With the conversion, the existing KLSE will vest and transfer its stock exchange business to a new wholly-owned subsidiary whilst the demutualised KLSE will become the Exchange Holding Company.
In the interim, the Exchange Holding Company will be known as Kuala Lumpur Stock Exchange Berhad (KLSE Bhd) whilst the operating stock exchange will be known as Malaysia Securities Exchange Berhad (MSEB). These names will subsist until the new name for the Exchange Group is announced - expected by the first quarter of 2004.
The use of the interim names comes into effect on Monday, 5 January 2004 and will continue to be used until further notice. Similarly, the use of the abbreviation KLSE (for example: KLSE Composite Index) and all its applications will continue for the time being.
Conversion of Kuala Lumpur Stock Exchange
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In conjunction with the conversion, KLSE has also undertaken the following actions:
- Issuance of new Rules of MSEB (previous rules of KLSE superseded).
- Amendments to the Listing Requirements.
With the conversion, the shareholding structure of KLSE Bhd as approved by the Minister of Finance is as follows:
| Shareholding Structure of KLSE Bhd | |
| Shareholders | Allocation of Shares (%) |
| Capital Market Development Fund | 30% |
| Minister of Finance Inc | 30% |
| Licensed Member Companies | 30% |
| Remisiers | 10% |
Meanwhile, the inaugural board of directors of KLSE Bhd will comprise:
Inaugural Board of Directors of KLSE Bhd
- Dato' Mohammed Azlan bin Hashim - Executive Chairman
- Datuk Mohaiyani binti Shamsudin - Deputy Chairman
- Tan Kim Leong
- Abdul Kadir bin Haji Md. Kassim
- Abdul Jabbar bin Abdul Majid
- Yusli bin Mohammed Yusoff
- Peter Leong Tuck Leng
- Datin Mariam binti Yusof
- Abdul Rauf bin Ramli
In connection with the conversion, the Rules of Malaysia Securities Exchange Berhad (MSEB) has been issued to supersede the Rules of KLSE. All stockbroking Member Companies of KLSE have been notified of the issuance of the Rules of MSEB on Monday, 29 December 2003.
The Rules of MSEB shall take effect from today, Monday, 5 January 2004. From the date of the conversion of KLSE, stockbroking Member Companies shall be termed Participating Organisations as provided in the Rules of MSEB.
The objectives for the issuance of the Rules of MSEB, which will also benefit Participating Organisations, include:-
- providing for the reformation of KLSE's membership structure which is separate and distinct from the eligibility of Participating Organisations to trade on the stockmarket of MSEB.
- reflecting the delineation of regulatory responsibility between KLSE Bhd and SC in terms of supervision of Participating Organisations and their activities dealings in securities.
- addressing and clarifying any ambiguities or inconsistencies as well as reviewing provisions in the interest of business efficacy and practicalities.
I. Amendments to Listing Requirements
With the conversion, the Listing Requirements of KLSE for the Main Board and Second Board and the MESDAQ Market become the Listing Requirements of Malaysia Securities Exchange Berhad for the Main Board and Second Board and MESDAQ Market respectively, with some amendments. Public listed companies have been notified of the amendments to the Listing Requirements on Monday, 29 December 2003.
The Listing Requirements of MSEB, together with the amendments, took effect from today Monday, 5 January 2004 .
The objectives for the issuance of the amendments to the Listing Requirements, which will also benefit public listed companies, include:-
- rationalising the provisions for consistency with the relevant amendments to the securities laws, including incorporating or modifying definitions to cater for MSEB and KLSE Bhd (referred to as the Exchange Holding Company in the Listing Requirements);
- removing duplication and enhancing efficiency by:-
- deleting provisions relating to the preparation of accounts in accordance with approved accounting standards of Malaysian Accounting Standards Board (MASB); and
- deleting provisions on minimum content of offer and offeree documents in relation to take-overs and mergers and vetting of the same by MSEB.
The amendments to the Listing Requirements are also available on the KLSE web-site at www.klse.com.my.
I. Signing of Regulatory Memorandum of Understanding
In conjunction with the conversion, a Regulatory MOU has been signed between the exchange holding company, KLSE Bhd and SC. At the signing ceremony held at KLSE Bhd today, Executive Chairman, Dato' Mohd Azlan Hashim signed on behalf of KLSE Bhd and SC Chairman Datuk Ali Abdul Kadir signed on behalf of SC.
At the event, Mohd Azlan said the Regulatory MOU sets out a statement of intent of the parties to enhance co-operation and mutual understanding, exchange of information and other assistance.
"Amongst the key objectives of the Regulatory MOU is to provide clarity, consistency and transparency to the regulatory roles and duties of the respective parties - KLSE Bhd and SC.
"This is to establish a framework for the purpose of facilitating the regulatory functions of the respective parties as provided for under the laws, rules and other regulatory requirements.
"In light of demutualisation , the Regulatory MOU also specifies the regulatory roles and obligations of KLSE Bhd in ensuring a fair, efficient, transparent, innovative and internationally competitive market. This will further enhance Malaysia as an attractive fund raising and investment centre," he said. Datuk Ali congratulated the KLSE on their demutualisation.
"The successful demutualisation of the KLSE marks the completion of a key recommendation of the Capital Market Masterplan to strengthen the competitive position of Malaysian market institutions.
"This is a very important milestone in the development of the capital market," he said.
With regards to the Regulatory MOU, Datuk Ali said, "The SC and KLSE Bhd recognise that each play a critical role in promoting fair, orderly and transparent markets as well as in contributing to the efficiency of the securities and futures markets in Malaysia.
"This Memorandum of Understanding signifies an important step for the future growth of the exchange and the capital market. With demutualisation, the opportunities for growth of the exchange business has expanded significantly and the principles of co-operation and collaboration embedded in the MOU provides a foundation for shared ideals and common objectives,"
"The formalisation of a process of review and re-assessment allows us to systematically work towards greater efficiency in the operations of the markets and greater effectiveness in the regulation and development of the market. It is particularly important now that we work seamlessly to offer the highest level of efficiency and security to our market participants," he said.
Also present at the signing ceremony was Encik Yusli Mohamed Yusoff, Member of KLSE Bhd Board of Directors and Chairman, Association of Stockbroking Companies Malaysia.
Yusli said with the completion of the conversion, stockbroking companies would now have entrenched rights as shareholders of KLSE Bhd whilst maintaining a consultative relationship with the management of the exchange.
"As shareholders of KLSE Bhd, stockbroking companies will benefit from the enhanced economic value created. As a public company limited by shares, we can expect further improvement in performance, greater accountability and transparency of the exchange holding company.
"As participating organisations of the operating stock exchange MSEB, stockbroking companies will continue to ensure the provision and maintenance of high standards in integrity whilst consistently offering competitive products and services for all investors of MSEB," he said.
The signing ceremony was also attended by senior representatives from SC and KLSE Bhd who have contributed to the successful completion of the various stages of the demutualisation process.
II. Significant Phases Completed in the Demutualisation of KLSE
The following is an overview of the significant phases completed in the process leading to the demutualisation of KLSE. The process commenced following a thorough review and evaluation to demutualise KLSE, which included amongst others the following stages:-
- 28 May 2002 - The KLSE Committee endorsed the proposed demutualisation of the Exchange and unanimously recommended the proposed demutualisation to stockbroking members.
- 24 July 2002 - With the endorsement by the KLSE Committee and agreement by stockbroking members, KLSE recommended the demutulisation of the Exchange to the government.
- 21 November 2002 - The Securities Commission announced that the government had given approval for the Exchange to proceed with demutualisation.
- 11 September 2003 - The Dewan Rakyat passed the demutualisation bill together with various amendments to current securities laws.
- 5 November 2003 - The Dewan Negara passed the demutualisation bill together with various amendments to current securities laws.
- 20 November 2003 - Members of KLSE passed key resolutions at an Extraordinary General Meeting on the proposed conversion of Kuala Lumpur Stock Exchange and the proposed adoption of the amended Memorandum & Articles.
- 30 December 2003 - Royal Assent for the Demutualisation Bill and Amendments to Existing Securities Laws.
- 31 December 2003 - Publication of Gazette Order for the coming into force of the Demutualisation (Kuala Lumpur Stock Exchange) Act 2003 on 2 January 2004 and Amendments to Existing Securities Laws on 5 January 2004.
- 5 January 2004 - Legal conversion of KLSE into a public company limited by shares and signing of Regulatory MOU between KLSE Bhd and SC.
