Make the. for you? n By Abdul Razak Rahman

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1 n By Abdul Razak Rahman Can SMEs Make the LEAP? SMEs and Sophisticated Investors now have an alternative capital raising and investment platform with Bursa Malaysia s Leading Entrepreneur Accelerator Platform (LEAP) Market. Is it right for you? Bursa Malaysia s new Leading Entrepreneur Accelerator Platform (LEAP) Market aims to provide small and medium enterprises (SMEs) with an alternative and efficient fund-raising platform and raise their visibility through the capital market. On 25 July 2017, Prime Minister Dato Sri Mohd Najib Tun Haji Abdul Razak officially launched the Leading Entrepreneur Accelerator Platform (LEAP) Market at the Invest Malaysia Kuala Lumpur (IMKL) 2017 conference. The LEAP Market is an alternative capital raising platform for SMEs which is the first of its kind in ASEAN. It is designed to address the funding gap for SMEs and make it easier for them to take their businesses to the next level through raising funds in the capital market. It also provides investors with a new Salihudin Mohd Razali VP IPO Marketing, Securities Market, Commercial and Development, Bursa Malaysia Berhad investable asset class. The availability of such a platform would further aid the development of SMEs and support broader economic activities, said Datuk Seri Tajuddin Atan, Chief Executive Officer of Bursa Malaysia, at the launch of LEAP, as reported by various media. At the same event, he also estimated that around 19,000 SMEs are in need of funds and that LEAP could help mitigate this. At an earlier presentation on LEAP at the Capital Market Conference (CMAC) 2017, Bursa Malaysia Chief Operating Officer Datin Azalina Adham had called attention to a study by consulting firm Oliver Wyman which showed that the capital market could bridge SME financing gaps by providing up to 20% of the financing needs of SMEs. Based on SME Corp data, financial institutions fund approximately 96% of 38 accountants today mar / Apr 2018

2 Can SMEs Make the LEAP? total SME financing, with the capital market providing less than 4%. The proposed LEAP market could address the overdependency by providing access to the capital market. LEAP Basics As explained by Salihudin Mohd Razali, VP IPO Marketing, Securities Market, Commercial and Development, Bursa Malaysia Berhad, at MIA s Public Practitioners Forum 2017, the LEAP Market was developed based on the following guiding principles: Cost-efficient fund raising and listing Datin Azalina Adham Chief Operating Officer Bursa Malaysia Rules that have been formulated on the lighttouch basis balanced with prudent standards Qualified market for Sophisticated Investors. The approving authority for the LEAP Market is Bursa Malaysia. As part of the light-touch rules, there is no requirement to prepare or lodge a Prospectus. The applicant only has to lodge an Information Memorandum (IM) with the Securities Commission (SC) and there is no prevetting by Bursa or SC. As far as the IM is concerned, the most important disclosure item is the Risk Factors. They have to be comprehensive MIA notice Decisions of the Disciplinary Committee of the Malaysian Institute of Accountants (Institute) against members pursuant to Rule 18(1) of the Malaysian Institute of Accountants (Disciplinary) Rules 2002 Tay Kai Guan (6685) as the sole proprietor of Messrs. Tay Kai Guan & Co (the Firm) had been punished and imposed a fine of RM , costs of RM2, and ordered to attend a course conducted by the Institute on Audit Quality Enhancement Program by the Disciplinary Committee of the Institute on 27 December 2017 after the Firm had been rated as unsatisfactory as indicated in the Follow-up Review Report dated 30 September 2016 which detailed the weaknesses in the audit work performed. Missripah Senawi (8069) as the sole proprietor of Messrs. Ripah & Co (the Firm) had been punished and imposed a fine of RM3,000-00, costs of RM2, and ordered to attend a course conducted by the Institute on Audit Quality Enhancement Program by the Disciplinary Committee of the Institute on 27 December 2017 after the Firm had been rated as unsatisfactory as indicated in the Follow-up Review Report dated 10 June 2015 which detailed the weaknesses in the audit work performed. Norhaslinda Addenan (23516) as the company secretary of NES Manufacturing (M) Sdn Bhd (Company) during the periods between 2009 to 2015, had been reprimanded and ordered to pay costs of RM2, by the Disciplinary Committee of the Institute on 27 December 2017 for failing to be in communication with the Complainant and further to surrender documents belonging to the Company which had caused incompletion of FY 2014 accounts of the Company. Chong Wai (7016) as the sole proprietor of Messrs. Chong Wai & Associates (the Firm) had been punished and imposed a fine of RM3,000-00, costs of RM2, and ordered to attend a course conducted by the Institute on Audit Quality Enhancement Program by the Disciplinary Committee of the Institute on 27 December 2017 after the Firm had been rated as unsatisfactory as indicated in the Follow-up Review Report dated 20 June 2016 which detailed the weaknesses in the audit work performed. mar / Apr 2018 accountants today 39

3 Can SMEs Make the LEAP? to enable the Sophisticated Investors to form opinion and decide on the investment. Other standard disclosures in the IM include information on applicant such as business activities, history of business and future plan, group and shareholding structure, competitive analysis and prospects, last two years financial results, licenses and permits, conflict of interests (if any), related party transactions (if any), details of promoters, substantial shareholders, directors and key management, proposed utilisation of IPO proceeds and material agreements. Banking on Advisors Much assurance will depend on the competency and credibility of the LEAP Advisors. According to Salihudin, the suitability assessment such as the feasibility and viability of the business, and the valuation are undertaken by the Advisors. In addition to the Principal Advisors, the list of approved advisors or sponsors for the LEAP Market has been expanded to include eligible Corporate Finance Advisors. LEAP Market also has no minimum profit or operation requirements as admission criteria but the moratorium period on promoters shares is four years. The minimum public spread for the LEAP Market is 10% and there is no minimum number of shareholders. The listing process for LEAP Market is also significantly shorter compared with the Main or ACE Markets. The lead time from the submission of the IM to approval by Bursa is estimated at three weeks. The listings of Cloudaron Group Berhad (the inaugural LEAP listing) and Red Ideas Holding Berhad took approximately one month. For post-listing, reports required are semi-annual financial reporting and annual audited accounts. There are also no requirements for annual report as well as Independent Directors, Audit Committee, Nomination Committee and Remuneration Committee. At the pre-listing stage, the approved advisor s role is to perform suitability and viability assessments on the company. Next is to advise on the structure, timing and pricing, in collaboration with other professionals such as Auditors, Lawyers and Market Researchers. Finally, the advisor must prepare, lodge and submit relevant documents for approval. Post-listing, the advisor s role is to continue in an advisory capacity on corporate matters as well as disclosure and post-listing requirements. The appointment of an advisor is for four financial years. Ensuring Good Governance Although requirements are lighter, this doesn t mean that corporate governance is being lightened for LEAP. Datin Azalina at CMAC 2017 had emphasised that LEAP will have adequate internal controls to ensure good governance and investor protection, even though companies listed on LEAP are not required to appoint Independent Directors and an Audit Committee. Further, companies listed on the LEAP market are not required to submit quarterly financial reports and annual reports, only semiannual financial reports and annual audited accounts. (Post listing) The governance team in Bursa will conduct evaluations to ensure that there are sufficient and proper internal controls and processes in place. We look at three elements conflicts of interest, public interest and corporate governance, she explained. For LEAP listings to succeed, the advisor must understand the business well and be able to articulate it to the investors. Investors engagement is key and it is therefore important to start the process early, said Salihudin. Given the streamlined requirements, Bursa is limiting investor participation to Sophisticated Investors who are able to stomach the higher investment risks posed by the LEAP market, versus the Main and ACE markets. Schedule 6 & 7 of the Capital Markets and Services Act 2007 (CMSA) define Sophisticated Investors as high net worth individuals with assets of more than RM3 million or income of more than RM300,000 per annum or a combined husband and wife income of more than RM400,000 per annum. To be eligible, corporates including Partnerships and Trust Companies must own net assets of more than RM10 million. n 40 accountants today mar / Apr 2018

4 n By the Association of International Certified Professional Accountants to protect your organisation from cybercrime simple ways How can you erect cybersecurity defence on a small budget? You may not be a multi-billion dollar corporation but that doesn t mean you are immune to one of the biggest risks currently threatening businesses: cybercrime. No matter your organisation s size or revenue, preventing and mitigating cybersecurity fraud needs to be a top priority. From WannaCry to NotPetya, the last year has shown us that cyber criminals will exhaust every avenue to get a hold of an organisation s assets, financial or intellectual. And the rise in cybercrime will only continue; according to the Ponemon Institute s Cost of Cyber Crime report, the number of breaches in 2017 was up an average 27.4% from the previous year. So where does this leave businesses, who have limited budgets and resources to protect their organisation? The good news is that you can still improve safeguards on your organisation without spending millions on new tech and infrastructure. This can be done by exploiting the resources and policies you already have at hand, as well as leveraging a few simple tools. Here are five simple ways to improve protection on a limited budget: 42 accountants today mar / Apr 2018

5 5 simple ways to protect your organisation from cybercrime Prioritise what to protect Even multi-billion dollar corporations can t protect every company asset. They simply don t have the means, nor the budget. For small and medium-sized businesses, this is even more critical. Decide which company assets are the most valuable and create a plan to protect them. As the primary users of company data, accounting and finance professionals have the greatest insights into where an organisation s high-value data is stored, how it is secured and who has access to it. With expertise in risk management, accountants are also wellplaced to guide businesses on ways to safeguard your company s data. Assess your organisation s culture and policies around cybersecurity This may sound simple but endusers are often the weakest link, and emphasising the importance of good security hygiene goes a long way toward building a better cyber defence. For example, as stewards of their organisations, familiar with risk and control processes, accountants can play a key role in developing a companywide culture that supports cybersecurity efforts. This includes leading and participating in the development of key policies such as data classification, incident response plans, data retention and acceptable use. They could also support you in rolling out training, risk assessments and cyber insurance choices. Update your software Software is updated for a reason. Companies like Microsoft or Apple are constantly releasing software updates, commonly referred to as patches, to cover vulnerabilities that could let hackers in. These patches should never be ignored. Unpatched vulnerabilities offer gaps into your system that hackers use to install malware and ransomware, or to just gain control of your systems. An example of software updates being ignored en masse is the WannaCry attack last year, which is estimated by some to have possibly cost businesses large and small USD4 billion! Implement a cybersecurity framework for your business If it hasn t happened yet, at some point your organisation will develop a relationship with a larger entity. This relationship may generate data, and this could offer hackers not only a way into your organisation but a step into your Encrypt everything Much like the software update tip, this is also an easy win. If a hacker is able to infiltrate your system, you want to ensure that anything they do get hold of is indecipherable. Use an up-to-date algorithm to encrypt all hard drives, databases and data in transit. partner s business. Before committing to a relationship, many larger organisations will want to understand the steps you are taking to mitigate and respond to cybersecurity risks (and buffer them in the process). The American Institute of Certified Public Accountants (AICPA) recently released a flexible cybersecurity framework to help your organisation communicate, externally and internally, about how your business is managing this risk. The framework has been created to allow businesses of all sizes to address cybersecurity in an agile way that suits their organisation and needs. To learn more about how to help manage cybersecurity risk, visit this cybersecurity resource centre (www. aicpa.org/cybersecurity) from the Association of International Certified Professional Accountants, the new global organisation launched by members of the AICPA and the Chartered Institute of Management Accountants (CIMA) last year. This article was contributed by Venkkat Ramanan, FCMA, CGMA, Regional VP Asia-Pacific, Association of International Certified Professional Accountants n mar / Apr 2018 accountants today 43