Before listing on the Malaysian Stock Exchange, companies must ensure they are ready to meet the strict requirements. Companies must first determine whether the listing will meet their goals if the company has a healthy financial status and several other factors listed below.
Considerations to make prior to listing in Malaysia
Following your company’s success, you may feel that your company is ready to be listed on the Malaysian Stock Exchange (Bursa Malaysia). However, there are some key considerations to take into account to assess the impact that listing may have on your company.
These considerations include:
- How will the listing meet the stakeholder’s goals and objectives?
- Whether your company has an effective management team in terms of experience and qualifications
- Does your company have a healthy financial status?
- Does your company fully understand the corporate governance policies?
- Is your company ready for strict reporting and disclosure requirements?
- Do the company directors fully understand their fiduciary obligations?
- Are you ready for a dilution in the control of your company?
Eligibility criteria
Businesses wanting to go public in Malaysia must satisfy a set of two criteria – quantitative and qualitative.
Quantitative criteria
Main market
The main market is a market for established companies that have satisfied the quality, scale and operations benchmark.
Local and foreign companies must ensure that they meet one of the following quantitative admission criteria:
- Profit test:
- Uninterrupted profit of three to five full financial years (FY), with aggregate after-tax profit of at least RM 20 million
- After-tax profit of at least RM 6 million for the most recent FY
- Have been operating in the same core business over at least the profit track record before submission
- Market capitalisation test:
- A total market capitalisation of at least RM 500 million upon listing
- Incorporated and generated operating revenue for at least one full FY before submission
- Infrastructure project corporation test:
- Must have the right to build and operate an infrastructure project in or outside Malaysia, with project costs of not less than RM 500 million
- The concession or license for the infrastructure project has been awarded by a government or a state agency, in or outside Malaysia, with a remaining concession or license period of at least 15 years from the date of submission
The public spread requirements are:
- At least 25% of the company’s total number of shares
- Minimum of 1,000 public shareholders holding not less than 100 shares each
ACE Market
The ACE Market is a sponsor-driven market for companies with high growth potential. There are no minimum operating track record or profit requirements.
The public spread requirements are:
- At least 25% of the company’s total number of shares
- Minimum of 200 public shareholders holding not less than 100 shares each
LEAP Market
The LEAP Market is an advisor-driven market that intends to assist rising companies, especially SMEs, with improved capital market access and visibility. There are no minimum operating track record or profit requirements.
At admission, the public spread requirement is at least 10% of the company’s total number of ordinary shares.
Qualitative criteria
The qualitative criteria for the Main Market, ACE Market and LEAP Market are as follows:
Main Market
- The company’s core business must not be holding investments in other listed companies
- Have an identifiable core business in which it has majority ownership and management control
- Continuity of substantially the same management for at least three full financial years before submission or since the commencement of operations (if less than three full financial years)
- Sufficient level of working capital for at least 12 months from the date of the prospectus
- Positive cash flow from operating activities
- No accumulated losses based on its latest audited financial statement
- Sufficient level of working capital for at least 18 months from the date of the prospectus (for mineral, oil and gas exploration and extraction corporations or assets)
ACE Market
- Engage a sponsor to assess the sustainability of listing
- Sponsorship is required for at least three full years post listing, and the sponsor who submitted the listing application must act as the sponsor for at least one full year following the application
- ACE market corporations that have met the main market admission criteria – sponsorship is for one full financial year
- Core business must not be holding investments in other listed companies
- Continuity of substantially the same management for three full financial years before submission or since its incorporation
- Sufficient level of working capital for at least 12 months from the date of the prospectus
LEAP Market
- Engage an approved advisor to assess the suitability for listing
- Secure and maintain a continuing advisor for at least three years post listing, and the approved advisor who submitted the listing application must act as the continuing advisor for at least one financial year after admission
- A clearly identifiable core business
Conclusion
Companies must first take into consideration certain key factors to assess the readiness of the company and if there will be any impacts that may affect the company. It is important to make sure that the company is well prepared for the IPO listing.
Once the company is ready, there are specific requirements to satisfy to ensure the company is successfully listed on the market. It is recommended to engage with trusted advisors to assist you in developing a comprehensive strategy. Feel free to contact Acclime to discuss your IPO plans.
