PRESS RELEASES
Monday, 10 December 2007
What happens when the public spread of the company’s shareholding is less than the public spread requirement of 25%?
Only Bursa Malaysia has the sole right to decide the listing status of companies that do not meet the public spread requirements. Bursa Malaysia may choose to keep such companies listed if it deems the liquidity level sufficient for trading.
CEO of Bursa Malaysia Datuk Yusli Mohamed Yusoff explains. “… Investors should check with Bursa Malaysia as non-compliance of (public) spread by a company does not automatically result ion delisting of the said company. For instance, generally, large companies with a smaller than 25% free float will be allowed to remain listed if Bursa Malaysia is satisfied that such lower percentage is sufficient for a liquid market in such shares…”
Yusli says the power is in the hands of investors. “If they think that the offer price is too low, then they should not accept it. And when investors accept the offer, they [investors] are essentially facilitating the move by the company to leave the stock market, as once the offeror has a 90% acceptance rate, the offeror can proceed to compulsorily acquire the company and proceed to take it private”, Yusli points out.
The good news is some investors are exercising their power. Recall the case of Malaysian Oxygen Bhd (MOX), where its institutional shareholders – Aberdeen and the Employees Provident Fund – were successful in obtaining a higher buy-out price than what was initially offered.
Says the head of corporate governance of Aberdeen Assets Management Asia Ltd, Peter Taylor, “MOX, for us, was an important case in the region. That was a case where we saw ourselves as potentially being treated unfairly as minority shareholders. We thought that [the original price offered] wasn’t a sufficient premium for a very stable company with quite good prospects.”
Thanks to Aberdeen and the Employees Provident Fund (EPF) who held their ground in seeking a higher buy-out price, all the other minority shareholders of MOX enjoyed a better price too, even though they did not join the fight.