Myanmar Times | A second stock exchange, or pre-listing board, will be set up for the purpose of trading shares in public companies that have yet to list on the Yangon Stock Exchange (YSX), said U Maung Maung Win, who is Deputy Minister for Planning, Finance, and Industry as well as Chair of the Securities and Exchange Commission of Myanmar (SECM). However, no further details were provided on when this would take place.
“The pre-listing board is for investors to buy and sell the shares of Myanmar public companies that have yet to meet the criteria to be listed on the YSX,” U Maung Maung Win said, adding that in other countries, secondary listing boards are common to enable companies that have yet to meet main board listing criteria to raise capital by selling their shares.
This will be beneficial to small and medium-sized enterprises (SMEs) in particular, a they will have the opportunity to raise capital, U Maung Maung Win said.
There are currently more than 260 public companies registered under the Myanmar Companies Law. Only six public companies are listed on the YSX.
“Most public companies do not meet the criteria for listing on the YSX. So, a pre-listing board will be established to fill this gap. Establishing this market creates the right environment for unlisted public companies and exposes them to new challenges and opportunities that raise their potential of listing on the YSX in the future,” said U Yin Zaw Myo, Managing Director of the YSX.
The new board will be established with the approval of the Ministry of Planning, Finance, and Industry and under the supervision of the SECM.
Although less stringent than listing on the YSX, public companies will also need to meet the requirements of the second board before their shares are open for trading.
Discussions to establish a second stock exchange for public companies commenced last year. The move is also expected to create an official platform for the trading of shares in public companies. Currently, the shares are traded in the over the counter (OTC) market, which is loosely regulated.
Unlike many international markets, where qualifying to become a public company involves meeting a slew of conditions such as being profitable for a consecutive period of time, providing evidence of growth potential and listing on a stock exchange, in Myanmar, companies can opt for public status at their inception.
Public companies are set up with two main objectives – to raise capital from the public and compete for government tenders. They are also required to obtain permission from the SECM and other authorities and meet a list of criteria before they are officially allowed to sell their shares.