15 December 2020

On 11 November 2020, the Securities Commission Malaysia (“SC”) issued the revised Equity Guidelines which will take effect on 1 January 2021.

The amendments were introduced mainly to:

  • facilitate the enhanced initial public offerings (“IPO”) framework announced by the SC on 21 July 2020;
  • allow existing listed corporations to satisfy the market capitalisation test in respect of a chain listing proposal; and
  • provide clarity and guidance to existing requirements.

The key amendments introduced in the revised Equity Guidelines are as follows:

Mandatory pre-submission holistic consultation with SC

The enhanced IPO framework was introduced to promote greater shared responsibility among the key stakeholders involved in the submission of an IPO for listing.

The revised Equity Guidelines now make it mandatory for the applicant and its advisers to consult SC prior to making an application for the following proposals:

  • equity offering and primary listing of a corporation on the Main Market of Bursa Malaysia Securities Berhad (“Main Market”); and
  • proposals which result in a significant change in the business direction or policy of a listed corporation on the Main Market.

Briefly, the mandatory consultation process entails the following:

  • A preliminary application pack accompanied by a fee of RM50,000 must be submitted to SC at least one month before the submission of the formal application for the proposal.
  • There is a deadline of three months from the submission of the preliminary application to submit the formal application to SC.
  • If submission of the formal application is not made within three months, a new preliminary application pack must be submitted to SC.

General information on the applicant, material issues or concerns affecting the applicant and its business, as well as relief sought are required to be included in the preliminary application pack.

SC must be informed immediately if there is any material change or development that may impact the preliminary application. The preliminary application pack or updated preliminary application pack with a summary of the material changes must be submitted with the formal application to SC.

The process therefore necessitates the substantial completion of due diligence to identify and address material issues or concerns, prior to such consultation.

Validity period of formal applications submitted to SC limited to six months

Under the enhanced IPO framework, formal applications will have a validity period of six months from the date of submission to the SC.

After the expiry of the six months period, the applicant must submit a new formal application as well as the prescribed fees if it intends to proceed with the proposal.

This requirement applies to formal applications for transfers of listing, secondary listings and cross listing proposals.

New market capitalisation test introduced for chain listing proposals

A chain listing takes place when a subsidiary or a holding company of an existing listed corporation seeks a listing of its own.

In respect of a chain listing proposal, the revised Equity Guidelines introduces the market capitalisation test as an alternative to the current profit test. An existing listed corporation must, after excluding its interest in the applicant, meet the profit test or the market capitalisation test set out in the revised Equity Guidelines.

The revised Equity Guidelines further provides that where the existing listed corporation has to satisfy the market capitalisation test, the existing listed corporation must cease its control over the applicant or the applicant must cease its control over the existing listed corporation.

Other key amendments

Other key amendments to Equity Guidelines are in respect of the content of the formal application pack or the circular to be submitted to the SC. These are, amongst others:

  • Additional confirmations by the principal adviser to be included in the cover letter accompanying the submission of the application pack to the SC.
  • Additional information to be included in the content requirements for circular relating to a proposal which would result in a significant change in the business direction or policy of a listed corporation.
  • Inclusion of a declaration by a proposed director and/or controlling shareholder of the applicant as one of the supporting documents required for the formal application pack submission.


The mandatory requirement for certain proposals to have pre-submission holistic consultation with the SC will require substantial due diligence to be conducted on information to be submitted in the pre-submission pack with payment of upfront fees to the SC. After the submission of the pre-application pack, a delay of submission of the formal application pack may cause the applicant to incur additional costs in that another pre-submission pack must be submitted with additional upfront fees to be paid to the SC. An applicant or issuer should therefore at a preliminary stage of the proposal establish a due diligence working group, prepare and adhere to the proposal timeline.

If you have any questions or require additional information, please contact Joan Ting of Zaid Ibrahim & Co. (a member of ZICO Law).

This alert is for general information only and is not a substitute for legal advice.


On 1 December 2022, KPMG and ZICO Law entered into an agreement under which a number of law firms and teams from the ZICO Law network have joined the KPMG network of firms.

The deal will see more than 275 lawyers join over 2,900 legal professionals in the KPMG global organization, creating a significant legal footprint across Asia. It will offer legal services and solutions, a globally connected legal services platform, and specialists who work with leading technology providers to modernize legal functions across organizations. The strategic combination increases the total number of legal professionals in the KPMG network to over 3,750 across 84 jurisdictions. You may read the press release here.

For more information and to see how we can assist you in your desired jurisdiction, please follow the links below: