SC raids premises of listed firms

It is learnt that the raids were conducted around the Tropicana area in Petaling Jaya.

PETALING JAYA: The Securities Commission (SC) is believed to have raided premises of listed companies for suspected abuse of fund-raising activities.

According to well-placed sources, the regulator kicked off the investigations following complaints and tip-offs from the public on alleged fraud, as well as potential false or misleading disclosure by several public-listed companies in their fund-raising exercises, including private placements, employees share option schemes and rights issues.

It is learnt that the raids were conducted around the Tropicana area in Petaling Jaya.

A number of listed companies had taken advantage of relaxed fund-raising rules that were loosened during the Covid-19 crisis. The rules were changed to allow companies to sell up to 20% of their issued share capital via private placements until Dec 31, 2021, compared with 10% previously.

In addition, companies were permitted to issue up to 30% of their existing share capital in a share placement if the shareholders approve the exercise at an EGM.

Naturally, the relaxed ruling attracted numerous small-cap companies to raise fresh cash for working capital and future investments or for new business ventures such as rubber glove manufacturing or distribution of vaccines and Covid-19 test kits.

According to the SC, fresh capital raised from secondary issuance, such as share placements and rights issues, rose 76% year-on-year (y-o-y) to RM8bil in 2020 and another 78.8% y-o-y jump to RM14.3bil in 2021.

Late last year, Bursa Malaysia proposed amendments to the Main Market and ACE Market Listing Requirements to, among others, boost the transparency on fund-raising exercises involving new securities issuance.

The exchange issued a consultation paper seeking public feedback on these proposed amendments.

Interested parties were invited to submit their comments and feedback by Jan 26, 2024.

Among the key proposed amendments include enhanced disclosures in relation to placement exercises, enhancing the employee share scheme framework by subjecting a share grant scheme to the same restriction on the total number of shares issued under a share issuance scheme.

These amendments were proposed probably to tighten the screw on public-listed companies’ fund-raising exercise rules, which were relaxed to help ease cash constraints caused by the Covid-19 pandemic in 2020.

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