Wednesday, February 10, 2010

June 30, 2009 10:41 AM

Foreign Ownership In Stockbroking Firms Raised To 70 Pct

KUALA LUMPUR, June 30 (Bernama) -- Foreign shareholding limits in existing stockbroking companies will be increased to 70 percent from the current 49 percent in efforts to further enhance Malaysia's position as a listing and investment destination, Prime Minister Datuk Seri Najib Tun Razak announced here today.

He also announced that with immediate effect, the Foreign Investment Committee (FIC) guidelines covering the acquisition of equity stakes, mergers and takeovers were repealed without any new guideline in place.

"The FIC would no longer process any share transactions nor impose equity conditions on such transactions," he said.

Ownership in the wholesale segment of the fund management industry would also be fully liberalised to allow 100 percent foreign ownership for qualified and leading fund management companies to establish operations in Malaysia, he said.

Najib, who is also Finance Minister, said that for the retail segment, foreign shareholding limits for the unit trust management companies would also be raised to 70 percent from its current level of 49 percent.

Najib said this when announcing a comprehensive deregulation of investment guidelines administered by the FIC encompassing acquisition of equity stakes, mergers and takeovers, treatment of fund raising by listed companies and acquisition of properties at the "Invest Malaysia 2009" conference.

As to changes in the role of the FIC, he said that "this represents a major rationalisation of FIC regulation. Up till yesterday, processing such transactions was the mainstay of FIC (but) from today this function of FIC ends."

Najib said that the treatment of fund raising by listed companies has also been significantly enhanced towards raising Malaysia's attractiveness as a listing destination.

Currently, he said companies seeking listing were required to satisfy the public shareholding spread requirement of 25 percent based on Bursa Malaysia's listing rules and also the Bumiputera equity condition based on FIC guidelines.

Going forward, he said the public spread requirement remains and in addition, the Securities Commission would introduce a new guideline which requires companies seeking listing to offer 50 percent of the public shareholding spread to Bumiputera investors.

"The Bumiputera equity condition therefore becomes subsumed within the public spread requirement," said Najib.

He said this reinforces the competitiveness of Bursa Malaysia as a listing destination as promoters of companies seeking listing would no longer need to divest equity beyond that required to satisfy the public spread requirement.

The Prime Minister said that in addition to further easing rules on raising funds from the capital markets, post listing fund raising exercises would no longer be subject to any equity condition.

"This deregulation will immediately support existing listed companies seeking to raise funds to undertake investment and reduce the friction cost of compliance," he said.

This new requirement to offer 50 percent of public shareholding spread to Bumiputeras applies only to Malaysian companies seeking listing on Bursa Malaysia.

"The current guidelines for foreign companies to seek listing without any need for compliance with any equity conditions remain and we have seen several foreign companies successfully applying for listing in Malaysia as a result," he said.

Najib also announced that a new investment institution called Ekuiti Nasional Bhd (Ekuinas) would be established.

Ekuinas would be set up as a private equity fund, with an initial capital of RM500 million.

Ekuinas, which would subsequently be enlarged to become a RM10 billion fund, would focus its investments in sectors with high growth potential, in line with supporting the New Economic Model, said Najib.

At the same time, he said that Ekuinas would invest jointly with private sector funds in order to promote genuine partnership and a fully commercial approach.

-- BERNAMA

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