The Securities Commission Malaysia (“SC”) and Bursa Malaysia Berhad (“Exchange”) issued separate but related announcements on 16 April 2020, according further relief and flexibility measures for capital market participants.
 
Key initiatives by the SC
 
The main measures announced by the SC are as follows –
 

The SC said that the Exchange will provide affected companies listed on the Main Market temporary relief from being classified as a “PN 17 Issuer” under Practice Note 17 (“PN17”) of the Main Market Listing Requirements (“MMLR”) in relation to the following criteria -

 

The SC added that similar temporary relief from Guidance Note 3 (“GN3”) classification under the ACE Market Listing Requirements (“ACE LR”) will also be provided by the Exchange for companies listed on the ACE Market. The relaxation of the requirements in relation to PN17 and GN3 will be effective from 17 April 2020 until 30 June 2021.^[1]

 

The fundraising limits on Equity Crowdfunding (“ECF”) platforms will be lifted; and ECF and peer-to-peer financing (“P2P”) platforms are allowed to operationalise secondary trading. Both these measures take effect immediately.

 

The Government’s Malaysia Co-Investment Fund (MyCIF), administered by the SC, will increase its funding matching ratio from 1:4 to 1:2 for eligible ECF and P2P campaigns. This measure will have effect until 30 September 2020.

 
The full text of the SC’s announcement can be accessed here.
 
Key initiatives by the Exchange
 

The Exchange will grant a further extension of time until 30 June 2020 to listed issuers/ listed corporations to submit the following –

 

The general mandate threshold for issue of new securities by Main Market and ACE Market listed issuers is increased from the existing 10% to not more than 20% of the total number of issued shares (excluding treasury shares) of the listed issuer (“Increased Threshold”) subject to compliance with applicable legal requirements and the listed issuer’s constitution as well as disclosure of its board of directors’ views that the Increased Threshold is in the best interest of the listed issuer and its shareholders.
 
The Increased Threshold must be approved by shareholders in a general meeting and may be utilised by a listed issuer to issue new securities until 31 December 2021. Thereafter, the original 10% limit will be reinstated.

 

A listed issuer that triggers the criteria in PN17 (for Main Market) or GN3 (for ACE Market) (each an “Affected Issuer”) of the relevant Listing Requirements from 17 April 2020 to 30 June 2021 will not be classified as a PN17 Issuer or a GN3 Company (as the case may be) and will be relieved from complying with the obligations under paragraph 8.04 of the MMLR or Rule 8.04 of the ACE LR, as applicable, for a period of 12 months from the date of triggering the relevant criteria (“Moratorium Period”). However, the Affected Issuer must make an immediate announcement that it has triggered the specified criteria and the relief provided.
 
If an Affected Issuer triggers any of the criteria in PN17 or GN3 after the expiry of the Moratorium Period, it will be classified as a PN17 Issuer or a GN3 Company (as the case may be) and must comply with all the obligations under paragraph 8.04 and PN17 of the MMLR or Rule 8.04 and GN3 of the ACE LR (as applicable).^[3]

 
The full text of the Exchange’s announcement can be accessed here.
 
Comments
 
It is to be noted that PN17 sets out six events which will result in a Main Market listed issuer being classified as a PN17 Issuer while GN3 sets out eight events which will result in an ACE Market listed issuer being classified as a GN3 Company. The announcement by the Exchange suggests that the relief in relation to PN17/ GN3 apply to every event specified in PN17/ GN3. However, the SC’s announcement states that the relief will only apply to three of the events specified in PN17/ GN3. It is imperative for the SC or the Exchange to clarify this inconsistency as soon as possible to remove any doubt as to the scope of the relief accorded to financially distressed listed issuers. It is to be noted that certain of the trigger events which are not mentioned in the SC’s announcement, such as appointment of receivers and managers and the winding-up of a significant subsidiary or associated company, may trigger consequential events that are beyond the control of the Affected Issuer and inaction on the part of the latter may not be a realistic option.
 
The latest suite of measures announced by the SC and the Exchange are welcomed for the following reasons: (1) the moratorium granted in relation to PN17 and GN3 will provide financially distressed listed issuers additional time to regularise their financial positions; (2) the measures for ECF and P2P platforms will provide additional liquidity in the alternative fundraising space; and (3) a listed issuer’s fund raising capabilities will be enhanced and expedited if its shareholders approve the Increased Threshold.

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