THE Securities Commission (SC) will implement next month the final phase of disclosure-based regulation (DBR), a move that will hasten the fund raising process in the capital market.
In a statement, the SC said the implementation involved the revision of several guidelines governing fund raising, and there would be major changes to how the SC reviewed corporate proposals and prospectuses.
These amendments will translate into significant advantages for the market, such as shorter regulatory approval time for issues, shorter exposure periods for investors, and a more effective fund-raising process.
The existing rules have also been amended to, among other things, promote the listing of companies with large market capitalisation, and further facilitate the issuance of unit trust products, private debt securities and call warrants.
The market will benefit in many ways, one of which will be the shorter time for processing of corporate proposals,'' SC chairman Datuk Ali Abdul Kadir said in the statement.
He also reminded advisers and issuers to make sure that submissions of corporate proposals were up-to-the mark and met the required standards.
Meanwhile, investors should invest with their eyes open and ensure that they continuously keep abreast of developments, he added.
Commerce International Merchant Bankers (CIMB) Bhd head of corporate finance Tan Choon Thye said the faster fund raising process would be good for the parties involved. Time is actually a hidden cost in a fund-raising exercise.
He pointed out that merchant bankers should also have new structures in place in order to cope with the faster pace.''
Consideration for most corporate proposals by the SC will be improved by up to 50%, premised on submission of complete information, the statement said.
For instance, a rights issue can be approved within 21 market days, compared to the current one to three months.
The abridged prospectus can be registered within seven market days, as opposed to 45 days presently. As for renewal of unit trust fund prospectuses, the registration and lodgement process by the SC would be brought down to seven market days from the current one month.
A company can get listed within 15 market days of the prospectus being registered, compared to more than 25 market days currently.
KL City Securities head of research Andy Ong said the implementation of the final phase of DBR reflected the authorities' serious efforts to improve the efficiency of the country's capital market.
He said a more efficient process would also help issuers to catch the right timing for their fund raising exercises. The success of a fund raising exercise is much dependent on market sentiment, which fluctuates from time to time.
The SC had progressively implemented DBR since 1996 under a three-phased programme, gradually liberalising the assessment process of corporate proposals for the issue, offer and listing of securities while maintaining regulatory standards.
The SC has reviewed the policies and guidelines on issue/offer of securities; and guidelines on asset valuations; prospectus; the offering of private debt securities, asset-backed securities, and unit trust funds; and for the issue of call warrants.