‘Prepare for listings at least two years in advance’

KUCHING (September 29): Companies eyeing a listing should begin preparations at least two years in advance to avoid last-minute hurdles, said Bursa Malaysia executive vice president of listing development, origination and listing Lee Kuan Tek.

Speaking at the IPO Readiness and Tax Insights Conference hosted by RDS Partnership here today, he stressed that early planning is crucial to ensure compliance with listing rules.

“Certain things within the company planning to list need to change and certain things need to be introduced.

“For example, converting your financial reporting from Malaysian Private Entities Reporting Standard (MPERS) to Malaysian Financial Reporting Standards (MFRS). That would be your starting point,” he said.

MPERS is a simplified accounting standard used by smaller private firms, while MFRS is the stricter system required for public companies.

“Get the right auditor to convert your standards or re-audit your numbers from MPERS to MFRS.

“If you are showing RM6 million profit under MPERS but after re-audit the figure drops to RM1 million or even negative, then you cannot start now. You may need to wait one or two years before you can proceed,” he said.

Lee added that companies also need to resolve compliance and conflict of interest issues before listing.

“Some related party transactions need to be addressed. Outdated agreements may need to be reformalised, or new agreements signed with customers or suppliers. All this will take time.

“If you plan to list in two years, now is the right time to start. Otherwise, you might end up pushing your team too hard and even drive them away,” he said.

He added that governance and compliance towards listing rules are equally as important and companies should engage external parties to review their internal controls.

He explained that only after the numbers, systems and compliance are in order can other advisers be brought in. Sponsors and banks, he added, would only step in once these matters are resolved.

When asked how companies can tell if its the right time to go public, Lee highlighted that there is no “perfect timing”, only readiness.

“You can’t catch the right moment. What you can manage is to ask whether you and your people are ready to go public.

“The intention must be right. And if you have several shareholders, everyone must share the same intention. It cannot be just one person’s decision,” he said.

Lee reminded companies that listing also means higher costs and stricter obligations.

This means that companies must be prepared to bear listing costs and to face continuous scrutiny as every action requires announcement, which could draw media attention and questions from investors or regulators.

He added that firms must have a proper chief financial officer (CFO) to ensure accurate quarterly financial reports, warning that regulators could take action if mistakes occur.

He stressed that not only the management but also the staff must be ready, with internal controls, risk management and compliance firmly in place before listing.

-Agency