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Main Market Listing Requirements

Question 1
Explain the meaning of material information in the context of Chapter 9.
Provide examples for your explanation.

Answer:

The Bursa Malaysia Listing Requirements (BMLR) requires all public listed
company to make an immediate public disclosure pertaining to any material
information relating to the company as required under the provision of paragraph
9.03(1).

Material information in this context is defined under paragraph 9.03(2)


whereby information is considered as material if it has material effect on one of these
two aspects namely the price, value, or market activity of the listed issuers securities
or the decision of holder of securities of the listed issuer or any investor in making his
investment decision. One of the examples of information that can be considered as
material information under the provision of this paragraph is information relating to
any change in the composition of the board of directors of the company, corporate
officers or the external auditor of the listed company.

Paragraph 9.03(3) of BMLR provides four additional scopes defining material


information in addition to the one provided under Paragraph 9.03(2) discussed
above. The first one is that, any information concerning the assets and liabilities,
business, financial condition or prospects of the listed company can also be
considered as material information. Examples of material information concerning this
scope is any purchase or acquisition of assets, borrowing of funds, or any information
relating to the financial status of the company such as financial statements.

Paragraph 9.03(3) further provides that information relating to dealings with


employees, suppliers, customers, and others also constitutes material information in
the context of Chapter 9 of BMLR. For an example, in the case where there is a labor
dispute occurs with the employees or disputes with the suppliers, any information
relating to such disputes shall be considered as material information as it is related to
the dealings between the listed company with its employees and suppliers.

Under Paragraph 9.03(3)(c), material information also include any information


relating to any event that may affect the listed issuers securities in way where there
is or may be present or future potential dilution of the rights or interests attached to
the securities of the listed issuer. For an example, any information relating to the
decision of the listed company to enter into a merger with another company
constitutes material information. This is because, in the event of merger, the rights or
interests attached to the securities of the company may be reduced as a result of the
merger.

Lastly, Paragraph 9.03(3)(d) provides that material information also includes


any information relating an event that materially affects the size of the public holding
of the listed companys securities. Examples of information that is relating to an event
that materially affecting the size of the public holding in a listed company are
information relating to any acquisition of another company or a merger that may
dilute the size of public holding of the listed issuers securities.
Question 2:
Discuss specific situations, or events which require immediate disclosure.

Answer:

There are several events or circumstances that require immediate disclosure


to be made to Bursa Malaysia as provided in Chapter 9 of BML. The examples of
these events are listed out under Paragraph 9.04 of BMLR.

The first event in which immediate disclosure must be made to Bursa Malaysia
is in the event where the listed issuer enters into a joint venture agreement or merger
with another company. The information relating to entering into a joint venture
agreement or merger with another company constitutes information that may have a
material effect on the price, value, or market activity of the listed issuer as well as the
decision of the holder of securities of the listed issuer. Besides joint venture or
merger, information pertaining to the acquisition or loss of a contract, franchise, or
distributing rights also is an example of the specific situations that requires immediate
disclosure to the Exchange.

Another event that requires immediate disclosure to be made to Bursa


Malaysia is in the event of change in management, general business direction,
capital investment plans, and intellectual property rights. Change in management
occurs when there are changes in the listed companys composition of the board
members or the corporate officers such as appointment of new director, change of
the company secretary, or retirement of director from the board. Change in capital
investment plans on the other hand refers to the changes made to the listed
companys plan for future investment in another company or in assets. Lastly,
changes in the intellectual property rights also constitute an event that renders the
company liable to make an immediate disclosure to Bursa Malaysia. Any intellectual
property such as copyright or trademark that is no longer belonging to the listed
company as a result of any suit is an example of the change that may occur
pertaining to the intellectual property right.
Besides the event discussed above, Paragraph 9.04 of the BMLR further
provides that any event that constitutes changes in the assets and liability of the
company must also be immediately disclosed. For an example, in the event where
the company acquires additional loans thus increasing its long-term liabilities, the
new borrowing of funds should be immediately announced to Bursa Malaysia.
Immediate announcement also should be made in the event where the company
purchases a new fixed asset or sells its existing fixed assets such as buildings,
factories, and vehicles.

The requirement for immediate disclosure of material information also extends


to any event of litigation commenced or involved by the listed company. Litigation in
this context refers to any legal action taken by or against the listed company involving
a third party. In addition to that, any dispute and arbitration occurring due to the
dispute also constitute events that require immediate disclosure to be made. Dispute
in this context include labor dispute or dispute involving the sub-contractors or
suppliers of the listed company as provided under Paragraph 9.04(j). Arbitration
proceedings or any other alternative dispute resolution proceedings commenced by
the listed issuer to resolved dispute such as negotiation and mediation should also
be immediately announced to the Exchange.
Question 3:
Advise on THREE (3) exceptional circumstances where disclosure may be
temporarily withheld.

Answer:

Although Paragraph 9.03 of the BMLR imposes public listed companies to


make immediate public disclosure on matters pertaining to material information,
Paragraph 9.05 allow listed company to temporarily withhold any material information
in three exceptional circumstances. These circumstances are further explained under
subparagraph 9.05(3).

The first exceptional circumstance where public disclosure of material


information may temporarily be withheld is when the immediate public disclosure
made would bring more undesirable consequences to the listed company than the
unfavorable result of non-disclosure of such information. Listed company may
temporarily refrain from disclosing material information to a more appropriate time in
future if the act of immediately disclosing such material information would prejudice
the ability of the listed company in realizing its corporate objectives. For an example,
a listed company wishing to acquire a real estate could temporarily withheld the
disclosure of such information to the public since the disclosure of the plan could
result in an increase in the cost for the planned acquisition or could prevent the listed
company from pursuing the plan at all. Therefore, in such event where the
undesirable consequences of disclosing the plan would be greater to the listed
company as compared to the unfavorable result for non-disclosure of such
information, the listed company is allow under the provision of subparagraph
9.05(3)(a) to temporarily withhold the public disclosure of such material information.

The second exceptional circumstance where immediate disclosure of material


information may be temporarily withheld is when the information to be disclosed is in
the state of flux or constantly changing and a more appropriate time for such
disclosure is imminent. There are certain events that may render information
pertaining to corporate developments that are material constantly changing. In the
case where the information may be continuously changing over several period in the
future, it is allowable for listed company to make a public disclosure of such material
information once the situation has stabilized or the final fact has been obtained so as
to not create confusion among the public due to the changing facts of the same
subject. For an example, a company undergoing discussion to acquire another
company may undergo several additional discussions after the first meeting before
the final agreement in principle with specific terms of the acquisition agreed by both
parties. In this case, the listed company may temporarily withheld the public
disclosure that should be made regarding the first meeting discussing on the
acquisition until the final meeting where an agreement has been reached This is to
ensure that only the final information is made known to the public to avoid raising
public confusion on the matter.

The last exceptional circumstance in which material information may be


temporarily withheld from being disclosed to the public is where the companies or
securities laws restrict the extent of permissible information to be disclosed to the
public before or during the process of public offering of securities or a solicitation of
proxies. In the event where listed company wishes to raise additional funds for its
capital through public offering of its securities, the listed company may be subjected
to certain provision imposed by either the companies or securities laws pertaining to
the information that are permissible and non-permissible to be disclosed before or
during the public offering process. In this event, the public disclosure of such material
information that are not permitted to be disclosed during the period by the companies
or securities laws can be temporarily withheld until the period provided by the laws
ended.
Question 4:
After the information is withheld and the market activity of the securities is
monitored, when must the listed issuer announce the information withheld to
the Exchange?

Answer:

The listed issuer must make an immediate announcement of the information


withheld to the Exchange when one of the following circumstances occurred. The first
circumstance is when there is any unusual market activity in the listed issuers
securities during the process of monitoring the market activity of the listed issuer. AN
unusual market activity may signify that the material information being withheld has
leaked to a third party and therefore, such material information much be immediately
disclosed to the Exchange.

The second circumstance is where rumors or reports concerning the material


information being withheld have appeared. When the rumors or reports regarding the
information withheld have surfaced, this may signify that the confidentiality of such
material information can no longer be ensured. When the confidentiality of the
information being withheld can no longer be maintained by the listed company, an
immediate public disclosure must be made to the Exchange.

The last circumstance when the listed issuer should announce the information
withheld to the Exchange is when the listed issuer becomes aware of the signs that
insider trading may be taking place. In the event where the listed issuer learns that
there are insider trading happening as a result of such material information being
withheld from the public, the listed issuer must make an immediate announcement to
the Exchange about the information as soon as it becomes aware of such insider
trading activity.
Question 5:
Discuss the procedure of fullest possible public dissemination as stated in
the paragraph 9.08.

Answer:

The material information disclosed by listed issuer must be in the manner in


which the information can be fully disseminated to the public as required under
Paragraph 9.08 of the BMLR. In ensuring that the requirement of fullest possible
public dissemination of material information is met, listed issuer must ensure that no
such information is disclosed on individual or selective basis to any party including
analysts, shareholders, journalists, or other persons unless the information has first
be fully disclosed and disseminated to the public. In the event where the material
information is accidentally disclosed in any meeting with the parties mentioned
above, the information must be publicly disseminated as quickly as possible after
such accidental disclosure is made.

However, there are certain circumstances where selective disclosure of


material information in inevitable. For an example, where the listed issuer is
undertaking a corporate exercise or to facilitate a due diligence exercise, the
disclosure of material information relating to the corporate or due diligence exercise
must only be made to relevant persons involved in those exercises to ensure that
strictest confidentiality be maintained. In this case, selective disclosure of material
information is thus allowed under the provision of subparagraph 9.08(3) of the BMLR.

With regards to when the disclosure of material information should be


announced to the Exchange, subparagraph 9.08(4) provides that the information is
often disclosed at the end of the day after the trading hour which is after 6.00 p.m. of
the market day. In the case where the disclosure is made immediately before or
during the trading hours, the trading of the listed issuers securities may be
temporarily suspended or halted by the Exchange to provide the opportunity for the
evaluation and dissemination of the information announced.
Subparagraph 9.08(5) on the other hand requires any public disclosure of
material information to be made in the form of announcement first to the Exchange or
simultaneously to the Exchange, the press, and the newswire services. Listed
company must ensure that no information is released to the media until it has been
announced to the Exchange to eliminate any doubt from the announcement. The
Exchange will evaluate such information to determine its accuracy before it can
publicly disclosed and disseminated to the public.
Question 6:
Advise on the content of a press or other public announcement made by a
listed issuer in each announcement.

Answer:

In order to ensure that material information can be disseminated to the public


on the basis of fullest possible public dissemination, the listed issuer may opt for a
press release or public announcement. The content of a press or public
announcement is as important as its timing. The listed issuer therefore must closely
follow the guidelines provided by the BMLR under paragraph 9.16(1) regarding the
content of the press or public announcement to be released by the listed issuer.

The content of the press or public announcement must be factual, clear,


unambiguous, accurate, and contain relevant information that will allow investors to
make informed investment decision based on the information released. The content
of the public announcement must be one that addressed the subject matter clearly
and directly so that the public can make informed investment decision upon receiving
such information. It also must not be false, misleading or deceptive, and does not
contain any phrase that may be defamatory or scandalous in nature which may
cause an injury to the reputation of another person. Not only that, listed issuer also
need to ensure that the content of such press or public announcement is balanced
and fair.

In ensuring that the content of the announcement is balanced and fair, there
are certain guidelines given under subparagraph 9.16(1)(c) pertaining to the things to
avoid in preparing the content of the announcement. As according to the guidelines,
the content must avoid, amongst others, the omission of material facts which may
affect the materiality of the information including any material information that may be
unfavorable to the public or the listed issuer or by slighting of such facts. Example of
the act of slighting an unfavorable fact is by burying the facts at the end of the press
release. The content must include all material information relating to the subject
matter of the public announcement without omitting any details even the smallest
ones if such material information would have a material effect on the investment
decision of the public or investors.

The content of the announcement also should avoid from portraying any
favourable possibilities as certain or more probable than it actually is. This is to
ensure that listed issuer does not overemphasizing the favourable possibilities to the
extent of it becoming a lie. The content also should not reflect any representation
relating to future performance, occurrence, or matter unless it is accompanied by
adequate justification or reasonable ground as the basis of making such
representation. This is to ensure that no misrepresentation is included in the content
of the announcement that may impair the balanced and fair aspect of the
announcement.

Not only that the content of public announcement that is negative in nature
should not be phrased in a way that creates a positive implication to the public. The
content released should only reflect the actual circumstance of the matter and cannot
be phrased to imply a positive effect that is not certain which can be misleading. The
content also should avoid the use of any promotional jargon that may induce
investment or create interest of the public in the securities of the listed issuer rather
than to inform the public on the matter.

Besides that, any presentation of financial estimate, forecast, or projection


should not be made without any sufficiently reasonable bases and assumptions.
These presentations must be prepared according to the requirements provided under
Chapter 12 and 13 in Part 1, Division 1 of the Security Commissions Prospectus
Guidelines relating to future financial information. Chapter 12 and 13 of the said
guidelines also required the underlying accounting policies and assumptions adopted
for any financial projections or estimates released by the listed issuer to be reviewed
by external auditors or reporting accountant first before it can be released to the
public except if such financial estimates or projections must be released on an
immediate released following a media report. The above requirements are necessary
in order to ensure that a balance and fair presentation of future financial information
can be released to the public.

Besides ensuring that the content of public announcement is balanced and


fair, listed issuer must also ensure that it avoids the use of over-technical language to
ensure that it can be understood by all. Listed issuer must try to express the content
to the extent possible in a manner that can be easily comprehended by the layman.
In the case where the effect of the information released on listed issuers future
prospects cannot be ascertained during the public announcement, listed issuer is
required to explain the reason why this is so. Lastly, in relation to an announcement
on internal targets, listed issuer is required to explain that the information disclosed is
only internal management targets set to be achieved by the listed issuer and does
not represent any financial estimate, forecast, or projection.

In the case where the listed company appointed an adviser to submit the
announcement to the Exchange on behalf of the listed company, the adviser so
appointed is also bound by the guidelines provided under subparagraph 9.16(1)
pertaining to the content of the public announcement to be released, as discussed
above, as imposed by the provision of subparagraph 9.16(2) of BMLR.