Digitisation Of Corporate Exercises
July 3, 2020
Against the backdrop of the rapidly evolving technology and increasingly dynamic market activity, Bursa Malaysia Securities Berhad (Bursa Securities) has incorporated amendments to the Main Market Listing Requirements (LR) in relation to new issue of securities (LR Amendment).
In that regard, the LR Amendment facilitates the electronic participation by securities holders in corporate exercises such as the subscription for rights shares, exercise of the convertible shares and participation in a Dividend Reinvestment Scheme(DRS) (collectively, the Corporate Exercises), which will be supplementary to the existing manual procedures.
The LR Amendment was made after collating the feedback received in response to the public consultation paper issued by Bursa Securities on 26 September 2019.
Existing Manual Procedures
Prior to the LR Amendment, securities holders have to participate in the Corporate Exercises by manually completing the relevant forms.
Thereafter, submission of the completed forms to the listed issuer’s share registrar is to be by hand, by post or courier before the expiry of the stipulated timeframe for acceptance or submission. This is a cumbersome process that may result in incomplete or misplaced forms as well as delayed deliveries.
Where requisite fees are payable, securities holders will also have to prepare a banker’s draft, cashier’s order, money order or postal order to be submitted together with the completed forms.
Bursa Securities aims to expedite the corporate exercises undertaken by listed issuers through facilitating an alternative electronic mode of submission and payment by securities holders. The LR Amendment includes the following insertion in Chapter 6 of the LR, “New Issues of Securities”:
“6.08A Electronic mode of submission and payment
(1) In addition to the manual method, a listed issuer must facilitate its securities holders to perform the following, electronically:
(a) Subscription and payment for rights issue; (b) Conversion and payment for convertible securities; and (c) Election to participate in a Dividend Reinvestment Scheme.
(2) For the purpose of sub-paragraph (1) above, “electronically” means through an internet-based facility made available to securities holders, the use of automated teller machines or any other electronic mode as may be prescribed by the Exchange.”
As some securities holders may not be familiar with electronic services or may have difficulty accessing the internet, listed issuers must continue to make available the manual method for application or submission for the Corporate Exercises.
To ensure that the securities holders are able to complete the Corporate Exercises electronically with ease, listed issuers are also required to include the following in the relevant notice/statement in addition to the general requirement in paragraph 6.08A of the LR above:
(a) Procedures for electronic conversion in the notice of conversion or exercise of convertible securities; and
(b) Procedures for completing the election notice to participate in a DRS electronically in the statement accompanying the election notice.
For rights issue, the Prospectus Guidelines already requires disclosure on the procedures for application for the rights issue and excess rights in the abridged prospectus.
The LR Amendments are only effective for any Corporate Exercises that are announced on or after 2 February 2021 (Effective Date). As such, listed issuers are given ample time to do the necessary to comply with the LR Amendments, such as developing or upgrading their systems accordingly to cater for the provision of electronic services to their securities holders.
Nevertheless, listed issuers may opt to offer the electronic mode to their securities holders in relation to the Corporate Exercises before the Effective Date, as long as the electronic services provided are in compliance with the LR.