THE ACE MARKET
Key Changes to the LR
- GN3 Companies
- Cash Companies
- Default in Payment
10 July 2009
Ch’ng Boon Huat,
Head, Issuers Investigation & Surveillance

Key Changes to GN3 Companies
Key Changes to GN3 Companies
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Statistics of Financially Distressed Companies
Statistics of Financially Distressed Companies
• Statistics of GN3 Companies as at 30 June 2009
Outstanding Regularised De-listed
GN3 6 1 3
Total 6 1 3
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GN3 Co. -- Change of Prescribed Criteria
GN3 Co. Change of Prescribed Criteria
Amendment to shareholders’ equity criterion
MESDAQ Market ACE Market
(a) shareholders’ equity (a) shareholders’ equity
(a) shareholders’ equity
(SE)
•
• ≤ 25% of the issued & paid-
≤ 25% of the issued & paid-
• ≤ 25% of the issued & up
up capital
capital (excluding
(excluding
paid-up capital treasury shares)
treasury shares)
• < minimum issued and
paid-up capital
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GN3 Co. --Change of Prescribed Criteria (Cont’d)
GN3 Co. Change of Prescribed Criteria (Cont’d)
No change to other Prescribed Criteria
Default in
Default in Suspended/
Suspended/
Modified
Modified Payment in no
Payment in no Ceased All/
Ceased All/
Opinion on
Opinion on Solvency
Solvency Major
Major
Going Concern
Going Concern Declaration
Declaration Business or
Business or
& SE < 50% of
& SE < 50% of Operations
Operations
Issued & Paid-
Issued & Paid-
up Capital
up Capital Insignificant
Insignificant
business/
business/
operations (SE <
operations (SE <
Adverse/
Adverse/ 5% of Issued &
5% of Issued &
Disclaimer
Disclaimer Paid-up Capital)
Paid-up Capital)
Opinion
Opinion Prescribed
Criteria
L1 > SE1 & SE
L1 > SE1 & SE
Winding-up
Winding-up < 50% of Paid-
< 50% of Paid-
Order of
Order of up Capital
up Capital
Subsi/Assoc.
Subsi/Assoc.
Company
Company
R&M
R&M L1 + L2 > SE1 &
L1 + L2 > SE1 &
appointed for >
appointed for > SE2, (L2 > 50% of
SE2, (L2 > 50% of
50% of total
50% of total L1) & SE2 < 50%
L1) & SE2 < 50%
assets
assets of Paid-up Capital
of Paid-up Capital
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GN3 Co. – Regularisation Flowchart
GN3 Co. – Regularisation Flowchart
Trigger GN3 Criteria
First Announcement
Within 3 months
Appoint a Sponsor
Submit Plan to Bursa Within 12 months
Securities
Obtain Bursa Securities’
approval
Implementation Within 6 - 12 months
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GN3 Co. – New Requirements on Regularisation Obligations
GN3 Co. – New Requirements on Regularisation Obligations
1) Appoint a Sponsor within 3 months from FA date;
Obligation to
Obligation to
Regularise
Regularise 2) Submit plan to Bursa & obtain Bursa’s approval
within 12 months from FA date; and
3) Complete implementation of the plan within 6 – 12*
months from plan approval date.
• Sufficiently comprehensive, capable of resolving all
Regularisation
Regularisation problems, financial or otherwise
Plan
Plan
• Enable to regularise its financial condition and level
of operations
• Fair and reasonable to the company and
shareholders & increase shareholder value
* For plan which involves Court proceeding
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GN3 Co. – Sponsor
GN3 Co. – Sponsor
• A GN3 Company must appoint a Sponsor within 3
months after being classified as a GN3 Company.
Appointment
Appointment
Duration of • A GN3 Company must retain the services of a
Duration of Sponsor for at least 3 full financial years after it is no
Sponsorship
Sponsorship longer considered as a GN3 Company by the
Exchange.
Period
Period
• The Sponsor appointed to restructure the Company
must act as the Sponsor for at least the first full
financial year.
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GN3 Co. – New Requirements on Regularisation Obligations
GN3 Co. – New Requirements on Regularisation Obligations
Failure to Comply with
Failure to Comply with
Obligations to
Obligations to
Regularise
Regularise
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Key Changes to Requirements for
Key Changes to Requirements for
Cash Companies
Cash Companies
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What is a Cash Company?
What is a Cash Company?
A listed issuer whose assets on a
A listed issuer whose assets on a
consolidated basis, consist of 70% or
consolidated basis, consist of 70% or
Criteria
more of cash or short term investments,
more of cash or short term investments,
or a combination of both (“Cash
or a combination of both (“Cash
Criterion”)
Criterion”)
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Cash Co. – Regularisation Flowchart
Cash Co. – Regularisation Flowchart
Trigger Cash Criteria
Notify Bursa Securities in writing
immediately upon receipt of the
Exchange’s notice that it is a
Cash Company
Announcement
Within 3 months
Appoint a Sponsor
Within 12 months
Submit proposal to acquire a new
core business to Bursa Securities
Procure approval
Implementation Within 6 - 12 months
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Cash Co. – New Requirements
Cash Co. – New Requirements
Place > 90% cash & short-dated securities
with account opened and operated by a
custodian – cannot withdraw except for
- to implement reg. proposal; or
- to distribute to shareholders on pro-rata
basis if fails to regularise
Cash
Company
Submit Proposal to Acquire
Failure to regularise New Core Business to Bursa
- May be suspended & delisted Securities for Approval within
- Must distribute money in 12 months & Implement
account to shareholders on within 6 – 12 months
pro-rate basis

Transitional Arrangements for
Transitional Arrangements for
Cash & GN3 Companies
Cash & GN3 Companies
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Transitional Arrangements for
Transitional Arrangements for
Cash & GN3 Companies
Cash & GN3 Companies
Existing Cash & GN3 Company may apply to Bursa to
Existing Cash & GN3 Company may apply to Bursa to
regularise its condition under new framework
regularise its condition under new framework
PROVIDED THAT --
PROVIDED THAT
it is still within the stipulated or extended timeframe to
it is still within the stipulated or extended timeframe to
submit its proposal or plan to regularise its condition
submit its proposal or plan to regularise its condition
under the GN3 Framework.
under the GN3 Framework.
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Key Changes to Guidance Note 5
Key Changes to Guidance Note 5
Default in Payment
Default in Payment
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GN5 – Amendments to Event of Default
GN5 – Amendments to Event of Default
MESDAQ Market ACE Market
(a) Default for credit facility is ≥ 5%
(a) Default where the total amount
(a) Default where the total amount
of PLC’s net assets outstanding of the defaulted credit
outstanding of the defaulted credit
facility is ≥ 5% of PLC’s net assets
facility is ≥ 5% of PLC’s net assets
(b) Default which has material effect (b) Clarify that where a PLC has a
(b) Clarify that where a PLC has a
on the price, value or market activity negative net asset, any amount in
negative net asset, any amount in
default will be considered as material
default will be considered as material
General - default not dependent on demand
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GN5 – Amendments to Event of Default
GN5 – Amendments to Event of Default
No change to other Event of Defaults
Event of
Defaults
default in
default in default in
default in
payments of
payments of payments
payments
interest in respect
interest in respect under aa
under
of loan stocks or
of loan stocks or debenture
debenture
bonds, whether
bonds, whether
listed or unlisted
listed or unlisted
on the Exchange
on the Exchange default in principal
default in principal
payments in respect of
payments in respect of
loan stocks or bonds,
loan stocks or bonds,
whether listed or unlisted
whether listed or unlisted
on the Exchange
on the Exchange

GN5 – Amendments to Definition of Solvency
GN5 – Amendments to Definition of Solvency
MESDAQ Market ACE Market
(c) “Solvent” if majority directors (c) “Solvent” if majority directors
(c) “Solvent” if majority directors
forms the opinion that PLC will be forms the opinion that PLC will be
forms the opinion that PLC will be
able to pay all its debts within 12 able to pay all its debts as and when
able to pay all its debts as and when
months from announcement date they fall due within 12 months from
they fall due within 12 months from
announcement date
announcement date
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Cash Co. – Definition of “Custodian”
Cash Co. – Definition of “Custodian”
“Custodian” means any of the following who is independent
“Custodian” means any of the following who is independent
of the Cash Company:
of the Cash Company:
(a) a trust company registered under the Trust Companies
(a) a trust company registered under the Trust Companies
Act 1949 or incorporated pursuant to the Public Trust
Act 1949 or incorporated pursuant to the Public Trust
Corporation Act 1995 and is in the List of Registered Trustees
Corporation Act 1995 and is in the List of Registered Trustees
in relation to Unit Trust Funds issued by the SC; or
in relation to Unit Trust Funds issued by the SC; or
(b) a licensed bank or merchant bank as defined in the
(b) a licensed bank or merchant bank as defined in the
Banking and Financial Institutions Act 1989.
Banking and Financial Institutions Act 1989.

Thank You
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