What Is the Kuala Lumpur Stock Exchange?

The Kuala Lumpur Stock Exchange / Bursa Malaysia (KLSE). In 1930, Malaysia established the first formal securities organization: the Singapore Stockbrokers Association, but there was no public trading venue until the establishment of the Bursa Securities in 1960.

Kuala Lumpur Stock Exchange

After Singapore's departure from Malaysia in 1965, the exchange still operates in both countries as before, but was merged and renamed "Malaysia and Singapore Stock Exchange". In 1973, the Currency Swap Agreement between Malaysia and Singapore was terminated, and the Stock Exchange split into two and became the Kuala Lumpur Exchange Company Limited and

The second board of the Kuala Lumpur Stock Exchange was established in 1988. Its purpose was to provide conditions for small businesses with growth potential to enter the capital market. Since 1991, the second board of the Kuala Lumpur Stock Exchange has begun to publish its own indexes.

The second board market of the Kuala Lumpur Stock Exchange of Malaysia has developed rapidly since its establishment in November 1998. In just one and a half years, the number of listed companies has increased rapidly, reaching 287 in June 2000, with a total market capitalization of more than 39 billion ringgit (3.8 ringgit for $ 1).

According to a senior official from the Kuala Lumpur Stock Exchange, the establishment of the second board market has expanded and deepened the Kuala Lumpur stock exchange market, improved the effectiveness of stock market capital raising and capital circulation, and enabled more Malaysian companies to provide stock market investors with more Investment Opportunities.

The company seeking a listing must be a continuing business. Listing can be through the following methods: public offering, priced sale, placing and bidding.

In order to ensure the order and fairness of the second board market, the Malaysian Securities Commission has formulated company listing guidelines, which imposes various requirements on companies applying for listing in order to apply rules for listing companies, and to ensure that investors have sufficient information about listed companies. . Information Only companies that meet the listing requirements can apply for listing.

Listing requirements

Must be a local company registered in Malaysia;

The minimum paid-up capital for listing is not less than RM10 million and not more than RM50 million;

Have a company's operating record of continuous profit in the 2-3 years before listing. Within 3 years before listing, the average annual profit before tax is not less than RM2 million, and the average annual profit after tax is not less than RM1 million;

Public shareholdings are between 25% and 30%, and are held by at least 500 investors, each holding not less than 1,000 shares (excluding employees);

The limitation period for shareholders to sell their equity is one year, after which one year can only sell up to 15% of their equity;

The abstract of the prospectus must be made public;

Continuing requirements for company information disclosure: use semi-annual reports to immediately disclose sensitive information that has an impact on valuation (same requirements as the main board).

Evaluation criteria for companies entering the second board market

I. Provisions on shareholding ratio

First, the Securities Commission considers the quantitative factors of companies seeking to list, especially with specific quantitative requirements for paid-in paid-up capital. A company seeking a listing on the second board market should have at least 40 million ringgit paid-in paid-up share capital. The company must ensure that at the time of listing, the paid-up paid-up share capital consists of ordinary shares (1 ringgit per share). If you have preferred shares, privileged shares or convertible bonds, you must take corresponding measures to sell or convert the relevant securities into cash before listing.

Second, the Securities Commission has clear regulations on the number of public shares and the proportion of shares held by listed companies. Companies with paid-up share capital of between 40 million and 60 million ringgit, at least 750 public shareholders each holding no less than 1,000 shares at the time of listing, and companies with paid-up share capital of over 100 million ringgit At least 1,000 public shareholders. Companies with paid-up share capital of more than 100 million ringgit have at least 1,250 public shareholders. Employees seeking a listed company and its subsidiaries and parent companies can be listed as public shareholders, but the company must ensure that at least 500 of its shareholders are public individuals who are not company employees.

At the same time, when the company is listed, 25% of its paid-up share capital must be held by public shareholders. 5% of the paid-in paid-up share capital of the company is held by employees and 10% of the paid-up paid-up capital of the company is held by Indigenous (Local Aboriginal) investors, which can be considered as meeting this condition.

The Securities Commission stipulates that the holding public does not include directors of companies applying for listing, their subsidiaries and affiliates, shareholders holding 5% or more of the paid-up share capital of the company, and persons connected with these two types of people-family members , Acting according to their instructions and wishes, and legal unions, and the trustees of the trust property that they and their families benefit from.

Second, the profit requirements of enterprises

The company applying for listing must meet the requirements of business operations and company profitability. A company seeking a listing based on the group's estimated financial strength. If the company has been the single largest contributor to the group's profit in the past three financial years, the company must have been corporatized and engaged in the same business or supplementary business at least 5 before submitting a listing application to the Securities Commission. For a company that is not seeking listing based on the group's expected financial strength, the company applying for listing must be corporatized and engaged in the same business or supplementary business for at least 5 financial years before submitting an application to the Securities Commission.

The specific requirements for the profit performance of listed companies that apply for listing are: Second-tier market listed companies must have a record of maintaining profitability for three consecutive financial years. The cumulative after-tax profit in these three years is not less than 120,000 ringgit and in the most recent one Fiscal year profit after tax is not less than 4 million ringgit. The Securities Commission only accepts audited results.

The Securities Commission also stipulates that companies seeking a listing must generally be able to maintain a reasonable level of after-tax profit in the coming financial years to support their expanded share capital; they are in good financial condition and have sufficient working capital; before going public, they must apply for company directors All debts owed by the applicant company and other companies under their control must be settled, and the net tangible assets per share must be not less than the par value of each share.

Third, the quality factor

The Securities Commission also considers the quality of the company to determine whether it is suitable for listing. The scope of consideration includes: 1. Operational dynamics: quality management, diversification of supply and marketing channels, skilled workers, staff adjustments, technical advantages, effective operation and production processes, research and development capabilities, etc .; 2. Competitiveness: high-quality products and services, Determined target markets and promotions, effective marketing channels, a certain number of market shares, competitive prices and the ability to withstand the blow of the economic downturn.

Other qualitative factors considered by the Securities Commission include: 1. Independence of the business, that is to say, the company seeking to list must have a fully independent business. 2. Continuity of management, that is, the company seeking to be listed must be managed by the same management team for at least 3 years before submitting a listing application to the Securities Commission. If the above requirements cannot be met, the founder of the company seeking to list must demonstrate to the Securities Commission that the company can be effective Operational expertise and management capabilities. 3. Conflict of interest, that is, there should be no significant conflict of interest between the company and its directors or founders. 4. Risk assessment. If a company applying for listing is affected by special factors or events, such as the company relying on a small number of customers, the Securities Commission considers such a company to be unsuitable for listing. 5. Contribution to economic growth and government goals. Such contributions include the use of domestic primary products, national labor, training of local managers and workers, and participation in value-added activities.

The Securities Commission also put forward requirements for accounting policies, chain listings, securities underwriting, equity sales, and rights allotments of companies applying for listing.

Companies applying for listing may not change their accounting policies in order to meet the requirements for profit records. The Securities Commission considers companies that adopt this approach to be unsuitable for listing.

If one or more subsidiaries and affiliates of a holding company are already listed, and these listed companies together account for 50% of the holding company's after-tax profits or 50% or more of the net tangible assets of the past 3 financial years, such a holding Companies are generally not allowed to go public. The Securities Commission may consider allowing a holding company to list only under the following conditions. The holding company has its own autonomous business and can meet the listing requirements of the Securities Commission, or its unlisted subsidiaries and subsidiaries' after-tax profits or net tangible assets accounted for the group's after-tax profits or tangible assets in the past 3 or 5 years 50% or more.

There must be a subscription arrangement before the securities are issued to the public. The full list of subscribers, along with their subscription commitments, must be filed with the Securities Commission.

Fourth, equity transfer

The Securities Commission imposed a temporary ban on the transfer of equity in listed companies, and the companies concerned must not sell or transfer more than 45% of their paid-up share capital within one year from the date of listing. That is, according to the temporary ban, the company can only sell or transfer up to one-third of its equity each year (continuous calculation). If the company in question is a private limited company, each shareholder of the company must make a commitment that he or she will not sell or transfer its shares that are unique to the private company in the specified period.

Companies applying for listing may allot shares to directors, employees, and others who contribute to the company (such as suppliers, distributors, brokers, and customers), but the shares allocated to the latter can only be allocated to business entities and not individuals. The total amount of rights must be within 5% of the company's issued share capital. Each legal director, employee or other person will receive no more than 10,000 shares.

A company that has been approved for listing must not engage in other activities that are not related to its original core business within three years from the date of listing. The company must also publish a company profile in the form of Guangji in newspapers with a wide range of distribution.

Companies on the second board market have been listed for three years and meet the requirements for listing on the main board market. They can be transferred to the main board market with the approval of the Securities Commission.

Changes to new regulations

On March 9, 1999, the Kuala Lumpur Securities Exchange Commission announced that in order to increase the number of shares in the second board market, the Kuala Lumpur Stock Exchange will start from April 1999 with a minimum paid-up capital of 10 million listed companies on the second board market. The ringgit increased to RM40 million.

With the implementation of the new listing regulations, all companies seeking to list on the second board must meet the minimum paid-up capital of RM40 million, while companies on the second board market that have already listed and have difficulty listing must be within the grace period. Raise capital to a minimum of RM40 million.

The Securities and Exchange Commission also announced that they are currently reviewing a number of listing regulations for listed companies on the second board to ensure that listing requirements remain at an appropriate and competitive level to the satisfaction of the investing public.