AMENDMENTS TO THE REQUIREMENTS ON INITIAL PUBLIC OFFERINGS OF SECURITIES ON KUALA LUMPUR STOCK EXCHANGE

Transcription

1 AMENDMENTS TO THE REQUIREMENTS ON INITIAL PUBLIC OFFERINGS OF SECURITIES ON KUALA LUMPUR STOCK EXCHANGE (Issued on 3 September 2001 in relation to Chapter 10 of the Policies and Guidelines on Issue/Offer of Securities) The following are amendments made to certain requirements in Chapter 10 of the Policies and Guidelines on Issue/Offer of Securities in relation to initial public offerings of securities on Kuala Lumpur Stock Exchange (KLSE). Other existing requirements not mentioned here remain unchanged. 1. Public-Offer of Securities (To replace paragraph of Chapter 10) 1.1. The method of offering should take into consideration the capital needs of the company seeking listing, the opportunity for the general public to participate in the offering and the shareholding spread requirements to be complied with by the company A company is required to, as part of its listing scheme, undertake an offer of securities to the general public. The offer to the public can be in the form of a public issue and/or an offer for sale. In making the public offer, the company should decide the amount of existing or new securities that it needs to offer to the general public However, the company is not required to make an offer to the general public if listing of securities is sought under the following circumstances: 1

2 Where the securities for which listing is sought are already listed on another stock exchange; or Where a listed company intends to distribute in specie to its shareholders the securities of its subsidiary which is seeking listing The Securities Commission (SC) has the discretion not to allow or to vary any particular method of offering/method of listing chosen by the company if it is of the view that such method is not suitable to be carried out in the interests of the public. 2. Placements of Securities (To replace paragraph of Chapter 10) 2.1. Placements of securities which are intended to be undertaken as part of a listing scheme must be done through an independent placement agent (a merchant bank or a stockbroking company) unless the placement is to Bumiputera investors for purposes of meeting the requirement of the National Development Policy (NDP) The securities may be placed with persons other than nominee companies (unless the names of the ultimate beneficiaries are disclosed) or connected parties of the independent placement agent. [A connected party means A director or substantial shareholder of the independent placement agent; The spouse, parent, child (including adopted child and step-child), brother, sister, or spouse of the child, brother or sister of any individual in above; 2

3 (c) A trustee of a trust (other than a trustee for an employee share scheme or pension scheme) under which any individual in and above is a sole beneficiary; and (d) A body corporate which is associated with and above, wherein the term associated has the same meaning as in section 122A(3) of the Companies Act 1965.] 2.3. On implementation of the placement exercise, the corporate adviser or independent placement agent, where applicable, must submit to the SC, for its notification, a final list of the placees, and a confirmation that the placement complies with these guidelines [The requirement on claw-back is deleted.] 3. Allocation to Bumiputera Investors (To replace paragraph of Chapter 10) 3.1. At least 30% of securities allocated under an offering to the general public; and under a placement exercise, should, to the extent possible, be allocated to Bumiputera investors. 4. Flotation Exercise Involving a Restricted Issue and/or Offer For Sale (To replace paragraph of Chapter 10) 4.1. [The requirement is deleted.] 3

4 5. Requirement on Issued and Paid-up Share Capital and Capital Structure [To replace paragraph 10.10(1) of Chapter 10 and the guidelines on the issuance and listing of irredeemable convertible unsecured loan stock (ICULS) as part of a flotation scheme issued on 10 May 2001] 5.1. A public company seeking listing of and quotation for its securities on the Main Board of KLSE should have a minimum issued and paid-up capital of RM60 million comprising ordinary shares of not less than 10 sen each. A public company seeking listing of and quotation for its securities on the Second Board of KLSE should have a minimum issued and paid-up capital of RM40 million comprising ordinary shares of not less than 10 sen each A company seeking listing is allowed to issue and list any securities as part of its listing scheme, including preference shares, options, convertible securities and debt securities, subject to compliance with the following requirements: - Maintenance of Promoter Shareholding The company should ensure that the shareholdings of promoters are not significantly diluted (to the extent that the promoters would lose control of the company), at the point of listing, on the assumption that any options or convertibles which are outstanding or intended to be issued as part of the listing scheme are fully exercised/converted. Compliance with Shareholding Spread Requirement The company should ensure that the shareholding spread requirement (i.e. at least 25% of the company s issued and paid-up capital are in the hands of public shareholders) is continually met as and when any options 4

5 or convertibles that are outstanding or intended to be issued as part of the listing scheme are exercised/converted. (c) Exercise/Conversion Price The exercise/conversion price of any options or convertibles that are intended to be issued as part of the listing scheme should be set at a price not lower than the public offer price of the ordinary shares of the company. ; and (d) Disclosure in the Prospectus The company should make full and comprehensive disclosure in the prospectus issued in conjunction with the initial public offering, where applicable, on the following: (i) The effects of the issuance and exercise/conversion of the options or convertibles on, inter alia, the earnings per share and nettangible -asset per share of the company; (ii) Details of the proposed utilisation of the proceeds from the issuance and exercise/conversion of the securities; and (iii) The rights attaching to the different classes of securities. 5

6 6. Public Spread [To replace paragraph 10.10(1)(ii) of Chapter 10] 6.1. At least 25% of the company's issued and paid-up capital at the time of listing shall be in the hands of public shareholders who can be any person but does not include the following: A director (including one who is designated as a director under the Companies Act 1965) of the company and its subsidiary/associated companies; and A shareholder who owns 5% or more of the issued and paid-up capital of the company, except where such shareholder fulfils the following requirements:- (i) Such shareholder s interest, directly or indirectly, is not more than 15% of the issued and paid-up capital of the company; (ii) Such shareholder is not a promoter of the company; and (iii) Such shareholder is either- a statutory institution who is managing funds belonging to contributors or investors who are members of the public; or an entity established as collective investment schemes, such as closed-end funds, unit trusts or investment funds (but excluding investment-holding companies). 6

7 6.2. An associate of a director or shareholder who owns 5% or more of the issued and paid-up capital of the company shall also be excluded, and such associate is one that falls under any one of the following categories: - (c) (d) (e) (f) (g) A member of the director's or shareholder's family, which family shall have the same meaning as that defined under section 122A of the Companies Act 1965; A trustee of a trust (other than a trustee for an employee share scheme or pension scheme) under which the director, shareholder or a member of the director's or shareholder's family is a sole beneficiary; A person who is accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the director or shareholder; A person in accordance with whose directions, instructions or wishes the director or shareholder is accustomed or is under an obligation, whether formal or informal, to act; A body corporate which is, or the directors of which are, accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the director or shareholder; A body corporate in accordance with the directions, instructions or wishes of which, or of the directors of which, the director or shareholder is accustomed or under an obligation, whether formal or informal, to act; A body corporate in which the director, shareholder or a member of the director's or shareholder's family is entitled to exercise, or control the exercise of, not less than 15% of the votes attached to voting shares in the body corporate; or 7

8 (h) A body corporate which is a related corporation, which related corporation shall have the same meaning as that defined under section 6 of the Companies Act Subject to the above, in fulfilling the public spread requirement, - the entire issued and paid-up capital of the company which is held by employees; and up to 10% of the issued and paid-up capital of the company which is held by Bumiputera investors [or 15% if the shareholder falls under paragraph 6.1 above] for the purpose of compliance with the NDP, could make up the 25% public spread. 7. Proforma Accounts [To replace paragraph 10.10(1)(e) of Chapter 10] 7.1. Where a group of companies is seeking listing on KLSE, at least 1 company (which is the qualifying company) within the group should be able to fulfil the profit track record requirements. If no one company qualifies, listing based on the strength of the group's proforma accounts may be considered provided that all the companies within the group - are involved in the same or complementary business activities; have common directors; and (c) have common shareholders with controlling shareholding, on a collective basis, over the profit track record period. 8

9 For the purpose of determining controlling shareholding, only legal or registered ownership will be accepted, and control is taken as more than 50% of the voting rights However, a group of stockbroking companies which have consolidated and are eligible for universal broker status can apply for listing based on the strength of the group s proforma accounts without having to meet the requirements on the need to have common directors or to have common shareholders with controlling shareholding, on a collective basis, over the profit track record period Likewise, a group of Bumiputera-controlled companies applying for listing based on the strength of the group's proforma accounts would only have to comply with the criterion that the companies should be involved in the same or complementary business activities and not with the other 2 criteria that there must be common directors and common controlling shareholders. Such Bumiputera group of companies, in order to qualify for the flexibilities given, should fulfil the following conditions:- The group must have a genuine pooling arrangement; The company which is the single largest contributor, on an average basis for the past 3 full financial years, to profits within the proforma group should have been incorporated and have been operating in the same or complementary business for at least 5 full financial years prior to making submission to the SC; (c) Each company to be pooled together must have been a Bumiputeracontrolled company under the control of the same Bumiputera shareholders with controlling shareholding for at least 3 full financial years prior to making submission to the SC [or throughout the life of the 9

10 company if the company has been incorporated for less than 3 financial years]; and (d) The company used as the listing vehicle must, upon and subsequent to listing, be a Bumiputera-controlled company A company is classified as a Bumiputera-controlled company if either one of the following 2 criteria is satisfied:- Where more than 50% of its equity is owned by Bumiputera shareholders; or Where at least 35% of its equity is owned by an identifiable Bumiputera shareholder and - there is no other non-bumiputera group holding more than 10% of the voting power of the company or, in aggregate, the identifiable non-bumiputera groups should not own more than 24% of the voting power of the company; the shareholding of the Bumiputera group is not associated directly or indirectly with any non-bumiputera group; the Bumiputera group is the rightful owner and each Bumiputera party is capable of exercising the voting power attached to his/her/its shareholding free of any influence; the Chairman, Chief Executive Officer/Managing Director and at least 51% of the company's board members are Bumiputera individuals; and 10

11 at least 51% of the management, professional and supervisory staff comprise Bumiputera individuals. 8. Asset Backing [To replace paragraph 10.10(1)(i) of Chapter 10] 8.1. The net tangible assets per share (net of listing expenses), which should exclude any surplus arising from the revaluation of plant, machinery and equipment, and before any public issues undertaken as part of the listing scheme, must not be less than the par value of the share. 9. Retention of Reserves [To replace paragraph 10.10(1)(j) of Chapter 10] 9.1. [The requirement is deleted.] 10. Transfer of Company from Second Board to Main Board [To replace paragraphs of Chapter 10] A company listed on the Second Board could, subject to approval of the SC, be considered for transfer to the Main Board provided that the company (c) has been listed for at least 1 year; has met its profit forecast as disclosed in the prospectus, if the company is seeking transfer after being listed for less than 2 years; meets the requirements of listing on the Main Board pertaining to issued and paid-up capital and shareholding spread; and 11

12 (d) meets the historical profit requirement for listing on the Main Board pertaining to the aggregate after-tax profit, uninterrupted profit record and minimum after-tax profit for the latest financial year. Exceptions to the uninterrupted profit record test of the historical profit requirement could be given provided that the company is seeking transfer based on its original core asset/business A company listed on the Second Board which has been involved in reverse takeover/back-door listing exercises could only be allowed for transfer to the Main Board upon the new injected asset(s)/ business(es)/interest(s) meeting the historical profit requirement of the Main Board or upon the original core asset/business of the company meeting the requirements for transfer to the Main Board as stipulated in paragraph 10.1 above Promoters of Second Board companies could apply for a lifting of moratorium imposed on the disposal of their shares, if applicable, as part of the transfer exercise, unless the Second Board companies are involved in property development, construction, services or specialised activities. Consideration by the SC for the lifting of moratorium would be based on the merits of the case and whether or not the company has achieved its profit forecast and projections subsequent to listing on the Second Board. 12