Can PLS vary a corporate proposal which has been approved by shareholders?

Equity capital markets (ECM)

A client may change its mind at the last minute.

Shareholders’ and regulators’ approvals are required for certain corporate proposals by a public company listed on Bursa Malaysia (“𝗣𝗟𝗖”).

After all the required approvals have been obtained, the PLC may ask:

“Can we do it this way instead?”

Sometimes the client may want to utilise the proceeds raised from a corporate exercise differently from what is set out in prospectus or circular after shareholders’ approval for the corporate exercise has been obtained.

Under the Listing Requirements, the PLC must issue a circular to its shareholders and seek its shareholders’ approval if it proposes to make a material change to the utilisation of proceeds raised by the PLC from its IPO or new issue of securities which has been approved by way of specific shareholder approval.

A change to the utilisation of proceeds is considered material if such change is 25% or more of the total proceeds raised.

It is not uncommon for PLCs to go back to their shareholders to seek their approval to vary the utilisation of proceeds for corporate exercises which have been approved by their shareholders.

The Listing Requirements also require a PLC to issue a circular to its shareholders and seek its shareholders’ approval if it proposes to make a material amendment, modification or variation to a proposal which has been approved by shareholders in general meeting.

An amendment, modification or variation is considered material if it can be reasonably expected to have a material effect on the decision of a holder of securities of the PLC in relation to such proposal.

Short answer to the question in the header- yes but shareholders’ approval is required if the variation is material.


This post was originally posted on Linkedin on 16 February 2022. Follow me on Linkedin.

Linkedin Post
Five key steps for legal due diligence

Most lawyers are good at identifying issues, but legal due diligence shouldn’t be limited to merely reviewing documents and identifying issues. Here are my five steps for conducting legal due diligence: 1. Identify the issues based on the scope of legal due diligence as agreed with the clients. 2. Provide recommendations …

Linkedin Post
Begin with the end in mind: Post-completion integration

I once worked on an M&A deal that took more than a year to complete. While the deal was not inherently complex, it dragged on due to delays in finalizing the details of the transaction agreements for reason beyond my control. As the deal involved a larger corporation acquiring a …

Being a Corporate Lawyer: Why I Do What I Do

After years of demanding schedule and juggling simultaneous corporate exercises which take a toll on physical and mental health, it is not surprising that some corporate lawyers experience burnout. Unlike some legal practice areas, the work of a corporate lawyer may not seem immediately impactful or “make a difference” to …