Why delays in listing can happen again

Focus Point made Malaysian corporate history when it became the first listing that was shelved on the day itself. Could this be prevented in the future?

Focus Point Holdings Bhd has made Malaysian corporate history when it became the first listing that was shelved on the day itself.

The big question now is, could this be prevented in the future? Not very likely, say analysts, which means that there could be another similar episode down the road.

On July 27, Focus Point, Malaysia's biggest professional eye-care chain, deferred its listing an hour before the opening gong. Much later in the evening, it disclosed that an anonymous complaint about its business was made to the authorities four days earlier.

Focus Point refuted the allegations on the same day but it is still not clear if the stock will trade anytime soon. Bursa Malaysia has yet to give it a new listing date.

Unfortunately, deferred listings are likely to happen again as there could be genuine whistleblowers or even disgruntled employees and unethical rivals.

In cases like this, a company's reputation would be hurt as investors would obviously fear the worst.

"You can never avoid handling complaints, whether it is a day before listing or a month before listing," said Kenanga Investment Bank Bhd head of research Yeonzon Yeow.

This is why transparency is vital in critical situations like this.

"The regulatory authorities and the company should sit together and do a joint press statement. It is important to have a complete report from the two parties instead of information coming in drabs," Yeow told Business Times.

To its credit, Focus Point managed to defuse the situation somewhat with its late announcement on July 27 and another one the next day.

"We are cooperating with the regulatory authorities to address the malicious allegations against the company and believes everything will be sorted out in a matter of time.

"The last-minute deferment notice made on the morning of the listing was unavoidable as matters had only evolved past midnight on the listing day itself," its president and chief executive officer Datuk Liaw Choon Liaw said in a statement to Business Times.

Under the existing process, the Securities Commission invites the investing public to comment on draft prospectuses put on its website for about two weeks. The listing process then continues if there are no complaints.

But should the Focus Point incident change this?

Maybank Investment Bank head of research Andrew Lee maintains that it is better for companies to clear up matters before listing rather than after.

Ultimately, what happened to Focus Point shows that companies that go for listings need to be prepared and they must have a strategy to deal with complaints when they come.