Malaysia Stockmarket - Upcoming Changes You Need To Know

If you are an investor of equity stocks in Malaysia's stock market, you should be aware of the following impending changes taking place soon. First and foremost, on 6th July 2009, Bursa Malaysia will change the market’s primary benchmark index from the 100-stock Kuala Lumpur Composite Index (KLCI) to the FTSE-Bursa Malaysia KLCI which comprises just 30 stocks. 73 stocks will thus fall out of the new benchmark index while three new stocks will be added.

The transition will be seamless, i.e., the new FBM KLCI will start off with an index value equal to the closing value of the current KLCI on 3 July 2009.
















Secondly, the main board and second board of Bursa Malaysia will be merged and be known as the "Main Market" while the Mesdaq market will be transformed into a sponsor-driven market known as "ACE Market" from 3rd August 2009.

The requirement for listing on the Main Market will also be eased with companies needing only an aggregate after-tax profit of RM20 million over three to five years with at least RM6million in after-tax profit in the latest financial year. This compares with current requirements to have aggregate post-tax profit of RM30 million with at least RM8 million in the latest financial year.

The Mesdaq market, which was reserved for technology companies, will be transformed into an alternative market open to companies of all sizes and from economic sectors.

All equity-based proposals, such as share placements, rights offerings and restricted share issuances will no longer require the SC's approval.

In order to attract both local and foreign companies to list in Bursa Malaysia, the Securities Commission is also relaxing rules on secondary listings of foreign corporations, effective 3rd August 2009. The relaxed rules include foreign companies no longer need to have at least RM1.0 billion in market capitalization with RM60 million in after-tax profit in the latest financial year for a secondary listing.

In order to encourage private equity activities and corporate mergers and acquisitions, SC will also allow the listing of shell companies that have no operations but have intentions to merge with or acquire operating companies or businesses with their IPO proceeds. However, a shell company seeking a listing must raise a minimum of RM150 million through its IPO and must complete an acquisition within 36 months of listing.