KL eases rules to hasten restructuring

KL eases rules to hasten restructuring

KUALA LUMPUR (AFP): Malaysia's Securities Commission on Monday relaxed guidelines on fund raising in a sweeping move to hasten restructuring for troubled companies amid weak market conditions.

Rules on shareholding spread, underwriting, reserves and capital structure for companies planning an initial public offering (IPO) and fund raising by troubled listed firms were eased with immediate effect, commission chairman Abdul Ali Kadir said in a press conference.

The minimum 15 percent public shareholding level for IPO companies was removed and institutional funds can own up to 15 percent of shares allocated to the public, up from five percent previously.

Firms may now list any securities as part of their IPO schemes including preference shares, options and convertible securities, instead of just ordinary shares.

They can also place out private securities, previously allowed only for those with paid-up capital of at least 100 million ringgit (US$26.3 million).

Second board firms can transfer to the main board after a year instead of three years and need not have an uninterrupted profit record.

All listed companies now enjoy flexibility on fund raising and restructuring, previously granted to only firms defined as "rescue cases", such as easier profit requirements for assets to be injected.

"There are also companies which are very sick but not in intensive care ... they are not allowed to enjoy this medicine so they all suffer prolonged agony," said Abdul Ali.

"We hope they do not get into intensive care so we are now allowing this medicine to be dispensed to all those also in the general ward."

Analysts hailed the market liberalization and said it would shore up the economy amid the U.S. slowdown.

"Companies efforts to tap the capital markets for funds have been delayed in the past by cumbersome rules so this will expedite the process," said Jupiter Securities research chief Pong Teng Siew.

Abdul Ali said the move would give companies more options in structuring their corporate proposals.

Abdul Ali said more than 40 companies had still not made public their debt restructuring plans following the expiry last week of a deadline for them to regularize their financial position.

Under new rules, the post-restructuring net tangible asset requirement for distressed companies is cut to 33 percent of the par value of their ordinary shares, down from at least 50 percent previously.

He said the new rules had been benchmarked against the practices of developed markets such as the U.S., Britain, Hong Kong, Australia and Singapore and would not compromise the interests of minority shareholders.