Going Public in Malaysia: Main, ACE or LEAP?

Introduction

Picture three Malaysian business owners, each thinking about going public.

Aisyah runs a manufacturing company with years of steady, growing profits.

Daniel’s technology start-up is growing fast but has yet to turn a profit.

Mei Ling’s young farming-technology business wants to raise money from a small group of experienced investors without the cost of a full public offering.

All three want to list on Bursa Malaysia, but they are unlikely to end up on the same market.

An initial public offering (“IPO”) is a major milestone for any company. Just as important is choosing where to list. The market a company lists on affects whether it qualifies to list, the rules it must follow once listed and how it can raise money in the future. Knowing how Bursa Malaysia’s three markets differ helps companies choose the one that best suits their goals and stage of growth. In this article, we follow Aisyah, Daniel and Mei Ling as they weigh up their options.

What is an IPO?

An IPO is when a private company offers its shares to the public for the first time and applies to be listed on a regulated stock exchange. Once listed, the company becomes publicly traded, which means investors can buy and sell its shares on the exchange.

Why Do Companies Choose to Go Public?

Each of our three business owners has a different reason for going public.

Aisyah wants to fund a new factory and let her early investors cash in part of their investment.

Daniel needs money to expand and wants to offer shares to reward and keep his engineers.

Mei Ling wants to fund her next stage of growth and build credibility with investors.

Their reasons are typical. More generally, companies go public for a mix of strategic and commercial reasons. The main one is usually to raise money to grow the business and take up new opportunities. An IPO can also allow existing shareholders to realise the value of their investment, make it easier to set up share schemes that reward and retain employees, and boost the company’s credibility, reputation and profile as a listed company.

An Overview of Bursa Malaysia’s Listing Markets

Bursa Malaysia has three markets on which companies can list: the Main Market, the ACE Market and the LEAP Market. Each is designed for companies at a different stage of growth, with different levels of financial strength, business maturity and fundraising needs.

Whether a company is suitable for listing depends on two things. On the regulatory side, the company must meet the listing requirements and guidelines issued by the regulators. On the market side, it should be able to attract investors and keep growing as a listed company.

The sections below explain the key features of each market to help companies identify the one that best fits their needs and goals. As you read, think about where Aisyah, Daniel and Mei Ling might fit.

Main Market

The Main Market is Bursa Malaysia’s prime market for established companies with a proven track record. It generally suits companies with strong financial results, clear business operations and the capacity to meet more extensive rules on regulation, disclosure and corporate governance. A company can qualify for the Main Market by meeting one of three tests: the Profit Test, the Market Capitalisation Test or the Infrastructure Project Corporation Test. The Securities Commission Malaysia (“SC”) is the main approving authority.

ACE Market

The ACE Market is Bursa Malaysia’s alternative market for companies with growth potential. Unlike the Main Market, it has no minimum requirement on how long a company has been operating or how much profit it has made. However, the company must still be suitable for listing. It must show that it has growth prospects, good governance and proper disclosure, and that it is ready to follow the listing rules.

LEAP Market

The LEAP Market is Bursa Malaysia’s adviser-driven market for emerging companies. It is a “qualified market”, which means it is open only to Sophisticated Investors (such as high-net-worth individuals and institutional investors). It is designed to make listing easier and less costly than on the Main Market or ACE Market. A company can list on the LEAP Market either by issuing new securities without a prospectus (known as an “excluded issue”) or by listing its existing shares without raising new money (known as an “introduction”).

Comparing the Main Market, ACE Market and LEAP Market

The table below sets out the key differences between the three markets, covering who each market is for, who approves the listing and who can invest. For the full listing requirements of each market, including public shareholding spread, corporate governance and Bumiputera equity, see our separate guides to the Main Market, ACE Market and LEAP Market.

Listing Requirements

Criteria	Main Market	ACE Market	LEAP Market
Typical company	Established companies with a stronger financial track record or larger operations.	Growing companies that may not yet meet the Main Market’s financial thresholds.	Emerging companies looking for a simpler, adviser-driven way to list.
Who approves the listing	Securities Commission Malaysia (SC). Bursa Malaysia’s requirements also apply.	Bursa Malaysia Securities Berhad. The company applies through a Sponsor.	Bursa Malaysia Securities Berhad. SC approval is not needed, but the information memorandum must be deposited (filed) with the SC.
Entry tests / listing route	The company must pass one of three tests: the Profit Test, the Market Capitalisation Test or the Infrastructure Project Corporation Test. Under the current SC Equity Guidelines, the Profit Test requires a total after-tax profit of RM30 million over the most recent 3 full financial years, and an after-tax profit of RM15 million in the most recent financial year.	No minimum operating history or profit is required, but the company must show it is suitable for listing and has growth prospects.	No minimum operating history or profit is required, but the company must be suitable for listing, as assessed by an Approved Adviser.
Who can invest	All investors, including the general public (retail investors).	All investors, including the general public (retail investors).	Only Sophisticated Investors.
Adviser needed	The company applies through a recognised Principal Adviser.	A Sponsor is required. The Sponsor generally stays on for at least 3 full financial years after listing, or at least 1 full financial year after the company starts generating operating revenue, whichever is later.	An Approved Adviser is required. A Continuing Adviser is then generally required for at least 3 full financial years after listing, or at least 1 full financial year after the company starts generating operating revenue, whichever is later.
Main disclosure document	Prospectus.	Prospectus.	Information memorandum.
Moratorium (lock-up on selling shares)	For listings under the Profit Test or Market Capitalisation Test, the relevant shareholders generally cannot sell, transfer or assign their shares for 6 months from listing. Extra conditions apply to listings under the Infrastructure Project Corporation Test.	Specified shareholders cannot sell their shares for the first 6 months. For the next 6 months they must retain at least 45% of the shares. After that, up to one-third of the remaining locked-up shares may be sold each year over 3 years, provided the company has generated at least one full financial year of operating revenue.	Promoters cannot sell their shares for the first 12 months. For the next 36 months they must retain at least 45% of the shares. This restriction may continue for longer if the company has not generated one full financial year of operating revenue.
Financial reporting after listing	Quarterly financial reports and annual audited accounts. An annual report is required.	Quarterly financial reports and annual audited accounts. An annual report is required.	Half-yearly financial reports and annual audited accounts. An annual report is not required.

Advantages

Each market has its own advantages, depending on how developed the company is, how much it wants to raise and which investors it wants to reach.

For Aisyah, the Main Market’s broad investor base and higher profile could support her expansion plans.

For Daniel, the ACE Market gives access to public investors now, with the option of moving to the Main Market later.

For Mei Ling, the lower cost and the fact that no prospectus is needed are the main attractions of the LEAP Market.

The table below sums up the main advantages of each market.

Market	Advantages
Main Market	Suits established companies that want a broad investor base, a higher profile in the market and greater credibility. It can also support larger fundraising, acquisitions and long-term investment by institutional investors.
ACE Market	Suits growing companies that may not yet meet the Main Market’s financial thresholds. It gives them access to public investors while they prove their growth prospects, with the option of moving to the Main Market later.
LEAP Market	Suits emerging companies looking for a simpler, lower-cost way to list. No prospectus is required and the market is open to Sophisticated Investors, making it useful for companies not yet ready for the Main or ACE Market.

Disadvantages

Companies should also weigh up the limitations of each market, and the ongoing obligations that come with it, before choosing where to list.

Each of our business owners faces trade-offs too.

Aisyah should expect a longer, more costly process and closer scrutiny from regulators.

Daniel will have to work closely with his Sponsor and keep up with the ongoing obligations of a public market.

Mei Ling will have fewer potential investors, and her shares may be harder to buy and sell.

The table below sets out the main drawbacks of each market.

Market	Disadvantages
Main Market	Entry requirements are generally stricter. The listing process can take longer and cost more because of higher financial thresholds, closer regulatory scrutiny, and more demanding due diligence, disclosure and governance standards.
ACE Market	Although more flexible than the Main Market, the ACE Market still comes with the obligations of a public market. Companies must work closely with a Sponsor and comply with the rules on prospectuses, public spread, moratorium, disclosure and ongoing listing requirements.
LEAP Market	Fewer investors can take part, because the market is open only to Sophisticated Investors. This can mean a smaller investor base and less liquidity (shares are harder to buy and sell) than on the Main and ACE Markets.

Which Bursa Malaysia Market Is Right for Your Company?

Key Factors to Consider

No single market suits every company. The right choice depends on the company’s financial track record, stage of growth, target investors, readiness to comply with the rules and long-term fundraising plans.

So where does this leave our three business owners?

With a strong profit record, Aisyah’s company may be able to meet the Main Market’s Profit Test.

Daniel’s start-up does not yet meet the Main Market’s profit thresholds, but the ACE Market has no minimum profit requirement, so he can still offer shares to the public if his Sponsor is satisfied with his growth prospects.

Mei Ling only wants to raise money from Sophisticated Investors at a lower cost, so the LEAP Market, which needs an information memorandum rather than a prospectus, may suit her best for now.

These are simplified examples. In practice, each company’s choice will depend on a full assessment by its advisers.

Factor	Why it matters
Financial track record	The Main Market suits companies with a stronger profit record or market value. ACE and LEAP may suit companies that do not yet have the financial track record the Main Market requires.
Growth prospects	ACE and LEAP may suit companies that are still growing but can show a credible business model and growth prospects.
Investor base	Main and ACE are open to all investors, including the general public. LEAP is limited to Sophisticated Investors.
Compliance readiness	Main and ACE come with heavier disclosure, governance and ongoing reporting obligations. LEAP is simpler, but still requires oversight by an adviser.
Fundraising objective	Companies that want to raise money from the wider public may prefer Main or ACE. Companies targeting a narrower group of investors may consider LEAP.
Future transfer	A company listed on ACE may move to the Main Market once it meets the Main Market’s entry requirements. LEAP can also serve as an early step into the capital market before the company considers a move to another market or further fundraising.

Conclusion

The right listing market depends on how far the company has grown, how financially ready it is, which investors it wants to reach and whether it can keep up with the listing obligations. In general, the Main Market suits established companies like Aisyah’s, the ACE Market suits growth companies like Daniel’s, and the LEAP Market offers a more flexible route for emerging companies like Mei Ling’s that are raising money from Sophisticated Investors.

Before starting an IPO, companies should assess whether they are ready and get advice from qualified advisers. This will help them choose the most suitable market and prepare for the requirements of being a public listed company.

As our three business owners show, the right market is the one that fits where a business is today and where it wants to go.