THE much-awaited board transfer framework for companies listed on Bursa Malaysia’s Leading Entrepreneur Accelerator Platform (LEAP Market) could materialise as early as the first quarter of 2021. According to industry sources, the transfer framework will be rolled out in the first quarter of next year following an exercise by the bourse to seek public feedback in the next three to four months.

Together with the Securities Commission Malaysia (SC), the stock exchange hopes to finalise the details of the framework by the end of the year, they say. “Finally, there is light at the end of the tunnel after such a long wait. There is definitely a viable path forward. This is very positive news indeed,” a LEAP Market-listed company owner tells The Edge.

When contacted by The Edge, Bursa says it had been working closely with the SC on enhancements to improve the stock market ecosystem, including the LEAP Market. It did not provide further details as to the timeline or what the framework would entail.

Introduced three years ago, the LEAP Market serves as a platform for emerging companies to raise much-needed capital and eventually migrate to the ACE or Main Market. But there has been no further update on the transfer framework since late 2019, according to market players.

Trading volume on the LEAP Market has been low as it is only open to sophisticated investors. By and large, accredited investors and high-net-worth individuals are scarce in the country.

This has resulted in the LEAP companies considering privatisation, says the company owner. “Given the long-drawn timeline of the transfer framework, these companies would certainly consider that.”

Danny Ng, founder and CEO of Fibromat (M) Bhd, concurs, saying that it would make business sense to consider merger and acquisition offers from local and international suitors.

Without transfer guidelines from the bourse, small and medium enterprises will have no choice but to delist from Bursa.

Ng acknowledges that the LEAP listing has raised the company’s profile and eased the challenge of obtaining funding, but a successful transfer to the ACE Market would put the company on a stronger financial footing.

Currently, LEAP Market companies seeking a transfer to the ACE Market are required to submit a fresh application to the SC. This would cost them RM1 million to RM2 million.

When asked whether there are concerns that more LEAP Market companies will look at delisting, Bursa points to the encouraging performance of the market players. “Despite the challenging market conditions in 2019 and 1Q2020, the market capitalisation of these companies has grown from RM1.58 billion [during their IPOs] to RM2.77 billion as at June 30, representing an increase of 75.3%. Some 84.4% of the companies listed on the LEAP Market have seen an increase in market capitalisation since their IPOs,” it highlights.

There are currently 24 listed companies on the LEAP Market. Six listings have been recorded so far this year despite the economic uncertainties.

To address the liquidity issue, there have been calls to open the LEAP Market to the general public. Bursa explains that the listing rules, including admission criteria and post-listing obligations for the platform, are actually far less extensive than those for the ACE and Main Market as the regulatory framework that governs the LEAP Market is based on cost efficiency, appropriate regulation and providing a qualified market for sophisticated investors.

However, a lighter-touch regulatory regime is possible under the Capital Markets & Services Act 2007 (CMSA) as the target investors are limited to sophisticated investors as set out in Part I, Schedules 6 and 7 of the CMSA. “The LEAP Market is also an adviser-driven market, which aims to provide emerging companies, including small and medium enterprises, with greater fundraising access and visibility via the capital market,” it adds.

“Nevertheless, we take cognisance of issuers’ preference for higher trading liquidity, and we are looking at several approaches to address this concern. We are in continuous consultation and engagement with the relevant stakeholders, including regulators, advisers and policymakers, to further improve the LEAP Market’s ecosystem.”