General
1. What proposals would be considered by the SC under the new Bumiputera equity requirement?
The proposals that will be considered by the SC under the new Bumiputera equity requirement are those proposals involving listing of companies, reverse take-over (RTO) and transfer of listing.
2. When will the new policy take effect?
The new policy will take effect immediately. This new requirement will supersede all existing Bumiputera equity conditions previously imposed on public listed companies (PLCs).
3. Do companies need to comply with any Bumiputera equity requirement imposed by the relevant Ministries as part of their licensing conditions?
Yes, where relevant, companies must obtain sector regulator?s approval prior to submitting any proposals to the SC.
IPO (Initial Public Offering)
4. What is the new Bumiputera equity requirement for companies seeking listing on the Main Market?
Currently, all companies seeking listing must meet the 25% public spread requirement under the Bursa Malaysia Listing Rules.
Companies with Malaysian-based operations seeking listing on the Main Market are required to allocate 50% of the public spread requirement to Bumiputera investors at the point of listing. This includes the portion made available for subscription via balloting, 50% of which are to be made available to retail Bumiputera investors. Hence, the Bumiputera equity requirements will be subsumed under the public spread requirements.
Companies with Malaysian-based operations are defined as companies deriving more than 50% of their profits after tax from operations based in Malaysia.
5. How do companies comply with the new Bumiputera equity requirement?
The 25% public spread requirement is generally fulfilled by companies in the following manner:-
i. companies are expected to make available up to 5% for subscription by the general public via the balloting process; and
ii. the balance of up to 20% can be placed out to non-substantial shareholders i.e. those owning less than 5% each.
Under the new policy, companies must apply to MITI, or to MOF (if licensed financial institutions) for the allocation of up to the 50% of the public spread requirement shares to MITI or MOF recognized Bumiputera investors.
When the company offers up to 5% of its issued capital for subscription via the balloting process, 50% of these shares must be offered to Bumiputera public.
6. What if Bumiputera allocation is not fully subscribed?
In the event that MITI or MOF approved Bumiputera investors take up less than the 10% of the shares offered to them, the balance of the shares that are unallocated will be made available for subscription by the Bumiputera general public in addition to the mandatory requirement under the IPO balloting process. Say only 8% of the shares offered are taken up by MITI and MOF approved Bumiputera investors, the remaining 2% of the shares will be added to the balloting portion, thus making the total available for subscription by the Bumiputera public to be 4.5%.
The company will be deemed to have complied with the Bumiputera equity requirement once it has completed this process.
7. If a company has existing Bumiputera shareholders, can the Bumiputera shareholders be recognized to fulfill the Bumiputera equity requirement?
Yes, subject to recognition by MITI /MOF and only if the Bumiputera shareholder is not a substantial shareholder i.e. holds less than 5% of the issued and paid-up share capital.
Example:
Existing Bumiputera shareholders: 8%, each holding less than 5%
Bumiputera equity requirement to be fulfilled: 12.5% - 8% = 4.5%
8. What if the companies have met with the 12.5% Bumiputera equity requirement, do they still need to offer 50% of the shares under the balloted public offer portion to Bumiputera investors?
Whenever a company undertakes a public balloting exercise, it must make available up to 50% for subscription by Bumiputera public.
9. Does the new Bumiputera equity requirement apply to all companies seeking listing?
The equity requirement only applies to companies with Malaysian-based operations seeking listing. Companies with MSC status, BioNexus status and companies with predominantly foreign-based operations are exempted from the Bumiputera equity requirement.
Although the Bumiputera equity requirement does not apply to these companies, they are, however, required to notify the SC.
10. What is the definition for companies with predominantly foreign-based operations?
The determination is based on the profit contribution from domestic and foreign operations of the group for the past year, in which the profits after tax derived from the foreign-based operations are higher than the Malaysian-based operations ie more than 50%.
11. Does the new Bumiputera equity requirement apply to companies which have been granted approval for listing but have yet to be listed?
Yes, the new Bumiputera equity requirement also applies to such companies.
12. What is the Bumiputera equity requirement for companies seeking listing on the ACE Market?
For listing on the ACE Market, companies are required to allocate 12.5% of their enlarged issued and paid-up share capital to MITI-recognized Bumiputera investors within 1 year after achieving the profit record required for a listing on the Main Market, or 5 years after being listed on ACE Market, which ever is the earlier.
This also applies to all companies currently listed on the MESDAQ Market that have yet to comply with the Bumiputera equity requirements.
13. What should a company listed on the ACE Market do to comply with the Bumiputera equity condition after achieving the profit track record or after being listed for 5 years?
For the purpose of complying with the equity condition imposed, the company needs to submit to the SC on its proposal to comply with the Bumiputera equity condition within six (6) months from the trigger date.
14. Under the new Bumiputera equity requirement, does that mean the Bumiputera shareholding in a company is restricted to 12.5%?
The 12.5% is the prescribed minimum limit. Of course the Bumiputera shareholding can be higher. For example, in the situation where 20% of the shares are held by existing Bumiputera investors, with the 12.5% Bumiputera public spread requirement, this will potentially bring the total Bumiputera shareholding to 32.5%.
Subsequent Fund Raising/Corporate Exercise
15. Are PLCs required to make a submission to the SC for subsequent fund raising exercises involving placement of shares?
No. However, where a proposed placement results in the entry of one or more new controlling shareholders of the company, a submission must be made to the SC. For issuance of shares which results in the entry of new controlling shareholders, the revised Bumiputera equity condition will be imposed. This is because the entry of new controlling shareholders through a reverse take-over or backdoor listing of assets is treated like an IPO and requires the company to meet the IPO guidelines including the Bumiputera equity condition.
16. Are PLCs required to make a submission to the SC for subsequent corporate exercises that result in RTO and/or transfer of listing that they intend to undertake?
Yes. A submission should be made to the SC.
17. What are the Bumiputera equity conditions to be imposed on PLCs in the case of RTO?
For RTO, the PLC is required to comply with the 12.5% Bumiputera equity requirement 3 years after the implementation of the proposal.
18. What are the Bumiputera equity conditions to be imposed on PLCs in the case of transfer of listing?
In the case of a transfer of listing, the PLC is required to comply with the 12.5% Bumiputera equity requirement at the point of transfer.
19. If a PLC has outstanding Bumiputera equity requirement previously imposed pursuant to a fund raising exercise, will the equity condition be removed under the new policy?
Yes. The outstanding equity conditions previously imposed pursuant to subsequent fund raising exercises undertaken by PLCs will be removed with immediate effect.