Bursa Malaysia Seeks Feedback on Proposed Reduction in Security Holding Spread
28 July 2020
Bursa Malaysia Berhad (‘the Exchange’) released Consultation Paper No. 2/2020 on Proposed Amendments to the Main Market and ACE Market Listing Requirements in Relation to Public Security Holding Spread
on 23 July 2020.
Although the Main Market and ACE Market Listing Requirements (collectively ‘LR’) currently require a listed issuer to have at least 25% of its listed securities in the hands of the public (‘public spread’), the Exchange has in exceptional cases allowed listed issuers with large market capitalisation to have a lower public spread, ranging between 15% and 25%, if such lower public spread is sufficient for a liquid market.
To enhance transparency and provide regulatory clarity, the Exchange proposes to codify the policy considerations for the acceptance of a lower public spread based on both objective and subjective criteria.
In respect of the objective criteria, the Exchange proposes to allow a listed issuer having a market capitalisation threshold of:
- at least RM1 billion but less than RM3 billion, to have a minimum lower public spread of 20%; and
- at least RM3 billion, to have a minimum lower public spread of 15%.
In addition, the Exchange will consider the following subjective criteria in deciding whether to allow a listed issuer to have a lower public spread:
- sufficiency of liquidity in the market for the securities;
- whether there is orderly and fair trading in the securities;
- whether there are circumstances which make it undesirable for the Exchange to exercise its discretion, having regard to the corporate governance conduct and compliance record with the LR or securities laws of the listed issuer and its directors; and
- the justification provided for the lower public spread.
A listed issuer which has been granted approval for a lower public spread will be required to notify the Exchange of following:
- any decrease in its issued share capital;
- any decrease in the percentage of the public spread below the percentage approved by the Exchange; and
- any decrease of the listed issuer’s average market capitalisation for the preceding 12 months to below the prescribed threshold set out in the fourth paragraph above.
A listed issuer will be required to notify the Exchange as soon as it becomes aware of any of the above circumstances, either in conjunction with the preparation of its semi-annual returns (for a Main Market listed issuer) or annual returns (for an ACE Market listed issuer), or otherwise, to enable the Exchange to consider whether such event warrants a review of the lower public spread granted.
It is also proposed that the Exchange will have the right to review its approval for a listed issuer to have a lower public spread if:
- the average market capitalisation of the listed issuer falls below the prescribed threshold set out in the fourth paragraph above;
- there are issues relating to the orderliness and fairness of trading in the securities of the listed issuer; or
- there are issues with the listed issuer’s and its directors’ corporate governance conduct and compliance with the LR or securities laws.
The consultation paper also includes other proposed amendments to the LR.
The consultation period ends on 21 August 2020.