PETALING JAYA: The Securities Commission (SC) has revised its guidelines for the special-purpose acquisition company (SPAC) framework in a bid for greater access to fundraising in Malaysia.
This came three months after Singapore announced new rules that enable SPACs to list on the Singapore Exchange.
SPACs, dubbed cash shells or blank-cheque firms, are formed by a group of individuals to raise funds through an initial public offering (IPO) with the purpose of using the proceeds to acquire assets or businesses, also known as a qualifying acquisition (QA).
In a statement yesterday, the SC said the revision to the SPAC guideline was part of its ongoing efforts to promote the development of the Malaysian capital market.
“The SC re-evaluated the SPAC framework to ensure that it remains relevant and capable of spurring interest in listings and deals involving SPACs, thereby providing issuers with greater access to the capital market,” said SC chairman Datuk Syed Zaid Albar.
The review of the SPAC framework is in line with the Capital Market Masterplan 3 aspiration to create a capital market that is relevant, efficient and diversified.
The revisions include enabling business combinations via the issuance of securities as consideration for a QA. Under the current rules, SPACs may only meet the QA requirement by way of cash acquisitions. The new guidelines will also broaden the avenue for SPACs to obtain additional financing by allowing private placements for QAs.
However, the SC has reduced the minimum amount of funds required to be raised by a SPAC through its IPO from RM150mil to RM100mil.
The new guideline will also allow professionals with extensive experience in private equity and venture capital with asset sourcing and deal making experience to steer SPACs.
To minimise the greenmail issue faced by SPACs in the past, the threshold for shareholders’ approval of the QA has been reduced from a special resolution of at least 75% majority to a simple majority approval by all shareholders present and voting.
To reflect the inherent risks of investing in SPACs, the minimum IPO price has been raised from 50 sen to RM2.00 to ensure that it attracts investors who are able and willing to take on the unique risks associated with investing in SPACs, the SC said.
“While the Malaysian capital market has seen new development and innovation, the SC would like to remind investors that SPACs are an alternative capital market investment option that may carry higher investment risk when compared with shares of listed corporations with operating businesses. Investors should familiarise themselves with the nature of SPACs and consider whether the investment meets their objectives and risk profile,” the SC said.
The revised SPAC framework will take effect on Jan 1, 2022.