Malaysia's Securities Commission announces series of capital market measures to support businesses

The Securities Commission Malaysia (SC) today announced further reliefs for public listed companies (PLCs), and is considering additional measures to facilitate greater access to funding for small and midcap companies, as well as Micro, Small and Medium Enterprises (MSMEs).

“With this Covid -19 pandemic, we are confronting a situation that none of us has experienced in our lifetimes. It requires measured responses that consider the longer term impact on our market and its participants, beyond this immediate crisis,” said Datuk Syed Zaid Albar, Chairman of the SC.

Speaking to journalists during the announcement of the SC’s Annual Report for 2019, Syed Zaid added: “While the world comes together to combat this public health emergency, we have taken proactive measures to ensure that markets continue to operate in an orderly manner, as access to funding is vital to maintain confidence and ensure the long-term recovery of the market.”

Further Regulatory Reliefs for PLCs

Acknowledging that companies may face challenges as a result of the pandemic, the SC today announced that Bursa Malaysia (Bursa) will provide affected companies listed on the Main Market temporary relief from the Practice Note 17 (PN 17) classification in relation to the following criteria:

i. the shareholders’ equity of the listed issuer on a consolidated basis is 25% or less of the share capital (excluding treasury shares) of the listed issuer and such shareholders’ equity is less than RM40 million.

ii. the auditors have highlighted a material uncertainty related to going concern or expressed a qualification on the listed issuer’s ability to continue as a going concern in the listed issuer’s latest audited financial statements and the shareholders’ equity of the listed issuer on a consolidated basis is 50% or less of share capital (excluding treasury shares) of the listed issuer.

iii. a default in payment by a listed issuer, its major subsidiary or major associated company, as the case may be, as announced by a listed issuer pursuant to paragraph 9.19A of the Listing Requirements and the listed issuer is unable to provide a solvency declaration to the Exchange.

These measures will allow companies more time to regularise their financial positions. Similar temporary relief from Guidance Note 3 classification will also be provided by Bursa for companies listed on ACE Market. This PN17 relaxation will be effective from 17 April 2020 until 30 June 2021.

Greater Fundraising Access for Smaller Companies

Observing heightened interests by MSMEs to tap into alternative fund raising channels, the SC today also lifted fundraising limits on Equity Crowdfunding (ECF) platforms, and allowed ECF and peer-to-peer financing (P2P) platforms to operationalise secondary trading, both with immediate effect.

From now until 30 September 2020, the government co-investment fund MyCIF, administered by the SC, has also increased its funding matching ratio from 1:4 to 1:2 for eligible ECF and P2P campaigns, to provide additional liquidity into the alternative fundraising space.

Accelerate Digitisation of Capital Markets

The SC also called upon the industry to seize the opportunity to accelerate their digitisation transformations and offer more online products and services to investors as the regulator observed a significant increase of new online trading accounts opening in recent months. The SC itself, in view of this new norm, will expedite guidelines for holding virtual general meetings. The SC will also review the Rules On Take-Overs and Mergers to facilitate e-service of documents and compliance with regulatory requirements for take-over and merger transactions.

The regulator is also working on efforts to broaden the suite of product offerings of fund management industry through facilitating the introduction of waqf-based collective investment schemes and alternative investments for wholesale funds, where underlying assets can be property, gold or private equity.

Noting that extraordinary times call for extraordinary responses, Syed Zaid said this is not business as usual and that the SC is deploying a wide range of regulatory tools to provide support to the market and relief to market participants.

Maintain Market Integrity and Investors’ Protection While the regulator is doing what it can to support the businesses, Syed Zaid said the SC remains steadfast in ensuring investor interest is protected during this challenging time.

“We continue to raise investor awareness on scams, as scammers tend to target people during times of uncertainty. The SC will take a targeted approach to protect vulnerable investors and minority shareholders. I would also like to remind our intermediaries to remain vigilant and for PLCs to remember their obligations to shareholders and to make timely disclosures,” he stressed.

The SC also assured investors that the Malaysian capital market remains fundamentally strong and is functioning in an orderly manner, supported by deep domestic liquidity, complemented by the Government’s stimulus packages, amidst non-resident outflows.

“Over the years, Malaysia has withstood many crises and the SC has worked closely with the industry to strengthen the capital markets and address systemic weaknesses. As a result, the Malaysian players and institutions are better equipped to face the onslaught of challenges arising from this pandemic,” added Syed Zaid.

As the financial system adjusts to the impact of Covid-19, the SC will continue to monitor the evolving situation in global and domestic markets, and calibrate its responses and update the public accordingly. For more information on the SC’s measures to maintain market integrity, please visit www.sc.com.my/covid-19 and www.sc.com.my/resources/publications-andresearch/sc-ar2019

Copyright Press Releases 2020