LEAP to ACE

THE much awaited proposed framework for companies from the LEAP Market to get transferred to the ACE Market is here. Well, not quite.

This week, Bursa Malaysia said it is seeking public feedback on the amendments it needs to make changes to its listing rules to facilitate this process of accelerating Leap-listed companies into the ACE Market. This has been something long awaited by market participants.

Bursa said any LEAP Market-listed entity seeking a transfer of listing must meet the suitability assessment by a sponsor under the ACE Market listing rules, has been listed for at least two years on the LEAP Market, and completed its business plan and fully used the proceeds raised from its LEAP listing.

On paper, the ACE Market listing rules do not require applicants to have a profit track record. This would mean that LEAP Marketlisted companies should not have much challenges in that aspect.

However, what is interesting to note is that in reality, it does seem that only profitable companies get approved to list on the ACE Market. And those that typically list, have profits of at least Rm5mil.

Hence the question that arises is do the companies coming through the LEAP Market funnel into the ACE Market will also have to display such high profits? If so, it may hamper the number of companies who get through.

That may not be a bad thing, considering that companies that are already profitable have a higher chance of success and hence pose less risk to investors. But if that unwritten rule is applied, then having a LEAP to ACE Market funnel for such listings may prove to be not so useful.

Perhaps some middle-of-the-road approach ought to be taken, considering that the LEAP Market companies have proven some level of their mettle following their two years of being listed on the former market.