THE Securities Commission (SC) has set up on its website the reasons for rejecting the listing plans for initial public offerings (IPOs) in the first six months this year. Incidentally, since January to June this year, 28 companies out of 51 proposals submitted were rejected by the SC.

Of those rejected, 20 were meant for the Mesdaq market while six had applied to be listed on the second board of Bursa Malaysia and two were for the main board.

It is interesting to note that the regulator has turned down many Mesdaq Market aspirants simply because “they are not qualified as a technology-based company and failed to display characteristics of a high-growth firm”. Reason enough for a market designed to cater for young, technology-related companies with high growth potential.

So for those aspiring companies that wish to go for IPO, please check out the below rejections/ reasons given by the SC:

Main Board:

• Did not meet profit track record;

• May not be able to compete with big foreign players in a tough market;

• Over dependent on limited contracts.

Second Board:

• Poor corporate governance;

• Over dependent on small pool of customers;

• Lack of competitive advantages;

• Over dependent on lower end contract manufacturing business;

• Concerns on financial sustainability

Mesdaq Market:

• Not qualified as high technology and high growth firm;

• Unproven market acceptance of products;

• Difficulty in maintaining sales, as customers are either too small or too new;

• Low barrier of entry;

• Dependent on products that are yet to be commercialized;

• Hard to compete in a tough market;

• Lack of transparency;

• Over dependent on a restricted market

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