Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 21): Malaysia's capital market regulator said it is still in the midst of reviewing its framework for special-purpose acquisition company (SPAC) listings amid developments in other markets that are allowing these blank-cheque companies to raise money on their exchanges.

"We are now reviewing the SPAC framework for greater efficiency amid developments in the other markets. We are monitoring the developments very closely and looking at how it works in the other markets," said the Securities Commission Malaysia (SC) at the media technical briefing on the Third Capital Market Masterplan (CMP3) (2021-2025) yesterday (Sept 20).

"We have to be mindful that whatever that may be relevant in some other markets may not necessarily be directly transportable or adopted in our ecosystem. At the same time, we are engaging with industry players in reviewing the framework to ensure that we have something that is useful and relevant for our own market needs.

"It is an ongoing work," it added.

While the SPAC framework has been around since 2009 in Malaysia, its successes have been relatively few, being that of only Hibiscus Petroleum Bhd and Reach Energy Bhd.

However, SPAC listings have gained popularity in the US in the past year as they offer a simpler and more flexible process than traditional initial public offerings. Ride-hailing giant Grab Holdings Inc and Singapore online real estate firm PropertyGuru are among many high-growth Asian firms looking to list there. Last year saw 248 SPACs raise US$85.35 million in the US, according to SPAC Insider data. A total of 435 companies have raised US$125.91 million so far in 2021.

Over in Asia, Singapore Exchange earlier this month announced new rules allowing SPACs to list, while Hong Kong's financial regulators are still considering whether it should follow but with tighter restrictions.

On another front, the SC is looking to impose a 12-year tenure limit mandate for independent directors in any one public listed company (PLC) in the Listing Requirements of Bursa Malaysia. The SC's Malaysian Code on Corporate Governance showed that at the end of March this year, 434 independent directors had served their respective boards for more than 12 years; of these, 49 had served on the same board for over 20 years.

"Previously we have had annual general meetings to extend the tenure of independent directors and then (in 2017), we introduced the two-tier voting process.

"However, what we found is that under the two-tier voting process, while it gives minority shareholders the opportunity to decide on whether or not to retain independent directors with tenures of more than 12 years, many of them in fact do not turn up to exercise these rights. Hence, the listing rules will be amended to include the 12-year tenure limit," said the SC.

Under a two-tier voting process, votes will be cast during the shareholder meeting, whereby the large shareholders of the company will vote under Tier 1, while the rest of the shareholders will vote under Tier 2. Large shareholders are defined as those who own no less than 33% of the voting shares in the company. The decision for any resolution to be passed will be determined based on the votes of Tier 1 and a simple majority of Tier 2.

The move is part of the SC's continuous efforts to promote gender diversity in PLCs under the newly launched CMP3, in which the regulator said it "has made quite good progress". As at end-2020, 73% of PLCs had at least one female representation on their board, compared with 44% in 2018.

"We are recording slow, but steady improvements (in promoting gender diversity in PLCs). But over the last one to two years, we've seen a bit of a plateau. Thus, we are reprioritising and refocusing on how we can do this and one of the areas that we feel could slow down the progress in gender diversity is the issue of long-serving independent directors," said the SC.

Meanwhile, the CMP3 will articulate both the developmental and regulatory approaches and initiatives for the next five years in building a relevant, efficient and diversified capital market for the future.

"Moving forward, the SC will place emphasis on the identification and assessment of vulnerable investors. Simultaneously, the SC will also refine its regulatory approach to better supervise, identify and address capital market transgressions, to ensure more effective deterrence against market misconduct," it said.

"Vulnerable investors do not mean that if a person is of high net worth, he is not vulnerable. He may be vulnerable because he may not have enough investment experience. Same goes for entities. We have many entities and cooperatives that are sitting on a large pile of funds and looking to invest those funds and they are not necessarily savvy investors based on our experience throughout the CMP2 period," added the SC.

Read more stories about the Securities Commission's Capital Market Masterplan 3 (CMP3) here.

Edited ByJoyce Goh
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