Legal Victory
Listed Company Scheme of Arrangement with SC Clearance Removes Malaysian Technology Company from PN17 Watch List
NZSK Legal acted in a complex Bursa-listed company scheme involving Securities Commission approval, new ICPS issuance, simultaneous capital reduction, and RM 115 million in total liabilities — resulting in removal from PN17 and full resumption of trading.
Summary
Industry
Technology & ICT Infrastructure — Bursa Malaysia Main Market Listed
Court
High Court (Commercial Division), Kuala Lumpur
Total Liabilities
RM 115 Million
Regulatory Approvals
SC+ Bursa Malaysia
Creditor Approval
88% Weighted Average
Result
PN17 Removed
Maxine Khoo
Published: May 5, 2026
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Background
Our client was a Bursa Malaysia Main Market-listed company providing ICT infrastructure and managed services to public sector clients across Malaysia. A combination of aggressive debt-funded expansion, client concentration risk, and a key government contract renewal failure resulted in a material deterioration of the company’s financial position. The company was subsequently placed on Bursa Malaysia’s Practice Note 17 (PN17) watch list — the exchange’s designation for financially distressed listed issuers — triggering mandatory disclosure obligations and a timeline to submit a regularisation plan.
The board resolved to pursue a scheme of arrangement under the Companies Act 2016 as the primary PN17 regularisation plan, incorporating new securities issuance and a simultaneous capital reduction to eliminate accumulated losses. As a law firm experienced in both Malaysian corporate restructuring and listed company regulatory requirements, NZSK Legal was appointed to lead the legal workstream.
The Challenges
- The listed company context added layers of regulatory complexity absent from private company schemes. Any scheme involving the issuance of new irredeemable convertible preference shares (ICPS) to creditors required a formal submission to and approval from the Securities Commission of Malaysia under the Capital Markets and Services Act — a parallel regulatory track running alongside the High Court proceedings.
- Bursa Malaysia required the scheme booklet to be vetted and cleared by its corporate affairs division before circulation to shareholders and creditors. Multiple rounds of clarification queries were raised and required timely, accurate responses prepared by NZSK Legal in consultation with the company’s reporting accountants and investment bankers.
- The company was required to undertake a simultaneous capital reduction under Section 117 of the Companies Act 2016 to eliminate its accumulated losses before new ICPS could be issued. This created a compound transaction requiring parallel court applications and regulatory filings that had to be sequenced and coordinated precisely.
- Disclosure standards were heightened throughout. Every statement in the scheme booklet and all regulatory submissions was subject to due diligence verification. Directors and legal advisers face criminal liability under Malaysian law for false or misleading statements in documents submitted to Bursa Malaysia and the Securities Commission.
Our Approach
- NZSK Legal assembled and coordinated a multi-disciplinary team including investment bankers, reporting accountants, an independent financial adviser to scheme creditors, and Shariah advisers for Islamic financing components. The legal team assumed responsibility for all court applications, scheme documentation, and regulatory submissions.
- A master project timeline was prepared at the outset mapping every court application, regulatory submission, Bursa clearance milestone, and creditor engagement checkpoint across the 18-month process. Weekly cross-team coordination calls were held throughout implementation.
- The Securities Commission submission was prepared and filed concurrently with the High Court application to convene the creditors’ meeting — ensuring both regulatory and judicial tracks advanced in parallel rather than sequentially, saving several months of elapsed time.
- Three separate creditor class meetings were convened: one for secured creditors, one for unsecured trade and financial creditors, and one for public bondholders — each with a tailored explanatory circular reflecting their specific rights and recovery analysis under the scheme.
The Outcome
- Securities Commission approval for the new ICPS issuance was obtained. Bursa Malaysia cleared the scheme booklet following the clarification process. All three creditor classes voted in favour of the scheme with an aggregate weighted approval of 88% by value.
- The capital reduction was sanctioned by a separate court order issued concurrently with the scheme sanction. ICPS were issued to consenting creditors and the remaining debt was restructured over a seven-year repayment schedule.
- The company successfully submitted its PN17 regularisation plan and was removed from Bursa Malaysia’s PN17 watch list within six months of scheme implementation. Full trading in the company’s securities resumed on the Main Market.
- This matter stands as one of the most technically complex listed company schemes of arrangement handled by a Malaysian corporate restructuring law firm, involving simultaneous High Court, Securities Commission, and Bursa Malaysia proceedings across an 18-month timeline.
Key Legal Principle
A listed company scheme of arrangement in Malaysia is not merely a corporate restructuring exercise — it is a regulated transaction. Documents submitted to the Securities Commission and Bursa Malaysia carry heightened disclosure obligations and criminal liability for false or misleading statements. Every material fact must be independently verified before filing, and the legal, financial, and regulatory workstreams must be precisely coordinated.
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