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SC mulls licensing startup accelerators, venture capitalists as advisers for LEAP Market

Publish date: Thu, 23 May 2024, 10:56 AM

KUALA LUMPUR (May 23): The Securities Commission (SC) is considering allowing startup accelerators and venture capitalists, among others, as approved advisers for the LEAP Market listing on Bursa Malaysia.

The move will diversify the pool of listing advisers, the SC said in its “Catalysing MSME and MTC Access to the Capital Market: Five-Year Roadmap" launched on Thursday. The regulator said it will review the regulatory requirements surrounding the eligibility criteria for approved advisers.

“Different types of existing ecosystem players may be allowed to assume the role of listing advisers, which may include legal and accounting firms, startup accelerators, remisiers, [as well as] venture capital and private equity players,” the SC said.

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Currently, a company needs to appoint an adviser in order to list on the LEAP Market, that was set up in 2017 as the third board on Bursa Malaysia to provide small- to medium-sized enterprises (SMEs) with a platform for public listing and fundraising.

The adviser, who must be licensed by the SC and registered with Bursa Malaysia, will be responsible for tasks entailing the assessment of suitability of an applicant seeking listing, the submission of initial listing applications, the preparation of information memorandums, to guiding the company to comply with post-listing requirements.

“This will encourage a more competitive market in the advisor space, and a better pool of expertise to provide support services for the SMEs,” said the SC.

The initiative is part of SC’s 2024-2028 roadmap that covers micro, small, and medium enterprises (MSMEs), as well as mid-tiered companies (MTC). Under the roadmap, the SC plans to help MSMEs and MTCs raise RM40 billion from the capital markets by 2028.

There are as many as 28,000 MSMEs and MTCs generating annual sales of under RM500 million, which have the potential to tap the capital market, according to the SC’s estimates.

Meanwhile, the SC also aims to allow alternative means of remuneration for advisors, in lieu of cash, to provide financial management flexibility and help financially strained SMEs reduce their cash outflows.

“An example of an alternative remuneration method is fee payment in the form of equity,” said the SC. “This will be accompanied [by] safeguards to mitigate conflicts of interest, such as moratoriums, limits on how much of the fee can be paid in equity, and limits on [the] advisor’s stake in the company.”

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