For most Malaysian businesses, the private limited company (Sdn. Bhd.) is the go-to corporate vehicle. It offers a relatively simple shareholder structure and flexibility for businesses whose ownership and fundraising remain closely held.
As a business grows, however, its shareholding and capital-raising needs may evolve. At that point, the question is not automatically whether (or not) the company should list, but there is still a little discussed intermediate step to consider. This is where the unlisted public company (“UPC”) becomes relevant.
A UPC is a public company whose shares are not listed and which is not seeking to have them listed. It therefore occupies a distinct position between a private company and a listed company. It is not necessarily a stepping stone to an initial public offering; in appropriate circumstances, it may be the intended corporate structure in its own right.
How a UPC Can Raise Capital
As a general rule, Section 212(5) of the Capital Markets and Services Act 2007 (“CMSA”) requires a person intending to make available, offer for subscription or purchase, or issue an invitation to subscribe for or purchase unlisted capital market products to obtain the Securities Commission Malaysia’s (“SC”) authorisation and register a disclosure document. Section 212(8) of the CMSA, however, disapplies that authorisation requirement for matters specified under Schedule 5 to the CMSA, which includes share offerings by a UPC.
The Guidelines on Offer of Shares by Unlisted Public Companies (“2025 Guidelines”) set out, among others, the requirements applicable to a UPC offering its shares, without seeking the SC’s prior authorisation under Section 212(5)(a) of the CMSA.[1]
Effective from 28 March 2025, the 2025 Guidelines supersede the Guidelines on Offer of Shares by Unlisted Public Companies to Sophisticated Investors issued by the SC in 2021 (“2021 Guidelines”),[2] which applied only to a UPC making an offer of its shares to sophisticated investors,[3] and now cover offers to both sophisticated and retail investors. The 2025 Guidelines, however, do not apply to a UPC that offers its shares through a platform operated by a recognised market operator registered with the SC under the Guidelines on Recognised Markets.[4]
The requirements for share offerings by a UPC depends principally on the investor category.[5] Offers to sophisticated investors[6] may not require a registered prospectus and be made by way of an information memorandum (“IM”), subject to the applicable requirements of the 2025 Guidelines, including its deposit of the IM with the SC and a maximum offering period of 18 months.[7] Where the offer involves preference shares, the UPC must consult the SC[8] and appoint a corporate finance adviser (“CFA”)[9], whereas an offer of ordinary shares does not require such consultation.[10]
Offers to retail investors, by contrast, must be made pursuant to a prospectus registered with the SC under Section 232 of the CMSA,[11] regardless of whether the shares offered are ordinary or preference shares. The prospectus must be submitted through a recognised principal adviser in accordance with the Prospectus Guidelines. Such offer is not subject to consultation with the SC or the corresponding CFA requirement,[12] but the offering period is capped at a maximum 6 months.[13]
The significance of the 2025 Guidelines, however, is not simply that they widen the potential investor pool. They also impose substantive conduct, governance and reporting requirements on UPCs, their boards and relevant advisers and agents. The SC has expressly framed the revised regime around investor protection and market integrity, including in response to concerns over inadequate disclosure, unrealistic return expectations, and the marketing of offers intended for sophisticated investors to retail investors.[14]
Where Does the UPC Make Commercial Sense
The commercial case for a UPC starts with what the business has outgrown. For a company whose existing shareholders can continue to fund its growth, or whose capital requirements can be met through private financing, remaining private is likely to remain the simpler option. In practice, few businesses are likely to reach the 50-member threshold under the Companies Act 2016[15], and this threshold is unlikely, by itself, to drive a move to UPC status.
The stronger case arises where private fundraising does not provide the desired breadth of investor access, but the company has little need for its shares to be publicly traded. A public listing on Bursa Malaysia may provide access to a broader market for the company’s shares, but it also brings strict governance and compliance requirements and expectations. A UPC potentially addresses the narrower need by allowing the company to broaden its equity investor base while keeping its shares unlisted.
That distinction matters because broader equity participation does not necessarily mean that a company needs a market in which its shares are continuously traded. A company may instead seek access to a wider pool of investors through periodic equity raisings, without creating a public market for its shares.
The Investor Perspective
The difficulty is that the same feature that may make the UPC attractive to the company can make it less attractive to investors. A listing does more than provide a fundraising mechanism. Commensurate with the continuing disclosure and governance requirements, a public listing creates a market in which investors can trade the company’s shares, providing liquidity, price discovery and market visibility.
A UPC does not replicate that market. Its shares remain unlisted, so there is no continuously observable price and no ready pool of counterparties to trade with. A transfer, where it happens at all, typically takes place privately, and is often subject to pre-emption rights or board consent under the company’s constitution or a shareholders’ agreement, mechanisms designed to let the company control who its shareholders are, but which also mean an exit cannot simply be executed on demand. Price, in the absence of a public market, is usually anchored to the last fundraising round or set by an independent valuation, rather than arrived at through continuous trading.
The investment proposition therefore turns, in part, on whether the underlying opportunity justifies accepting less liquidity and less readily available pricing. This may be more acceptable to investors with a longer investment horizon, but less so where liquidity and price transparency are central investment objectives. The broader investor access enabled by the UPC may therefore be meaningful only where there is a sufficient pool of investors willing to invest on that basis.
Closing Thoughts
Whether a UPC is the right structure is ultimately a commercial call. The businesses for whom it is most likely to be worth considering tend to share a few characteristics: a credible reason to broaden their equity base and no real need for their shares to trade continuously in a public market. Where those characteristics are absent, a UPC is unlikely to offer any real advantage over remaining private or pursuing a public listing, and its regulatory and governance burden (albeit lighter compared to a public listed company) becomes a cost without a corresponding benefit.
Even where these circumstances are present, the decision still comes down to whether both sides consider the trade-off worthwhile: the company weighing broader investor access against the regulatory and governance burden, and investors weighing the underlying investment opportunity against reduced liquidity and lack of price discovery. A UPC is therefore not a general middle ground between private and listed companies. Its value is only unlocked by companies needing to address a narrow set of circumstances that neither the private nor pubic listed model can address sufficiently well.
[1] Paragraph 1.02 of the 2025 Guidelines
[2] Paragraph 3.01 of the 2025 Guidelines
[3] Paragraph 2.01 of the 2021 Guidelines
[4] Paragraph 2.03 of the 2025 Guidelines
[5] Chapter 4 of the 2025 Guidelines
[6] A sophisticated investor is a person determined as such under the Guidelines on Categories of Sophisticated Investors, or a person acquiring shares through a private placement of not less than RM250,000. A retail investor is any person who is not a sophisticated investor.
[7] Paragraph 5.08 of the 2025 Guidelines
[8] Paragraph 6.01 of the 2025 Guidelines
[9] Paragraph 6.03 of the 2025 Guidelines
[10] Paragraph 6.02 of the 2025 Guidelines
[11] SC, Item 3 of the Frequently Asked Questions on the Guidelines on Offer of Shares by Unlisted Public Companies (28 March 2025)
[12] Paragraph 6.02(a) of the 2025 Guidelines
[13] Paragraph 5.09 of the 2025 Guidelines
[14] SC, Item 1 of the Frequently Asked Questions on the Guidelines on Offer of Shares by Unlisted Public Companies (28 March 2025)
[15] Section 42(1) of the CA 2016
About the authors
Shaun Lee Zhen Wei
Principal Associate
Corporate & Investor Services
Halim Hong & Quek
shaun.lee@hhq.com.my
.
Sherzanne Lee
Senior Associate
Corporate & Investor Services
Halim Hong & Quek
sz.lee@hhq.com.my
.
Carmen Lee Kar Mun
Associate
Corporate & Investor Services
Halim Hong & Quek
carmen.lee@hhq.com.my
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