The Securities Commission Malaysia’s (SC) revised Equity Guidelines, issued on 28 May 2026 and effective from 3 June 2026, mark one of the most significant changes to our capital markets in recent years.[1] Most commentary has treated these revisions as a routine compliance update. However, their implications are far more significant. The changes affect how mid-market companies time their listings, how private equity investors plan their exits, and how long fast-growing companies need to stay private before going public.
The revisions reflect the SC’s response to a problem that has been building for several years: Bursa Malaysia has been setting listing volume records, but a large share of recent listings have underperformed once the IPO hype faded.
1. The Paradox: Record Volume, Inconsistent Value
To understand why the SC revised the guidelines, it is helpful to begin with numbers. Bursa Malaysia’s listing volumes have grown sharply over the past three years across all three boards: the Main Market (for established companies), the ACE Market (a sponsor-driven board for growth companies), and the LEAP Market (restricted to sophisticated investors and serving as a pre-IPO staging ground for smaller firms).
Bursa Malaysia recorded a 19-year high of 55 IPOs in 2024, followed by a new record of 60 in 2025, raising RM5.96 billion in proceeds.[2]
The momentum has continued into 2026. As of the end of July 2026, approximately 39 to 40 companies have listed on Bursa Malaysia, putting the exchange on track for another strong year and retaining Malaysia’s position as Southeast Asia’s leading IPO market for a second consecutive first-half period. Deloitte’s Mid-Year IPO Snapshot confirms this regional shift: the average deal size in Southeast Asia has grown 2.4 times compared with H1 2025, driven by larger and more mature issuers. It should be noted, however, that every one of those 2026 listings was processed and approved under the previous regulatory framework, as the revised guidelines only took effect on 3 June 2026. The real test of the new thresholds begins now. The pipeline for the remainder of the year comprises over 40 companies, and these applications will be the first to be assessed against the higher bar.
The Quality Question
Beyond the listing date, however, the picture is less convincing. The Edge Malaysia analysed the share price performance of IPOs listed between 2023 and 2025, and found a broad declining trend relative to the FBM KLCI. In 2025, two out of every three new listings ended the year below their IPO price.[3]
The underlying cause appears to be earnings rather than sentiment. The same analysis found that 57% to 61% of companies listed in 2023 and 2024 reported lower net profit in the financial year immediately following their listing, despite each having shown rising profit for three consecutive years before their IPO.[4] The Edge Malaysia summarised this as IPOs being “priced to sell, not to perform”. The pricing reflected a track record built for the prospectus, not a trajectory that continued once the company was public.[5]
This is the gap that the revised Equity Guidelines are designed to close.
2. Main Market: A Higher Profit Bar, and Less Room to Manage the Numbers
The Profit Test thresholds have been increased, which will change how mid-market companies plan their route to listing.
The Profit Hurdle
The aggregate Profit After Tax (PAT) requirement over the track record period has risen from RM20 million to RM30 million. The PAT requirement for the most recent financial year alone has more than doubled, from RM6 million to RM15 million.[6]
The RM15 million single-year requirement matters more than the aggregate increase. It removes the possibility of qualifying on the back of one strong year layered on top of a weaker track record. Companies will need to show sustained, recent profitability which, for many founders, means extending the private growth phase by a further 12 to 24 months before they can credibly apply.
Audit Quality
The revised Equity Guidelines also require an unmodified audit opinion and the absence of any statement of material uncertainty on going concern, across the three most recent financial years.[7] This closes a route that some companies had previously used, namely by resolving accounting issues or aggressive revenue recognition practices in the period leading up to listing. That route is no longer available, bringing Malaysia’s standard closer to Hong Kong’s, where HKEX raised its three-year aggregate profit requirement by 60%, from HK$50 million to HK$80 million, effective 1 January 2022, with the explicit aim of reducing low-quality, thinly-traded listings.[8]
Cash Flow: More Flexibility, Not Less
One change works in the other direction. The SC has replaced the fixed operating cash flow requirement with a more qualitative assessment of overall financial health.[9]
This matters for asset-light and digital businesses, which often run negative operating cash flow for a period due to upfront customer acquisition costs, even where the underlying unit economics are sound. Removing a rigid, formula-based test allows such companies to make their case on commercial merit, rather than being excluded by an accounting convention built for a different kind of business.
3. ACE Market: A Longer Minimum Stay Before Transferring Up
The changes to the ACE Market concern timing rather than eligibility.
The Two-Year Floor
Companies must now have at least two full financial years of post-listing track record on the ACE Market before they can apply to transfer to the Main Market.[10]
This is not entirely new ground. The SC introduced an accelerated transfer route in January 2024 for large ACE-listed companies that had already reached RM1 billion in market capitalisation, and that route remains available.[11] What has changed is the default position: for an ordinary transfer, two years is now a floor, not a guideline. Previously, fast-growing companies could move to the Main Market relatively quickly once their numbers improved. That option is now more constrained. Advisers and promoters will therefore need to plan an ACE listing as a multi-year phase in its own right, which will also affect how pre-IPO private equity investors model their return timelines on these deals.
Promoter Lock-In
The SC has also removed certain exemptions from promoter moratoriums and tightened sponsorship requirements.[12] Previously, promoters of ACE Market companies could seek exemptions from the standard moratorium period in certain circumstances, such as where a promoter held a relatively small stake or where the company had reached a specified market capitalisation threshold. Those exemptions are no longer available. The effect is that promoters will have their wealth tied to the company’s performance for a longer period after listing, thereby aligning their incentives more closely with those of public shareholders. From a deal-structuring perspective, this also means that private equity sponsors who assume promoter positions will need to factor in a longer lock-up period when modelling their exit timelines, a consideration that may affect pre-IPO deal pricing.
4. The Real Question: What Happens to Mid-Tier Companies and SMEs
The revised framework makes the public market more selective. The harder question is where the companies that no longer meet the threshold will go.
Companies that would have comfortably cleared the previous thresholds but fall short of the new RM15 million single-year requirement now face a real choice. If they opt to list on ACE Market instead, they will be committed to that board for at least two years, regardless of how quickly they grow in the meantime. For fast-scaling companies, this represents a meaningful constraint on timing and capital planning.
The Knock-On Effect for SMEs
For Malaysia’s smaller businesses, the practical effect is a more crowded ACE Market. As the Main Market becomes harder to reach, companies that previously aimed for a Main Market listing will spend longer on the ACE Market, and that has three consequences for SMEs sitting below them:
- • Higher cost of capital: with larger, more established companies now occupying the ACE Market for longer periods, investment banks and institutional investors are likely to prioritise them over smaller, less established issuers.
- • A wider equity funding gap: SMEs that need public capital to scale beyond the domestic market may find the step up to public-market compliance, audit, and governance standards further out of reach than before.
- • Increased demand for private capital: as the public listing timeline lengthens, more mid-market and high-growth companies are likely to turn to private equity, mezzanine financing, and structured private credit to fund the gap.
The Global Context: Where Does Malaysia Sit?
This is where the story gets more interesting than simply saying that “Malaysia is catching up”. The region is not all moving in the same direction.
Malaysia vs. Singapore: converging, but from opposite directions. In October 2025, SGX RegCo lowered its Mainboard profit test from S$30 million to S$10 million for the latest financial year, specifically to widen the pool of companies eligible to list and bring Singapore closer in line with other major exchanges.[13] Bursa Malaysia’s new RM15 million threshold now sits in a broadly comparable range, but Malaysia reached this point by raising its bar, whereas Singapore did so by lowering its own. The two exchanges are therefore converging from opposite ends. The practical takeaway for Malaysian issuers is that a Main Market listing is no longer obviously easier or harder than a Singapore listing on profit grounds alone, and the decision will increasingly turn on valuation, liquidity, and the investor base a company wishes to attract.
The Hong Kong precedent. Malaysia’s approach has a closer parallel in Hong Kong’s 2022 increase in its profit requirement, which was made for largely the same reason: a market capitalisation requirement had already risen in 2018, while the profit bar had remained unchanged since 1994, allowing companies to list at high valuations against thin earnings.[14] HKEX’s IPO volumes did soften in the year that followed. Malaysia is making a similar trade-off roughly four years later, with the advantage of being able to see how that bet played out.
The Commercial Verdict
The SC has chosen market quality over market volume. Some practitioners may argue that this slows the pipeline of mid-cap listings in the near term, and they may be right, for a year or two. However, the regional precedent, particularly Hong Kong’s, suggests that a smaller pool of better-prepared issuers tends to hold up better with institutional investors over time.
For corporate leaders and issuers, the practical implication is straightforward: a semi-mature corporate structure or an unresolved accounting history is no longer sufficient to reach the market. Capital strategy now requires a longer horizon, with financial governance addressed well before any planned listing, rather than in the run-up to it. The SC has made the right call. Whether Bursa can now attract the institutional depth required to match the higher listing standard remains the next question and is one worth watching over the next three to five years.
Disclaimer
This article is for general informational purposes only. It does not constitute legal or financial advice. Readers should seek professional advice specific to their own circumstances before acting on any information in this article.
[1]Securities Commission Malaysia, Equity Guidelines (Revised: 28 May 2026; Effective Date of Revision: 3 June 2026). https://www.sc.com.my/regulation/guidelines/equity
[2]Bursa Malaysia IPO figures as reported in: The Edge Malaysia, “Bursa Malaysia finishes 2025 with two-decade high listings, more in queue,” 11 December 2025 (quoting Bursa Malaysia CEO Datuk Fad’l Mohamed); Bernama, “Bursa Malaysia Eyes RM28 Bln IPO Market Capitalisation In 2026,” 29 January 2026; and New Straits Times, “Malaysia IPOs add nearly RM33bil in market cap as 2025 closes”, 29 December 2025. Underlying data: Bursa Malaysia IPO Summary, https://www.bursamalaysia.com/listing/listing_resources/ipo/ipo_summary
[3]“IPOs on Bursa: Priced to sell, not to perform,” The Edge Malaysia. https://theedgemalaysia.com/node/801250
[4]“IPOs on Bursa: Priced to sell, not to perform,” The Edge Malaysia. https://theedgemalaysia.com/node/801250
[5]“IPOs on Bursa: Priced to sell, not to perform,” The Edge Malaysia. https://theedgemalaysia.com/node/801250
[6]Securities Commission Malaysia, Summary of Amendments – Revised Equity Guidelines (Date of Issuance: 28 May 2026), paragraph 5.02(a). Prior requirement confirmed in Equity Guidelines SC-GL/EG-2009 (R7-2024), paragraph 5.02.
[7]Securities Commission Malaysia, Summary of Amendments – Revised Equity Guidelines (Date of Issuance: 28 May 2026), paragraphs 5.08B, 5.09(j), 6.31(d), 7.05B.
[8]Hong Kong Exchanges and Clearing Limited, Consultation Conclusions on the Main Board Profit Requirement, 20 May 2021 (Modified Profit Increase effective 1 January 2022).
[9]Securities Commission Malaysia, Summary of Amendments – Revised Equity Guidelines (Date of Issuance: 28 May 2026), paragraphs 5.08A, 5.09A, 6.31(c), 7.05A, 8.03.
[10]Securities Commission Malaysia, Summary of Amendments – Revised Equity Guidelines (Date of Issuance: 28 May 2026), paragraph 8.01(a).
[11]Securities Commission Malaysia media statement on the accelerated transfer of listing framework for ACE Market companies, December 2023 (effective January 2024); reported in “Market players laud new rule accelerating transfer of listing,” The Edge Malaysia, 18–24 December 2023.
[12]Securities Commission Malaysia, Summary of Amendments – Revised Equity Guidelines (Date of Issuance: 28 May 2026) (amendments to promoter moratorium exemptions and sponsorship requirements under the ACE Market Listing Requirements).
[13]Singapore Exchange Regulation (SGX RegCo), A Shift to a More Disclosure-Based Regime (Response Paper), 29 October 2025; SGX-ST Mainboard Rules, Rule 210(2), effective 29 October 2025.
[14]Hong Kong Exchanges and Clearing Limited, Consultation Conclusions on the Main Board Profit Requirement, 20 May 2021 (Modified Profit Increase effective 1 January 2022).
About the authors
Justin Ng Shien-Wen
Partner
Corporate & Capital Markets Practice Group
Halim Hong & Quek
justin.ng@hhq.com.my
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Tan Jun Kit
Partner
Corporate & Capital Markets Practice Group
Halim Hong & Quek
jk.tan@hhq.com.my
