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Some business entrepreneurs may decide that growing the business using internal funds may not be fast enough (especially when there are business opportunities). As such some business entrepreneurs may be willing to relinquish some control of the business in return for access to additional cash for funding the expansion of the business.
The business entrepreneur may decide to list the company on the local stock exchange i.e. the Kuala Lumpur Stock Exchange (KLSE) or on a foreign stock exchange. To do so, the company has to meet certain listing requirements.
(a) Main Board
The minimum issued and paid-up capital required for listing on the Main Board of the KLSE is RM60 million.
Additionally, the Company must be in operations for at least 5 full financial years showing an uninterrupted profit for 3 to 5 years with aggregate after-tax profit of not less than RM30 million. The Company’s most recent financial year has to show at least RM8 million after-tax profit.
(b) Second Board
The minimum issued and paid-up capital required for listing on the Second Board of the KLSE is RM40 million.
Additionally, the Company must be in operations for at least 5 full financial years showing an uninterrupted profit for 3 to 5 years with aggregate after-tax profit of not less than RM12 million. The Company’s most recent financial year has to show as least RM4 million after-tax profit.
(c) MESDAQ
The minimum issued and paid up capital required for listing on the MESDAQ is RM2 million for technology and non-technology companies while the minimum issued and paid-up capital required for Technology Incubators is RM20 million.
No specific profit record is required but the Company has to show a healthy financial position and have sufficient working capital at the point of listing.
The above requirements are just some of those imposed the regulator of listed companies; Bursa Malaysia Berhad. For more details on the listing requirements on the KLSE, please visit the Bursa Malaysia website.
Once a company is listed there are ongoing requirements which the company needs to comply with, such as furnishing the quarterly report for Main Board and Second Board listed companies.
In order to ensure that the company continues to comply with and not breach any of the listing requirements, the management and support team has to be strong enough in terms of manpower and skills. Otherwise, the company may find it difficult to cope with meeting the regular reporting requirements of a listed company.
Also, interviews to understand the current situation and the future plans of the company are conducted by analysts before they write about their reviews on the company. Business entrepreneurs who are not familiar about this process may find that the information that they reveal about the company has an impact on the company’s share performance on the stock exchange. Therefore, they have to prepare themselves well in order to avoid unnecessary miscommunication of the company’s financial position and well-being by the reviewers.
As highlighted under the Listing requirements, a company intending to be listed on the KLSE has to maintain uninterrupted after-tax profits between 3 to 5 years. As such, proper care and planning has to be taken especially when making big business decisions which may have impact on the profits of the company thereby harming the chances of listing approval by the regulators.
If you have intentions of being listed in the future and need assistance in this respect, feel free to contact us.
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