Listing of Securities for CSC students - Bursa Malaysia Guidelines

AGENDA     

CORPORATE SECRETARY CERTIFICATE

LISTING OF SECURITIES

1

AGENDA     

    

Ministry of Domestic Trade, Cooperatives & Consumerism

Companies Commission of Malaysia • Companies Act 1965

Market Capitalisation

Ministry of Finance

Securities Commission • Capital Markets & Services Act 2007 • SC Guidelines • Code On Takeovers & Mergers

Bursa Malaysia • Listing Requirements (LR) • Other Rules

2

BOARD STRUCTURE

ACE Market

4

REGULATORY FRAMEWORK

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

Main Market

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

Listed Corporations

5

REGULATORY FRAMEWORK Securities Commission

Bursa Malaysia

 Equity Guidelines

 Main Market LR

 Prospectus Guidelines

 ACE Market LR

 Principal Adviser Guidelines

 Trading Rules

 Asset Valuation Guidelines

 Clearing Rules

 Structured Warrants Guidelines

 Depository Rules

844 companies 116 companies RM999 billion

 Code Of Takeovers & Merger Source : Bursa Malaysia Website As At 31/12/2009

Refer To Appendix 1 3

6

1

REGULATORY FRAMEWORK Securities Commission

REGULATORY FRAMEWORK

Bursa Malaysia

Controlling Shareholder

 RTO / BDL Approving Authority

Approving Authority

 IPO for Main Market

 IPO for ACE Market (ILA)

 Transfer from ACE to Main Market

 Post IPO issues for Main and ACE Markets (ALA) (e.g. right issue/ bonus issue)

 Significant change in business direction or policy of a Main Market Company (Appendix 2)

Issue shares

RTO >33% XYZ

ABC Bhd

Commonly referred to as RTO/BDL

Existing businesses

Assets

Assets

BDL

7

REGULATORY FRAMEWORK Securities Commission

Bursa Malaysia

Approving Authority

Approving Authority

 Regularisation plan of PN17 Company (Main Market) resulting in RTO/ BDL

 Regularisation plan of PN17 Company (Main Market) not resulting in RTO/ BDL

 Regularisation plan of PN16 Company (Main Market)

 Regularisation plan of GN3 & GN2 Company (ACE Market)

AGENDA     

Notes : 1) PN16/ GN2 Companies = Cash Companies for Main & ACE Markets respectively 2) PN17/ GN3 Companies = Financial Condition Companies for Main & ACE Markets respectively

8

REGULATORY FRAMEWORK Securities Commission

10

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

11

IPO RULES What’s an IPO?

Bursa Malaysia

Pre-IPO Exercise Other Matters

Other Matters

 Statutory power for criminal prosecution

 Powers from LR & Rules reprimand & fine

 Issue consideration shares for acquisition

 Custodian of the Code Of Takeovers & Merger

 Post listing obligations under LR

 Rights Issue

IPO  Public Issue  Offer For Sale

 Bonus Issue 9

Initial Public Offering

 Restricted Offer For Sale  Private Placements 12

2

IPO RULES

IPO RULES Main Market

Profit Test

IPC Test Market Capitalisation (Market Cap) Test

Main Market

 Remaining concession > 15 years  Minimum project cost RM500 million

Infrastructure Project Company (IPC) Test

 Shorter remaining concession period, if Profit Test fulfilled



Aggregate profit after tax (“PAT”) RM20m over 3-5 years



Uninterrupted PAT



Latest PAT > RM6m

13

IPO RULES

16

IPO RULES Main Market

Main Market

 No minimum paid-up capital

Profit Test

Public Spread

 Aggregate profit after tax (“PAT”) RM20m over 3-5 years

 25% in hands of 1,000 public shareholders

 Uninterrupted PAT

 No mandatory underwriting

 Latest PAT > RM6m

 Minimum offering to public (Appendix 3)

 Minimum issue price RM0.50

14

IPO RULES

IPO RULES

Main Market

Main Market

Market Cap Test  Minimum Market of RM500 million

17

 No restriction on Offer For Sale (OFS), except for IPC

No. Of Shares x IPO Price

Cap

 IPC may undertake OFS, provided IPC has 2 consecutive FYs of operating revenue

 No minimum profit track record required  > 1 financial year of operating revenue 15

18

3

IPO RULES

IPO RULES Main Market

Main Market

Bumiputra Equity Interest

Moratorium Listing via Profit Test or Market Cap Test: 100% in

1st

 Applicable to companies with Malaysian-based operations only

6 months after listing

 i.e. > 50% PAT from operations based in Malaysia

 Thereafter, no restriction

 Not applicable to companies with MSC status, BioNexus status (biotechnology business) or companies with > 50% PAT from foreign-based operations 19

IPO RULES

22

IPO RULES

Main Market

ACE Market

Moratorium

 No minimum track record required

Listing via IPC Test: 100% in 1st 6 months after listing

 All business sectors allowed

 Thereafter, at least 45% under moratorium, until 1 FY operating revenue achieved

 Sponsor to determine suitability

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23

IPO RULES

IPO IPO RULES Rules Main Market

ACE Market

Bumiputra Equity Interest

Sponsor to determine suitability

 50% of public offering to be allocated upon listing

50% x Minimum Public Spread of 25%

 Prospects  Corporate Governance

 Effective minimum = 12.5%

 Conflict of Interest

 Deemed complied if no take up at IPO stage

 Suitability, Efficacy, Past Conduct of Directors & Key Management

 Public Interest

 Internal Controls & Risk Management 21

 Systems, Procedures, Policies, Controls, Resources To Comply With ACE LR 24

4

IPO RULES

IPO RULES

ACE Market

ACE Market

 No minimum paid-up capital

Bumiputra Equity Interest

 25% in hands of 200 public shareholders

 Allocate 12.5% of paid-up capital to approved bumiputra shareholders

 No minimum issue price

 Within 1 year after achieve Main Market Profit Test; Or

 No mandatory underwriting

 5 years after listing, whichever is earlier

 No minimum offering to public 25

IPO RULES

28

IPO RULES ACE Market

ACE Market

Same as Main Market

Bumiputra Equity Interest  Offer For Sale (OFS) allowed with 1 financial year of operating profit  OFS subject to promoter retain at least 45% of paid up capital upon listing

 Applicable to companies with Malaysian-based operations only  i.e. > 50% PAT from operations based in Malaysia  Not applicable to companies with MSC status, BioNexus status (biotechnology business) or companies with > 50% PAT from foreign-based operations

26

IPO RULES

29

AGENDA     

ACE Market Moratorium  100% in 1st 6 months after listing  Next 6 months, at least 45% under moratorium  Thereafter, may dispose 1/3rd, provided 1 FY operating revenue achieved

27

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

30

5

SPONSORSHIP – ACE MARKET

SPONSORSHIP – ACE MARKET SC’s approval for IPO – Not Required/ Sponsor determined suitability for listing

 SC’s approval for IPO – Not Required/ Sponsor determined suitability for listing

• 3 FY after listing

During the sponsorship period, Sponsor must review and approved all documents (including announcements/ circulars to shareholders) issued by the Sponsored Corporation (“Public Documents”), except the followings:-

• 1st FY = IPO Sponsor

 Annual audited financial statements;

• If no operating revenue after 3 FY, sponsorship period extended for at least 1 FY after operating revenue is generated

 Certain non-material announcements (e.g. change of address or telephone number); or

 Sponsorship period :-

 Public Documents prepared or submitted to Bursa by an Adviser, who is an entity other than the Sponsor 31

SPONSORSHIP – ACE MARKET

34

SPONSORSHIP – ACE MARKET

Change of Sponsor

 Outside sponsorship period, Adviser to prepare, review & approve certain Public Documents (Appendix 4)

 Within 1 full financial year after admission • Sponsor cannot resign or be terminated  After 1 full financial year after admission

 All additional listing application during & outside sponsorship period – through Sponsor or Adviser

• Resignation/ termination subject to Bursa’s approval • Bursa will not approve unless there is a replacement Sponsor or in exceptional circumstances • After approval from Bursa, Sponsor or plc must give 3 months notice period for resignation/ termination

32

35

AGENDA

SPONSORSHIP – ACE MARKET Change of Sponsor  If fail to find replacement Sponsor under exceptional circumstances (where Bursa has approved)

    

• Suspension after expiry of the aforesaid 3 months notice period • Automatic de-listing after 2 months following expiry of the 3 months notice period

33

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

36

6

CONTINUING LISTING CRITERIA

CONTINUING LISTING CRITERIA PUBLIC SPREAD Public Spread

 Public Spread

Substantial shareholders holding up to 15% can be considered “public” provided….

 Financial Condition (PN17/ GN3)

 Such shareholder is not a promoter of the Listed Issuer

 Cash Company (PN16/ GN2)

 Such shareholder is either… A statutory institution managing funds of contributors who are member of the public Collective Investment Schemes 37

CONTINUING LISTING CRITERIA

CONTINUING LISTING CRITERIA

Public Spread 25% public spread (excluding treasury shares)

40

Financial Condition Need not maintain minimum number of public shareholders

Public excludes  Directors of Listed Issuer & its subsidiaries

 Shareholders’ Equity (SE) < 25% Of Paid-Up Capital & SE< RM40 million  R&M On Assets Of Listed Issuer Or On Subsidiary/ Associated Company > 50% Total Assets  Revenue < 5% Of Paid-Up Capital

 Substantial shareholders (>5%) of Listed Issuer

 Adverse/ Disclaimer Opinion By Auditors  Modified Opinion On Going Concern & SE < 50% Of PaidUp Capital

 Associates of directors & substantial shareholders of Listed Issuer

38

CONTINUING LISTING CRITERIA PUBLIC SPREAD

41 41

CONTINUING LISTING CRITERIA

Public Spread

Financial Condition

Associates Of Directors/ Substantial Shareholders

 Default In Payment & Without Solvency Declaration  Suspended/ Ceased All/ Major Business/ Operations

 Family members (spouse/parent/child etc.)  Person or body corporate, accustomed or obliged to take instructions

 Winding-up Order On Subsidiary/ Associated Company > 50% Total Assets Any Triggered

(Appendix 5) PN 17 39

42

7

CONTINUING LISTING CRITERIA

CONTINUING LISTING CRITERIA

Financial Condition

Financial Condition

Failure To Regularise

Suspension/ Delisting

43

CONTINUING LISTING CRITERIA

46

CONTINUING LISTING CRITERIA

Financial Condition – Oilcorp

Cash Company

Default In Payment & Without Solvency Declaration

> 70% Assets = Cash Or Short Term Investment

Triggered

“..failed to make interest payment of RM1.6 million…”

PN 16

“..directors are unable to form an opinion that the company will be able to meet its debts as they fall due…company is not solvent” 44

CONTINUING LISTING CRITERIA

CONTINUING LISTING CRITERIA

Financial Condition

Immediate Announcement As PN17 Company

If RTO

47

Cash Company

12 mths from 1st ann.

Submit Plan To SC

Implement As Per SC’s Timeframe

Submit Plan To Bursa + Approval

Implement Within 6 – 12 Months

Trigger Cash Company Criteria

Notify Bursa In Writing

Bursa To Determine

3 Months

Announce Whether Regularisation Plan = RTO

If Not RTO

12 mths From 1st Ann.

45

Implement As Per SC’s Timeframe

Submit Plan To SC

12 months

Immediate Announcement As PN16 Company

PN 16 Company

48

8

AGENDA     

    

AGENDA     

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

49

FINANCIAL REPORTING FINANCIAL REPORTING  Quarterly Results

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

52

TRANSACTIONS  Non-related party transaction (Non-RPT)

< 2 months after quarter end Or immediately after Board approval

 Related Party Transactions (RPT)  Recurrent related party transactions (RRPT)

 Annual Audited Accounts

< 4 months after financial year end

 Percentage ratios (% Ratios)

 Annual Report

< 6 months after financial year end

 Obligations

50

FINANCIAL REPORTING FINANCIAL REPORTING

53

TRANSACTIONS Non-RPT/ RPT

RULES

Late Submission Of Financial Statements

Close of 1Q

Due date for 1Q Results

3 MD 30/9/09

In addition to enforcement action

“Entered Into By Listed Issuer Or Its Subsidiaries”

5 MD

30/11/09

24/11/09 Announce unable to release 1Q Results

Suspension Deadline

7/12/09 Next MD Suspension Effected

31/5/10 Commence delisting

6 months 51

54

9

TRANSACTIONS Non-RPT/ RPT

TRANSACTIONS

RULES

Non-RPT

RPT transactions……

“Acquisitions or disposals of assets by a listed issuer or its subsidiaries but excludes transactions of revenue nature in the ordinary course of business”

Does not exclude transaction of revenue nature in ordinary course of business

RRPT

55

TRANSACTIONS Transaction -

58

TRANSACTIONS Non-RPT/ RPT

RPT

RPT

Related Parties

“Transaction entered into by the listed issuer or its subsidiaries which involves the interest, direct or indirect, of a related party”

Persons Connected Holding Company Listed Company Subsidiaries

TRANSACTIONS Non-RPT/ RPT

RULES

Major Shareholders

Preceding 6 months prior to transaction

59

RULES

Related Parties

RPT transactions include     

Directors

Related Parties

56

TRANSACTIONS Non-RPT/ RPT

RULES

 Directors includes chief executive

Acquisition, disposals or leasing of assets Establishment of joint ventures Provision of financial assistance Provision or receipt of services Any business transaction or arrangement

….entered into by company or subsidiaries.

57

 Major Shareholder > 10% voting shares > 5% voting shares, if largest shareholder  Persons Connected  Family members (spouse/parent/child etc.)  Partners  Person or body corporate, accustomed or obliged to take instructions 60

10

TRANSACTIONS Transaction -

TRANSACTIONS Non-RPT/ RPT

RPT

RPT

RULES

RPT (Basic Example 3) Family Members

Director

“Transaction entered into by the listed issuer or its subsidiaries which involves the interest, direct or indirect, of a related party”

Listed Company

Mr. ABC

Land

Land

61

TRANSACTIONS Non-RPT/ RPT

64

TRANSACTIONS Non-RPT/ RPT

RULES

RPT (Basic Example 1)

RULES

RPT (Basic Example 4) Commission

Major Shareholder

Directors/ Shareholder

>10%

Land

Unrelated

Directors/ Shareholders

Listed Company

Listed Company

ABC Sdn Bhd

Land

Land

Land

62

TRANSACTIONS Non-RPT/ RPT

TRANSACTIONS Non-RPT/ RPT

RULES

RPT (Basic Example 2) Major Shareholder

65

Non-RPT

RULES Materiality Test To Determine Obligations Under The LR

>10%

8 Ratios

>10%

Listed Company

XYZ Sdn Bhd

ABC Sdn Bhd

ABC Sdn Bhd

% Ratio ≥ 5% And Consideration ≥ RM250k

63

Announcement

66

11

TRANSACTIONS Non-RPT/ RPT

TRANSACTIONS Non-RPT/ RPT

RULES

Non-RPT

RULES

RPT

% Ratio ≥ 25% And Consideration ≥ RM250k

Announcement + Shareholders’ Approval + Valuation of Real Estate

% Ratio ≥ 25% And Consideration ≥ RM250k

67

TRANSACTIONS Non-RPT/ RPT

70

TRANSACTIONS Key Amendments 1

RULES

RPT

10.04

% Ratio ≥ 0.25% And Consideration ≥ RM250k

Announcement + Shareholders’ Approval + Valuation of Real Estate + Independent Adviser + Main Adviser

Acquisition or disposal of real estate i. RPT & % ratio > 5% ii. non-RPT & % ratio > 25%  Valuation report is required for:-

Announcement

i. real estate disposed; or

to

be

acquired/

ii. corporation with real estate to be acquired/ disposed 68

TRANSACTIONS Non-RPT/ RPT

71

TRANSACTIONS Key Amendments 1

RULES

RPT

10.04

% Ratio ≥ 5% And Consideration ≥ RM250k

Announcement + Shareholders’ Approval + Valuation of Real Estate + Independent Adviser 69

Corporation With Real Estate: Property developer/ property investment corporations – valuation on all material real estates.  Other corporation that owns real estate and where real estate has been revalued & revaluation formed basis for arriving at consideration

72

12

TRANSACTIONS Key Amendments 1 10.04

TRANSACTIONS Transaction : RRPT

Acquisition or disposal of real estate

RRPT

 Purchase of raw materials for manufacturing business  Purchase of machinery for manufacturing business

 Valuation date < 6 months from Circular date  Valuation Report must comply with SC’s Asset Valuation Guidelines

e.g.  Purchase of fertilizers for plantation business  Sale of completed houses by property developer

 Bursa has discretion to require a 2nd valuation

 Purchase of office equipment  Rental of office premises  Receipt of management & support services

73

TRANSACTIONS

TRANSACTIONS Transaction : RRPT

RPT transactions…… Does not exclude transaction of revenue nature in ordinary course of business

RRPT

RRPT

 Higher threshold for announcement (% ratio = 1% or RM1m, whichever the higher)  Shareholders’ mandate allowed

 Necessary For Day-To-Day Operations

 Independent Adviser not required (% ratio > 5%)

 Contribute Directly/ Indirectly To Generation Of Revenue

 Annual renewal required

 Main Adviser not required (% ratio > 25%)

 Disclosure in Annual Report required

 Reasonably Expected Given Type Of Business 74

TRANSACTIONS Transaction :

76

 Immediate announcement where actual exceeds 77 estimated by > 10%

TRANSACTIONS 8 RATIOS

RRPT

RRPT Revenue Nature/ Ordinary Course Of Business  Necessary For Day-To-Day Operations

Recurrent

Value/ Net Assets

Equity Issued/ Equity Capital

JV Ratio

Once Every 3 Years

Net Profits/ Net Profits

Consideration/ Market Capitalisation

Cost/ Net Assets

Consideration/ Net Assets

Total Asset/ Total Assets

 Contribute Directly/ Indirectly To Generation Of Revenue  Reasonably Expected Given Type Of Business

Attributable to ordinary equity holders i.e. shareholders’ fund

% Ratios After all charges, tax & extraordinary items 75

No. of shares x market price

78

13

TRANSACTIONS 8 RATIOS

CORPORATE GOVERNANCE CG Materiality Test To Determine Obligations Under LR:-

Board of Directors

 Announcement

 No conviction in court of law within last 5 years

 Shareholders Approval

 Maximum 25 directorships (10 in PLCs/ 15 in non-PLCs)

 At least 2 or 1/3rd independent directors

 Independent Adviser

% Ratios

 Must attend MAP by Bursatra Sdn Bhd

 Main Adviser  Must attend continuous training

 Valuation Report (real estate transactions)

 Must vacate office, if unsound mind, bankrupt, convicted or absent > 50% of board meeting

79

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AGENDA     

    

CORPORATE GOVERNANCE CG

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

Audit Committee  At least 3 members 

All must be non-executive directors

 Majority must be independent directors  Chairman must be an independent director  At least 1 must be MIA member, or  If not MIA, 3 years experience plus qualifications as per 1st Schedule of Accountants Act 1967 (Appendix 6) 80

83

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE Independent Director

2007 Malaysian Code Of Corporate Governance

Bursa’s Corporate Governance Guide 2009

Broad Principles & Best Practices

Suggestions & Practical Examples

Voluntary/ Hybrid

Listing Requirements

 Independent of management and free from any business or other relationship that could interfere with exercise of independent judgement or ability to act in the best interest of a listed issuer e.g.

Mandatory

 Is not an executive director of the listed issuer or its related corporation (“said Corporation”)

+ Disclosure in Annual Report

 Has not been within the last 2 years and is not an officer (except non-executive director) of the said Corporation

 A narrative statement on how the listed issuer has applied the Principles of CG Code; and  A statement on the extent of compliance with the Best Practices of CG Code - specifically identify with reasons for non-compliance and the alternatives adopted, if any.

 Is not a major shareholder of the said Corporation 81

84

14

AGENDA

CORPORATE GOVERNANCE Independent Director  Independent of management and free from any business or other relationship that could interfere with exercise of independent judgement or ability to act in the best interest of a listed issuer e.g.

    

 Is not a family member of an executive director, officer or major shareholder of the said Corporation  Is not acting as a nominee or representative of any executive director or major shareholder of the said Corporation 85

CORPORATE GOVERNANCE CG

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

88

TAKEOVERS

Audit Committee  At least 3 members 

All must be non-executive directors Securities Commission

 Majority must be independent directors

Custodian

Code On Take-Overs & Mergers

 Chairman must be an independent director  At least 1 must be MIA member, or  If not MIA, 3 years experience plus qualifications as per 1st Schedule of Accountants Act 1967 (Appendix 6) 86

CORPORATE GOVERNANCE CG Audit Committee

Review & report

89

TAKEOVERS Board of Directors

Mandatory General Offer

 External Auditors – audit plans, audit report & evaluation of internal controls  Internal Auditor – scope, function, competency, resources, processes, program & results thereof

MGO On Balance Of Up To 67% # Mr X

 Financial results – accounting policies, compliance with accounting standards, significant & unusual events  Related party transactions

Controlling Shareholder

>33%; 33% Listed Company

Balance 67%

# Conditional Upon Acceptance Resulting In Offeror Holding > 50% in Listed Company 87

90

15

AGENDA

TAKEOVERS

    

Mandatory General Offer

MGO On Balance Of Up To 65% # Mr X

+ 2%/ 6 months

Shareholder A

>33%; 50% in Listed Company

AGENDA     

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

91

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

94

DISCLOSURE Dealing In Securities By Directors  Directors buy/ sell securities of own listed company  Closed period  Procedures in dealings  Disclosure requirements

92

95

AGENDA

DISCLOSURE

    

LR’s Corporate Disclosure Policy  Disclosure Of Material Information  Thorough Public Dissemination  Clarification Of Rumours  Response To Unusual Market Activity  Unwarranted Promotional Disclosure  Insider Trading 93

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

96

16

ISSUE OF SECURITIES

ISSUE OF SECURITIES

 General mandate to convertible securities

issue

shares

or

 General mandate to issue shares or convertible securities

 Allotment to directors etc.

 Allotment to directors etc etc..

 Rights Issue

 Rights Issue

 Bonus Issue

 Bonus Issue

 Employee Share Option Scheme

 Employee Share Option Scheme

97

ISSUE OF SECURITIES General Mandate

100

ISSUE OF SECURITIES Powers for directors to issue shares without specific approval at EGM

Allotment to Directors etc.

 Resolution pursuant to Section 132D, CA 1965  Renewed at every AGM

 Includes chief executive & major shareholders of the listed issuer; and

 Allotment to directors etc. prohibited  Nominal value, when aggregated with issuance in preceding 12 months, must not exceed 10% of nominal value of issued & paid-up capital (excluding treasury shares)

 Persons connected to them.

Similar to “Associates”; see Appendix 5

 Pricing not more than 10% discount to weighted average market price for 5 market days before price-fixing date 98

ISSUE OF SECURITIES

101

ISSUE OF SECURITIES Entitlement basis e.g. rights issue, bonus issue

General Mandate

Allotment to Directors etc.

 Flexibility & cost savings; need not convene EGM

 Except on pro-rata basis, a listed issuer & its subsidiary must not issue shares or convertible securities to “Directors etc.” without shareholders approving the specific allotment to them in general meeting. Separate resolutions

 Normally for raising funds to repay bank borrowings/ other creditors or general working capital

required

 Via private placement or special issue

 The “interested Directors etc.” must not vote on the resolution approving the specific allotment to him/ her.

99

 Precise terms & conditions of allotment must be disclosed to shareholders 102

17

ISSUE OF SECURITIES Allotment to Directors etc. Directors

Issue shares/ convertible securities Shareholders’ approval on specific allotment is required with precise terms & conditions

ISSUE OF SECURITIES Rights Issue

Abstain from voting of respective resolutions

Major Shareholder

Directors (also sh/holder)

Chief Executive

Issue shares/ convertible securities

Listed Issuer

Subsidiary 103

ISSUE OF SECURITIES General Mandate

Issue shares/ convertible securities for cash on pro-rata entitlement basis

Major Shareholder

Other Shareholders

Listed Issuer

Issue shares/ convertible securities for cash on pro-rata entitlement basis

e.g.  1 new ordinary share for every 2 existing ordinary shares held  1 new ordinary share with 1 free warrant for every 2 existing ordinary shares held 106

ISSUE OF SECURITIES Rights Issue (RI)

Can You See Why ??

 Resolution pursuant to Section 132D, CA 1965  Renewed at every AGM

 Must be renounceable  Underwriting at listed issuer’s discretion

 Allotment to directors etc. prohibited  Nominal value, when aggregated with issuance in preceding 12 months, must not exceed 10% of nominal value of issued & paid-up capital (excluding treasury shares)  Pricing not more than 10% discount to weighted average market price for 5 market days before price-fixing date 104

ISSUE OF SECURITIES

 Subject to minimum level of acceptance, failing which RI terminated & all proceeds returned to subscribers  Shareholders’ irrevocable undertaking to subscribe must be supported by sufficient financial resources as verified by independent party 107

ISSUE OF SECURITIES

 General mandate to issue shares or convertible securities

 General mandate to issue shares or convertible securities

 Allotment to directors etc.

 Allotment to directors etc.

 Rights Issue

 Rights Issue

 Bonus Issue

 Bonus Issue

 Employee Share Option Scheme

 Employee Share Option Scheme

105

108

18

AGENDA

ISSUE OF SECURITIES

    

Bonus Issue Directors (also Sh/holder)

Issue shares/ convertible securities on pro-rata entitlement basis

Major Shareholder

Listed Issuer

Other Shareholders

Issue shares/ convertible securities on pro-rata entitlement basis

e.g.  1 new ordinary share for every 1 existing ordinary shares held  1 new ordinary share for every 10 existing ordinary shares held Proceeds $$$$ ???

109

ISSUE OF SECURITIES

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub--Division & Consolidation Sub Share Buy-Back Enforcement Withdrawal Of Listing

112

SUB-DIVISION & CONSOLIDATION

 General mandate to issue shares or convertible securities

Sub-division of Shares  Also know as “Share Split”  E.g.

 Allotment to directors etc.

Issued & paid-up capital of RM100m comprising 100m ordinary share of RM1.00 each

 Rights Issue  Bonus Issue

Issued & paid-up capital of RM100m comprising 200m ordinary share of RM0.50 each

 Employee Share Option Scheme

110

ISSUE OF SECURITIES ESOS  A right but not an obligation to subscribe for shares in the listed issuer  Not more than 15% of issued & paid up share capital at any one time  Participation restricted to directors & employees of listed issuer’s group of companies  Maximum duration of scheme is 10 years  Pricing not more than 10% discount to 5 day weighted average market price when option is offered 111

113

SUB-DIVISION & CONSOLIDATION Sub-division of Shares  Adjusted market share price after sub-division must not be less than RM0.50 based on daily closing price during 3-month period prior to application date (application to Bursa)  Listed issuer must not be Cash Company (PN16/ GN2) or PN17/ GN3 Company

114

19

SUB-DIVISION & CONSOLIDATION

SHARE BUY-BACK

Consolidation of Shares

Treasury Shares

 Opposite of Sub-Division  E.g.

 No voting rights  No entitlement rights  Disregarded for computation of EPS, NTA etc

Issued & paid-up capital of RM10m comprising 100m ordinary share of RM0.10 each

 Subsequently cancelled or resold “in the market” or distribute as “share dividend”

Issued & paid-up capital of RM10m comprising 10m ordinary share of RM1.00 each

115

AGENDA     

    

SHARE BUY-BACK

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share BuyBuy-Back Enforcement Withdrawal Of Listing

Why Share Buy-Back?

 Utilisation of excess funds to purchase own shares which are deemed undervalued by the market  Potential gain from resale of treasury shares when market recovers  Reduce unwarranted volatility in share price by stabilising supply, demand and market price  Flexibility to declare share dividend, instead of cash dividend  Enhance EPS & positive impact of share price

116

SHARE BUY-BACK Listed Issuer

118

119

SHARE BUY-BACK  Authorisation ~ shareholders’ mandate required Directors

 Validity of mandate (AGM to AGM) ~

Major Shareholders

Issued/ pdup Shares

 the conclusion of the first AGM after mandate is obtained

Other Shareholders Investing Public

 the expiration of the period within which the next AGM must be held; or

Listed Issuer (itself)

 revoked or varied by ordinary resolution passed by the shareholders in general meeting whichever occurs first. 117

120

20

SHARE BUY-BACK

SHARE BUY-BACK

 “On the market” transactions ~ buy-back through Automated Trading System

 Resale price ~ not less than the weighted average market price for the shares for the 5 market days immediately prior to the resale; or

 Maximum limit ~ shares purchased or held as treasury share must not to exceed 10% of its issued and paid-up capital

A discounted price of not more than 5% to the weighted average market price for the shares for the 5 market days immediately prior to the resale provided that

 Source of funds ~ wholly out of retained profits (“RP”) or share premium (“SP”) account of the listed issuer or both (RP & SP at Company level)



The resale takes place not earlier than 30 days from date of purchase; and



The resale price is not less than the cost of purchase

121

124

AGENDA

SHARE BUY-BACK  Types of funds ~ No restriction on the types of funds which can be utilised so long as the buy back is backed by an equivalent amount of retained profits or share premium

    

i.e. use of bank borrowings permitted  Declaration of solvency ~ in accordance with section 67A of the Companies Act 1965 and Part IIIA of the Companies Regulations 1966  Execution of solvency declaration ~ signed and dated by the majority of the directors prior to actual buy-back & valid for 6 months 122

SHARE BUY-BACK  Public shareholding maintained

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

125

ENFORCEMENT spread

~

must

be

Undertaking By Listed Company “To Bursa Malaysia Securities Berhad

 Appointment of stockbroker ~ to purchase and/or resell treasury shares.  Purchase price ~ not more than 15% above the weighted average market price for the shares for the 5 market days immediately prior to purchase

Compliance with Main Market Listing Requirements and Rules of Bursa Malaysia Securities Berhad In consideration of Bursa Securities approving the application for admission of .................. WE FURTHER UNDERTAKE AND AGREE to comply with Bursa Securities Main Market Listing Requirements ……insofar as the same shall apply to the Corporation. The above Undertaking has been signed by me as.............................. Date: Signature:”

123

126

21

ENFORCEMENT

ENFORCEMENT

Undertaking By Directors

Paragraph 16.13

“To Bursa Malaysia Securities Berhad

“A director of a listed issuer must not….

Compliance with Main Market Listing Requirements I, ......................................[name of director], am a director of ........................ to be admitted to the Official List of Bursa Securities … In consideration …….., I UNDERTAKE AND AGREE to comply with Bursa Securities Main Market Listing Requirements including any amendment as may be made from time to time, insofar as the same shall apply to me as a director of the Corporation(s). Yours faithfully”

“…cause, aid or abet a breach of these Requirements by such listed issuer or..” “…permit, either knowingly or where he had reasonable means of obtaining such knowledge, such listed issuer to commit a breach of these Requirements”

127

ENFORCEMENT

130

ENFORCEMENT Common Breaches

Paragraph 16.18

“In the event of any breach of these Requirements by any applicant, listed issuer, management company, trustee or its directors, officers or advisers….the Exchange may take or impose such actions or penalties as it consider appropriate.”

 Late Submission Of Financial Statements  Material Deviations Between Results And Unaudited Results

Audited

 Late Announcement Of Material Information  Related Party Transactions Source : Bursa Malaysia Website

128

ENFORCEMENT

131

ENFORCEMENT

Types of Actions/ Penalties

Recent Trend



Caution Letter



Private Reprimand



Public Reprimand



Fine not exceeding RM1.0 million



Public Reprimand & Fine

Paragraph 16.13 - A director of a listed issuer…must not cause, aid or abet a breach of these Requirements by such listed issuer…or permit, either knowingly or where he had reasonable means of obtaining such knowledge, such listed issuer…,to commit a breach of these Requirements



Mandatory training program for directors



Suspension



Delisting

Directors’ Enforcement

Public Reprimand & Fine On Directors 129

132

22

ENFORCEMENT

WITHDRAWAL OF LISTING GO & Other Corporate Proposals A listed issuer may withdraw its listing as follows:

Fine On Directors

Enforceable ?



In a take-over offer, upon 90% or more of its listed shares (excluding treasury shares) being held by a shareholder either individually or jointly with associates of the said shareholder; or



In relation to a corporate proposal undertaken by or in relation to the listed issuer, upon 100% of the listed shares of the listed issuer being held by a shareholder either individually or jointly with the associates of the said shareholder, and



The offeror’s intention is not to maintain listing status of the listed issuer

133

136

AGENDA     

    

Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)  Continuing Listing Criteria  Financial Reporting  Transactions  Corporate Governance  Takeovers  Corporate Disclosure Policy  Dealing In Securities By Directors Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing

END THANK YOU

134

137

WITHDRAWAL OF LISTING Voluntary Withdrawal 

A listed issuer may request for withdrawal of listing subject to approval of Bursa & shareholders



Resolution must be approved by a majority in number representing three fourths in value of the shareholders, present and voting; and



Shareholders who object is not more than 10% of the value of the shareholders, present and voting



Shareholders are offered a reasonable cash alternative or other reasonable alternative (“Exit Offer”)



Independent adviser is required to advise and make recommendations to shareholders, as well as the fairness and reasonableness of the Exit Offer. 135

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