This guide was first published on 21 April 2020 and was later updated on 29 June 2020 and 25 October 2020.
With the aim of boosting the Malaysian capital markets amidst the Covid-19 economic fallout, a number of measures had been taken by the Securities Commission and Bursa Malaysia Securities Berhad.
Here, we summarise these measures in categories to assist listed entities, company secretaries and other participants of the Malaysian capital markets.
Stock Exchanges & Publicly Listed Companies
Listing Fees Waiver
Bursa Malaysia has waived all listing related fees for a period of 12 months for:
- Companies with market capitalisation of less than RM500 million seeking to list on the Main Market; and
- All companies seeking to list on the LEAP Market and ACE Market.
The processing fees applicable for listings on the ACE Market and LEAP Market will be waived for applications submitted within 12 months from 27 February 2020.
The initial listing and annual listing fees applicable for listings on the ACE Market, the LEAP Market and the Main Market (for companies with estimated market capitalisation of less than RM500 million at the date of listing) will be waived where the listing date falls within 12 months from 27 February 2020.
Increased General Mandate Limit for New Issue of Securities
Effective until 31 December 2021, Bursa allows listed issuers on the Main Market and ACE Market to have higher general mandate of not more than 20% of the total number of issued shares (excluding treasury shares) for issue of new securities (“20% General Mandate“).
The following are the conditions:
- the listed issuer must obtain its shareholders approval for the 20% General Mandate at a general meeting;
- the listed issuer complies with all the relevant applicable legal requirements, including its constitution or relevant constituent document; and
- in addition to existing disclosures required in the statement accompanying the proposed resolution, the listed issuer must also disclose the views of its board of directors that the 20% General Mandate is in the best interests of the listed issuer and its shareholders, as well as the basis for such views.
After 31 December 2021, the general mandate limit for issue of new securities will revert to 10% of the total number of issued shares (excluding treasury shares).
Extension of Time for Holding of Annual General Meetings
(*updated on 25 October 2020*)
(*Updated on 25 October 2020*) There is an extension of time for public companies to hold AGMs for an extended period of 90 days. This 90-day period is effective from the date the AGM was supposed to be held. Companies are required to apply to SSM for such extension by 15 November 2020, with application fee waived.
In addition, the Securities Commission had earlier announced that managers of listed real estate investment trusts (REITs) with a financial year ending on 31 December 2019 are granted a 2-month extension to hold AGMs by 30 June 2020.
Virtual General Meetings
(*updated on 25 October 2020*)
Securities Commission has announced that virtual general meetings (including annual general meetings and extraordinary general meetings) for issuers listed on Bursa Securities are now permitted during a period when the MCO is in place or outside of an MCO period but where safe distancing requirements remain.
(*updated on 25 October 2020*) In line with the Conditional Movement Control Order (CMCO) in Kuala Lumpur, Putrajaya, Selangor and Sabah, general meetings conducted in these states and territories shall be conducted in a fully virtual manner.
The SC allows the conduct of the following types of general meetings:
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In addition to the above, the SC attaches a series of rules and conditions to conducting general meetings virtually.
Extensions on Audited Reports and Periodic Reports for Publicly Listed Entities
(*updated on 9 May 2020*)
Automatic extension of time until 30 June 2020 is granted to listed issuers for issuance of:
- quarterly and annual reports (in the case of Main Market and ACE Market)
- semi-annual and annual audited financial statements (in the case of LEAP Market)
that are originally due on 31 March 2020, 30 April 2020 and 31 May 2020.
Bursa Malaysia has clarified that the issuance of quarterly reports and annual reports (which include annual audited financial statements and the auditors’ and directors’ reports) which are due on 31 May 2020 (including those originally due by 31 March 2020 and 30 April 2020 which had earlier been automatically extended to 31 May 2020 by Bursa), the listed issuers will now have an extension of time until 30 June 2020.
Notwithstanding the extension above, Bursa clarified that if the preparation of quarterly reports and annual reports is not adversely affected by the MCO and Covid-19 pandemic, and listed issuers are able to issue the said reports within the prescribed timelines under the listing requirements, they must continue to do so without any undue delay.
(*updated on 9 May 2020*) In addition to the above, listed issuers with financial year ending on 31 March 2020, whose annual reports (and annual audited financial statements) are originally due by 31 July 2020, will have an extension of time until 31 August 2020.
Temporary Relief from PN17 and GN3 Classification on Main Market & ACE Market
Bursa Malaysia has provided affected listed companies temporary relief from the Practice Note 7 (PN7) classification and Guidance Note 3 (GN3) classification on the Main Market and ACE Market respectively. This relaxation came into effect from 17 April 2020 until 30 June 2021.
For background information, the listing requirements for the Main Market and the ACE Market require that the financial condition of a listed company on a consolidated basis must, in the opinion of Bursa Malaysia, warrant continued trading or listing on the relevant exchange. The exchange regulator has prescribed a number of criteria which trigger a PN17 or GN3 status, which imposes an obligation on the part of the listed issuer to submit and implement a regularisation plan, failing which may lead to suspension or delisting on the relevant exchange.
The relevant PN17 or GN3 criteria that fall under the temporary relief (“Suspended Criteria“) are as follows:
- (In the case of Main Market listed issuers) the shareholders’ equity of the listed issuer on a consolidated basis is 25% or less of the share capital (excluding treasury shares) of the listed issuer and such shareholders’ equity is less than RM40 million; and (in the case of ACE Market listed issuers) the shareholders’ equity of the listed issuer is 25% or less of the share capital of the listed issuer.
- The auditors have highlighted a material uncertainty related to going concern or expressed a qualification on the listed issuer’s ability to continue as a going concern in the listed issuer’s latest audited financial statements and (in the case of Main Market) the shareholders’ equity of the listed issuer on a consolidated basis is 50% or less of share capital (excluding treasury shares) of the listed issuer; or (in the case of ACE Market) the shareholders’ equity of the listed issuer is 50% or less of the share capital (excluding treasury shares) of the listed issuer.
- (In the case of both Main Market and ACE Market) the listed issuer is unable to provide a solvency declaration to Bursa where there is a default in payment by a listed issuer, its major subsidiary or major associated company, as the case may be, of either interest, principal sums, or both, in respect of any credit facility or debt securities (whether listed or unlisted on the relevant exchange), irrespective of whether a demand has been made, where:
- the total amount outstanding of the defaulted credit facility or debt securities, either singly or collectively, is 5% or more of the net assets of the listed issuer based on the latest published or announced financial statements; or
- the default in payment is reasonably expected to have a material effect on the price, value or market activity of any of the listed issuer’s securities or the decision of the listed issuer’s securities holder or investor in determining his choice of action.
- (in the case of ACE Market only) the listed issuer has incurred loss in any one full financial year commencing on or after its listing, which is equal to or exceed the amount of its shareholders’ equity at the end of the said financial year and its shareholders’ equity is equal to or less than 50% of its share capital at the end of the said financial year.
- (in the case of ACE Market only) the listed issuer has incurred aggregated losses in any two consecutive full financial years commencing on or after its listing:
- which exceed the amount of its shareholders’ equity at the end of the said financial period;
- the loss incurred in the 2nd full financial year is 50% or more of the loss incurred in the 1st full financial year; and
- its shareholders’ equity is equal to or less than 50% of its share capital at the end of the said financial period.
Bursa has provided additional clarification below:
- Listed issuers that trigger any of the Suspended Criteria above from 17 April 2020 to 30 June 2021 will not be classified as PN17 or GN3 listed issuers (as the case may be), and will not be required to comply with the ensuing obligations thereunder for a period of 12 months from the date of triggering the criteria.
- The affected listed issuers will still be required to make immediate announcement that it has triggered the Suspended Criteria and the relief provided (“Relief Announcement“).
- Upon expiry of 12 months from the Relief Announcement, the affected listed issuer must re-assess its condition and announce whether it continues to trigger any of the PN17 or GN3 criteria (as the case may be) (“Reassessment Announcement“). If it continues to trigger, it will then be classified as a PN17 or GN3 listed issuer (as the case may be) and must comply with all the ensuing obligations including to submit a regularisation plan to the relevant authorities within 12 months from the Reassessment Announcement.
Bursa had earlier also granted extension of time for PN17 or GN3 listed issuers to submit their regularisation plan from 12 months to 24 months from the date they first announced the trigger of PN17 or GN3 criteria (as the case may be). This applies to listed issuers which trigger and announce the criteria from 2 January 2019 to 31 December 2020.
Bursa also clarified that listed issuers which triggered the criteria before 2019 and which have been granted an extension of time prior to these Covid-19 relief measures, are still required to submit regularisation plans within the approved timeframe granted. Applications for further extension will be considered by Bursa on a case-to-case basis.
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Flexibilities for Takeover Requirements
(*updated on 9 May 2020*)
(*updated on 9 May 2020*)
The Securities Commission of Malaysia (SC) has announced flexibilities in complying with the relevant requirements under the Capital Markets and Services Act 2007 (CMSA) and the Rules on Take-overs, Mergers and Compulsory Acquisitions (Rules) in relation to takeover offers during the Movement Control Order (MCO) period.
To read more, please go to our Alert on 29 April 2020 via this link.
Suspension of Short-Selling
(*updated on 29 June 2020*)
(*updated on 29 June 2020*)
Securities Commission and Bursa Malaysia have temporarily suspended intraday short-selling (IDSS) and regulated short-selling (RSS) until 31 December 2020.
The temporary suspension of short selling began on 24 March 2020. It involves the suspension of Intraday Short Selling (IDSS) and Regulated Short Selling (RSS), as well as intraday short selling by Proprietary Day Traders. The suspension does not however apply to Permitted Short Selling (PSS).
It was introduced by the SC and Bursa Malaysia as part of the proactive measures to mitigate potential risks arising from heightened volatility and global uncertainties as a result of the Covid-19 pandemic.
Margin Financing Flexibilities for Capital Market Participants
(*updated on 25 October 2020*)
(*updated on 25 October 2020*)
Effective from 27 March 2020 until 31 December 2020, brokers are allowed a discretion not to make margin calls or impose haircuts on any collateral and securities purchased and carried in margin accounts. They can also exercise their discretion whether or not to impose force selling measures on clients.
Previously, brokers must automatically liquidate clients’ margin accounts if the equity in those accounts falls below 130% of the outstanding balance.
Brokers can now accept other collaterals, such as bonds, unit trusts, gold and immovable properties to maintain their clients’ margin accounts, and value these collaterals accordingly.
This flexibility can be exercised by brokers on the condition that they are able to comply with their own capital adequacy ratio and credit risk policies, as well as shareholder funds as required by Bursa Malaysia.
Temporary Increase in Gearing Limit for Real Estate Investment Trusts
(*updated on 25 October 2020*)
(*updated on 25 October 2020*)
Securities Commission Malaysia (SC) has temporarily increased the gearing limit for Malaysian real estate investment trusts (M-REITs) from 50% to 60%, effective immediately, until 31 December 2022. This provides greater cash flow flexibility to M-REITs and allows managers to better manage the debt and capital structures of M-REITs.
Notwithstanding the temporary increase in gearing limit, the SC expects managers of M-REITs to consider the sustainability of the REIT and the best interests of unit holders, before taking on any additional debt.
Temporary Revisions to Existing Market Management & Control Mechanisms
(*updated on 25 October 2020*)
(*updated on 25 October 2020*)
The Securities Commission Malaysia (SC) and Bursa Malaysia Berhad (Bursa Malaysia) have implemented temporary revisions to existing market management and control mechanisms, namely the dynamic and static price limits, and the circuit breaker, to provide added stability and confidence in the markets. The revisions are applicable from 20 July 2020 to 18 January 2021.
Revised Static and Dynamic Price Limits for FBMKLCI Component Stocks
Revised Circuit Breaker Trigger Levels
(Temporary reduction of the circuit breaker levels from three levels (10%, 15% and 20%) to two levels (10% and 15% only)
Expansion of Eligibility Criteria for Fee Incentive Scheme for Issuances of Exchange-Traded Funds and Structured Warrants
Under existing fee incentive programs for issuances of exchange-traded funds (ETFs) and structured warrants on the Main Market, issuers are required to conduct a minimum number of retail seminars or roadshows in order to be entitled to initial listing fee rebates.
Bursa Malaysia has expanded the eligibility criteria for the initial listing fee rebates to include webinars and participation in Bursa Marketplace’s Facebook live sessions as part of the marketing and educational engagement activities required.
Equity Crowdfunding & Peer-to-Peer Lending
Increased Fundraising Limits Through Equity Crowdfunding
Securities Commission has raised fundraising limits on equity crowdfunding (ECF) platforms to RM10 million. This means that issuers can now raise up to RM10 million through ECF platforms over its lifetime. Nevertheless, this does not apply to microfunds that are registered with the Securities Commission as a venture capital company which has a specified investment objective and only raises funds from sophisticated investors and angel investors.
Secondary Trading on ECF & P2P Platforms
Securities Commission now allows secondary trading on equity crowdfunding (ECF) and peer-to-peer lending (P2P) platforms. This means that shares listed on ECF platforms and notes hosted on P2P platforms can now be traded by holders in the secondary market.
To operate secondary trading, the platform operators must seek approval from the SC and satisfy a range of conditions which include but not limited to the following:
- In the case of equity shares on ECF platforms, the issuer’s shares may only be traded 6 months from the date of completion of the issuer’s ECF fundraising exercise, and the shares held by the promoter are subject to a moratorium period of 6 months from the date the shares are traded on the secondary market.
- In the case of notes on P2P platforms, the issuer’s notes must at the point of admission for secondary trading, has a remaining repayment period of at least 3 months.
The SC imposes comprehensive regulations to govern secondary trading.
Increased Funding Matching Ratio for Eligible ECF and P2P Campaigns
Effective until 30 September 2020, the government co-investment fund MyCIF, administered by the Securities Commission, has increased its funding matching ratio from 1:4 to 1:2 for eligible ECF and P2P campaigns.
Startups & Enterprises Issuing Convertible Notes to Private Equity & Venture Capital Firms in Malaysia
(*updated on 9 May 2020*)
(*updated on 9 May 2020*)
The Securities Commission (SC) has announced flexibilities for businesses to issue convertible notes to private equity and venture capital firms that are registered with the SC. With these flexibilities, the SC aims to benefit startups, micro, small & medium enterprises as well as small-cap and mid-cap companies in their fundraising exercises.
Generally, these flexibilities allow issuers of eligible convertible notes to lodge such issuance directly with the SC without appointing an investment bank as principal adviser. Lodgement fees for such eligible convertible notes are also waived.
To read more, please go to our Alert on 30 April 2020 via this link.
Private Equity & Venture Capital Corporations & Management Corporations
Private Equity and Venture Capital Corporations and Management Corporations with financial year ending from December 2019 to April 2020 has been granted extension of time until 31 August 2020 to submit their audited financial statements.
Other Fund Management Companies & Private Retirement Scheme (PRS) Providers
Unit Trust Funds
– Submission of Interim Report & Annual Report
Management companies of unit trust funds with financial period or year ended 31 January 2020, 29 February 2020 and 31 March 2020 have been granted extension of time until 30 June 2020 to submit their Interim Report and Annual Report to unitholders and Securities Commission.
The SC encourages management companies to issue the report earlier where possible.
Private Retirement Schemes (PRS)
– Submission of Interim Report & Annual Report
Private Retirement Scheme (PRS) providers with financial period or year ended 31 January 2020, 29 February 2020 and 31 March 2020 have been granted extension of time until 30 June 2020 to submit their Interim Report and Annual Report to unitholders, Securities Commission and Private Pension Administrator (for PRS).
The SC encourages PRS providers to issue the report earlier where possible.
Wholesale Fund
– Submission of Quarterly Report & Annual Report
Management companies of wholesale funds with financial period or year ended 31 January 2020, 29 February 2020 and 31 March 2020 have been granted extension of time until 30 June 2020 to submit their Quarterly Report and Annual Report to unitholders and Securities Commission (where applicable).
The SC encourages management companies or representatives to issue the report earlier where possible.
Listed Real Estate Investment Trusts (REITs)
– Submission of Annual Report
Management companies of listed REITs with financial year ended 31 March 2020 have been granted extension of time until 30 June 2020 to submit their Annual Report to unitholders and Securities Commission.
Blanket Exemption from Training Expenditure
Management companies and PRS providers have been exempted from the requirement to spend at least 3% per annum of their gross salary expenses on training their officers for the year 2020.
Further, there are other flexibilities provided by the Securities Commission to CMSL holders and registered persons involved in the fund management industry.
Holders of Capital Markets Services Licence (CMSL) and Capital Markets Services Representatives Licence (CMSRL)
Waiver of Annual Licensing Fees
Securities Commission has waived the following fees for the year 2020:
- Annual licensing fees on the core regulated activity of all CMSL entities with profit before tax of RM5 million or less during the financial year 2019.
- Annual licensing fees for all individual CMSL holders and CMSRL holders.
CMSL entities, individual CMSL holders and CMSRL holders who have already made the payment will be offered a credit to offset against next year’s licensing fees.
Reduction of Minimum Continuing Professional Education (CPE) Requirements
Commencing from 1 July 2020 for a period of 12 months, the minimum Continuing Professional Education (CPE) requirements are reduced from the current 20 CPE points to 10 CPE points for all CMSRL holders and Employees of Registered Persons (ERPs).
This applies to CMSRL holders and Employees of Registered Persons (ERPs) whose licence anniversary date or cycle period falls between 1 July 2020 and 30 June 2021.
Individuals who have already collected more than 10 CPE points prior to their licence anniversary date in the second half of 2020 may carry forward their excess points to the next anniversary period.
Reduction of Minimum Training Requirements for Trading Representatives & Marketing Representatives
The minimum training requirements for Trading Representatives and Marketing Representatives are reduced to 3 days from the current 5 days, effective from 1 July 2020 for a period of 12 months.
In addition to the above measures, the Securities Commission has announced that it has the following strategies, among others:
- one-off training subsidy for existing registered firms of Audit Oversight Board (AOB) with less than 10 audit partners, up to RM30,000 per firm for approved training programmes conducted by the Malaysian Institute of Certified Public Accountants (MICPA)
- facilitation of waqf-based collective investment schemes and alternative investments for wholesale funds where the underlying assets can be property, gold or private equity
- a new co-investment fund of RM500 million to be set up for investments alongside private investors in early-stage and growth-stage Malaysian companies
- liberalisation of advisory scope for financial planners
- facilitation of alternatives to meet requirements of take-over rules
- liberalisation of digitisation, advertising and promotions of investment products
This summary is updated as of the date of writing. The relief measures above are attached with different conditions and some of them require submission of forms and documents. Should you need any clarification or assistance in this respect, please feel free to contact us.
To read all of our guides on Malaysia’s Covid-19 relief measures, please go here.
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