KUALA LUMPUR, 17 March 2026 – Bursa Malaysia Securities Berhad has publicly reprimanded and imposed a RM300,000 fine on KAF Investment Bank Berhad (KAF IB) over breaches of ACE Market Listing Requirements, underscoring heightened regulatory scrutiny on sponsors involved in IPO submissions.
The enforcement action relates to KAF IB’s role as Sponsor for a company seeking listing on the ACE Market, where the regulator found lapses in due diligence and disclosure obligations tied to critical compliance issues involving the applicant’s core manufacturing assets.
Failure in Due Diligence and Disclosure
Bursa Malaysia Securities determined that KAF IB breached multiple provisions under the ACE Market Listing Requirements (ACE LR), including Rules 3.02(4), 4.07(1) and (2), and 2.18(1).
Central to the case was KAF IB’s failure to adequately investigate and disclose non-compliances relating to the certificate of completion and compliance (CCC) for two key manufacturing plants owned by the applicant. These facilities were deemed material to the company’s operations and listing suitability.
Despite being aware that revised CCC approvals were pending months before submission, KAF IB did not disclose these issues in both the pre-admission consultation pack and draft prospectus. Instead, the documents represented that the applicant was fully compliant with relevant laws and that no material approvals were outstanding.
The non-compliances only surfaced following queries from Bursa Malaysia Securities, prompting further verification by due diligence solicitors, who confirmed that updated CCC approvals were indeed required due to prior building modifications.
Reliance on Subjective Assessments
The regulator noted that KAF IB had relied heavily on internal working group assessments and architects’ opinions regarding the validity of existing CCCs, assessments deemed inconclusive and lacking independent verification.
Critically, KAF IB did not escalate the issue to relevant local authorities for confirmation, despite the regulatory uncertainty and the importance of the assets in question. This omission represented a breakdown in the due diligence process expected of a Sponsor under the ACE Market framework.
As a result, the initial IPO application was withdrawn and only resubmitted after the applicant secured the revised CCC approvals.
Regulatory Action and Compliance Mandate
In addition to the RM300,000 fine and public reprimand, KAF IB has been directed to present Bursa Malaysia Securities’ findings to its Board of Directors. The bank must also conduct a comprehensive review of its internal policies, processes and procedures relating to its advisory and sponsorship roles.
The enforcement action was taken pursuant to Paragraph 16.19 of the ACE LR, following due process and consideration of the materiality of the breaches and the responsibilities of the Sponsor.
Protecting Market Integrity
Bursa Malaysia Securities emphasised that the breaches were serious, given the pivotal role Sponsors play in assessing listing suitability and ensuring accurate, complete disclosures.
The ACE Market operates as a “sponsor-driven” platform, placing significant responsibility on advisers to uphold high standards of integrity, accountability and professional diligence.
The regulator warned that failures in this process can undermine market confidence, distort listing assessments, and compromise investor protection.
A Strong Signal to Market Intermediaries
The case sends a clear signal to investment banks and advisers operating in Malaysia’s capital markets: regulatory expectations around due diligence and disclosure are tightening.
As IPO activity picks up and investor scrutiny intensifies, Sponsors are expected to exercise deeper verification, particularly when dealing with material assets and regulatory approvals.
For market participants, the message is unequivocal, transparency, rigour, and accountability remain the cornerstone of Malaysia’s capital market integrity.
