More Flexible Market Rules

To attract new listings and fend off regional competition, the Securities Commission will no longer require firms selling shares to the public to provide profit forecasts

By Adeline Paul Raj

THE Securities Commission (SC) will introduce more flexible rules early next year to attract fresh listings on the stock exchange and boost the market's competitiveness in the region.

Among other things, it will no longer require firms going for a listing to provide profit forecasts.

Instead, directors will have to provide an enhanced discussion and analysis on the company's financial condition and prospects.

Also, to encourage foreign listings, firms with foreign operations will be subject to the same listing criteria as those with domestic operations.

These changes are in line with international best practices, chairman Datuk Zarinah Anwar said.

She announced the new measures, which will be detailed in guidelines to be released in January, in her keynote address at the initial public offering (IPO) conference organised by Bursa Malaysia Bhd yesterday. Some of the measures will take effect from January 2.

"It is our objective to strengthen the positioning of Bursa Malaysia as a preferred listing destination for domestic companies, as well as to attract foreign companies to consider a primary or secondary listing.

"That's why we have to try and ensure that our listing rules and criteria are very much in line with international standards," she said.

The measures may help increase the number of new listings next year to as many as 40, said Bursa Malaysia's chief executive officer Datuk Yusli Mohamed Yusoff.

The number of IPOs in Malaysia has slowed down considerably in recent years, with just 25 so far this year compared with 40 last year and 79 previously. In comparison, Singapore attracted 52 IPOs and Hong Kong, 62, at the end of September.

Yusli attributed the lower numbers at home to more stringent quality-control vetting.

"I think there's been no shortage of companies wanting to come to list, but there's been a higher rejection rate (lately) as we want to attract only the best-quality companies," he said.

He believes the new SC measures will not only result in fresh listings but also encourage dual listings as well as merger and acquisition activities.

On the removal of profit forecasts, Zarinah explained that the move is to help develop a more well-informed breed of investors.

"We would like investors to make their investment decision not on the basis of one figure provided by the company, but a whole spectrum of information with regard to the business sustainability, prospects, risks and financial condition," she remarked.