Issuers desirous of listing their securities on the Main Market must seek an authorisation for a listing from both the Listing Authority and the MSE. With respect to securities to be admitted on Prospects, the MSE is the responsible authority for the approval of their admission.
The Listing Rules set out the conditions for admissibility of securities to the Main Market and the documentation that is required to be submitted by prospective issuers. The following are the principal criteria to be satisfied by an applicant:
- the applicant must be a public limited company duly incorporated or otherwise validly established according to the relevant laws of its place of incorporation or establishment and operating in conformity with its memorandum and articles of association (M&As) or equivalent constitutional document;
- the M&As of the applicant must conform with certain requirements under the Listing Rules;
- the securities for which authorisation for admissibility to listing is sought must be issued in accordance with the law of the applicant’s place of incorporation, be duly authorised according to the requirements of the applicant’s M&As and be duly authorised in terms of all necessary statutory and other authorisations for the creation and issue of such securities in terms of any applicable system of law;
- the securities for which authorisation to listing is sought must be freely transferable and fully paid up, unless otherwise approved by the Listing Authority;
- the aggregate market value of all equity securities (not being preference shares), which are the subject of the application for admissibility must be at least €1 million, unless otherwise accepted by the Listing Authority;
- the applicant must have fully paid-up capital of at least €1 million, which may include preference shares other than redeemable preference shares;
- unless otherwise approved by the Listing Authority, the applicant must have published or filed audited annual accounts that cover at least three financial years preceding the application for admissibility to listing, and the last audited information may not be older than 18 months from the date of the registration document;
- unless otherwise approved by the Listing Authority, at least 75 per cent of the company’s business must be supported by a historical revenue earning record that covers the period for which annual accounts are required under the Listing Rules (as described above) and must carry on as an independent business as its main activity; and
- at least 25 per cent of the class of shares in respect of which application is made must be held in public hands in one or more recognised jurisdictions, unless the Listing Authority accepts a lower percentage on the basis that it considers that the market would operate properly notwithstanding this lower percentage.
An applicant must also engage a sponsor, which must be an entity licensed under the Investment Services Act (Chapter 370, Laws of Malta), through which all communications or meetings with the Listing Authority must be made, up until approval of admission by the Listing Authority is given. During the application process, the following key documentation must be submitted to the Listing Authority through the sponsor:
- a completed application for authorisation for admissibility to listing in the prescribed form;
- a prospectus and any supplements;
- one copy of the issuer’s audited annual accounts for each of the previous three financial years;
- certain formal notices in the prescribed form;
- declarations from the officers of the issuer;
- appropriate corporate authorities sanctioning the application for admissibility to listing; and
- where the issuer is a property company, a valuation report prepared by an independent expert in compliance with the rules of property companies in the Listing Rules.
The Listing Authority may further require a copy of any other document it considers necessary or beneficial for it to decide upon the authorisation of admissibility to listing.
The eligibility requirements for SMEs seeking admission of their securities on Prospects are lighter than those applicable to issuers that wish to list securities on the Main Market. The Prospects Rules set out the details of the eligibility criteria for Prospects companies and the documentation to be submitted to the MSE. SME companies must have a two-year trading record. For companies with no previous trading record, a financial sustainability forecast for the first 12 consecutive months from the date of publication of the relevant document must be submitted as part of the admission process. Furthermore, there is no requirement for a minimum percentage of shares to be held by the public. The Malta Stock Exchange revised the Prospects Rules in January 2019 and June 2019. The spirit of the changes is to bolster the profile of Prospects by introducing financial soundness and collateral requirements as an integral part of the pre-application assessment process.
The revised Prospects Rules impose the requirement for debt securities to be fully secured and backed by tangible assets as collateral, or otherwise guaranteed by a guarantor, with the latter required to demonstrate its own financial soundness. The MSE may allow for a combination of collateral and guarantee, or disapply the requirement altogether where the financial soundness of the applicant issuer or the guarantor is proved to its satisfaction. In addition, the revised Prospects Rules offer prospective issuers a wider choice of funding options by lifting the restrictions on eligibility under the Listing Rules. Eligibility is no longer conditional upon ineligibility under the Listing Rules of the Main Market. Issuers are thus afforded greater flexibility in matching their business lifecycle and funding needs with the most appropriate capital markets segment. However, admission to the Prospects MTF is now capped at an €8 million threshold.
Although Prospects companies are not required to engage a sponsor, the services of a corporate adviser must be employed. The corporate adviser is responsible for communication with the MSE and for providing a broad range of advice to the issuer on an ongoing basis, even after admission of the company’s securities on Prospects. The corporate adviser must provide among the documents to be submitted to the MSE a declaration on the suitability of the company’s securities for admission to Prospects.
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