Bursa Malaysia simplifies listing rules for SMEs

Bursa Malaysia Berhad has issued new Listing Requirements and various amended rules for the Leading Entrepreneur Accelerator Platform Market, a service that gives the country’s small and medium enterprises (SMEs) a new avenue to raise funds via the capital market in an efficient manner.

Datuk Seri Tajuddin Atan, Bursa Malaysia Chief Executive Officer, explained that the LEAP Market complements both the Main Market and ACE Market by addressing the funding gap faced by the SMEs. It also enhances the existing SME funding eco-system and address the over-dependency of these SMEs on financial institutions by providing them access to the capital market.

Currently, 96 per cent of SME funding comes from the banking sector. Less than 4 per cent comes from the capital market.

“As the national exchange, we believe the exchange can play a greater developmental role to facilitate fund raising for and the growth of SMEs,” says Datuk Seri Tajuddin Atan.

Trading on the LEAP Market is limited to qualified investors, mainly those who fall within Part I of Schedule 6 or 7 of the Capital Markets and Services Act 2007 (“Sophisticated Investors”), according them with an opportunity to broaden their investment options in SMEs in a transparent and regulated environment.  

In finalizing the rules for the LEAP Market, the Exchange considered all industry and market views received from two public consultations and various focus group meetings conducted in September and November 2016 respectively. The new rules are premised on three key underlying principles, namely cost efficiency, balanced and proportionate regulation as well as a qualified market for Sophisticated Investors.

“The rules for the LEAP Market have been formulated on a light-touch basis, in tandem with it being a qualified market for Sophisticated Investors. It’s an ideal platform for SMEs who are currently underserved in the market to raise funds and enhance their profile in an efficient and cost effective manner,” adds Datuk Seri Tajuddin Atan.

Listing framework

The listing framework governing the LEAP Market as set out under the LEAP LR is as follows:

(a)  promoting a simple and easy listing regime where an issuer is required to issue an information memorandum instead of a prospectus;

(b)  facilitating an efficient fund raising platform for initial listings and secondary fund raisings with short time to market;

(c)  expanding the pool of advisers eligible to act in an initial listing and post listing on the LEAP Market, to beyond the existing principal advisers and sponsors for the Main Market and ACE Market;

(d)  adopting a market based approach where the Approved Advisers play the key role in assessing and determining the suitability of an applicant for listing based on prescribed considerations and providing advisory services to the listed corporation post listing;

(e)  ensuring commitment from promoters by requiring their shares to be placed under moratorium for 4 years from the date of admission;

(f)  facilitating ease and timely of secondary fund raising by allowing the following:

(i) a higher general mandate for directors to issue new shares or convertible securities i.e. 100 per cent of the total number of issued shares of a listed corporation in the case of an issuance on a pro rata basis and 50 per cent in the case of an issuance on a non pro rata basis, as opposed to 10 per cent only for Main and ACE Markets; and  

(ii) both renounceable and non-renounceable rights issue; and

(g)  promoting a transparent and proportionate disclosure regime by requiring immediate announcements of material information/transactions, semi-annual financial statements and annual audited financial statements.

The new LEAP LR and amended rules have been approved by the SC and took effect on 16 June 2017. All the existing 14 principal advisers and sponsors who are eligible to act on the Main Market and ACE Market are automatically admitted to the Register of Advisers of the LEAP Market.

The Exchange also invites and welcomes all suitably qualified corporate finance advisers licensed by the SC to apply to the Exchange to act as an Approved Adviser or Continuing Adviser on the LEAP Market. 

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