Transfer Listing: Taking A LEAP To ACE
This alert is an update to our alert dated 29 August 2022 in relation to the consultation paper for the transfer of listing from LEAP Market to ACE Market.
On 31 March 2023, Bursa Malaysia Securities Berhad (Bursa Securities) has made amendments to the ACE Market Listing Requirements (ACE LR) to facilitate the transfer of listing for eligible LEAP Market listed corporations to the ACE Market (Transfer Listing), which will be referred to as LEAP Market Transfer Framework in this alert, and the amendments also expand the role of eligible Approved Advisers on the ACE Market.
The LEAP Market Transfer Framework takes effect on 1 April 2023.
The key amendments to the ACE LR are discussed here:
LEAP Transfer Framework
The new LEAP Market Transfer Framework requires a public limited company to meet several criteria in order to be eligible for a transfer of listing to the ACE Market.
For instance, the company must have been listed on the LEAP Market for a minimum of 2 years and be considered as suitable for listing[1] on the ACE Market by a Sponsor. Additionally, the company must undertake a public issue of shares on the ACE Market. To qualify for the transfer, the company must also show that there is a clear and transparent price discovery mechanism in place to ensure that its issue price pursuant to its transfer to the ACE Market is fair and reasonable.
As part of the Transfer Listing process, a company seeking to transfer must also apply to withdraw its listing from the LEAP Market and provide its shareholders with an exit offer or any other appropriate means for their exit. The company will only be delisted from the LEAP Market upon successfully completing the transfer and listing on the ACE Market.
Upon being admitted to the ACE Market, a company seeking to transfer must engage the services of a Sponsor for a minimum of 2 complete financial years[2] or 1 full financial year after it has generated operating revenue, whichever is the later. This requirement is in place to ensure that the transfer applicant receives guidance and advice on the continuous compliance with the ACE LR and other regulatory obligations post listing.
A transfer applicant must also comply with the requirements relating to prospectus under Chapter 3 of ACE LR including the contents of prospectus as prescribed in Appendix 3B. Further, the transfer applicant must also ensure that the prospectus contains the additional information as set out in Appendix 3A(A), such as:
(i) Status or progress of the business plan in the previous information memorandum during the listing on the LEAP Market.
(ii) Details and status of the utilisation of proceeds raised during the listing on the LEAP Market.
(iii) Information on the price discovery mechanism including the bases and justifications.
Recognised Approved Adviser Framework
The amended ACE LR provides an opportunity for eligible Approved Advisers to participate in the ACE Market through the implementation of the Recognised Approved Adviser Framework. An Approved Adviser that has completed 3 initial listings on the LEAP Market, and has at least one Qualified Person, may apply for Bursa Securities’ approval to act as a Recognised Approved Adviser.
A “Qualified Person” refers to an individual who fulfils the requirements of a qualified person under the Securities Commission Malaysia’s Licensing Handbook.
If a Recognised Approved Adviser has previously acted as a listing adviser or continuing adviser on the LEAP Market, it may serve as a joint adviser alongside a Sponsor for the Transfer Listing application. In addition, the Recognised Approved Adviser may act as a replacement Sponsor or as an adviser for specific corporate proposals, such as bonus issues, private placements made under a general mandate and dividend reinvestment schemes, on behalf of the company.
As the ACE Market has widened its pool of Sponsors/Advisers to include Recognised Approved Advisers, the transfer applicants can choose to select either their Approved Adviser or any other existing Sponsor/Adviser from the ACE Market. The expansion of the pool also helps to enhance the capacity building of Recognised Approved Advisers as they gain exposure and experience on the ACE Market. Any future progression of a Recognised Approved Adviser's role on the ACE Market will be evaluated by Bursa Securities based on whether they are prepared and their performance quality.
Commentary
The LEAP Market Transfer Framework has been a long-anticipated framework by many eligible companies which have listed on the LEAP Market. Prior to the implementation of the LEAP Market Transfer Framework, the Transfer Listing is a two-step process whereby the delisting of a company on the LEAP Market must take place prior to the submission of the application for its listing on the ACE Market, and this entails certain risks for an applicant as the listing on the ACE Market is not guaranteed and is still subject to approval by Bursa Securities.
With the LEAP Market Transfer Framework in place, an applicant will only be delisted from the LEAP Market upon successfully completing the transfer and listing on the ACE Market. In that regard, the LEAP Market Transfer Framework would be better received for prospective applicants as compared to the previous Transfer Listing process.
[1] The consideration would also include how the transfer applicant has implemented its business plan and utilised the proceeds raised from its initial listing on the LEAP Market. [2] The minimum sponsorship period in an initial public offering is 3 full financial years.
10 April 2023