 3 January 2005, Bursa Securities will assume a more risk-based approach to perusal of circulars issued by companies listed on the Main Board and Second Board. The exchange will cease the perusal of certain circulars whilst continuing to review other circulars. A review by the exchange will either be a limited review or full review depending on the type of circular.”
Bursa Securities’ decision on the types of circulars that it would cease to peruse, conduct a limited review or continue with a full review, is based on its assessment of the impact of inadequate disclosure on market transparency, integrity and investor protection.
The difference between a limited review and full review is that, in a limited review, Bursa Securities will only focus on key disclosure areas and not the entire circular.
"The new approach will be coupled with effective enforcement action against listed companies and their advisers that fail to adhere to the disclosure requirements set out under the Listing Requirements.
“Under the Listing Requirements, the responsibility for ensuring the timeliness, accuracy and completeness of a circular rests with the listed companies, their directors and advisers acting on their behalf. Listed companies and their advisers have a critical role to play in ensuring a high standard of disclosure in circulars issued to shareholders," Selvarany said.
With the changes in the regulatory approach, the exchange is amending the Listing Requirements (LR) of Bursa Securities to address the following :
- Amendment to paragraph 8.09 of the LR to reflect that clearance from Bursa Securities is no longer required for certain circulars (‘Exempt Circulars’);
- A new provision which requires that any material variation to a proposal previously approved by shareholders is subject to shareholders' approval; and
- Secondary or additional amendments arising therefrom.
Bursa Securities is issuing Practice Note 18/2005 to address the following issues :
- The prescription of circulars which fall under the category of 'Exempt Circulars';
- The imposition of obligations in relation to the issuance of an Exempt Circular;
- The prescription of circulars which will be subject to a limited review (‘Limited Review Circulars’); and
- An explanation of Bursa Securities’ regulatory approach to Limited Review Circulars.
The list of circulars which fall under 'Exempt Circulars', 'Limited Review Circulars', and circulars which will be subject to a full review ('Non-Routine Circulars') are identified in Appendix 1A enclosed.
The amendments to the LR of Bursa Securities will take effect on 3 January 2005.
EXEMPT CIRCULARS
- Introductory circulars for a transfer to the Main Board
- Information circulars issued pursuant to paragraph 10.05 of the LR
- Notices of adjustments to warrants and irredeemable convertible loan stocks
- Notices of meetings
- Bonus Issues
- Purchase of own shares (including the ordinary resolution)
- Amendments to or adoption of memorandum and articles of associations
- Amendments to trust deeds or deed polls
- Increase in authorised share capital
- All other circulars to shareholders, which are not issued pursuant to a requirement to obtain shareholder approval prescribed under the LR
LIMITED REVIEW CIRCULARS
- Issuance of securities for cash
- including but not limited to rights issues, private placement, restricted issue, special issue to Bumiputera investors, issue of securities on a "bought deal" basis etc
- but excluding allotments to directors (including allotment of ESOS options), major shareholders or persons connected thereto which fall within paragraph 6.11 of the LR
- Employee share schemes ("ESOS") including establishment of or amendments to by-laws, extensions of the duration of the scheme or termination of the scheme
- Obtaining or renewing shareholders' mandate for recurrent related party transactions
- Notice of maturity of securities
- Extensions of time for maturity/expiry of securities.
NON-ROUTINE CIRCULARS
- All other circulars required to be issued under the LR, including but not limited to:-
- Related party transactions (excluding circulars in relation to shareholders' mandate for recurrent related party transactions)
- Reverse take-overs
- Diversification of operations
- Allotment of shares to directors etc (other than ESOS options)
- Provision of financial assistance to associated companies
- Schemes of compromise, arrangement, amalgamation or reconstruction and/or restructuring schemes in general
- Withdrawal of listing
- Back-door listings
- Share splits or consolidation
- Non-related party transactions for which shareholders’ approval is required pursuant to paragraph 10.06 of the LR
