Pump jacks are seen at the Lukoil company owned Imilorskoye oil field outside the west Siberian city of Kogalym, Russia, January 25, 2016. REUTERS/Sergei Karpukhin/File Photo
KUALA LUMPUR: The Securities Commission (SC) is introducing new listing requirements for mineral, oil and gas (MOG) companies, including the need to show they have adequate MOG assets in their portfolio.
The capital markets regulator said in a statement yesterday that the new framework, which covers listings of MOG firms either directly through initial public offering, indirectly through acquisition by listed companies, or qualifying acquisition by SPAC. would take effect on March 20.
For the new framework, SC has made amendments to the equity guidelines, prospectus guidelines and asset valuation guidelines.
An MOG corporation must have an adequate portfolio of at least contingent resources for O&G and indicated resources for minerals, which must be supported by a report by a “competent person” with at least five years’ relevant and recent professional experience in the estimation, assessment and evaluation of the MOG assets.
For a qualifying acquisition involving MOG assets, the special purpose acquisition company must comply with these requirements: the aggregate fair market value of the qualifying acquisition must be at least RM500mil, as supported by a competent valuer’s report. The MOG assets must have generated at least one full financial year of audited operating revenue. Otherwise, the SPAC must have clear plans, and sufficient funds to do these plans, to advance the MOG assets to commercial production within two years.
For the majority of its MOG assets (in value), the MOG corporation must have the legal rights for exploration or extraction activities as well as control in respect of the assets.
The company is also required to have sufficient level of working capital for at least 18 months from the date of the prospectus.
At least one independent director must have the appropriate MOG exploration or extraction experience or expertise.
The company also must have, as its external auditor, an audit firm which has relevant MOG exploration or extraction industry expertise.
Where a valuation of the mineral or O&G asset is disclosed in the prospectus, the valuation must be supported by a competent valuer’s report prepared in accordance with MOG valuation standards. The report must be dated not more than six months from date of the prospectus.
For O&G resources, production targets disclosed must only be based on proven reserves and probable reserves, as opposed to possible reserves, contingent resources or prospective resources.
“The amended guidelines aim to provide clarity on the types of MOG businesses considered suitable and eligible for listing on Main Market of Bursa Malaysia, particularly for those engaged in early stage exploration and extraction of MOG resources,” SC said in the statement.
The regulator said it developed the framework following a thorough review, jurisdictional benchmarking, engagements with investors and industry experts, as well as a public consultation process.
“These new regulatory measures would enable investors to make better informed decisions on the merits and risks of investing in MOG businesses, which is in line with SC’s mandate of ensuring a fair and orderly capital market. The new guidelines would also provide additional fundraising avenues for MOG corporations and in turn broaden investment options for investors,” it added.
The revised equity guidelines, prospectus guidelines and asset valuation guidelines are available on the SC’s website.
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