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Securities Commission Malaysia Introduces Enhanced IPO Framework For Main Market

Date 21/07/2020

  • New Framework to Take Effect on 1 January 2021;
  • Introduces Mandatory Holistic Consultation Process to Facilitate Greater Efficiency;
  • Longer Exposure Period for Draft Prospectus;
  • Liberalise Principal Adviser Regime;
  • Bursa to be in charge of registering prospectuses of ACE Market IPO.

The Securities Commission Malaysia (SC) announced today an enhanced initial public offering (IPO) framework to promote greater shared responsibility among key stakeholders involved in the submission of an IPO for listing on the Main Market of Bursa Malaysia.

The new framework, which is also applicable for Reverse Takeover (RTO) submissions, will take effect on 1 January 2021.

“Under this enhanced approach, the SC places greater emphasis on the shared responsibility among all stakeholders involved in the IPO application process. Applicants and all their advisers will play a greater role to ensure that relevant due diligence is properly conducted before the submission and that the governance standards of industry gatekeepers are maintained in order to facilitate greater efficiency in the approval process,” said Datuk Syed Zaid Albar, Chairman of the SC.

One of the key features of the new framework is the introduction of a mandatory pre-submission holistic consultation between the SC and key stakeholders including the applicant, principal advisers, lawyers, reporting accountants and valuers.

The SC said that the mandatory pre-submission session will facilitate discussions of any material issues and concerns prior to the submission of IPO application.

The new framework will also provide for a longer exposure period of the draft prospectus until the date of registration of the prospectus, instead of the current 15- market-day exposure period. This will enable greater public participation in providing feedback on the draft prospectus.

The Approved Principal Adviser and Qualified Senior Personnel regime will also be liberalised under the new framework, to allow for a larger pool of qualified professionals to be involved in the submission of IPO or RTO applications to the SC. This will be balanced with specific obligations on the Principal Advisers, the qualified professionals and other parties involved in the submission of applications to the SC.

To operationalise the framework, the SC has revised the Licensing Handbook and incorporated the eligibility criteria of Principal Adviser and Qualified Person and requirements for recognition as a Recognised Principal Adviser. The revised Licensing Handbook has also been updated to place greater emphasis on the need for quality of submission to the SC, especially on the need for intermediaries and applicants to ensure the validity, accuracy, completeness and consistency of any documents to be submitted to the SC.

Meanwhile, the SC is also looking into reforming the regulatory framework for the ACE Market. Discussion is currently being held on the potential migration of the entire ACE market framework including registration of prospectus to Bursa Malaysia in the first half of 2021. In this regard, the SC will be working closely with Bursa to enhance its internal processes and resources in order for Bursa Malaysia to undertake this additional function.

All guidelines and other materials in relation to the  newly enhanced IPO/RTO framework can be found at the SC website.