The IPO process in Malaysia involves a lot of thorough planning to ensure that the company meets the listing requirements and is successfully listed on the market.
Our guide on the Malaysia IPO process provides an overview of the listing process, related fees and compliance issues for IPO in Malaysia.
IPO process in Malaysia
Businesses wanting to go public in Malaysia must satisfy a set of two criteria – quantitative and qualitative.
1. Appoint professional advisors
Listing on the Bursa Malaysia requires appointing professional advisors who will assist you throughout the listing process. The professional advisors will act as the due diligence working group (DDWG).
The professional advisors include:
- Investment bank
- The investment bank will act as the principal advisor who will advise you on the listing structure, timing, pricing and regulatory requirements. The principal advisor will also coordinate with other professionals, such as accountants, lawyers, market researchers and property valuers, with the preparation of documents and the prospectus and the due diligence process.
- The principal advisor also submits the application documents to the regulators and lodges the prospectus to the relevant authorities.
- Lawyers advise on all legal matters related to the listing application and engage in the legal due diligence and verification process of documents and prospectus.
- Lawyers are also responsible for drafting all documents, including the due diligence planning memorandum, due diligence report and minutes of meetings.
- Reporting Accountants
- Accountants prepare the Accountant’s Report and conduct due diligence on application documents and prospectus on information related to finance. If necessary, accountants also perform due diligence on the applicant’s internal control system and analyse reports on future financial performance.
- Property valuer
- If your company’s listing exercise contains any property, plant, machinery or equipment that has been or will be revalued, an independent property valuer should be appointed. The valuer is required to provide a valuation report.
- The Valuation Report is required to be submitted to Bursa Malaysia Securities Berhad / Securities Commission before the submission of the Listing Application.
- Business and market researcher
- An independent business or market researcher can assist your company with developing a report on the company’s business prospects, market positioning and risks.
- The Market Researcher is also entrusted to review the Management Discussion and Analysis to be disclosed in the submission documents.
- Issuing house and Share Registrar
- The issuing house oversees the allotment, balloting and issuance process of the company’s shares.
- The Share Registrar oversees and maintain the Register of Members of the listed company and to deal with Bursa Malaysia Depository Sdn Bhd on behalf of the Company.
- Public relations (PR) company
- The PR company is responsible for raising awareness, interest and appeal for the soon-to-be-listed company.
- Tax advisor
- A tax advisor may be necessary to provide expert advice and opinion on any tax issues, especially if the company goes through group restricting, transfer of properties and cross-border activities.
- Company Secretary
- The Company Secretary will assist the Company to ensure that the statutory information is updated and confirm it accuracy before submission.
- The Company Secretary also ensures that the Company Board Structure, composition of the Board Committees, Terms of References of the Committees and Constitution are in compliance with the relevant provision s of the Listing Requirements and Malaysian Code on Corporate Governance and all relevant rules and regulations.
2. Due diligence
The due diligence process includes:
- Issuing the prospectus to the general public
- Responding to comments from regulators
- Submitting documents and preparing the prospectus
- Submitting the listing application
The professional advisors will need to conduct due diligence to ensure there is no misleading or inaccurate information in the prospectus.
3. Drafting the prospectus
The prospectus must include the following information:
- Timetable of the opening and closing dates of the issue and/or offer
- Corporate information on the directors, including names and addresses
- Key information about the offer/issue and corporation
- Details of the public offering, including the number and type of securities and rights attached
- Risk factors
- Business and industry description and details of a subsidiary or associated corporations
- Future plans, strategies and prospects of the corporation
- Related-party transactions or conflicts of interest
- Financial information
4. Appointing individual directors
An individual director must be appointed to the company’s board of directors as required under Bursa Malaysia’s Listing Requirements. Independent directors must make up one-third of the board.
5. Method of listing and valuation
You will need to decide on a suitable equity structure and a method of offering the company’s shares. The most common methods are issuing new shares or offering for sale of existing shares.
6. Preparing documents for submission
The DDWG will prepare the listing application along with the process of deciding on the method of listing and valuation of your company. The advisors will gather detailed information about your company to prepare the listing application and prospectus. Written declarations must be made by the company directors, senior management and other related parties as required by the regulators.
Listing fees in Malaysia
The listing fees for IPO in Malaysia are:
|Fee||Main Market||ACE Market||LEAP Market|
|Securities Commission Malaysia||Bursa Malaysia||Securities Commission Malaysia||Bursa Malaysia||Securities Commission Malaysia||Bursa Malaysia|
|Processing fee||RM 80,000 + 0.05% of the total market value of securities to be listed and nominal value of any additional securities issued or to be issued||–||–||RM 30,000||–||RM 9,000|
|Fee for registration of prospectus||RM 15,000||–||RM 15,000||–||–||–|
|Fee for lodgement of information memorandum||–||–||–||–||RM 500|
|Initial listing fee||–||0.01% of the total market value of share capital (minimum of RM 20,000 and maximum of RM 200,000)||–||0.01% of the total market value of share capital (minimum of RM 10,000 and maximum of RM 20,000)||RM 3,000|
|Annual listing fee||–||0.0025% of total market value of share capital (minimum of RM 20,000 and maximum of 100,000)||–||0.0012% of total market value of share capital (minimum of RM 10,000 and maximum of 20,000)||RM 5,000|
Compliance issues & challenges companies face
Companies must ensure that the listing application contains accurate information and statements about the company. If the application contains misleading information, then the applicant fails to comply with the Capital Market and Services Act, Listing Requirements of the Bursa Malaysia Securities Berhad, Malaysia Code On Corporate Governance, Securities Commission’s (SC) Equity Guidelines and Guidelines on Submission of Corporate and Capital Market Product Proposals.
Manufacturing companies with a shareholders’ fund of RM 2.5 million and above or 75 or more employees must acquire a manufacturing license. If the group does not have a manufacturing license, it could delay the IPO listing process and additionally be subject to a fine not exceeding RM 2,000 or imprisonment of not exceeding six months and a further fine of not exceeding RM 1,000 for every day the offence continues.
The group of companies must have valid licenses and permits required by law to conduct business activities. Before submitting the listing application, all licenses that have expired should be renewed.
Companies must ensure they do not have any ongoing tax issues or non-compliance with the tax laws, if so, the tax issue must be resolved before the submission of the listing application. Non-compliance with tax laws can delay the listing process or may lead to an unsuccessful listing.
How Acclime can help
Acclime Malaysia provides pre-IPO planning consultancy, which we can help with the following:
- IPO readiness assessment
- Advising on the appointment of other professionals involved in the IPO
- Performing due diligence with the relevant professionals on your business and financial affairs
- Advising on your capital structure, invitation structure, marketing theme and timing of the IPO and more to maximise investor acceptance and shareholder value
- Management of the IPO process, including coordination of other professionals involved in the process
Companies can list three primary markets: the Main Market, ACE Market and the LEAP Market. Each market has specific listing criteria, and companies must comply with the requirements as they may affect the listing process.
Contact us if you are considering listing on the Malaysian stock market and require local expertise to look into your IPO plans. Our team will be able to help you understand the process and seamlessly guide you throughout the entire screening and listing process, including maintaining compliance post-IPO.
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