On 15 June 2017, Bursa Malaysia announced the new Leading Entrepreneur Accelerator Platform (LEAP) Market. The purpose of the LEAP Market is to address the funding gap faced by Small Medium Enterprises (SMEs) and increase their branding through the capital market. On 29 September 2017, the first company was approved to listed on the LEAP Market. More details about the company can be found here.
In this article, we set out a few key requirements for listing on the new LEAP Market:
1. Companies that qualify for the LEAP Market
Any Malaysian company may apply to be listed on the LEAP Market through an Approved Adviser. The company must engage an Approved Adviser to assist in the listing on the LEAP Market. An Approved Adviser is an adviser approved by Bursa Malaysia to carry out both the initial listing activities and post-listing activities.
Unlike the Main Market, no profit track record or operating history is required to list on the LEAP Market. However, the Approved Adviser is required to ensure that the company is suitable for listing. The standard imposed on the Approved Adviser is similar to a listing making all reasonable due diligence enquiries and considering all relevant matters.
Table 1 – Assessment criteria for listing to be determined by the Approved Adviser
2. Clear and identifiable core business
The company must have a clearly identifiable core business. Core business is defined as “a business which provides the principal source of operating revenue or after tax profits to the company which comprises the principal activities of the company and its subsidiaries“.
An applicant with several diversified businesses may face issues in listing if the test above is not fulfilled.
Furthermore, a company will not be considered as suitable for listing if it is:
- a subsidiary or holding company of an existing corporation listed on the Main Market or ACE Market of Bursa Malaysia and the listing of such company will result in the existing listed corporation within the group ceasing to have a separate autonomous business of its own and not be capable of sustaining its listing in the future;
- an investment holding corporation with no immediate or prospective business operations; or
- an incubator, including a technology incubator which may apply for admission to the Main Market only.
3. Manner of admission
Admission of the company to the LEAP Market may be made either:
- by an issue of new securities by way of an excluded issue; or
- by way of an introduction.
Deciding whether to list or introduce
4. Information memorandum
An information memorandum rather than a prospectus is required for the purposes of submission. It is imperative to note that the liability that prospectus liability under the Capital Markets and Services Act 2007 (“CMSA”) still applies.
5. Public spread requirement
The public spread of the shares must be equal to or more than 10% at listing. The requirement is however silent as to the requirement to maintain any minimal public spread post-listing.
6. Qualified market for qualified or sophisticated investors only
Apart from the promoters or the owners of the company, trading on the LEAP Market is limited to qualified or sophisticated investors, specifically to those who fall within Part 1 of Schedule 6 or 7 of the Capital Markets and Services Act 2007.
Figure 1 – Who can buy and sell shares on the LEAP Market
7. Auditor must be registered member of Audit Oversight Board
Another key requirement for listing is for the applicant to have a recognised auditor which is a registered member of the Audit Oversight Board. From our experience, we note that many potential applicants do not fulfil this requirement.
Furthermore, in the information memorandum, the applicant must enclose the latest consolidated or combined audited financial statement and audited by auditor registered with the Audit Oversight Board.
8. Approved Advisors
All the existing 14 principal advisers and sponsors who are eligible to act on the Main Market and ACE Market are automatically admitted to the Register of Advisers of the LEAP Market.
A licensed corporate finance adviser under the Securities Commission may also apply to act as an Approved Adviser or Continuing Adviser on the LEAP Market.
For a complete list of the Approved Advisors, please refer to Bursa Malaysia’s website here.
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