The Malaysian Insider

KUALA LUMPUR, Aug 3 — The Kuala Lumpur’s stock exchange’s new board structure, encompassing the Main Market and ACE Market was implemented today.

Under the new structure, the previous Main Board and Second Board of Bursa Malaysia have been merged into a single unified board called Main Market which will list the established companies.

The MESDAQ Market, previously for technology-based and high growth companies meanwhile has been transformed into an alternative market for emerging companies of all sizes and sectors and it will be now called ACE Market.

ACE stands for Access, Certainty and Efficiency.

In announcing the exercise in May, Bursa Malaysia had said that the new board structure will provide companies with a clearly defined platform to raise capital, which will enhance efficiency, access and certainty in the fund raising process while ensuring protection for investors.

Commenting on this, the chief executive officer of Maybank Investment Bank Bhd, Mohammed Rashdan Yusof said, the creation of a new board, particularly the ACE Market, would help new companies entering the market to access capital.

“At least some Malaysian companies would not be tempted to go elsewhere such as Singapore, or even London. Some of them have left to list in London.”

As an investment banker, Mohammed Rashdan hoped that there would be more activity from the consolidation of the markets.

He said that the ACE Market would allow “more innovative” and “more knowledge-based” companies getting access to the market.

“I wish a lot of activities in these areas.”

Following the change, the FTSE Bursa Malaysia (FBM) Second Board Index is now retired while the FBM MESDAQ Index is renamed as the FBM ACE Index.

The FBM ACE Index closed the session at 4,266.96, up by 8.25 points despite lower performance of the benchmark market FBM Composite Index which ended 3.59 points lower at 1,171.31.

Meanwhile, volume on the newly formed board, the Main Market, stood at 690.531 million shares worth RM1.203 billion.

Of the ACE Market, volume was at 74.924 million shares worth RM12.937 million.

Along with the new structure, there is also a significant shift in the regulatory approach with regard to listings and equity fund-raising.

Under the new framework, rules and processes for equity fund raising have been streamlined in order to provide greater certainty, shorter time to market and lower regulatory cost.

The review of corporate proposals will now focus on compliance with minimum requirement, standards of corporate governance, resolution of conflicts of interest, preservation of public interest, and adequacy of disclosure to enable investors to make informed investment decisions.

All other equity-based corporate proposals such as acquisitions (other than reverse takeovers and backdoor listings), disposals, placements of securities, rights offerings and issuance of warrants will no longer require the Securities Commission’s approval.

The commission will continue to vet and register prospectuses to ensure adequate and meaningful disclosure to investors.

Bursa Malaysia will then take a more active role as the front line regulator for secondary equity fund-raising.

Another key reform to the ACE Market, apart from it being sponsor-driven, is that there will be no prescribed minimum operating history or profit track record requirements for entry to the alternative market.

According to the commission, it is due to that the sponsors will be empowered to assess the suitability of listing applicants.

The current system of requiring the services of a sponsor for a period of at least three years by the listed issuer is maintained.

At large, the framework reforms are aimed at allowing efficient access to capital and investment, as well as making Bursa Malaysia a more attractive platform for Malaysian and foreign companies.

In conjunction with this, Bursa Malaysia has also revamped its listing requirements for the main market and ACE market. – Bernama