30 October 2019
From 26 September 2019 to 25 October 2019, Bursa Malaysia Securities Berhad (“Exchange”) conducted a public consultation on proposed amendments to the Main Market Listing Requirements and ACE Market Requirements (collectively, “LR”). The proposals in the Consultation Paper that was issued relate to anti-corruption and whistleblowing measures and digitisation of corporate exercises.
Anti-corruption and whistle-blowing measures
The Consultation Paper notes that combating corruption has become a priority for the Malaysian government as demonstrated by recent initiatives undertaken to eradicate corruption in both the private and public sectors. These initiatives include the establishment of the Governance Integrity and Anti-Corruption Centre in 2018 and the launch of the five-year National Anti-Corruption Plan 2019-2023 in 2019.
In keeping with these initiatives, the proposals seek to strengthen the governance of listed issuers to prevent corruption, misconduct and fraud by requiring a listed issuer’s board of directors to:
- establish and maintain policies and procedures on anti-corruption and whistle-blowing;
- conduct annual review of such policies and procedures and publish them on the listed issuer’s website; and
- include corruption risk in its annual risk assessment framework.
These initiatives complement the stated aims of the Securities Commission Malaysia (“SC”) to implement an action plan to support the government’s National Anti-Corruption Plan (NACP) and with the view to improve Malaysia’s ranking in the biennial Corporate Governance Watch survey by the Asian Corporate Governance Association. The SC intends to establish and implement an anti-corruption compliance programme, a review of corruption risk in listed issuers’ risk assessment frameworks, and establish and implement policies and procedures on whistleblowing consistent with the Whistleblower Protection Act 2010. These requirements will be implemented through the LR.
Digitisation of corporate exercises
Innovation in the capital market has now become a necessity especially in an increasingly digital world. The Consultation Paper notes that this has also become a key agenda for the regulators. Hence, with the common aim to drive digitisation within the Malaysian financial industry, the SC and Bank Negara Malaysia (“BNM”) established the Brokerage Industry Digitisation Group (“BRIDGe”). BRIDGe is a joint working group between regulators (encompassing SC, BNM and the Exchange) and the industry (such as brokers, banking institutions and share registrars). It aims to accelerate digitisation of the stockbroking industry to enhance operational efficiencies and service standards.
BRIDGe recommended the digitisation of corporate exercises. For this purpose, it was proposed that securities holders be given the option to subscribe for rights shares, exercise convertible securities and elect to participate in a Dividend Investment Scheme (“DRS”) electronically. The Consultation Paper notes that the Exchange has reviewed the requirements relating to new issue of securities under the LR to facilitate this recommendation. This is in tandem with various digital initiatives already undertaken by the Exchange to enhance customer experience and further develop an efficient and effective market ecosystem.
The Consultation Paper proposed to promote operational efficiency and efficacy through digitising corporate exercises, by requiring a listed issuer to facilitate the following actions by its securities holders electronically:
- Subscription and payment for rights issue;
- Conversion and payment for convertible securities; and
- Election to participate in a DRS.