alteration of share capital(listed co)

8/15/2019 Alteration of Share Capital(Listed Co)

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ADM657COMPANY SECRETARIAL PRACTICE II

PM Alicia Tan & Dr Norziana Lokman


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Lecture Outline

1. Consolidation2. Subdivision3. Reduction4.

Share buy back


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Procedure for listed company:1. Check the AOA.2. At the BODM discuss and decide to make recommendations to

consolidate the share, to form DDWG with members consist of principaladviser (investment bank), solicitor, accounting firm, PR, IH etc for duediligence purposes and authorised the principle adviser to makeannouncement.

3. Announcement to BM after the trading hours at the end of the day of theboard meeting.

4. Due diligence work by various parties involved.5. Submit application to BM for approval within one month from the date of

the announcement.

6. Upon approval of BM, make announcement to BM.7. Principal adviser to finalise the draft circular to members and submit toBM for approval.

8. Upon approval of circular, instruct secretary to convene an EGM.9. Secretary to send out notice of the EGM at least 14 days before the

meeting to all persons entitled to attend.3


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Procedure for listed company:10. Immediately upon issuance of circular to shareholders, submit 15

copies of the circular to BM.11. After the meeting, make announcement to BM after the trading hours

at the end of the day of the general meeting.12. Lodge form 11 with CCM within 14 days after the passing of the

resolution.13. Insert a copy of Form 11 into every MOA.14. Make announcement on the book closing date and the date of listing

and quotation of consolidated shares to BM.15. At least three and half clear market days before the book closing date

(lodgement date) make request to BMD for the Record of depositors

(ROD).16. BMD will within 3 clear market days issue the relevant ROD as at

lodgement date to the company together with the jumbo certificatesrepresenting the deposited securities.

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17. The board of directors allots the new consolidated shares.18. Announcement to BM on the book closing date, on the number, the

type and par value of shares to be consolidated.19. The consolidated shares are listed and quoted on BM on the next

market day following the book closing date.20. Upon finalisation of the consolidation, prepare and deliver to BMD a list

of the allottees together with the jumbo share certificates before the

listing of the consolidated shares. BMD then will credit or debit therespective CDS accounts.21. After the date of listing and quotation of the new shares (no later than 4

market days of the date of listing and quotation), the company throughthe share registrar despatches notices of allotment of consolidatedshares to shareholders.

22. Amend the register of members.

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Procedure for subdivision (share split):

Similar to that of consolidation of shares

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1. Board Meeting to consider whether the reduction of

capital is needed. Consult legal advisers and accountants2. Check the articles, if the articles provide the power to

reduce capital, then proceed with the following procedure.If not, then the procedure for amending the articles to add

in the power shall be followed before proceeding with thefollowing procedure3. After consultation, Board Meeting to decide to make

recommendation to shareholders to reduce the sharecapital. Appoint solicitors and principal adviser to preparethe necessary documents for submission to SC.

4. Due diligence process.5. Submit application to SC for approval.

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6. Upon approval of SC, principal adviser to announce to BM.

7. Secretary to issue Notice of EGM and circular toshareholders stating the proposed special resolution andgiving details of the capital reduction.

8. Before the general meeting, request for a second ROD as

at a date not less than 3 market days from date of GM toascertain who are the members who shall be entitle toattend and vote at the GM.

9. After the passing of the special resolution with at least a

three-fourth majority, make announcement to BM.10. Lodge with the CCM Form 11 within 14 days of the passingof the resolution

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11. The next step is to apply through the solicitors appointedfor a Court Order by presenting a petition for confirmationof the reduction.

12. On obtaining the court order, make announcement to BM.13. Lodge with CCM a copy of the court order within 14 days

together with a fee of RM50.

14. The ROC having registered the court order and the specialresolution shall issue a Certificate of Lodgement of Orderof High Court Confirming Reduction of Share Capital(Form 29 ) which is conclusive evidence that allrequirements of the CA 1965 with respect to reductionhave been complied with and the share capital shall be asstated in the order. The special resolution lodged takeseffect on the registration of the court order.

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15.A copy of Form 11, the court order and Form 29 must beinserted into every copy of the memorandum held in stock.

16.The court order may require a notice of reduction to bepublished.17.Fix and announce book closing date (ie the entitlement

date or lodgement date) for the purpose of determining theeligible shareholders.

18.At least three and a half market days before book closingdate, request from BMD the ROD as at lodgement date.

19.BMD will within 3 clear market days issue the relevant RODas at book closing date to the company together with theappropriate (jumbo) certificates representing the depositedsecurities.

20.Trading of the share of the company will be suspendedfrom 3 market days prior to the entitlement date.

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21. Upon finalisation of the number of shares of each memberafter reduction, prepare and deliver to BMD a list ofallotees specifying the names of the allotees, their NRIC

No., their securities account no. and the quantity ofdeposited securities allotted to their respective CDSaccounts together with the appropriate certificatesregistered in the name of Bursa Malaysia Depository

Nominees Sdn. Bhd.22. BMD will then credit or debit the respective CDS accounts

of the shareholders.23. Within ten market days after the entitlement date despatch

a notice to each member showing the number of shares heholds after the reduction of capital.24. Amend the register of members.

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25. Make arrangements for a listing of the new shares afterthe reduction of capital. The listing is to be effective from 3market days following the day of the receipt by the BM ofthe following documents:

a full list of the shares;confirmation that the notices of allotment have beenissued and despatched to the shareholders; andconfirmation from BMD of the receipt of the allotmentfor crediting the stock.

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S 67(1) - a company is prohibited from purchasing its own

shares or from providing any financial assistance whetherdirectly or indirectly to any person to purchase or subscribefor any shares in the company or shares of its holdingcompany.

Financial assistance includes:• a loan;• a guarantee; and

• the provision of security or otherwise any financialassistance.

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There are exceptions to S 67(1):

i) where the lending of money is part of the company’sordinary business for example a bank, finance companyand money lender.

ii) the provision of money for purchase of shares in thecompany by a company to its employees in accordancewith a scheme for example ESOS.

iii) the giving of financial assistance to persons other than

the directors of the company with a view to enableemployees to purchase fully-paid shares in the companyor its holding company.

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S 67A provided that a listed company which is solvent mayutilise its retained profits and share premium account topurchase its own shares through the stock exchange.

A listed company may purchase its own shares if the AOAauthorised so. If not then procedure for amending the articles

must first be carried out.

The conditions to be fulfilled before exercising share buy-backs (s 67A(3) & Part IIIA s 18A-18G):

1. The articles of the company must authorise such action.2. The company is solvent at the date of purchase and will

not become insolvent by reason of the purchase;3. The purchase must be made through stock exchange;4. The purchase must be made in good faith and in the

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5. The purchase must be authorised by shareholders of thecompany by way of ordinary resolution.

6. The directors must make a declaration of solvency at aboard meeting

7. The share buy-back must be made wholly out of retainedprofits or the share premium accounts.

8. The purchase price must not be more than 15% above theweighted average market price for the shares for the fivemarket days immediately before the purchase.

9. The total amount of shares to be purchased or held astreasury shares by the listed company shall not inaggregate exceed 10% of its issued and paid-up capitaland shall not result in the company being in breach of thepublic shareholding spread or its issued and paid-up sharecapital falling below the prescribed minimum.

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Reason for purchase of own shares:

1. To give shareholders a price nearer to that of its assetsvalue2. To provide a bolster to the earning per share3. To make a good investment of surplus corporate funds

4. To return surplus funds to the shareholders5. To reduce volatility of share prices

Treatment for shares purchased1. Cancel all shares purchased2. Retain all the shares purchased as treasury shares3. Retain part as treasury shares and cancel the remainder.

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Procedure for share buy-backs:

1. At the board meeting – to resolve to recommend toshareholders:

i. to alter the articles of association (as to permitshare buy back)

ii. to approve the share buy backs exerciseiii. to call for an EGM.

2. Immediate announcement to BM and submit to BM theprinted Circular to Shareholders or Share Buy-backStatement together with a checklist showing compliancewith Part A or B of Appendix 12A respectively.

3. Issue notice of EGM with Circular or Share Buy-backStatement.

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4. At the EGM – pass the special resolution to alter thearticles of association and the ordinary resolution toapprove the share buy backs exercise

5. Immediately after EGM announce to BM of the resolutionpassed at the EGM

6. File form 11 (Notice of resolution, both the OR and SR) withCCM within 1 month of date of passing of the resolution

7. Board meeting – to determine the solvency of company.8. Declaration of solvency to be signed by majority of the

company’s directors and must be supported by auditor’s

report and lodged with BM. Send a copy to SC and CCM.9. Appointment of stockbroking firm and opening of CDSaccount for share buy backs. Notice of appointment mustbe lodged with BM immediately.

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10. Any purchase of own shares must be announced to BM nolater than 6.30 p.m. on the day the purchase is made.

11. Lodge with the CCM and BM a notice (F28A) within 14days after the shares are purchased. Also send a copy toSC.

12. All shares so purchased by the company shall be creditedinto the “share -buy back account’ and shall be treated as asuspend and must not:• be dispose, transfer, change or otherwise deal with by

the company except as specifically provided unders67A and any regulations; or

• be entitled to or subject to any rights and obligations.

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Announcements -Notice of Shares Buy BackForm28A.docx

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© Copyright Alicia Tan and Norziana Lokman
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