[Last updated: 1 January 2024, unless otherwise noted]

Jurisdiction of incorporation

As a general matter, there is no specific jurisdiction of incorporation or industry that would not be acceptable to the SC or Bursa Malaysia for a listed company. However:

• Malaysia does not have diplomatic relations with the State of Israel and does not allow its citizens to travel to the State of Israel, save in very limited circumstances.
• A foreign company seeking to list on Bursa Malaysia must be incorporated in a jurisdiction that is subject to corporation laws and other relevant laws and regulations, which have standards at least equivalent to those in Malaysia, particularly with respect to corporate governance, protection of shareholders and minority interests, and the regulation of takeovers and mergers.

With regard to the latter, however, it is possible for the regulatory authorities to approve the listing application of a foreign company that is incorporated in a jurisdiction that does not provide similar regulatory standards, if it is possible for such standards to be adopted by varying the foreign company's constituent documents. For this purpose, the applicant must submit a comparison of the standards of laws and regulations of the jurisdiction in which it is incorporated and those provided in Malaysia, together with the proposed variations to its constituent documents to address the deficiencies in the standards.

Quantitative and qualitative criteria

Generally, a domestic or foreign company seeking a primary listing on Bursa Malaysia must fulfill both quantitative and qualitative criteria, and additional criteria must be met by a foreign company seeking primary listing. However, a foreign company seeking a secondary listing on Bursa Malaysia need only meet certain qualitative criteria; it is not required to meet any quantitative criteria.

There is no difference between the quantitative criteria applicable to a foreign company and a domestic company that is seeking a primary listing on Bursa Malaysia. An applicant company whose core business does not involve undertaking infrastructure projects must satisfy either the profit test or the market capitalization test. A company whose core business is carrying out infrastructure projects (that is, attending to projects that create the basic physical structures or foundations for the delivery of essential public goods and services that are necessary for the economic development of a state, territory or country) must satisfy the infrastructure project corporation test. These tests are as follows:

• Profit test. Under the profit test, the applicant company must have an uninterrupted profit of three to five full financial years, based on audited financial statements as of the financial year-end immediately prior to its application to the SC, with an aggregate after-tax profit of at least MYR20 million (approximately US$4.35 million) and an after-tax profit for the most recent financial year of at least MYR6 million (approximately US$1.31 million). In fulfilling the profit requirements, contributions from associated companies must not exceed those of subsidiary companies.
• Market capitalization test. An applicant seeking listing by way of the market capitalization test must have a total market capitalization of at least MYR500 million (approximately US$108.80 million), based on the issue or offer price as stated in the listing prospectus and the enlarged issued share capital upon listing.
• Infrastructure project corporation test. The applicant, either directly or through its subsidiary company, must have the right to build and operate an infrastructure project (within or outside Malaysia) with project costs of not less than MYR500 million (approximately US$108.80 million) and for which a concession or license has been awarded by a government or a state agency (within or outside Malaysia) with a remaining concession or license period of at least 15 years from the date of submission to the SC. An applicant with a shorter remaining concession or license period may be considered if it meets the profit requirements under the profit test above. Where an applicant is seeking listing under this test, no offer for sale of securities is allowed, unless the infrastructure project has generated two consecutive full financial years of operating revenue based on the audited financial statements prior to submission to the SC.

In addition to the above, a Mineral or Oil and Gas (MOG) corporation seeking listing on Bursa Malaysia must comply with additional requirements as follows:

• It must have an adequate portfolio of at least contingent resources (for oil and gas) or indicated resources (for minerals) supported by an independent competent person's report.
• For the majority of its MOG assets, in value, it must have the legal rights for exploration or extraction activities in respect of the MOG assets and control over the MOG assets.
• It must have sufficient level of working capital for at least 18 months from the date of the prospectus.
• It must have at least one independent director out of the requisite number of independent directors, with the appropriate MOG exploration or extraction experience or expertise.
• It must have an audit firm with the relevant MOG exploration or extraction industry expertise as its external auditor.
• It must appoint a reporting accountant that has relevant MOG exploration or extraction industry expertise.

A company would be considered a MOG corporation, if MOG exploration or extraction activities represent 50% or more of its total assets, revenue, operating expenses or after-tax profit based on audited financial statements. Notwithstanding, the SC may deem a corporation to be a MOG corporation if the corporation's MOG exploration or extraction activities form the single largest contributor to its total assets, revenue, operating expenses or after-tax profits based on audited financial statements.

As a pre-requisite to listing, each applicant must also demonstrate to the SC that it has:

• A sufficient level of working capital for at least 12 months (18 months for MOG corporations) from the date of the listing prospectus.
• Positive cash flow from operating activities over the profit track record period (if listing is sought under the profit test) or in the most recent financial year (if listing is sought under the market capitalization test) based on audited financial statements.
• No accumulated losses, based on its latest audited financial statements at the time of submission to the SC (if listing is sought under the profit test).

Operating history. A foreign or domestic company seeking a primary listing must have been incorporated and operating in the same core business over the profit track record period (if it is seeking to qualify by way of the profit test) or must have been incorporated and generated operating revenue for at least one full financial year prior to the application for listing (if it is seeking to qualify by way of the market capitalization test). This requirement does not apply to a foreign company that is seeking listing by way of a secondary listing.

Public float and Bumiputera participation. Any applicant seeking a primary listing must ensure that it complies with the public shareholding spread requirement. This entails having at least 25% of the total number of shares to be listed being in the hands of at least 1,000 public shareholders, holding not less than 100 shares each. In addition, a company that derives more than 50% of its profits (after tax) from operations based in Malaysia must allocate 50% of the public spread requirement (that is, 12.5% of the total number of shares to be listed) to Bumiputera investors (the indigenous people of Malaysia). The SC has provided specific guidance about how to make this allocation to Bumiputera investors (see https://www.sc.com.my/regulation/regulatory-faqs/bumiputera-equity-requirement-for-public-listed-companies). The Bumiputera equity participation requirement must be met at the point of listing but does not need to be maintained thereafter. It is worth noting that a company with predominantly foreign-based operations (that is, where the profits after tax derived from the foreign-based operations are higher than those from Malaysian-based operations), or that has been granted Multimedia Super Corridor or Bionexus status, is exempted from the Bumiputera equity requirements. If a corporation offers shares to Malaysian public investors via balloting in conjunction with the corporate proposal, at least 50% of the shares offered to Malaysian public investors via balloting must be made available to Bumiputera public investors at the point of listing.

Offerings to the general public. Any applicant seeking a primary listing is required to allocate a proportion of the securities to the general public through a balloting process. The minimum proportion of securities to be allocated to the general public is as follows:

• If the enlarged issued and paid-up capital is below MYR200 million (approximately US$43.52 million), at least 5% of the enlarged number of shares issued must be allocated to the general public.
• If the enlarged issued and paid-up capital is at least MYR200 million (approximately US$43.52 million), then at least 2% of the enlarged number of shares issued must be allocated to the general public.

Minimum price. A company applying to list on the Main Market must have a minimum initial public offering price of MYR0.50 (approximately US$0.11) per share. However, there are no requirements for a listed company to have or maintain a minimum trading price for its securities after listing.

Corporate governance. Any applicant submitting a proposal to the SC is expected to have good corporate governance practices. A foreign company seeking to list on Bursa Malaysia must comply with the corporate governance requirements of its home jurisdiction, meeting standards that are equivalent to those in Malaysia. Please see section 5 for a further discussion of the applicable corporate governance requirements for foreign and domestic companies.

Sponsorship and submission. There is no requirement for an applicant company to obtain a sponsor to list its securities on the Main Market. However, generally only a recognized principal adviser is eligible to submit an application to the SC for the listing and quotation of securities on the Main Market.

Interviews. There is no specific requirement for an applicant to conduct interviews with the SC or Bursa Malaysia in connection with its listing application. It is not uncommon, however, for the senior management team of the applicant to deliver a presentation to the SC that will provide the SC with an overview of the operations of the group.

Escrow; shareholders whose securities are subject to moratorium. While shares do not have to be placed in escrow in connection with a listing, the "shareholders whose securities are subject to moratorium" are not allowed to sell, transfer or assign their entire shareholding in a company for six months after the date of that company's admission to the Main Market (if listing is sought under the profit test or market capitalization test). The term "shareholders whose securities are subject to moratorium" refers to any controlling shareholder, person connected with a controlling shareholder and an executive director who is a substantial shareholder of the company, or any other person as specified by the SC. Certain situations are subject to additional requirements:

• If a company is listed by way of the infrastructure project corporation test, the "shareholders whose securities are subject to moratorium" will only have their moratorium lifted at the end of the six-month period if its infrastructure project has generated one full financial year of audited operating revenue. In cases where the infrastructure project corporation has not yet generated one full financial year of audited operating revenue, such shareholders must retain their shareholding amounting to 45% of the total number of issued shares of the company, until one full financial year of audited operating revenue has been achieved.
• The "shareholders whose securities are subject to moratorium" of a MOG corporation granted relief by the SC from specific requirements where listing is by way of the market capitalization test will only have the moratorium lifted upon the MOG corporation achieving one full financial year of operating revenue and positive cash flow from operating activities, based on audited financial statements.
• Where the "shareholders whose securities are subject to moratorium" are entities which are not listed, all direct and indirect shareholders of these entities, if they are individuals or other entities which are not listed up to the ultimate individual shareholders, must give an undertaking to the SC that they will not sell, transfer or assign any of their securities in such entities for the relevant period.

This "regulatory" lock-up is also conventionally supplemented with contractual lock-ups with the underwriters.

Currency. The applicant should consult Bursa Malaysia and obtain the approval of the Central Bank of Malaysia if it prefers its securities to be quoted in a currency other than Ringgit Malaysia.

Clearing and settlement. All securities must be cleared and settled through Bursa Malaysia Securities Clearing Sdn Bhd, which is the sole approved clearing house for Bursa Malaysia.

Compliance adviser. There is no requirement for a foreign or domestic company, seeking to maintain its listing, to appoint a compliance adviser that is established with Bursa Malaysia.

Additional qualitative requirements. In addition to the criteria described above, any applicant company (domestic or foreign) seeking a primary listing on the Main Market must:

• Have an identifiable core business, of which it has majority ownership and management control, but which is not merely holding investments in other listed companies.
• Provide evidence of management continuity and capability. The company must have substantially the same management for at least three full financial years before it submits its corporate proposal for listing to the SC or since the commencement of its operations (if the company has been in operation for less than three full financial years and is seeking listing by way of the market capitalization or infrastructure project corporation tests).
• Ensure that all transactions entered into between the company (or its subsidiaries) and related parties, before listing, were based on terms and conditions that are not unfavorable to the company.
• Settle fully all trade debts exceeding the normal credit period and all non-trade debts, owing by interested persons to the company (or its subsidiaries), before listing.

In addition, a foreign company seeking a primary listing on the Main Market must also:

• Obtain the approval of all relevant regulatory authorities of the jurisdiction in which it is incorporated and carries out its core business before issuing its prospectus.
• Register as a foreign company with the Malaysian Registrar of Companies under the Companies Act 2016.
• Prepare its financial statements and reports in accordance with the approved accounting standards under the Malaysian Financial Reporting Act 1997.
• Adopt auditing standards in accordance with the approved auditing standards applied in Malaysia or International Standards in Auditing.
• Ensure that all information or documents submitted or disclosed pursuant to the listing requirements are in English.
• Obtain the prior approval of the Central Bank of Malaysia to utilize proceeds from the offering of securities, if applicable.
• Either:
  • If the company's operations are entirely or predominantly based in Malaysia, have a majority of directors whose principal (or only) place of residence is within Malaysia.
  • If the company's operations are entirely or predominantly foreign based, have at least two directors whose principal (or only) place of residence is within Malaysia and at least one of these directors must be a member of the company's audit committee.
• Establish transfer and registration of securities facilities in Malaysia.
• Appoint an agent or representative in Malaysia to be responsible for communication with Bursa Malaysia on behalf of the applicant/listed issuer.

A foreign company seeking secondary listing on the Main Market must meet the criteria described in the above bullet points, and must also:

• Already have a primary listing on the main market of a foreign stock exchange that is specified by the SC and has disclosure rules that are at least equivalent to those of Bursa Malaysia.
• Be in full compliance with the listing rules of that foreign stock exchange.

Continuing listing criteria

Although a listed company is not required to continuously meet the quantitative criteria after listing, its financial condition and level of operations on a consolidated basis must warrant continued trading or listing on the exchange. If a listed company triggers any of the following criteria, it must comply with the directions of Bursa Malaysia to regularize the condition, failing which Bursa Malaysia may suspend trading in the company's securities and/or de-list them:

• Shareholders' equity on a consolidated basis is 25% or less of the share capital (excluding treasury shares) of the listed company and such shareholders' equity is less than MYR40 million (approximately US$8.70 million).
• A receiver or manager, or judicial manager, is appointed over the assets of the listed company, its subsidiary or its associated company, which assets account for at least 50% of the listed company's total assets employed on a consolidated basis.
• A winding-up of the listed company's subsidiary or an associated company, which accounts for at least 50% of the company's total assets employed on a consolidated basis.
• The auditors have expressed an adverse or disclaimer opinion on the listed company's latest audited financial statements.
• The auditors have highlighted a material uncertainty related to a going concern or expressed a qualification on the listed company's ability to continue as a going concern in the listed company's latest audited financial statements, and the consolidated shareholders' equity is 50% or less of the listed company's share capital (excluding treasury shares).
• A default in payment by the listed company, its major subsidiary or a major associated company is announced by the listed company, and the listed company is unable to provide a solvency declaration to Bursa Malaysia.
• The listed issuer has suspended or ceased all of its business or its major business, or its entire or major operations, for any reason whatsoever.
• The listed issued has an insignificant business or operations.

In addition, following listing, a listed company must ensure that at least 25% of its total listed shares (excluding treasury shares) are held by public shareholders, unless Bursa Malaysia accepts a lower percentage where it is satisfied that such lower percentage is sufficient to maintain a liquid market.

Additional equity conditions may be imposed by sectoral regulators through the licenses, approvals and permits held by the listed issuer and/or its subsidiaries. Unless these equity conditions are waived by the relevant sectoral regulator, a listed company must continuously comply with these conditions after listing. For instance, based on the licensing guidelines issued by the Land Public Transport Commission (which has now been dissolved and replaced by the Land Public Transport Agency), generally companies that provide transportation services using commercial vehicles for carriage of goods for rent or hire for, or in connection with, any trade or business, are required to have at least 51% local equity ownership (of which at least 30% must be held by Bumiputera), unless waived by the regulator.