LISTING MALAYSIAN-BASED OPERATIONS ABROAD€¦ · * for shares listed or approved for listing on...
Transcript of LISTING MALAYSIAN-BASED OPERATIONS ABROAD€¦ · * for shares listed or approved for listing on...
LISTING MALAYSIAN-BASED OPERATIONS ABROAD
- LEGAL PERSPECTIVE
1
2
1. DUE DILIGENCE
2. RESTRUCTURING
4. PRE-IPO PRIVATE FUNDING
3. OFFERING & PLACEMENT IN
MALAYSIA
3
PHASE 1 – RESTRUCTURINGAND IPO-RELATED APPROVALS
PHASE 2 – REGULATORYCOMPLIANCE AND CORPORATEGOVERNANCE ISSUES: ‘FITNESS’FOR LISTING
PHASE 3 – DISCLOSURE IN OFFERDOCUMENT/ PROSPECTUS
----
----
----
----
CO
NT
INU
ING
PR
OC
ES
S--
----
----
---
----
1. DUE DILIGENCE: KEY AREAS
<<DUE DILIGENCE WORKING GROUP>>
4
PHASE 1 – RESTRUCTURING AND IPO-RELATED APPROVALS
Typical examples of restrictions:-
(i) provisions prohibiting change of control or foreign ownership (Restructuring-relevant)(ii) provisions prohibiting listing, including becoming a subsidiary of a listed corporation
(IPO-relevant)
MAIN OBJECTIVE: Identifying required regulatory and other third party consents/waivers arising from restrictions under
regulatory/ licensing requirements or contractual arrangements
Change of control provisions are particularly common in bank
documents and sometimes, in licensing conditions and major
contracts
5
PHASE 2 – COMPLIANCE AND CORPORATE GOVERNANCE
ISSUES: ‘FITNESS’ FOR LISTING
SCOPE: Normally determined by principal advisor/ lead counsel based on requirements of the foreign stock exchange;
typically include areas such as the Group’s compliance with law, related party transactions and conflicts of interest,
material contracts, real property & other assets, indebtedness & security, insurance, litigation etc. as well as information,
status & records of proposed directors, substantial shareholders & key management
Irregularities identified will be rectified prior to IPO
PHASE 3 – DISCLOSURE IN OFFER DOCUMENT/
PROSPECTUS
Third party consents identified from
confidentiality undertakings will be obtained for certain
disclosures in offer document
6
Part 1. ‘HOUSING’ MALAYSIAN OPERATING ENTITIES UNDER NEWLYINCORPORATED FOREIGN LISTING VEHICLE
Normally by way of SHARE SWAP
2. RESTRUCTURING
2. RESTRUCTURING
7
2. RESTRUCTURING
8
1
2
2
1. Incorporation of ListCo
2. The Share Swap: Shareholders transfer entire share capital of ABC Sdn Bhd to ListCo in exchange for new shares in ListCo.
ListCo
2. RESTRUCTURING
9
1
ListCo
IPO Group Structure
10
X/ Y Sdn Bhd’s swapping of financial asset in Malaysia (ABC Shares) for financial asset outside Malaysia
(ListCo Shares)
INVESTMENT ABROAD
Q: Does the resident shareholder (X/Y SDN BHD) or its group of entities with parent-
subsidiary relationship have domestic ringgit borrowings (Note: including
redeemable preference shares but excluding borrowings within the group)?
An regulated by Central Bank of Malaysia pursuant to Financial Services Act 2013
(assuming no other investment abroad in the same year)
Allowed up to RM50 million equivalent in
aggregate per calendar year (on aggregate and group basis)
(For resident individual, sole proprietorship or partnership, the yearly cap is RM1 million)
Approval required if it will exceed the cap
Allowed, with no cap
NO YES
The answer is commonly yes for Y Sdn Bhd (being the holding
company) as the Malaysian operating entities normally would have local
bank borrowings
11
APPLICATION PROCESS
Online Submission (Own Submission/ Submission by Consultant)
Q&As between Central Bank of Malaysia and Applicants(by way of emails and/or meetings)
Decision from Central Bank of Malaysia
----
----
----
----
1 –
2 m
on
ths--
----
----
----
----
12
Part 2. WHEN TO IMPLEMENT?
2. RESTRUCTURING
AFTER obtaining approval(s)/ waiver(s) from Central Bank of Malaysia (ifrequired) and other third party(ies)
PREFERABLY AFTER obtaining listing approval from the foreign stock exchange (allowed by certain stock exchange, such as Singapore Stock Exchange, provided that a complete restructuring structure and plan is presented)
Unwinding the restructured group can be a complicated or costly process
Direct Overseas Listing of Malaysian Holdco
(ABC SDN BHD)? UNCOMMON
13
PRE-IPO CONSIDERATIONS Pre-IPO conversion into public limited company
(Berhad) is required
Approval required from the SecuritiesCommission under Capital Markets and ServicesAct 2007 (CMSA)
Q: Does the foreign stock exchange allow listingof corporation with ringgit-denominated shares?
POST-IPO COMPLICATIONS
Application of take-overs regulations under CMSA andMalaysian Code on Take-overs and Mergers 2016?
3. OFFERING AND PLACEMENT IN MALAYSIA
14
OFFERING TO PUBLIC IN MALAYSIA ? regulated by Securities Commission (SC)
under Capital Markets and Services Act2007 (CMSA)
APPROVAL required from SC Prospectus required
• must comply with CMSA requirements• must register with SC
• must be enclosed with form of application for securities
Section 232, CMSA
Section 212, CMSA
EXCEPTIONS ARE PROVIDED IN SCHEDULES 5, 6 AND 7 OF CMSA
3. OFFERING AND PLACEMENT IN MALAYSIA
15
Approval from SC not
required*
Prospectus not required
PLACEMENT TO HIGH –
NET WORTH ENTITIES/ PRIVATE
PLACEMENT
Corporationwith total net
assets >RM10million or equivalent based on last
audited accounts
Partnershipwith total net
assets >RM10million or equivalent
Individual
whose total net personal assets, or total net joint assets with his spouse,
> RM3million or equivalent, excluding the value of the individual’s primary residence;
who has a gross annual income >RM300,000 or equivalent per annum in
preceding 12 months; or
who, jointly with his spouse, has a gross annual income >RM400,000 or equivalent
per annum in preceding 12 months
* for shares listed or approved for listing on member exchange of the World Federation of
Exchanges AND where the distribution of such shares is made by a holder of a Capital Markets Services Licence who carries on the business of
dealing in securities.
Person who acquires
shares, as principal,for a consideration
≥RM250,000 or
equivalent for eachtransaction whetherpaid for in cash orotherwise
Person who acquiressecurities pursuant to a
private placementif the aggregateconsideration for theacquisition is
≥RM250,000 or
equivalent for eachtransaction whether paidfor in cash or otherwise.
16
OFFERING IN MALAYSIA NORMALLY EXCLUDED
e.g. “No Offer Document or other offering material or document in connection with the Placement and sale of our Placement Shares has been or will be registered with the
Securities Commission pursuant to the Capital Markets and Services Act and no approval for the offering of our Placement Shares has been obtained from the
Securities Commission pursuant to the Capital Markets and Services Act. Accordingly, this Offer Document and any other document or material in connection with the
Placement, or invitation for subscription, of our Placement Shares may not be circulated or distributed, nor may our Placement Shares be offered or sold, or be made the subject
of an invitation for subscription or purchase, whether directly or indirectly in Malaysia. This Offer Document does not constitute and may not be used for the purpose of a
public offering or an issue, offer for subscription, invitation to subscribe for any securities requiring the registration of an offer document with the Securities Commission
under the Capital Markets and Services Act. If you are in doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor or other
professional adviser immediately.”
Members of the World Federation of Exchanges as at 29 September 2016
Abu Dhabi Securities Exchange
Amman Stock Exchange
Athens Stock Exchange (ATHEX)
Australian Securities Exchange
Bahrain Bourse
BATS Global Markets
Bermuda Stock Exchange
BM&FBOVESPA S.A.
BME Spanish Exchanges
Bolsa de Comercio de Buenos Aires
Bolsa de Comercio de Santiago
Bolsa de Valores de Colombia
Bolsa de Valores de Lima
Bolsa Mexicana de Valores
Borsa İstanbul
Bourse de Casablanca
BSE India Limited
Bursa Malaysia
CBOE Holdings, Inc.
China Financial Futures Exchange
CME Group
Colombo Stock Exchange
Cyprus Stock Exchange
Dalian Commodity Exchange
Deutsche Börse AG
Dubai Financial Market
The Egyptian Stock Exchange
Euronext
Hochiminh Stock Exchange
Hong Kong Exchanges and
Clearing
Indonesia Stock Exchange
Intercontinental Exchange, Inc.
International Securities Exchange
Irish Stock Exchange
Japan Exchange Group, Inc.
Johannesburg Stock Exchange
Kazakhstan Stock Exchange
Korea Exchange
Luxembourg Stock Exchange
Malta Stock Exchange
Moscow Exchange
Muscat Securities Market
Nasdaq
National Stock Exchange of India
Limited
Nigerian Stock Exchange
NZX Limited
Oslo Børs
Philippine Stock Exchange
Qatar Stock Exchange
Saudi Stock Exchange (Tadawul)
Shanghai Futures Exchange
Shanghai Stock Exchange
Shenzhen Stock Exchange
Singapore Exchange
SIX Swiss Exchange
Stock Exchange of Mauritius
The Stock Exchange of Thailand
Taipei Exchange
Taiwan Futures Exchange
Taiwan Stock Exchange
Tel-Aviv Stock Exchange
TMX Group Inc.
Zhengzhou Commodity
Exchange
4. PRE-IPO PRIVATE FUNDING
18
PRE-IPO RUND-RAISING SCHEME INVOLVING ISSUANCE OF SHARES TO PRIVATE INVESTORS
Such scheme normally contains the promoters’ commitment to secure listing within an agreed time frame/ promise of an investment return and accords the pre-IPO investors rights to ‘put’ the shares to the
promoters if the listing fails or does not occur.
The High Court has in 2014 and 2015 ruled in two cases in favour of the pre-IPO investors in their claims
when the SMEs failed in listing.
MALAYSIA VENTURE CAPITAL
MANAGEMENT BERHAD v. TEANG
SOO THONG & ANOR [2015] 1 LNS
948
MUAMALAT
VENTURE SDN BHD
v. KHOO KOAY
HOCK & ORS [2014]
1 LNS 727
19
CASE STUDY
FACTS:
• A Sdn Bhd and B Sdn Bhd own the shares in C Sdn Bhd in 60:40 ratio. A Sdn Bhd and B Sdn Bhd intend to swap their shares in C Sdn Bhd in exchange for new shares in D Ltd, a corporation newly incorporated in England, which will act as the listing vehicle ‘housing’ C Sdn Bhd and its subsidiaries upon completion of the internal restructuring and then seek for listing on the London Stock Exchange. C Sdn Bhd has domestic ringgit borrowings. Both A Sdn Bhd and B Sdn Bhd do not have domestic ringgit borrowings. C Sdn Bhd and its group of entities are together valued at RM100 million.
• D Ltd intends to, as part of the listing exercise, offers its shares for placement to high net-worth entities in Malaysia.
CONTACT DETAILS
20
Ang Siak Keng
Partner
Zaid Ibrahim & Co
(a member of ZICO Law)
51-22-B&C Menara BHL
Jalan Sultan Ahmad Shah
10050 Penang
Tel: +604 227 0888
Fax: +604 228 6755
Email:
Thank You
AUSTRALIA | CAMBODIA | INDONESIA | LAOS | MALAYSIA | MYANMAR | SINGAPORE | THAILAND | VIETNAM
www.zicolaw.com
@ZICOlaw. All Rights Reserved.
21