Indirect interest in IPO

Equity capital markets (ECM)

The Prospectus Guidelines require disclosure of the principal business activities performed by directors, key senior management and key technical personnel (each a “Relevant Person”) of a corporation which intends to be listed on Bursa Malaysia (Listco), outside the Listco. Typically, there is a column for disclosure of their indirect shareholding or indirect equity interest in corporations outside the Listco, in the prospectus.

Sections 8 and 59 of the Companies Act 2016 (“CA“) are the usual provisions to consider in determining indirect equity interest.

Under section 59(11)(c) of the CA, the interest of a director of Company X in the shares of Company X includes the interest in the shares of Company X of:
(1) that director’s spouse, who is not a director of Company X; and
(2) a child of that director, including adopted child or stepchild who is not a director of Company X.

Section 8 of the CA should be considered in its entirety to determine the indirect equity interest of the Relevant Persons.

In respect of section 8, I find the following are the provisions which usually apply:

-Section 8(4) of the CA
The Relevant Person is deemed to have an interest in a share where (1) a body corporate has an interest in a share; and (2) the Relevant Person or his associates, or the Relevant Person and his associates are entitled to 𝖊𝖝𝖊𝖗𝖈𝖎𝖘𝖊 𝖔𝖗 𝖈𝖔𝖓𝖙𝖗𝖔𝖑 𝖙𝖍𝖊 𝖊𝖝𝖊𝖗𝖈𝖎𝖘𝖊 𝖔𝖋 𝖓𝖔𝖙 𝖑𝖊𝖘𝖘 𝖙𝖍𝖆𝖓 20% 𝖔𝖋 𝖙𝖍𝖊 𝖛𝖔𝖙𝖊𝖘  attached to the voting shares in the body corporate.

-Section 8(6)(d) of the CA
The Relevant Person is deemed to have an interest in a share where he is entitled, other than by reason of his having been appointed a proxy or representative to vote at a meeting of members of a corporation or of a class of its members, to 𝖊𝖝𝖊𝖗𝖈𝖎𝖘𝖊 𝖔𝖗 𝖈𝖔𝖓𝖙𝖗𝖔𝖑 𝖙𝖍𝖊 𝖊𝖝𝖊𝖗𝖈𝖎𝖘𝖊 𝖔𝖋 𝖆 𝖗𝖎𝖌𝖍𝖙 𝖆𝖙𝖙𝖆𝖈𝖍𝖊𝖉 𝖙𝖔 𝖆 𝖘𝖍𝖆𝖗𝖊, not being a share of which he is a registered holder.

Directors, key senior management and key technical personnel of the Listco must ensure that the disclosure of their information in this section of the prospectus is true, not misleading and does not contain any material omission.


This post was first posted on Linkedin on 25 June 2021.

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