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Bursa Malaysia Securities Berhad (“Bursa Securities”) today announced significant changes to the Listing Requirements for the Main Board and Second Board (“LR”) and MESDAQ Market Listing Requirements (“MMLR”) in relation to the rights issue framework, disclosure obligations, requirements pertaining to transactions and listing fees.
Bursa Malaysia Berhad’s Chief Legal Officer, Selvarany Rasiah said the amendments were made as part of Bursa Securities’ continuous efforts to reduce time-to-market for capital raisings, enhance the standard of regulation and practice in the Malaysian capital market as well as reduce regulatory costs where appropriate. “As a front-line regulator, Bursa Malaysia views efficiency, transparency and corporate governance as paramount to maintaining a robust and competitive market. These amendments will help improve the quality of the Malaysian market and aid the listed companies in the conduct of their business and capital raising activities.”& #160; She further added that these changes were largely undertaken in consultation with industry participants and are benchmarked to international practices.
The key changes made include:
- Shortening of time-to-market for capital raising activities
The timeframe from the date of announcement of a books closing date for a rights issue, up to the listing of rights securities has been substantially reduced from 53 market days currently to 33 market days representing a reduction of about 38%. This reduction is achieved with collaboration from market participants and involved shortening of various timeframes in the rights issue process. Both the shareholders and listed companies are expected to benefit as the shareholders will be credited with their securities earlier whilst the listed companies will be able to complete their corporate actions more expeditiously and utilise the proceeds from the rights issue earlier. This change brings the timeframes for capital raisings in line with those of developed markets.
- Enhanced transparency to aid informed investing
The requirements pertaining to issuance of prospects and revenue or profit estimate, forecast, projection (collectively referred to as “Projections and Forecasts”) or internal targets and the corporate disclosure policy pertaining to non-selective disclosure restriction have been clarified and enhanced. These changes made shall cumulatively encourage listed companies to provide greater guidance to investors on, amongst others, the financial performance of their companies and this will further assist investors make better informed investment decisions.
Where internal targets or Prospects and Forecasts are issued and there is material development which will affect the results of the internal targets or Prospects and Forecasts, it is now clarified that the listed company must make immediate disclosure of such development and the possible outcome. The listed company will also be required to make periodic disclosures on the achievability of such internal targets or Prospects and Forecasts issued to the market.
Additionally, Main Board and Second Board companies are no longer required to undertake an audit review in respect of the Projections and Forecasts which are disclosed on an immediate basis.
In relation to the corporate disclosure policy against selective disclosures, the amendments clarify the limited circumstances where selective disclosure of material information for achieving certain corporate objectives is permitted provided that the strictest confidentiality is maintained.
- Focus on Corporate Social Responsibility (“CSR”)
Whilst the practice of CSR is voluntary, in order to aid informed investing listed companies are required to make a statement in their annual reports on the CSR activities undertaken by them during a financial year. Such reporting will be mandatory in respect of annual reports of listed companies with financial years ending on or after 31 December 2007. However, listed companies are encouraged to voluntarily report on their CSR activities even before the mandatory period. In this respect, Bursa Malaysia’s CSR framework may be used to assist companies in writing their CSR statements for their annual reports.
- Reduction in regulatory costs for listed companies and greater efficiency in execution of transactions
Significant changes have been made to the regulatory framework on transactions in particular related party transactions with the objective of achieving a balance between market regulation and promotion of business efficacy.
These changes include an increase in the shareholdings threshold for major shareholders and reduction in the cooling-off period for former directors and major shareholders. With the changes, only shareholders with holdings of 10% or more of the paid-up capital are regarded as related parties whilst currently the threshold is 5%. Given the current market developments, it was viewed that these changes would better reflect and address any potential conflicts of interest.
In addition, for transactions, there is now a minimum threshold which must be triggered before listed companies are required to make immediate announcement and/or procure shareholders’ approval. As for recurrent related party transactions, the threshold for triggering the obligation to make immediate announcement has now been increased for listed companies with issued and paid-up capital of RM60 million and above. In this regard, investor protection would not be compromised as the thresholds are insignificant in comparison to the size of the companies and having regard to the safeguards that are in place.
- Revision of listing fees
Amendments to the Listing Requirements pertaining to the revision of the listing fees for shares of companies listed on the Main Board, Second Board and MESDAQ Market that was announced earlier in April 2006 were also made.
The amendments will take effect from 15 January 2007 except for certain specified provisions which include the provisions relating to revised listing fees for shares, which will take effect from 1 January 2007 as announced.
