On 15 June 2017, Bursa Malaysia announced the issuance of new listing requirements for the Leading Entrepreneur Accelerator Platform (LEAP) Market. The newly established LEAP Market hopes to address the funding gap faced by SMEs, now largely over-dependent on the banking sector, and aims to provide SMEs with a new avenue to raise funds and increase their profile through the capital market. The LEAP Market is designed to be an intermediary market for companies that complements the ACE or Main Markets, providing cost efficiency, balanced and proportionate regulation and a qualified market for sophisticated investors.
The new LEAP Market Listing Requirements and consequential amendments to Bursa Malaysia rules which govern the trading, clearing and depository framework for the LEAP Market took effect on 16 June 2017.
Here are a few key points relating to the new LEAP Market:
1. Companies that qualify for the LEAP Market
Public companies incorporated in Malaysia can apply for admission to the LEAP Market through an Approved Adviser, that is, an adviser authorised by Bursa Malaysia to carry out both the initial listing activities and post-listing activities.
No profit track record or operating history is required although the applicant must be suitable for listing as assessed by an Approved Advisor after making all reasonable due diligence enquiries and considering all relevant matters.
The company must have a clearly identifiable core business. It will not be considered as suitable for listing if it is (a) a subsidiary or holding company of an existing corporation listed on the Main Market or ACE Market of Bursa Malaysia and the listing of such company will result in the existing listed corporation within the group ceasing to have a separate autonomous business of its own and not be capable of sustaining its listing in the future; (b) an investment holding corporation with no immediate or prospective business operations; or (c) an incubator, including a technology incubator which may apply for admission to the Main Market only.
2. Manner of admission and public spread requirements
Admission of the company to the LEAP Market will be through an issue of new securities by way of an excluded issue or by way of an introduction. An information memorandum rather than a prospectus is required for the purposes of submission. It is pertinent to note that prospectus liability under the Capital Markets and Services Act 2007 (“CMSA”) still applies.
The public spread of the shares must be equal to or more than 10% at listing. There is no requirement to maintain any minimal public spread post-listing but the listed corporation is encouraged to ensure that there is sufficient liquidity of its securities.
3. Who can trade on the LEAP Market
Trading on the LEAP Market is limited to qualified or sophisticated investors, that is, those who fall within Part 1 of Schedule 6 or 7 of the Capital Markets and Services Act 2007.
4. Approved Advisors
All the existing 14 principal advisers and sponsors who are eligible to act on the Main Market and ACE Market are automatically admitted to the Register of Advisers of the LEAP Market. Bursa Malaysia has also invited all suitably qualified corporate financial advisers licensed by the Securities Commission to apply to act as an Approved Adviser or Continuing Adviser on the Leap Market.
5. Other listing requirements
The LEAP Market Listing Requirements also:
This alert is for general information only and is not a substitute for legal advice.