*Please note that this newsletter is for informational purposes only and does not constitute legal advice. In addition, it is based on information as of its date of publication and does not reflect information after such date. In particular, please also note that preliminary reports in this newsletter may differ from current interpretations and practice depending on the nature of the report.
Introduction
The Equity Guidelines issued by the Securities Commission Malaysia (“SC“) form a key component of Malaysia’s capital markets regulatory framework. Among other matters, the Equity Guidelines govern issues and offerings of equity securities, listing of corporations on the Main Market (the “Main Market“) of Bursa Malaysia Securities Berhad (“Bursa Malaysia“), and proposals that result in a significant change in the business direction or policy of corporations listed on the Main Market. Insofar as such proposals are concerned, the Equity Guidelines are generally applicable to body corporates incorporated in or outside Malaysia.
On 12 November 2025, the SC published a consultation paper (“Consultation“) to review and enhance the effectiveness of the public market segments on Bursa Malaysia, specifically concerning equity shares in operating companies. The illustration below is a general overview of the relevant markets and their capital markets regulatory frameworks supervised by the SC and Bursa Malaysia:
Following the Consultation, the SC has published the feedback thereto and revised the Equity Guidelines accordingly on 28 May 2026, which came into effect on 3 June 2026. While the scope of the Consultation and the overall revisions cover both the Main Market and ACE market of Bursa Malaysia, this article will focus on some key revisions made in relation to the Main Market as the number of listed companies on the Main Market comprises approximately 72% of the total number of listed companies across all the 3 markets of Bursa Malaysia in 2026, and those Main Market-listed companies represent a significant portion of the total market capitalisation of RM2.06 trillion on Bursa Malaysia in 2025.※1
Key Revisions to the Equity Guidelines
1. Higher Minimum Profit Threshold Under the Profit Test Route for Listing and Removal of “uninterrupted profit” requirement
A corporation or applicant seeking admission to the Main Market and whose core business is not that of infrastructure project must generally satisfy either the profit test or the market capitalisation test.
(a) Profit test
Prior to the revision to the Equity Guidelines, the corporation was required to have, amongst others, an uninterrupted profit of 3 to 5 full financial years with an aggregate after-tax profit of at least RM20 million and an audited after-tax profit of at least RM6 million for the most recent financial year.
Following the revisions to the Equity Guidelines, the applicant will need to demonstrate an aggregate after-tax profit of RM30 million for the most recent 3 full financial years and an audited after-tax profit of at least RM15 million for the most recent financial year. The computation of such higher aggregate after-tax profit should be based on the applicant’s audited financial statements. In addition, the requirement to have an “uninterrupted profit” for the relevant financial years has been removed and the profit track record requirement has been streamlined to the most recent 3 instead of 5 full financial years.
Guidance: In assessing what constitutes “after-tax profit”, the Equity Guidelines state that the SC has the discretion on whether any income or expense item may be included or excluded to derive such “after-tax profit” and the applicant and its advisers are encouraged to consult the SC on this. In relation to this, the following factors may be considered during the assessment:
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Whether profit or loss items in the ordinary and usual course of business, and the timing of income or expense are to a large extent at the discretion of the applicant’s directors or key senior management;
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Whether any adjustments to related party transactions that are not under normal commercial terms should be made; and
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For agricultural business, whether the fair value changes of biological assets have been excluded.
Rationale of the revisions: In considering the value proposition for the Main Market to be a premier market for larger, established corporations, the SC explained that the revised minimum profit threshold is appropriate and aligned with the current market environment, scale of the Main Market corporations and regional benchmarks.
(b) Market capitalisation test
There are no revisions made to the market capitalisation test in the latest Equity Guidelines. To satisfy this criterion, the applicant’s ordinary shares must have a total market capitalisation of at least RM500 million based on the issue or offer price as stated in the prospectus and the enlarged issued share capital upon listing.
For both the profit and market capitalisation tests, the applicant will also need to satisfy other relevant operating history requirements.
2. Relaxing the Positive Operating Cash Flow Requirement
Prior to the revision of the Equity Guidelines, an applicant was required to demonstrate its healthy financial position with amongst others, proof of sufficient working capital for 12 months from the date of the prospectus and positive cash flow from operating activities, based on audited financial statements, either (i) over the profit track record period if the listing application is sought under the profit test, or (ii) in the most recent financial year if the listing application is sought under the market capitalisation test.
Under the revised framework, an applicant is not mandated to demonstrate positive operating cash flow, but its positive operating cash flow (if any) will be one of the factors considered by the SC in assessing whether the applicant has a healthy financial position.
Rationale: The approach aims to strike a right balance: by preserving robust listing standards that protect investors, while ensuring that the framework remains inclusive and adaptable to evolving business models. For example, having a rigid requirement for positive operating cash flow may inadvertently deter listings of corporations with high growth potential, particularly those in the new economy and innovation-driven sectors. Such amendment, therefore, is aimed to provide greater flexibility for high-growth and new economy type of corporations to access the capital market.
3. Enhanced Requirement in relation to Resident Directors for Secondary Listing on Bursa Malaysia
Under the Companies Act 2016, a public company incorporated under the Act is required to have at least 2 directors whose principal or only place of residence is in Malaysia (“Resident Directors”). However, solely from the Companies Act 2016 perspective, this statutory requirement is not applicable to a company incorporated outside Malaysia (a “Foreign Corporation”).
However, in the context of a Foreign Corporation seeking secondary listing on Bursa Malaysia, the SC has enhanced the governance requirement applicable to such entity by introducing a requirement for the Foreign Corporation to have at least 2 Resident Directors, one of whom must be a member of the Foreign Corporation’s audit committee.
Rationale: As this enhanced governance requirement was not a part of the Consultation, and accordingly, no specific rationale for the same is expressly stated therein, this enhancement of the governance requirement may be expected to strengthen local accountability and oversight within the Foreign Corporation and bodes well for any potential update or revision to the Malaysian Code of Corporate Governance (last revised in 2021).
Conclusion
Following the SC’s Consultation in November 2025, the SC has since revised Equity Guidelines in line with the Consultation. The aforesaid revisions in relation to the Main Market took effect on 3 June 2026 and will be applicable to relevant capital markets proposals submitted to the SC from the effective date. Corporations (including companies incorporated in or out of Malaysia) which seek to be listed on Bursa Malaysia will need to be mindful of and comply with the updated and revised Equity Guidelines. These recent revisions to the capital markets regulatory framework represent one of the steps to enhance the equity capital markets framework in Malaysia and moving forward, there may be upcoming enhancements in this regulatory space such as the revision to the Malaysian Code of Corporate Governance, where a public discussion paper was issued in December 2025.
Endnotes
*1
Securities Commission Malaysia’s Annual Report 2025 and listing statistics published by Bursa Malaysia (accessed on 1 July 2026).
This newsletter is given as general information for reference purposes only and therefore does not constitute our firm’s legal advice. Any opinion stated in this newsletter is a personal view of the author(s) and not our firm’s official view. Given the nature of this newsletter as general information, statutory provisions and source citations may have been intentionally omitted. For any specific matter or legal issue, please do not rely on this newsletter but make sure to consult a legal adviser. We would be delighted to answer your questions, if any.
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