Bursa Malaysia issues Consultation Paper on Sustainability Reporting Requirements and Other Enhancements

On 24 September 2024, Bursa Malaysia Berhad (“Bursa Malaysia”) issued Consultation Paper No. 1/2024 (“CP No. 1/24”) on the proposed amendments to the Main Market Listing Requirements (“Main LR”) and ACE Market Listing Requirements (“ACE LR”) of Bursa Malaysia Securities Berhad (“Exchange”).
 
The key proposed amendments are as follows: 
  1. to align the sustainability reporting framework under the Main LR and the ACE LR with the National Sustainability Reporting Framework (“NSRF”) launched by the Ministry of Finance on 24 September 2024 by adopting IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (“IFRS S1”) and IFRS S2 Climate-related Disclosures (“IFRS S2”) issued by the International Sustainability Standards Board (“ISSB”) in June 2023 (collectively “ISSB Standards”) (“Proposed Sustainability Reporting Amendments”); 

  2. to promote shareholder participation in general meetings of a Main Market listed issuer (“listed issuer”) and an ACE Market listed corporation (“listed corporation”) by requiring physical or hybrid meetings; and 

  3. to strengthen accountability of advisers who promote applicants for listing by naming them in public documents issued by listed issuers/ listed corporations for a prescribed period. 
Proposed Sustainability Reporting Amendments
 
A listed issuer/ listed corporation must ensure that the Sustainability Statement to be included in its annual report (“Sustainability Statement”): 
  1. is prepared in accordance with the ISSB Standards; and 

  2. includes the disclosure of the common sustainability-related risks and opportunities as set out in Annexure PN9-A of the Main LR and Annexure GN11-A of the ACE LR, as applicable (“common sustainability matters”).1
 In addition, a listed issuer/ listed corporation must include the following in its Sustainability Statement: 
  1. a statement on whether the listed issuer/ listed corporation has subjected the Sustainability Statement to: 
  • internal review by its internal auditor; or
  • independent assurance performed in accordance with recognised assurance standards, 
to strengthen the credibility of the Sustainability Statement, and if so, the subject matter(s) and scope covered. In addition, for independent assurance, the conclusions must also be disclosed;2 and 
  1. a summary of the data and performance targets disclosed in the Sustainability Statement in relation to the reported indicators, in a prescribed format.3
 A listed issuer/ listed corporation must disclose the data and performance targets (if such targets are set) for all reported indicators in the Sustainability Statement for the last three financial years4, in the following manner:
 
No. Reporting of new indicator Minimum data disclosure
(a) In the first year of reporting a new indicator (“said indicator”) Data for the financial year
(b) In the second year of reporting the said indicator Data for the financial year and the immediate preceding financial year
(c) From the third year onwards of reporting the said indicator Data for the financial year and the two immediate preceding financial years
 
The common sustainability matters, as set out in Annexure PN9-A of the Main LR and Annexure GN11-A of the ACE LR, to be disclosed in the listed issuer’s/ listed corporation’s annual report are as follows:
 
No. Common sustainability matters Common indicators
1. Anti-corruption
  • Percentage of employees who have received training on anti-corruption by employee category
  • Percentage of operations assessed for corruption related risks
  • Confirmed incidents of corruption and action taken
2. Community / Society
  • Total amount invested in the community where the target beneficiaries are external to the listed corporation
  • Total number of beneficiaries of the investment in communities
3. Diversity
  • Percentage of employees by gender, age group and ethnicity, for each employee category
  • Percentage of directors by gender, age group and ethnicity
4. Energy management
  • Total energy consumption
5. Health and safety
  • Number of work-related fatalities
  • Lost time incident rate
  • Number of employees trained on health and safety standards
6. Labour practices and standards
  • Total hours of training by employee category
  • Percentage of employees that are contractors or temporary staff
  • Total number of employee turnover by employee category
  • Number of substantiated complaints concerning human rights violations
7. Supply chain management
  • Proportion of spending on local suppliers
8. Data privacy and security
  • Number of substantiated complaints concerning breaches of customer privacy and losses of customer data
9. Water
  • Total volume of water used
10. Waste management
  • Total waste generated, and a breakdown of : (i) total waste diverted from disposal; and (ii) total waste directed to disposal
11. Emissions management
  • Scope 1 greenhouse gas emissions in tonnes of CO2 equivalent
  • Scope 2 greenhouse gas emissions in tonnes of CO2 equivalent
  • Scope 3 greenhouse gas emissions in tonnes of CO2 equivalent (at least for the categories of business travel and employee commuting)
 
While the proposed requirement to disclose information on common sustainability matters is a new requirement for listed corporations, these disclosures other that the requirement to provide information on the ethnicity of their directors and employees (“proposed diversity amendments”) already apply to listed issuers.
 
Implementation periods
 
The Proposed Sustainability Reporting Amendments will be implemented in phases, as follows:
 
Main Market
 
For listed issuers with a market capitalisation (excluding treasury shares) of RM2 billion and above5, the Proposed Sustainability Reporting Amendments will apply for the Sustainability Statement in the annual report issued for financial year ended (“FYE”) on or after 31 December 2025.
 
For listed issuers other than those mentioned in the preceding paragraph, the Proposed Sustainability Reporting Amendments will apply for the Sustainability Statement in the annual report issued for FYE on or after 31 December 2026.
 
However, all listed issuers are required to comply with the proposed diversity amendments in the Sustainability Statement in the annual report issued for FYE on or after 31 December 2025.
 
ACE Market
 
A listed  corporation must comply with the Proposed Sustainability Reporting Amendments in the Sustainability Statement for its annual report issued for FYE on or after 31 December 2027.
 
Promoting shareholder participation
 
To give effect to the Securities Commission Malaysia’s announcement earlier requiring all listed issuers/ listed corporations to hold their general meetings by way of hybrid or physical meeting format from 1 March 2025, a new paragraph 8.27A and new rule 8.29A will be introduced to the Main LR and the ACE LR respectively which require a listed issuer/ listed corporation to hold its general meeting at a physical venue in Malaysia (“main venue”).6
 
If, in addition to the main venue, a listed issuer/ listed corporation proposes to hold its general meeting at another physical venue or use virtual meeting technology concurrently, the listed issuer/ listed corporation must: 
  1. put in place the required processes, infrastructure and tools to support among others, a smooth broadcast of the general meeting and interactive participation by shareholders; and 

  2. ensure the shareholders are accorded with equitable rights to speak and vote at the general meeting without being physically present at the main venue. 
Strengthening accountability of advisers
 
To strengthen accountability of advisers who promote applicants for listing, it is proposed that: 
  1. a Sponsored Corporation7 on the ACE Market be required to state the name of its Sponsor (or Recognised Approved Adviser, where applicable) responsible for its admission to the Official List on all its Public Documents8 for the duration of the Sponsorship Period9 or two full financial years from the date of its admission to the Official List, if the listed corporation meets the quantitative criteria for admission to the Main Market and is exempted from continued compliance with rule 3.21(1)10 of the ACE LR;11 and 

  2. a listed issuer on the Main Market be required under a new paragraph 2.21C(1) to state the name of the Recognised Principal Adviser responsible for its admission to the Official List in all its announcements to the Exchange and documents issued to its securities holders for two full financial years from the date of the listed issuer’s admission to the Official List. 
Close of Consultation Period
 
All comments are to be submitted in writing to Bursa Malaysia by 25 October 2024.
 
Comments
 
The Proposed Sustainability Reporting Amendments are far reaching and bring into alignment the Main LR and the ACE LR with the NSRF which requires the use of the ISSB Standards for reporting by companies in order to move companies to a global sustainability reporting framework and promote transparency and accountability on key sustainability matters.
 
This is in line with the endorsement of the ISSB Standards by the International Organisation of Securities Commissions (IOSCO) and the move by other regulators and exchanges such as the Singapore Exchange Regulation (SGX RegCo), the Hong Kong Exchanges and Clearing Limited (HKEX) and Taiwan’s Financial Supervisory Commission which are in post-consultation stages of their proposals to align sustainability reporting requirements with the ISSB Standards.
 
Resources
 
CP No. 1/24, the Proposed Amendments to the Main LR and the ACE LR can be accessed here, here and here.
 
 
Article by To’ Puan Janet Looi (Partner) and Siti Ayenaa Binti Mohd Anis (Associate) of the Corporate Practice and ESG Practice of Skrine.
 
 

1 New paragraph 6.1A of Practice Note 9 of the Main LR (“PN9”)/ new paragraph 6.1 of Guidance Note 11 (“GN11”) of the ACE LR.
2 Existing paragraph 6.2(e) of PN9/ new paragraph 6.2(a) of GN11 of the ACE LR.
3 Amended paragraph 6.2(f) of PN9 of the Main LR/ new paragraph 6.2(b) of GN11 of the ACE LR.
4 Amended paragraph 6.5 of PN9 of the Main LR/ new paragraph 6.3 of GN11 of the ACE LR.
5 The financial threshold is to be determined as at (a) 31 December 2024, or (b) the date of admission of a listed issuer to the Official List after 31 December 2024. A listed issuer which has satisfied the RM2.0 billion threshold must continue to comply with the Proposed Sustainability Reporting Amendments even if its market capitalisation subsequently falls below that threshold.
6 Our Alert on the Securities Commission Malaysia’s announcement can be accessed here.
7 A “Sponsored Corporation” is a listed corporation which is sponsored by a Sponsor or a replacement Sponsor during the Sponsorship Period.
8 The definition of “Public Document” in rule 4.02(b) of the ACE LR will be amended to mean “any announcement made by the applicant or a listed corporation to the Exchange and document issued to its securities holders pursuant to [the ACE LR]”.
9 “Sponsorship Period” means the period referred to in rule 3.21(1) (i.e. at least three full financial years after admission to the Official List, or at least one full financial year after the applicant has generated operating revenue, whichever is the later) or rule 3A.05(1) (i.e. for an applicant seeking a transfer from the LEAP Market of the Exchange to the ACE Market, at least two full financial years after its admission to the Official List, or at least one full financial year after it has generated operating revenue, whichever is the later), or such other period as may be approved by the Exchange, as the case may be, of the ACE LR.
10 Refer to Endnote 9 for a summary of rule 3.21(1) of the ACE LR.
11 New rule 4.27(2)(a) of the ACE LR.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.