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Goverment abolish 30% equity condition - Your views

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Smilehoe
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  #1 Old 01-07-2009 Default Goverment abolish 30% equity condition - Your views

Quote:
From TheStar

KUALA LUMPUR: The 30% bumiputra quota requirement for companies seeking to list on the Bursa Malaysia has been done away with under an overhaul of the Government’s economic policies.
...
...
The other announcements, which are to take effect immediately, were:
  • All property transactions, except for those involving a dilution of government or bumiputra interests for property valued at RM20mil and above, would no longer require FIC approval;
  • All Malaysian companies seeking listing would have to offer 50% of their public offering to bumiputra investors, which would work out to 12.5% of the total stake;
  • A 100% ownership would be allowed for qualified and leading fund management companies to set up operations in Malaysia;
  • Foreign equity in existing stockbroking companies would be increased to 70% from 49%;
  • All transactions on mergers and takeovers by local or foreign companies will no longer need FIC approval; and
  • All listed companies need not maintain 30% bumiputra equity as required previously.
I woke up to read this piece of announcement and boy was I glad to see reforms being executed by our PM. =)

Apart from the joy of seeing change, let's dissect the newly imposed regulations and discuss the effects of their implementation.

While doing away with the 30% equity is a step towards justness, the second bullet I quote mentions of the need for 50% public offering to be reserved for bumiputras. On maximizing efficiency of the market, I still feel that the 50% requirements is another barrier that reduce competitiveness. The only reason I see that being introduced is to soften the effects of the deregulation (read: fear of losing popular votes)

Such is still acceptable since the longer he stays in power, the more reforms he could do. And I bet his net approval ratings have just risen.

Last edited by Smilehoe; 01-07-2009 at 04:44 PM. Reason: inaccurate wording - thanks bluez
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henry_yew Male
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  #2 Old 01-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

By the way, what's the difference between equity and public offering? I'm quite a novice in this and I got a little confused when the article stated abolishing 30% equity and yet reserve 50% public offerings to Bumiputras.

Please enlighten me.
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Al-Bert
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  #3 Old 01-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

Is it something like reducing the reserved Bumiputras' equity for a public listed company from 30% to about 12.5%?
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  #4 Old 01-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

The way I interpret the announcement is that
  1. a company is free to have any percentage distribution of stock it wishes regardless of race
  2. however when it goes on public listing, 50% of the market traded stocks are reserved for Bumiputras.
  3. Considering the bold statement
    Quote:
    All Malaysian companies seeking listing would have to offer 50% of their public offering to bumiputra investors, which would work out to 12.5% of the total stake;
    , I guess it meant only initial public offering. Unless there's another rule coming out, I suppose 12.5% is the minimum level a company's stock being held by bumiputras.
I'm not so sure about this either. Hope to hear from others.

@henry_yew - I guess equity is simply the amount of ownership while public offering is those shares being traded in listed stock markets.

As reported in NY Times

Quote:
That requirement was scrapped for companies already listed on the stock exchange and reduced to 12.5 percent for initial public offerings. The requirement will remain in place for ?strategic industries? like telecommunications, water, ports and energy.
It did mean IPO after all.

Last edited by Smilehoe; 01-07-2009 at 03:50 PM. Reason: Automerged Doublepost
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Al-Bert
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  #5 Old 01-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

The IPO of a company will always represent 25% of its' total stock equity? Not any lesser or more than that?
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  #6 Old 01-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

It is good for government to do so though I believe that I should have done earlier. Anyway, better late than never. That way, our country will be more investor friendly.
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  #7 Old 02-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

Apparently, we're not the only ones who are confused and unsure about the 30% and 50% issue...

http://niamah.blogspot.com/2009/07/huh.html
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  #8 Old 07-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

Having done extensive research on this issue over the last several days [I'm doing an internship in a corporate law firm at the moment], and having read and dissected Najib's Invest Malaysia 2009 speech to the point of almost memorizing it, here's my explanation which I hope will help clarify issues.

To make it easier for you guys to understand, I'm going to separate the situation into two:

Before:
- Companies seeking to be publicly listed must satisfy TWO requirements. 25% public shareholding spread requirement at the IPO stage by the Securities Commission AND the 30% Bumiputera equity requirement by the FIC.

After:
FIC requirement is waived. However, SC's requirement still stands, and 50% of that 25% public offering must be offered to bumiputeras. This amounts to 12.5% of the total stake reserved for bumiputera investors. But bear in mind that this only applies to Malaysian public companies and NOT foreign companies.

I hope that helps. If anyone needs clarification on anything else announced by Najib during Invest Malaysia 2009, just ask.
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  #9 Old 08-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

Quote:
Originally Posted by Glassylicious View Post
Before:
- Companies seeking to be publicly listed must satisfy TWO requirements. 25% public shareholding spread requirement at the IPO stage by the Securities Commission AND the 30% Bumiputera equity requirement by the FIC.

After:
FIC requirement is waived. However, SC's requirement still stands, and 50% of that 25% public offering must be offered to bumiputeras. This amounts to 12.5% of the total stake reserved for bumiputera investors. But bear in mind that this only applies to Malaysian public companies and NOT foreign companies.

I hope that helps. If anyone needs clarification on anything else announced by Najib during Invest Malaysia 2009, just ask.
Ah, thanks. Now why can't our Prime Minister just say that?
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  #10 Old 09-07-2009 Default Re: Goverment abolish 30% equity condition - Your views

Finally something good to hear!

Can anyone tell me more about the 30% ownership of bumiputras under the previous policy? Seems to me that the policy basically reserve the participation of local investors in the running of a public listed company. However, at the same time, we must be aware of the fact that there might be a disparity in terms of income distribution even amongst the bumiputras as not everyone have the wealth to invest in stock purchases.

The latest policy, in my opinion, may pave way towards a more active foreign investment as more equity are being offered to prospective buyers.With more foreign investment, the intermission of ideas and technology may prove to be beneficial for the overall economy as a certain degree of free trade are being applied.
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