Eligible listed issuers have been given the green light to obtain mandated shareholder approval at general meetings to undertake rights issue exercises.
The follows the granting of a temporary relief measure by the Securities Commission (SC) and Bursa Malaysia for such purpose.
Both regulators said the temporary flexibility is to allow expedited right issue exercises by public listed companies (PLCs) and listed real estate investment trusts (REITs).
“The measure will be introduced via an enhanced rights issue framework which allows eligible PLCs and REITs to issue new rights shares or units to their existing securities holders on a pro rata basis of up to 50% of the total number of issued shares or issued units,” they said in a statement.
The regulators added the rights issue exercises implemented with mandate obtained under the temporary relief measure will be subject to certain conditions.
“For example, such rights issue must be a plain vanilla issuance where it can only be utilised for ordinary shares or units and not any other types of securities such as warrant or convertible shares.
“Under the expedited process, eligible listed issuers will be granted greater flexibility to manage market uncertainties while making capital calls, fast track secondary fundraising, subject to certain safeguards,” they said.
Citing an example, the regulators said eligible listed issuers must have controlling securities holders who will provide an irrevocable undertaking to subscribe for their full entitlements, with not more than a 30% discount to the theoretical ex-rights price on these newly issued shares or units.
“As a result of the pandemic and the movement control order (MCO), many listed issuers are facing operational challenges, including raising working capital and repaying bank borrowings.
“An expedited process for rights issues will enable eligible listed issuers to be more agile as they can raise funds from their existing securities holders in a shorter timeframe to meet their capital and financial needs,” they said.
This new general mandate for rights issue is in addition to the enhanced 20% general mandate for the issue of new securities which is commonly utilised for private placements.
Both relief measures are valid until Dec 31 next year.
For details, please visit www.sc.com.my/covid-19 and http://bit.ly/Bursa_Directives_Clarifications.– Nov 10, 2020
