Currently, 96% of small and medium enterprises (SMEs) funding comes from the banking sector, an indication of its huge dependence on financial institutions for its growth and survival.

On 25 July 2017, Prime Minister of Malaysia officially launched the Leading Entrepreneur Accelerator Platform (LEAP) Market – an alternative fund-raising platform for SMEs through capital market.

Advantages of the LEAP Market:

For SMEs and companies

• An alternative platform to raise funds with enhanced visibility/profiling
• Facilitative rules & regulations and lower cost of compliance
• Potentially unlock shareholder value and become listed on the ACE/Main Market
• Price discovery therefore easier to undertake mergers and acquisitions

For Sophisticated Investors

• Greater price discovery/transparency
• Capitalise on the potential growth of a LEAP Market company, which may yield high returns when companies on the LEAP Market become listed on ACE/Main Market.
• Access to a wider pool of potential investments.

What are the requirements to be listed on the LEAP Market?

The company must:

• be a public company incorporated in Malaysia;
• has a clearly identifiable core business;
• has 10% public shareholding spread at the point of admission only; and
• meet the suitability assessment by an approved Adviser.

Who can invest in companies listed on the LEAP Market?

Only “sophisticated Investors” defined by Schedules 6 & 7 of the Capital Markets and Services Act 2007 (“CMSA”) are allowed to invest in companies listed on the LEAP Market. Sophisticated Investors include accredited investors, high net-worth entities or individuals, for instance:

• an individual with total net personal assets exceeds RM3,000,000 or equivalent in foreign currencies; OR
• an individual who has a gross annual income exceeding RM300,000 or equivalent in foreign currencies in the preceding twelve months; OR
• an individual who, jointly with his or her spouse, has a gross annual income exceeding RM400,000 or equivalent in foreign currencies in the preceding twelve months; OR
• a corporation with total net assets exceeding RM10,000,000 or equivalent in foreign currencies based on last audited accounts; OR
• a partnership with total net assets exceeding RM10,000,000 or its equivalent in foreign currencies; OR
• a company that is registered as a trust company under the Trust Companies Act 1949 which has assets.

How does the LEAP Market work?

• The LEAP Market is a part of Bursa Malaysia and will operate under Bursa Malaysia Securities. Bursa Malaysia is the single approving authority for listing.
• SMEs and companies will have to appoint an approved Adviser to guide them through the LEAP Market’s listing process and post-listing requirements. The list of Advisers is available on bursamalaysia.com.
• Before listing takes place, the list of new SMEs and companies applying for the LEAP Market will be available on Bursa Malaysia’s website. Sophisticated Investors may contact these companies through their respective Advisers to learn more about the companies.
• After listing on the LEAP Market, trading will be similar to the ACE/Main Market. Sophisticated Investors will have to register with a broker and buy or sell shares through their accounts.

… In short, the LEAP market is part of a larger ecosystem created by the regulators which began with the implementation of the Equity Crowdfunding (ECF) platform two years ago, to aid the growth of SMEs through capital market towards the Ace/Main Market.