ON April 1 2023, the long overdue LEAP Market Transfer Framework (LEAP Framework), which facilitates the graduation of eligible LEAP Market-listed corporations to the ‘Access, Certainty, Efficiency’ (ACE) Market of Bursa Malaysia Securities Bhd (Bursa Malaysia), finally came into effect.
With the introduction of the LEAP Framework, many LEAP Market-listed entities are targeting an eventual transfer to the ACE Market.
LEAP Market investors are a limited and selective pool of sophisticated investors – accredited investors, high net-worth entities and individuals as prescribed under the Capital Market and Services Act 2007 (CMSA 2007).
By comparison, the ACE Market is open to the public, hence companies that successfully transfer from the LEAP Market to the ACE Market will have access to a larger pool of investors.
Since the LEAP Market is restricted to sophisticated investors, it is often associated with low trading volumes and the consequent lack of robust price discovery. This has influenced some companies to delist from the LEAP Market. For example, between 2020 and 2023, we witnessed the delisting of Polymer Link Holdings Bhd, Zenworld Holdings Bhd and JM Education Group Bhd from the LEAP Market.
Key Amendments under New Transfer Listing Framework
Under the LEAP Framework, a transfer applicant must have been listed for at least two years on the LEAP Market at the time of application to be considered as suitable for listing on the ACE Market by a Sponsor; or both Sponsor and Recognised Approved Advisers as Joint Transfer Sponsors.
Other requirements are compliance with the admission criteria; transfer of listing requirements set out in the ACE Market Listing Requirements; and the relevant admission procedures and requirements as may be prescribed by Bursa Malaysia.
The amendments also require the Sponsor (together with the transfer applicant and other key advisers) to consult the Exchange before submitting the transfer listing application.
Under the earlier regime, LEAP Market-listed companies had to delist on the LEAP Market to facilitate its listing on the ACE Market. According to existing records, TT Vision Holdings Bhd and Cosmos Technology International Bhd were the only companies to do so.
By contrast, with the LEAP Framework, the transfer applicant will only be delisted from the LEAP Market upon successful completion of the transfer and listing on the ACE Market. This is significant as companies need not risk withdrawing their listing on the LEAP Market without guarantee of a successful transfer listing to the ACE Market. It is now a simple one-step process, where the submission of the application to transfer to the ACE Market and the withdrawal of listing on the LEAP Market occurs concurrently.
Further, to withdraw its listing on the LEAP Market, the transfer applicant can opt to provide all its shareholders with an exit offer that complies with the Take-Overs and Mergers Code; or other alternative exit mechanisms that are equitable to shareholders, however, there is no clear definition of what amounts to an “equitable exit offer”.
Each exit offer will be assessed independently considering the transfer applicant’s prevailing circumstances, and Bursa Securities must be consulted prior to any announcement of the withdrawal, and the transfer of listing, and it must approve the proposed exit mechanism.
Conclusion
The LEAP Framework provides opportunities for small and medium enterprises listed on the LEAP Market to have greater access to the ACE Market by setting down a clear and efficient pathway for a transfer listing from the LEAP Market to the ACE Market.
This article is contributed by Low Gro Wen of Christopher & Lee Ong.
