listing of securities for csc students - bursa malaysia guidelines
TRANSCRIPT
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CORPORATE SECRETARY CERTIFICATE
LISTING OF SECURITIES
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AGENDA Board StructureBoard 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 2
BOARD STRUCTURE
844 companies
116 companies
Market Capitalisation
Main Market
ACE Market
Source : Bursa Malaysia WebsiteAs At 31/12/2009
RM999 billion
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AGENDA Board Structure Regulatory FrameworkRegulatory 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 4
REGULATORY FRAMEWORK
Ministry of FinanceMinistry of Domestic Trade, Cooperatives & Consumerism
Securities CommissionCompanies Commission of Malaysia
Bursa Malaysia
• Capital Markets & Services Act 2007• SC Guidelines• Code On Takeovers & Mergers
• Listing Requirements (LR)• Other Rules
Listed CorporationsListed Corporations
• Companies Act 1965
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REGULATORY FRAMEWORK
Equity Guidelines
Prospectus Guidelines
Principal Adviser Guidelines
Asset Valuation Guidelines
Structured Warrants Guidelines
Main Market LR
ACE Market LR
Trading Rules
Clearing Rules
Depository Rules
Code Of Takeovers & Merger
Securities Commission Bursa Malaysia
Refer To Appendix 1
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2
REGULATORY FRAMEWORKSecurities Commission Bursa Malaysia
IPO for Main Market
Transfer from ACE to Main Market
Significant change in business direction or policy of a Main Market Company (Appendix 2)
IPO for ACE Market (ILA)
Post IPO issues for Main and ACE Markets (ALA) (e.g. right issue/ bonus issue)
Approving Authority Approving Authority
Commonly referred to as RTO/BDL
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REGULATORY FRAMEWORKSecurities 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) notresulting in RTO/ BDL
Regularisation plan of GN3 & GN2 Company (ACE Market)
Regularisation plan of PN16 Company (Main Market)
Notes :1) PN16/ GN2 Companies = Cash Companies for Main & ACE
Markets respectively
2) PN17/ GN3 Companies = Financial Condition Companies for Main & ACE Markets respectively
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REGULATORY FRAMEWORK
Securities Commission Bursa Malaysia
Custodian of the Code Of Takeovers & Merger
Powers from LR & Rules -reprimand & fine
Post listing obligations under LR
Statutory power for criminal prosecution
Other Matters Other Matters
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ABC Bhd XYZ
AssetsAssetsExisting businesses
Issue shares
>33%
RTO / BDL RTO / BDL
BDL
RTO
REGULATORY FRAMEWORKControlling Shareholder
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AGENDA Board Structure Regulatory Framework IPO Rules 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? Initial Public Offering
Pre-IPO Exercise
Issue considerationshares for acquisition
Rights Issue
Bonus Issue
IPO
Public Issue
Offer For Sale
Restricted Offer ForSale
Private Placements 12
3
IPO RULES
Main Market
Profit Test
Market Capitalisation (Market Cap)Test
Infrastructure Project Company (IPC)Test
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IPO RULES
Main Market
Aggregate profit aftertax (“PAT”) RM20mover 3-5 years
Uninterrupted PAT
Latest PAT > RM6m
Profit TestProfit Test
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Market Cap TestMarket Cap Test
Minimum Market Capof RM500 million
No minimum profittrack record required
> 1 financial year of operating revenue
Main Market
IPO RULES
No. Of Shares x IPO Price
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IPO RULES
Main MarketIPC TestIPC Test
Remaining concession> 15 years
Minimum project costRM500 million
Shorter remainingconcession period, ifProfit Test fulfilled
Aggregate profit after tax(“PAT”) RM20m over 3-5 years
Uninterrupted PAT
Latest PAT > RM6m
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IPO RULES
Main Market
No minimum paid-up capital
25% in hands of 1,000 public shareholders
Minimum issue price RM0.50
No mandatory underwriting
Minimum offering to public (Appendix 3)
Public Spread
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IPO RULES
Main Market
No restriction on Offer For Sale (OFS), except for IPC
IPC may undertake OFS, provided IPC has 2 consecutive FYs of operating revenue
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4
IPO RULES
Main MarketMoratoriumMoratorium
Listing via Profit Test or Market Cap Test:-
100% in 1st 6 months after listing
Thereafter, no restriction
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IPO RULES
Main Market
Listing via IPC Test:-
100% in 1st 6 months after listing Thereafter, at least 45% under moratorium,
until 1 FY operating revenue achieved
MoratoriumMoratorium
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Bumiputra Equity Interest Bumiputra Equity Interest
50% of public offering to be allocated upon listing
Effective minimum = 12.5%
Deemed complied if no take up at IPO stage
IPO RulesIPO RULES
Main Market
50% x Minimum Public Spread of 25%
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Bumiputra Equity Interest Bumiputra Equity Interest
IPO RULES
Main Market
Applicable to companies with Malaysian-basedoperations only
i.e. > 50% PAT from operations based inMalaysia
Not applicable to companies with MSC status,BioNexus status (biotechnology business) orcompanies with > 50% PAT from foreign-basedoperations
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IPO RULES
ACE Market
No minimum track record required
All business sectors allowed
Sponsor to determine suitability
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IPO RULES
ACE MarketSponsor to determine suitability
Prospects
Corporate Governance
Conflict of Interest
Public Interest
Suitability, Efficacy, Past Conduct of Directors & Key Management
Internal Controls & Risk Management
Systems, Procedures, Policies, Controls, Resources To Comply With ACE LR 24
5
IPO RULES
ACE Market
No minimum paid-up capital
25% in hands of 200 public shareholders
No minimum issue price
No mandatory underwriting
No minimum offering to public
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IPO RULES
ACE Market
Offer For Sale (OFS) allowed with 1 financial year of operating profit
OFS subject to promoter retain at least 45% ofpaid up capital upon listing
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IPO RULES
ACE Market
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
MoratoriumMoratorium
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Bumiputra Equity Interest Bumiputra Equity Interest
IPO RULES
ACE Market
Allocate 12.5% of paid-up capital to approved bumiputra shareholders
Within 1 year after achieve Main Market Profit Test; Or
5 years after listing, whichever is earlier
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Bumiputra Equity Interest Bumiputra Equity Interest
IPO RULES
ACE Market
Applicable to companies with Malaysian-basedoperations only
i.e. > 50% PAT from operations based inMalaysia
Not applicable to companies with MSC status,BioNexus status (biotechnology business) orcompanies with > 50% PAT from foreign-basedoperations
Same as Main Market
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AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE MarketSponsorship 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
6
SPONSORSHIP – ACE MARKET
Sponsorship period :-
• 3 FY after listing
• If no operating revenue after 3 FY, sponsorship period extended for at least 1 FY after operating revenue is generated
• 1st FY = IPO Sponsor
SC’s approval for IPO – Not Required/ Sponsor determined suitability for listing
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SPONSORSHIP – ACE MARKET
Change of Sponsor
Within 1 full financial year after admission
• Sponsor cannot resign or be terminated
After 1 full financial year after admission
• 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
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
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SPONSORSHIP – ACE MARKET
During the sponsorship period, Sponsor must review andapproved all documents (including announcements/ circularsto shareholders) issued by the Sponsored Corporation(“Public Documents”), except the followings:-
Annual audited financial statements;
Certain non-material announcements (e.g. change ofaddress or telephone number); or
Public Documents prepared or submitted to Bursa by anAdviser, who is an entity other than the Sponsor
SC’s approval for IPO – Not Required/ Sponsor determined suitability for listing
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SPONSORSHIP – ACE MARKET
Outside sponsorship period, Adviser to prepare,review & approve certain Public Documents(Appendix 4)
All additional listing application during & outsidesponsorship period – through Sponsor or Adviser
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AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)Post Listing Obligations (LR)
Continuing Listing CriteriaContinuing 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
7
CONTINUING LISTING CRITERIA
Public Spread
Financial Condition (PN17/ GN3)
Cash Company (PN16/ GN2)
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CONTINUING LISTING CRITERIAPublic Spread
25% public spread(excluding treasury shares)
Substantial shareholders (>5%) of Listed Issuer Associates of directors &
substantial shareholders of Listed Issuer
Need not maintain minimum number of public shareholders
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Public excludes Directors of Listed Issuer & its
subsidiaries
PUBLIC SPREAD
Associates Of Directors/ SubstantialShareholders
Family members (spouse/parent/child etc.) Person or body corporate, accustomed or
obliged to take instructions
(Appendix 5)
CONTINUING LISTING CRITERIAPublic Spread
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PUBLIC SPREAD
Substantial shareholders holding up to 15%can be considered “public” provided….
Such shareholder is not a promoter of the Listed Issuer
Such shareholder is either…
A statutory institution managing funds of contributors who are member of the public
Collective Investment Schemes
CONTINUING LISTING CRITERIAPublic Spread
40
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CONTINUING LISTING CRITERIAFinancial Condition 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
Adverse/ Disclaimer Opinion By Auditors
Modified Opinion On Going Concern & SE < 50% Of Paid-Up Capital
41
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CONTINUING LISTING CRITERIAFinancial Condition
Default In Payment & Without Solvency Declaration
Suspended/ Ceased All/ Major Business/ Operations
Winding-up Order On Subsidiary/ Associated Company > 50% Total Assets
AnyTriggered
PN 17
8
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CONTINUING LISTING CRITERIAFinancial Condition
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CONTINUING LISTING CRITERIAFinancial Condition – Oilcorp
“..failed to make interest paymentof RM1.6 million…”
“..directors are unable to form anopinion that the company willbe able to meet its debts as theyfall due…company is not solvent”
Default In Payment & Without Solvency Declaration
Immediate Announcement
As PN17Company
AnnounceWhether
RegularisationPlan =RTO
3 Months
Submit Plan To
SC
If NotRTO
12 mthsFrom 1st
Ann.
If RTO
ImplementAs Per SC’s
Timeframe
12 mthsfrom 1st
ann.
Submit Plan To Bursa +Approval
ImplementWithin 6 – 12 Months
CONTINUING LISTING CRITERIAFinancial Condition
45
Suspension/Delisting
Failure To Regularise
CONTINUING LISTING CRITERIAFinancial Condition
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> 70% Assets = Cash Or Short Term Investment
Triggered
PN 16
CONTINUING LISTING CRITERIA
Cash Company
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CONTINUING LISTING CRITERIA
Cash Company
Trigger CashCompany Criteria
NotifyBursaIn Writing
Bursa ToDetermine
PN 16Company
ImmediateAnnouncementAs PN16Company
12 months
Submit Plan To SC
ImplementAs Per SC’s Timeframe
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AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)Post Listing Obligations (LR)
Continuing Listing Criteria Financial ReportingFinancial 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
Quarterly Results
Annual Audited Accounts
< 2 months after quarter end
< 6 months after financial year end
< 4 months after financial year end
Annual Report
Or immediately after Board approval
FINANCIAL REPORTING
50
Late Submission Of Financial Statements
30/9/09
Close of 1Q
Due date for 1Q Results
30/11/09
Announce unable to release 1Q Results
7/12/09
5 MD
Suspension Deadline
Next MDSuspension Effected
31/5/10Commence delisting
6 months
3 MD
24/11/09
FINANCIAL REPORTING
In addition to enforcement action
FINANCIAL REPORTING
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AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)Post Listing Obligations (LR)
Continuing Listing Criteria Financial Reporting TransactionsTransactions 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
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TRANSACTIONS
Non-related party transaction (Non-RPT)
Related Party Transactions (RPT)
Recurrent related party transactions (RRPT)
Percentage ratios (% Ratios)
Obligations
“Entered Into By Listed Issuer Or ItsSubsidiaries”
Non-RPT/ RPT RULESTRANSACTIONS
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10
“Acquisitions or disposals of assets by alisted issuer or its subsidiaries butexcludes transactions of revenue naturein the ordinary course of business”
Non-RPT
Non-RPT/ RPT RULESTRANSACTIONS
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RPTRPTRPTRPT
Transaction - RPT
“Transaction entered into by the listedissuer or its subsidiaries which involvesthe interest, direct or indirect, of arelated party”
TRANSACTIONS
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RPT transactions include
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.
Non-RPT/ RPT RULESTRANSACTIONS
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TRANSACTIONS
RPT transactions……
Does not exclude transaction of revenue nature in ordinary course of business
RRPT
Related Parties
Listed Company
SubsidiariesMajor
Shareholders
RelatedParties
Directors
PersonsConnected
HoldingCompany
Preceding6 monthsprior to
transaction
Non-RPT/ RPT RULESTRANSACTIONS
59
Directors includes chief executive
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
Non-RPT/ RPT RULESRelated Parties
TRANSACTIONS
60
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RPTRPTRPTRPT
Transaction - RPT
“Transaction entered into by the listedissuer or its subsidiaries which involvesthe interest, direct or indirect, of arelated party”
TRANSACTIONS
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RPT (Basic Example 1)
Listed Listed CompanyCompany
MajorShareholder
>10%
Land
Land
Non-RPT/ RPT RULESTRANSACTIONS
62
RPT (Basic Example 2)
Listed Listed CompanyCompany
ABCSdn Bhd
XYZSdn Bhd
ABCSdn Bhd
MajorShareholder >10%
>10%
Non-RPT/ RPT RULESTRANSACTIONS
63
RPT (Basic Example 3)
Listed Listed CompanyCompany
Land
Mr. ABC
Land
Director Family Members
Non-RPT/ RPT RULESTRANSACTIONS
64
RPT (Basic Example 4)
Listed Company
Land
ABCSdn Bhd
Land
Directors/Shareholder
Directors/ShareholdersUnrelated
Commission
Non-RPT/ RPT RULESTRANSACTIONS
65
Non-RPT
% Ratio ≥ 5% And Consideration
≥ RM250kAnnouncement
Non-RPT/ RPT RULESTRANSACTIONS
Materiality Test To Determine ObligationsUnder The LR
8 Ratios
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12
Non-RPT
Announcement +
Shareholders’ Approval
+Valuation of Real Estate
Non-RPT/ RPT RULESTRANSACTIONS
% Ratio ≥ 25% And Consideration
≥ RM250k
67
RPT
Announcement
Non-RPT/ RPT RULESTRANSACTIONS
% Ratio ≥ 0.25% And Consideration
≥ RM250k
68
RPTAnnouncement
+Shareholders’
Approval+
Valuation of Real Estate
+Independent
Adviser
Non-RPT/ RPT RULESTRANSACTIONS
% Ratio ≥ 5% And Consideration
≥ RM250k
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RPT Announcement+
Shareholders’ Approval
+Valuation of Real Estate
+Independent
Adviser+
Main Adviser
Non-RPT/ RPT RULESTRANSACTIONS
% Ratio ≥ 25% And Consideration
≥ RM250k
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Acquisition or disposal of real estate10.04
Valuation report is required for:-
i. RPT & % ratio > 5%ii. non-RPT & % ratio > 25%
ii. corporation with real estate to beacquired/ disposed
i. real estate to be acquired/disposed; or
Key Amendments 1TRANSACTIONS
71
Property developer/ propertyinvestment corporations – valuationon all material real estates.
10.04
Other corporation that owns realestate and where real estate hasbeen revalued & revaluation formedbasis for arriving at consideration
Key Amendments 1
Corporation With Real Estate:-
TRANSACTIONS
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Acquisition or disposal of real estate10.04
Valuation date < 6 months from Circular date
Valuation Report must comply with SC’s AssetValuation Guidelines
Bursa has discretion to require a 2nd valuation
Key Amendments 1TRANSACTIONS
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TRANSACTIONS
RPT transactions……
Does not exclude transaction of revenue nature in ordinary course of business
RRPT
Necessary For Day-To-Day Operations
Contribute Directly/ Indirectly To Generation Of Revenue
Reasonably Expected Given Type Of Business
RRPTTransaction : RRPT
RecurrentRevenue Nature/Ordinary Course Of Business
Once Every 3 Years
TRANSACTIONS
Necessary For Day-To-Day Operations
Contribute Directly/ Indirectly To Generation Of Revenue
Reasonably Expected Given Type Of Business 75
RRPT
Transaction : RRPT
e.g.
TRANSACTIONS
Purchase of raw materials for manufacturing business
Purchase of machinery for manufacturing business
Purchase of fertilizers for plantation business
Sale of completed houses by property developer
Purchase of office equipment
Rental of office premises
Receipt of management & support services 76
RRPT
Transaction : RRPT Higher threshold for announcement
(% ratio = 1% or RM1m, whichever the higher)
Shareholders’ mandate allowed
Independent Adviser not required (% ratio > 5%)
Main Adviser not required (% ratio > 25%)
Annual renewal required
Disclosure in Annual Report required
Immediate announcement where actual exceeds estimated by > 10%
TRANSACTIONS
77
Consideration/Net Assets
Equity Issued/Equity Capital
Value/ Net Assets
Net Profits/Net Profits
Consideration/Market
Capitalisation
Total Asset/Total Assets
Cost/Net Assets
JV Ratio
8 RATIOS
% Ratios% Ratios
TRANSACTIONSAttributable to ordinary equity holders i.e. shareholders’ fund
After all charges, tax & extraordinary items
No. of shares x market price
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14
8 RATIOS
% Ratios
TRANSACTIONS
Materiality Test To Determine Obligations Under LR:-
Announcement
Shareholders Approval
Independent Adviser
Main Adviser
Valuation Report (real estate transactions)
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AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)Post Listing Obligations (LR)
Continuing Listing Criteria Financial Reporting Transactions Corporate GovernanceCorporate Governance Takeovers Corporate Disclosure Policy Dealing In Securities By Directors
Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing 80
Bursa’s CorporateGovernanceGuide 2009
2007 Malaysian Code Of Corporate
Governance
Listing Requirements
Broad Principles &Best Practices
Suggestions &Practical Examples
MandatoryMandatory
CORPORATE GOVERNANCE
A narrative statement on how the listed issuer hasapplied the Principles of CG Code; and
A statement on the extent of compliance with the BestPractices of CG Code - specifically identify with reasonsfor non-compliance and the alternatives adopted, if any.
+Disclosure in
Annual ReportVoluntary/ Hybrid
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CGCORPORATE GOVERNANCE
At least 2 or 1/3rd independent directors
No conviction in court of law within last 5 years
Maximum 25 directorships (10 in PLCs/ 15 in non-PLCs)
Must attend MAP by Bursatra Sdn Bhd
Must attend continuous training
Must vacate office, if unsound mind, bankrupt, convicted or absent > 50% of board meeting
Board of Directors
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CGCORPORATE GOVERNANCE
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)
Audit Committee
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CORPORATE GOVERNANCE
Independent Director
Independent of management and free from any businessor other relationship that could interfere with exercise ofindependent judgement or ability to act in the bestinterest of a listed issuer e.g.
Is not an executive director of the listed issuer or itsrelated corporation (“said Corporation”)
Has not been within the last 2 years and is not anofficer (except non-executive director) of the saidCorporation
Is not a major shareholder of the said Corporation
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CORPORATE GOVERNANCE
Independent Director
Independent of management and free from any businessor other relationship that could interfere with exercise ofindependent judgement or ability to act in the bestinterest of a listed issuer e.g.
Is not a family member of an executive director, officeror major shareholder of the said Corporation
Is not acting as a nominee or representative of anyexecutive director or major shareholder of the saidCorporation
CGCORPORATE GOVERNANCE
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)
Audit Committee
86
CGCORPORATE GOVERNANCE
External Auditors – audit plans, audit report & evaluation of internal controls
Internal Auditor – scope, function, competency, resources, processes, program & results thereof
Financial results – accounting policies, compliance with accounting standards, significant & unusual events
Related party transactions
Audit Committee Review & report Board of Directors
87
AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)Post Listing Obligations (LR)
Continuing Listing Criteria Financial Reporting Transactions Corporate Governance TakeoversTakeovers Corporate Disclosure Policy Dealing In Securities By Directors
Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing 88
Code On Take-Overs &Mergers
CustodianSecuritiesCommission
TAKEOVERS
89
Mandatory General Offer
Listed Company
ControllingShareholder
MGO On BalanceOf Up To 67% #
Mr X
Listed Company
>33%; <50%
OtherShareholders
>33%
Balance67%
# Conditional Upon Acceptance Resulting In Offeror Holding > 50% in Listed Company
TAKEOVERS
90
16
Listed Company
Mr X
MGO On Balance Of Up To 65% #
OtherShareholders
>33%; <50% Balance65%
Shareholder A
2%+ 2%/6 months
# Conditional Upon Acceptance Resulting In Offeror Holding > 50% in Listed Company
TAKEOVERS
Mandatory General Offer
91
AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)Post Listing Obligations (LR)
Continuing Listing Criteria Financial Reporting Transactions Corporate Governance Takeovers Corporate Disclosure PolicyCorporate Disclosure Policy Dealing In Securities By Directors
Issue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing 92
93
Disclosure Of Material Information
Thorough Public Dissemination
Clarification Of Rumours
Response To Unusual Market Activity
Unwarranted Promotional Disclosure
Insider Trading
DISCLOSURE
LR’s Corporate Disclosure Policy
AGENDA Board Structure Regulatory Framework IPO Rules Sponsorship Regime Of ACE Market Post Listing Obligations (LR)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
95
Directors buy/ sell securities of own listedcompany
Closed period
Procedures in dealings
Disclosure requirements
DISCLOSURE
Dealing In Securities By Directors
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 SecuritiesIssue Of Securities Sub-Division & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing 96
17
97
GeneralGeneral mandatemandate toto issueissue sharesshares ororconvertibleconvertible securitiessecurities
Allotment to directors etc.
Rights Issue
Bonus Issue
Employee Share Option Scheme
ISSUE OF SECURITIES
98
Resolution pursuant to Section 132D, CA 1965 Renewed at every AGM Allotment to directors etc. prohibited Nominal value, when aggregated with issuance in
preceding 12 months, must not exceed 10% ofnominal value of issued & paid-up capital(excluding treasury shares)
Pricing not more than 10% discount to weightedaverage market price for 5 market days beforeprice-fixing date
ISSUE OF SECURITIES
General MandatePowers for directors to issue shares without specific approval at EGM
99
Flexibility & cost savings; need not convene EGM
Normally for raising funds to repay bankborrowings/ other creditors or general workingcapital
Via private placement or special issue
ISSUE OF SECURITIES
General Mandate
100
General mandate to issue shares or convertiblesecurities
AllotmentAllotment toto directorsdirectors etcetc..
Rights Issue
Bonus Issue
Employee Share Option Scheme
ISSUE OF SECURITIES
101
Includes chief executive & major shareholders ofthe listed issuer; and
Persons connected to them.
ISSUE OF SECURITIES
Allotment to Directors etc.
Similar to “Associates”; see Appendix 5
102
Except on pro-rata basis, a listed issuer & itssubsidiary must not issue shares or convertiblesecurities to “Directors etc.” without shareholdersapproving the specific allotment to them ingeneral meeting.
The “interested Directors etc.” must not vote onthe resolution approving the specific allotment tohim/ her.
Precise terms & conditions of allotment must bedisclosed to shareholders
ISSUE OF SECURITIES
Allotment to Directors etc.
Separate resolutions required
Entitlement basis e.g. rights issue, bonus issue
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103
ISSUE OF SECURITIES
Allotment to Directors etc.
Listed Listed IssuerIssuer
Subsidiary
Major Shareholder
Directors ChiefExecutive
Issue shares/ convertible securities
Issue shares/ convertible securities
Shareholders’ approval on specific allotment is required with precise terms & conditions
Abstain from voting of respective resolutions
104
Resolution pursuant to Section 132D, CA 1965 Renewed at every AGM Allotment to directors etc. prohibited Nominal value, when aggregated with issuance in
preceding 12 months, must not exceed 10% ofnominal value of issued & paid-up capital(excluding treasury shares)
Pricing not more than 10% discount to weightedaverage market price for 5 market days beforeprice-fixing date
ISSUE OF SECURITIES
General Mandate Can You See Why ??
105
General mandate to issue shares or convertiblesecurities
Allotment to directors etc.
RightsRights IssueIssue
Bonus Issue
Employee Share Option Scheme
ISSUE OF SECURITIES
106
ISSUE OF SECURITIES
Rights Issue
Listed Listed IssuerIssuer
Major Shareholder
Directors (also sh/holder)
Other Shareholders
Issue shares/ convertible securities for cash on pro-rata entitlement basis
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
107
Must be renounceable
Underwriting at listed issuer’s discretion
Subject to minimum level of acceptance, failingwhich RI terminated & all proceeds returned tosubscribers
Shareholders’ irrevocable undertaking tosubscribe must be supported by sufficientfinancial resources as verified by independentparty
ISSUE OF SECURITIES
Rights Issue (RI)
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General mandate to issue shares or convertiblesecurities
Allotment to directors etc.
Rights Issue
BonusBonus IssueIssue
Employee Share Option Scheme
ISSUE OF SECURITIES
19
109
ISSUE OF SECURITIES
Bonus Issue
Listed Listed IssuerIssuer
Major Shareholder
Directors (also Sh/holder)
Other Shareholders
Issue shares/ convertible securities on pro-rata entitlement basis
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 $$$$ ???
110
General mandate to issue shares or convertiblesecurities
Allotment to directors etc.
Rights Issue
Bonus Issue
EmployeeEmployee ShareShare OptionOption SchemeScheme
ISSUE OF SECURITIES
111
A right but not an obligation to subscribe forshares in the listed issuer
Not more than 15% of issued & paid up sharecapital at any one time
Participation restricted to directors & employeesof 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 isoffered
ISSUE OF SECURITIES
ESOS
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 SubSub--Division & ConsolidationDivision & Consolidation Share Buy-Back Enforcement Withdrawal Of Listing 112
113
Also know as “Share Split” E.g.
Issued & paid-up capital of RM100m comprising100m ordinary share of RM1.00 each
SUB-DIVISION & CONSOLIDATION
Sub-division of Shares
Issued & paid-up capital of RM100m comprising200m ordinary share of RM0.50 each
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Adjusted market share price after sub-divisionmust not be less than RM0.50 based on dailyclosing price during 3-month period prior toapplication date (application to Bursa)
Listed issuer must not be Cash Company (PN16/GN2) or PN17/ GN3 Company
SUB-DIVISION & CONSOLIDATION
Sub-division of Shares
20
115
Opposite of Sub-Division E.g.
Issued & paid-up capital of RM10m comprising100m ordinary share of RM0.10 each
SUB-DIVISION & CONSOLIDATION
Consolidation of Shares
Issued & paid-up capital of RM10m comprising10m ordinary share of RM1.00 each
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 BuyShare Buy--BackBack Enforcement Withdrawal Of Listing 116
117
SHARE BUY-BACK
Listed Issuer
Issued/ pd-up Shares
Directors
Major Shareholders
Other Shareholders
Investing Public
Listed Issuer (itself)
118
SHARE BUY-BACK
Treasury Shares
No voting rights
No entitlement rights
Disregarded for computation ofEPS, NTA etc
Subsequently cancelled or re-sold “in the market” or distributeas “share dividend”
119
SHARE BUY-BACK
Why Share Buy-Back?
Utilisation of excess funds to purchaseown shares which are deemedundervalued by the market
Potential gain from resale of treasuryshares when market recovers
Reduce unwarranted volatility in shareprice by stabilising supply, demand andmarket price
Flexibility to declare share dividend,instead of cash dividend
Enhance EPS & positive impact ofshare price
Authorisation ~ shareholders’ mandate required
Validity of mandate (AGM to AGM) ~
the conclusion of the first AGM after mandate isobtained
the expiration of the period within which thenext AGM must be held; or
revoked or varied by ordinary resolution passedby the shareholders in general meeting
whichever occurs first.
SHARE BUY-BACK
120
21
“On the market” transactions ~ buy-backthrough Automated Trading System
Maximum limit ~ shares purchased or held astreasury share must not to exceed 10% of itsissued and paid-up capital
Source of funds ~ wholly out of retained profits(“RP”) or share premium (“SP”) account of thelisted issuer or both (RP & SP at Company level)
SHARE BUY-BACK
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Types of funds ~ No restriction on the types offunds which can be utilised so long as the buyback is backed by an equivalent amount ofretained profits or share premium
i.e. use of bank borrowings permitted
Declaration of solvency ~ in accordance withsection 67A of the Companies Act 1965 and PartIIIA of the Companies Regulations 1966
Execution of solvency declaration ~ signed anddated by the majority of the directors prior toactual buy-back & valid for 6 months
SHARE BUY-BACK
122
SHARE BUY-BACK
Public shareholding spread ~ must bemaintained
Appointment of stockbroker ~ to purchaseand/or resell treasury shares.
Purchase price ~ not more than 15% above theweighted average market price for the shares forthe 5 market days immediately prior to purchase
123
SHARE BUY-BACK
Resale price ~ not less than the weightedaverage market price for the shares for the 5market days immediately prior to the resale; or
A discounted price of not more than 5% to theweighted average market price for the shares forthe 5 market days immediately prior to the resaleprovided that
The resale takes place not earlier than 30days from date of purchase; and
The resale price is not less than the cost ofpurchase
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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 EnforcementEnforcement Withdrawal Of Listing 125
ENFORCEMENT
Undertaking By Listed Company “To Bursa Malaysia Securities Berhad
Compliance with Main Market Listing Requirements and Rules of BursaMalaysia Securities Berhad
In consideration of Bursa Securities approving the application for admissionof ..................
WE FURTHER UNDERTAKE AND AGREE to comply with Bursa SecuritiesMain Market Listing Requirements ……insofar as the same shall apply tothe Corporation.
The above Undertaking has been signed by me as..............................Date:Signature:”
126
22
ENFORCEMENT
Undertaking By Directors
“To Bursa Malaysia Securities Berhad
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 BursaSecurities Main Market Listing Requirements including any amendment asmay be made from time to time, insofar as the same shall apply to me as adirector of the Corporation(s).
Yours faithfully”
127
Paragraph 16.18
“In the event of any breach of theseRequirements by any applicant, listedissuer, management company, trustee orits directors, officers or advisers….theExchange may take or impose suchactions or penalties as it considerappropriate.”
ENFORCEMENT
128
Types of Actions/ Penalties
Caution Letter Private Reprimand Public Reprimand Fine not exceeding RM1.0 million Public Reprimand & Fine Mandatory training program for directors Suspension Delisting
ENFORCEMENT
129
Paragraph 16.13
“A director of a listed issuer must not….
“…cause, aid or abet a breach of theseRequirements by such listed issuer or..”
“…permit, either knowingly or where he hadreasonable means of obtaining suchknowledge, such listed issuer to commit abreach of these Requirements”
ENFORCEMENT
130
Late Submission Of Financial Statements
Material Deviations Between AuditedResults And Unaudited Results
Late Announcement Of Material Information
Related Party Transactions
ENFORCEMENT
Common Breaches
Source : Bursa Malaysia Website131
Recent Trend
Paragraph 16.13 - A director of a listed issuer…mustnot cause, aid or abet a breach of theseRequirements by such listed issuer…or permit, eitherknowingly or where he had reasonable means ofobtaining such knowledge, such listed issuer…,tocommit a breach of these Requirements
Public Reprimand & Fine On Directors
Directors’ Enforcement
ENFORCEMENT
132
23
Fine On DirectorsFine On Directors
Enforceable ?Enforceable ?
ENFORCEMENT
133
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 ListingWithdrawal Of Listing 134
A listed issuer may request for withdrawal of listing subject toapproval of Bursa & shareholders
Resolution must be approved by a majority in number representingthree fourths in value of the shareholders, present and voting; and
Shareholders who object is not more than 10% of the value of theshareholders, present and voting
Shareholders are offered a reasonable cash alternative or otherreasonable alternative (“Exit Offer”)
Independent adviser is required to advise and makerecommendations to shareholders, as well as the fairness andreasonableness of the Exit Offer.
WITHDRAWAL OF LISTING
135
Voluntary Withdrawal
A listed issuer may withdraw its listing as follows:
In a take-over offer, upon 90% or more of its listed shares (excludingtreasury shares) being held by a shareholder either individually orjointly with associates of the said shareholder; or
In relation to a corporate proposal undertaken by or in relation to thelisted issuer, upon 100% of the listed shares of the listed issuer beingheld by a shareholder either individually or jointly with the associatesof the said shareholder, and
The offeror’s intention is not to maintain listing status of the listedissuer
WITHDRAWAL OF LISTING
136
GO & Other Corporate Proposals
ENDTHANK YOU
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