The ACE Market which stands for ‘Access, Certainty, Efficiency’ is actually the new name for the formerly known MESDAQ (Malaysian Exchange of Securities Dealing and Automated Quotation) market. MESDAQ came into existence in 1997 when it was the home of mainly technological stocks and today it is replaced by the ACE Market under Bursa Malaysia. The ACE Market was derived together with the unification of the Main and Second Board into the Main Market of Bursa Malaysia in 2009.
The ACE Market is seen as the ideal market for start-ups and new companies which are run by entrepreneurs who are looking to push for more capital by listing their companies public. This is where they might not have the large and high amount like companies in the Main Market but would probably have a strong product or service portfolio which if given more capital, would surely succeed.
Used to be MESDAQ
The ACE Market is very much like the GEM (Growth Enterprise Market) in Hong Kong or Catalist of Singapore and companies in ACE Market are sponsor-driven and it is not only limited to the technology sector when it was called MESDAQ.
This means that companies from any sector or size can apply to be listed in the ACE Market where it is designed to offer a more efficient and certain way for you to do so. Typically, the regulations for listing in ACE market are less stringent and the company need not provide the track records like how it is required in the Main Market.
Easier Rules in getting listed
The regulatory framework of the ACE Market is to offer companies and entrepreneurs with better transparency and hence makes it easier to list. Such is the objective of this market where the whole idea is to encourage more innovative technology and products and companies to push for development and growth. Entrepreneurs would be encouraged to offer better products and services where there is now an option to try and inject more capital into their company for the development of their offerings. This in return will provide investors with the opportunity to start investing in SMEs (small and medium enterprises) which might not be technology based.
Listing requirements in the ACE Market
If you intend to have your company listed in the ACE Market, there are several factors that must be considered. First, there is the suitability for listing issue. This is where Bursa Malaysia will rely on the Sponsor and then review the proposal of the company. This is where the company:
- Should have some form of potential in growth through the industry your business is in
- Have a sound team of management with appropriate expertise and qualification
- Has the suitable policies and procedures in place as well as adhering to the laws and regulations
- Has a Board of Directors who are capable and aware of their duties
- Is aware of the risks involved with a sound risk management plan
- Has a good track record of good corporate governance
Factors for listing
In recent years, there has been a lot of criticisms about the ambiguity of listing for companies in the ACE Market. Bursa Malaysia, in the effort to be more transparent about this, has changed the requirements and made them more understandable. One such move took place in 2017 when it was announced that the regulations to be listed in the ACE Market is not the same as the Main Market where it is all about profitability.
What makes this very interesting is that, companies that intend to get listed in Bursa Malaysia’s MAIN Market would usually need to provide their accounts to be evaluated before they are approved. In fact, any company with poor (or that which is not good enough) financial performances would not even be considered for the MAIN Market. If such strict guidelines are implemented for the ACE Market, then many companies will not make such considerations. The creation of the LEAP Market was only intended for SMEs and would not help industry-specific companies that did not qualify for the ACE Market.
In fact, some loss-making companies or those with low profitability could be approved to be listed in the ACE Market if it is an innovative business in the R & D or IT industry. It must, however, show efforts to improve the financial performance and a sound strategy to get there.
The major issue is from the Sponsor which is usually the investment bank or some other financial engine. This is to accommodate certain companies in long-term industries like biotechnology or new technologies. In such cases, regulatory or investment periods might take a longer time. This means that the company might experience losses in the first few years but would still need to inject funds to continue its business. Besides that, the moratorium requirements have been modified for ACE Market companies to be ‘promoted’ to the Main Market.
How prepared is a company to be listed in the ACE Market?
For any business to be listed in the ACE Market, there are considerations that must be taken into account. The most crucial one is to ensure that such a move is going to benefit the objectives and intentions of the company’s stakeholders. After all, it simply means that the company will become a publicly-shared business where the owners no longer enjoy the total autonomy of their business.
Besides that, there will be a lot of money invested in ensuring the company gets approved for listing. To get to that point, it will mean opening up the accounts to auditors and then being scrutinized by the authorities. A lot of transparency will be needed. That will mean engaging lawyers, accountants, auditors, tax advisors if required, Public Relations and many others.