Market regulator Securities and Exchanges Commission of Cambodia and Cambodia Securities Exchange are looking at reducing some of the current initial public offering requirements, as a way to attract more small- and medium-size businesses to list on the flagging exchange.
At a meeting of Securities and Exchanges Commission of Cambodia (SECC) last week, Economy and Finance Minister Aun Porn Moniroth asked the regulator to review the requirements and prakas on IPO issuance, listing norms and other concerned regulations.
Mok Rady, head of research for the Securities Market Development Division Securities at the SECC, said they would evaluate the possibility of reducing certain obligations to disclose company capital and net profit from three years to just one year prior to listing.
“It is the principle that we are considering for them now.
We want to reduce our strict regulation or prakas which makes it difficult for potential companies, including SMEs, to get listed,” he said.
This would involve setting up an alternate board for SMEs to list on, separate from the main board which will continue to lure the big ticket listings.
“All of these principles are not finalised and were just discussed during the meeting,” Rady said.
The two concerned bodies will also undertake consultations with relevant stakeholder, like securities firms and the public, and aim to implement the changes this year
According to the current listing prakas, businesses with a capital of at least 5 billion riel, or $1.25 million, can list on the exchange.
Additionally, for companies with capital less than $5 million the IPO size should be at least 20 per cent of the disclosed capital and 15 per cent for companies with capital over $5 million mark.
Soleil Lamun, acting director of market operations at the exchange, said the review would also look at making the listing process cheaper and not target family-owned SMEs.
“SECC, as well as CSX, are working to bring qualified SMEs to the capital market, so that they can raise sufficient funds to improve and expand their production and their competitiveness in the market,” he added.
According to the 2011 Cambodian Economic Census, Cambodia has more than 500,000 SMEs operating in the country, a figure that represents 99 per cent of all businesses and an estimated 1.67 million jobs.
Svay Hay, president and CEO of brokerage firm Acleda Securities, said that existing requirements in the prakas were proving to be a barrier for potential companies and SMEs looking to list on the bourse.
“This is a barrier. It needs more flexibility to fit the Cambodian market and purchasing power,” he said.
CSX CEO Hong Sok Hour told the Post in March that the exchange was banking on an SME board to boost its fledgling trade volumes and improve investor sentiment.
“We are trying to set up a legal framework for companies that want to raise $1 million to $2 million, without having to pay $1 million to $2 million in total costs,” Sok Hour said at the time.