Amendments to Main Market Listing Requirements and ACE Market Listing Requirements

On 8 May 2019, Bursa Malaysia (“the Exchange”) released details of the amendments that will be made to the Main Market Listing Requirements and the ACE Market Listing Requirements (collectively “LR”) with effect from 3 June 2019.

The amendments to the LR are essentially those outlined in Consultation Paper No. 3/2018 (“CP3/18”) issued by the Exchange on 28 September 2018 and incorporate relevant feedback received during the consultation period.

The objectives of the amendments are four-fold, namely:
  1. to ensure that transaction announcements and transaction circulars are coherent, relevant and easy to understand;
  2. to promote clear, relevant and practical requirements relating to corporate disclosure policies and other disclosure requirements;
  3. to promote balanced regulation by easing regulatory compliance through liberalisations; and
  4. to address critical gaps to safeguard shareholder interest.
This alert outlines some of the main changes that will be made to the LR when the amendments come into effect.

Transaction Announcements and Circulars

The requirements relating to contents of a transaction announcement and transaction circular are set out in Appendices 10A and 10B respectively of the LR. Listed issuers are presently given a freehand as to how, and the order in which, they disclose the required information in their transaction announcements and circulars. As such, the Exchange observed in CP3/18 that certain announcements and circulars had been prepared without regard to the flow, structure and coherence of information being disseminated.

To ensure that information contained in transaction announcements and circulars is presented in a structured and coherent manner and the announcements and circular are more reader-friendly, the information that is to be included in a transaction circular (Appendix 10B) is to be organised into the following key areas of a transaction:
  • cover page;
  • introduction;
  • details of the transaction;
  • basis and justification for the consideration;
  • rationale and benefits of the transaction;
  • utilisation of proceeds;
  • prospects, outlook and future plan;
  • risks of the transaction;
  • effects of the transaction;
  • approval/consent required;
  • conditionality of transaction;
  • interests of directors, major shareholders and persons connected;
  • directors statement/recommendation;
  • tentative timetable for implementation;
  • further/additional information; and
  • appendices.
The information to be included in a transaction announcement (Appendix 10A) will be substantially the same as for a transaction circular and is to be presented largely in the same order, without the requirement for a cover page and introduction. The transaction announcement will also require additional information to be disclosed if the percentage ratio is 25% or more. More detailed information is to be included in the appendices for a transaction circular than for a transaction announcement – for example, where another corporation is acquired or disposed of, or shares or securities of another corporation are to be received as consideration for a disposal, a substantial amount of information on the corporation is to be included in an appendix to enable the shareholders of the listed issuer to consider the merits of the transaction or the securities to be received by the listed issuer.

To align the disclosure in the transaction circular with the information in the announcement, the circular will be required to include, among others, information on (i) the weighted average market price of the shares if the consideration is in the form of shares; and (ii) the target assets’ net profits and net assets. Where the counterparty to a transaction is a corporation, the amendments also align the information to be provided in the transaction announcement and circular on the direct and indirect shareholdings of that corporation’s directors and substantial shareholders.

In line with Exchange’s existing practice, the circular will require a listed issuer to (i) explain the rationale of the transaction from three perspectives, i.e. business, financial and operational; (ii) provide the details and breakdown if the sale consideration is utilised by the listed issuer for working capital purposes; and (iii) disclose the date on which the target company and its subsidiaries commenced their respective business operations.

In the case of a disposal, a new provision is introduced that requires a listed issuer to disclose in its transaction circular, a description of its strategy or business plan to address the loss of the contribution from the asset disposed.

A listed issuer will also be required to disclose the highest percentage ratio applicable to the transaction in the circular to align the information contained in the announcement.

Corporate Disclosure Policies and Other Disclosure Requirements

The drafting of certain paragraphs of Chapter 9 (Continuing Disclosure) of the LR have been revised. Guidance on the contents of announcements and circulars will be streamlined and consolidated under a new Part LA (Standard of Disclosure for Announcement and Circular) in place of those in Part I (Preparation of Announcements) and Part L (Circulars and Other Requirements) of Chapter 9 the LR.

To eliminate overlapping provisions, the requirement to make an immediate announcement in respect of (i) any transaction requiring an announcement under Chapter 10 (Transactions) of the LR; (ii) any scheme of compromise, arrangement or amalgamation or reconstruction; and (iii) a subdivision or consolidation of shares will be deleted from Part J of Chapter 9 of the LR as these requirements are already set out elsewhere in the LR.

To ensure parity of disclosure, the additional disclosure requirements that apply to internet-related businesses or e-commerce activities which were introduced under Practice Note 3 of the Main Market Listing Requirements at the dawn of the internet era will be deleted as the Exchange takes the view that such business are like any other businesses of listed issuers today.

Easing Regulatory Compliance through Liberalisations

The LR presently prohibits a deed poll or trust deed for convertible securities from including provisions for (i) extending or shortening the tenure of debt securities; and (ii) changing the number of shares to be received upon the exercise of the conversion right, or the pricing mechanism for the conversion price of such security except where changes are adjustments that arise from capitalisation issues, rights or bonus issue, consolidation or subdivision of shares or capital reduction exercises. When the amendments come into effect, these restrictions will apply only to convertible equity securities and not to convertible debt securities.  The Exchange noted In CP3/18 that this would align the practice in Malaysia with that in Singapore and Hong Kong.

To dispense with announcements that are of insignificant impact, immediate announcements of any group reorganisation of a listed issuer will be required only if the listed issuer is of the view that the reorganisation is material. In other words, internal restructurings, such as the transfer of a subsidiary to another wholly-owned company within the group would not require an immediate announcement.

Similarly, the acquisition or disposal of a subsidiary will require an immediate announcement only if it breaches the materiality threshold in Chapter 10 of the LR, i.e. 5% (for a non-related party transaction) or 0.25% (for a related party transaction).

Addressing Critical Gaps to Safeguard Shareholder Interest

Two changes will be introduced to promote greater transparency in relation to a change in the financial year of a listed issuer. First, a listed issuer must make an immediate announcement of the change and disclose the reason for the change. Second, the Exchange may require the listed issuer to issue interim audited financial statements if it extends its financial year end to more than 18 months.

Presently, the LR requires a listed issuer to make an immediate announcement if there is a change in the utilisation of proceeds raised from the issuance of securities that deviates from the original utilisation by 5% or more. Two changes will be made to this requirement. First, the basis for determining the 5% materiality threshold for an immediate announcement will no longer be based on the amount of the “original utilisation” but on the “total proceeds raised”. This will liberalise the existing requirement. Second, and more significantly, a listed issuer will be required to obtain its shareholders’ approval for any material change (i.e. a change of 25% or more of the total proceeds raised) to the utilisation of proceeds raised by a listed issuer from an initial public offering or a new issue of securities which has been approved by way of a specific shareholder approval.


The liberalisation and clarification of certain requirements and the dispensation of announcements for events that have an insignificant impact will be welcomed by listed issuers. The amendments to the requirements pertaining to transaction announcements and transaction circulars and the new provisions to safeguard shareholder interest will be welcomed by the shareholders of listed issuers and the investing public.
The full text of the amendments to the Main Market Listing Requirements can be accessed here and to the ACE Market Listing Requirements can be accessed here.