Malaysia's capital market regulator revises SPAC framework

The Securities Commission Malaysia revised its framework for special purpose acquisition companies, effective Jan. 1, 2022.

The revisions are in line with Malaysia's Capital Market Masterplan 3, which aims to create a relevant, efficient and diversified capital market. The capital market regulator said the revisions would facilitate greater access to fundraising in the country.

The revisions enable business combinations via the issuance of securities as consideration for qualifying acquisitions, or initial acquisitions by SPACs. Currently, SPACs may only meet the requirement by way of cash acquisitions. SPACs are also allowed to conduct private placements to obtain additional financing for acquisitions, the regulator said in a news release.

The regulator reduced the minimum amount of funds required to be raised by a SPAC through its IPO to 100 million ringgit from 150 million ringgit. Further, the minimum IPO per-share price of SPACs has been raised to 2.00 ringgit from 50 sen to ensure it attracts investors who are able and willing to take on the unique risks associated with investing in SPACs.

Other changes include lowering the threshold for shareholders' approval of the qualifying acquisition to a majority of present shareholders during a meeting instead of at least 75%, as well as limiting the issuance of shares from the exercise of warrants to 50% of the total number of the SPAC's issued shares to reduce the dilution of existing shareholders.

As of Dec. 16, US$1 was equivalent to 4.21 Malaysian ringgit.