Executive summary: The Securities Commission of Malaysia (SC) published a consultation paper regarding its proposed policy on the admission of mineral, oil and gas (MOG) exploration or extraction corporations or assets to the main market of Bursa Malaysia Securities Bhd (Bursa) (the SC Consultation Paper) on 15 October 2015.
Immediately after this, on 16 October 2015, Bursa published a consultation paper which contained a review of the post-listing disclosure obligations for MOG listed issuers (the Bursa Consultation Paper, together with the SC Consultation Paper, the Consultation Papers).
Below we consider the proposed changes and whether they are likely to have a substantial impact on the number of MOG corporations listing on Bursa.
SC Consultation Paper
When an applicant's primary activity will be considered to be MOG The SC is proposing that an IPO applicant's (the MOG Applicant) primary activity will be considered to be MOG when its MOG activities represent 50 per cent or more of any one of its group total assets, revenue, operating expenses or after tax profit.
In order to demonstrate that it is a suitable candidate for listing, the MOG Applicant must comply with the requirements in chapter 5 of the SC's Equity Guidelines.
The MOG Applicant must also: (i) demonstrate that it has an adequate portfolio of at least contingent resources (for oil and gas) or indicated resources (for minerals) substantiated by an independent competent person's report; (ii) demonstrate that it has obtained the legal rights for and has control over the exploration or extraction activities for the MOG assets; and (iii) ensure that at least one of the independent directors appointed to its board has appropriate MOG industry experience and expertise.
Profits test and market capitalisation test Currently, the market capitalisation test, as specified in the Listing Rules (the Market Capitalisation Test), requires an applicant to have at least one full financial year of operating revenue and positive cash flow from operations. If an applicant is in the exploration stage or early production stage, this requirement can affect its ability to list.
Consequently, the SC is proposing that if a MOG Applicant is able to demonstrate certain requirements then the SC may consider allowing it to apply for a waiver of the requirement under the Market Capitalisation Test that an applicant must have at least one full financial year of operating revenue and positive cash flow from...