IPO: Bumiputera equity requirements


Corporations seeking listing on the Main Market and ACE Market of Bursa Malaysia Securities Berhad are required to allocate certain percentage of shares in their initial public offerings to Bumiputeras.

Application of the Bumiputera equity requirements

The Bumiputera equity requirements apply only to corporations with Malaysian-based operations seeking listing, namely companies deriving more than 50% of their profits after tax from operations based in Malaysia. The Bumiputera equity requirements do not apply to corporations with MSC-status, BioNexus-status and corporations with predominantly foreign-based operations but they are required to notify the Securities Commission Malaysia (“SC”).

Main Market

Corporations seeking listing on the Main Market must allocate at least 12.5% of their enlarged issued share capital to Bumiputera investors at the point of listing.

Corporations seeking listing on the Main Market must also meet the 25% public spread requirement, namely they must have at least 25% of the total number of shares for which listing is sought in the hands of a minimum number of 1,000 public shareholders holding not less than 100 shares or units each. Corporations with Malaysian-based operations seeking listing on the Main Market are required to allocate 50% of the public spread requirement to Bumiputera investors at the point of listing. This includes the portion made available for subscription by the general public via the balloting process (“Public Balloting”), 50% of which are to be made available to retail Bumiputera investors. As such, the Bumiputera equity requirements are subsumed under the public spread requirements.

If the corporations have met with the 12.5% Bumiputera equity requirement, the corporations must make available up to 50% for subscription by Bumiputera public if the corporations undertake Public Balloting exercises.

Corporations must apply to the Ministry of International Trade and Industry (“MITI”), or to the Ministry of Finance (“MOF”) (if the corporations are licensed financial institutions) for the allocation of up to the 50% of the public spread requirement shares to MITI or MOF-recognised Bumiputera investors.

ACE Market

Companies seeking to list on the ACE Market are required to allocate 12.5% of their enlarged issued share capital to MITI-recognised Bumiputera investors within 1 year after achieving the profit record required for a listing on the Main Market, or 5 years after being listed on ACE Market, whichever is the earlier. Such companies must submit to the SC on its proposal to comply with the Bumiputera equity condition within 6 months from the trigger date.

Such companies must also apply to MITI for allocation of shares to MITI-recognised Bumiputera investors.

The information in this article is intended only to provide general information and does not constitute any legal opinion or professional advice.

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