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IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE COURSE MASTER OF MANAGEMENT STUDIES UNIVERSITY OF MUMBAI
SR NO. 1 2 3 4 5 6 7 8 LISTING BSE – INDIA NSE – INDIA ASX – AUSTRALIA
PAGE NO. 4 5 15 33 40 44 52 61
BURSA MALAYSIA – MALASIA SINGAPORE – SGX USA – NASDAQ UK – FTSE
It is the process of taking a privately-owned organisation and making the transition to a publicly-owned entity whose shares can be traded on a stock exchange. Listing means admission of the securities to dealings on a recognised stock exchange. The securities may be of any public limited company, Central or State Government, quasi governmental and other financial institutions/corporations, municipalities, etc. The ability to have its shares traded on a stock exchange is central to an organisation's decision to list. The fundamental role of a stock exchange is to bring together in one market place providers of capital and organisations that require capital.. Providers of capital earn a return on their investments through dividends and capital growth, thereby increasing the overall wealth of the nation, while the organisations in which they invest provide jobs and drive the economic development of Country. The objectives of listing are mainly to :
• • •
provide liquidity to securities; mobilize savings for economic development; protect interest of investors by ensuring full disclosures.
These benefits include:
Access to capital for growth – listing gives one the opportunity to raise capital to fund acquisitions and/or organic growth. Higher public and investor profile – listing generally raises organisation’s public profile with customers, suppliers, investors and the media. Organisation may also be covered in analyst reports and may be included in an index.
Institutional investment – public listing means organisation will find it easier to attract institutional and professional investors. Improved valuation – being listed generates an independent valuation of organisation by the market. A (secondary) market for organisation’s shares – trading of shares on gives shareholders the opportunity to realise the value of their holdings, which in turn can help broaden the shareholder base.
Exit strategy for early stage investors – listing provides a mechanism for founders of a company, family interests or early stage investors to exit their investment.
Alignment of employee/management interests – the process of remunerating the employees, executives and directors with shares is simplified, making it easier to align the interests of employees with the goals of the organisation.
Reassurance of customers and suppliers – organisations listed on generally find that the perception of their financial and business strength is improved.
READTNESS OF ORGANISATION TO GET LISTED :
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What are the organisation's long-term goals and strategies? Are there skill gaps at the senior management and board level? How will these be resolved in a listed environment? Are directors and senior managers prepared for greater disclosure, accountability and transparency after listing? Is organisation’s culture ready for listing? Are there tax issues to be resolved? Are strategies in place to retain key employees and key customers? What initiatives (e.g. acquisitions) need to be completed before listing? Are your operational, financial and management information systems sufficiently robust for a listed organisation? Have you taken account of corporate governance best practice? Is the timing right for a listing, in terms both of the business and of market conditions? Do you understand what investors and the market expect and require from you?
• • • • •
Answers to these questions will give a good indication of how prepared company is for the transition to a publicly-listed company.
BSE - INDIA
The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of the Exchange. A company intending to have its securities listed on the Exchange has to comply with the listing requirements prescribed by the Exchange. Some of the requirements are as under : A. Minimum Listing Requirements for new companies. B. Minimum Listing Requirements for companies listed on other stock exchanges. C. Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange. D. Permission to use the name of the Exchange in an Issuer Company's prospectus. E. Submission of Letter of Application. F. Allotment of Securities. G. Trading Permission. H. Requirement of 1% Security. I. Payment of Listing Fees. J. Compliance with Listing Agreement. K. Compliance with regard to Valuation Certificate for fixing the base price. L. Cash Management Services (CMS) - Collection of Listing Fees.
A. Minimum Listing Requirements for new companies The following revised eligibility criteria for listing of companies on the Exchange, through Initial Public Offerings (IPOs) & Follow-on Public Offerings (FPOs), effective August 1, 2006.
ELIGIBILITY CRITERIA FOR IPOs/FPOs 1. Companies have been classified as large cap companies and small cap companies. A large cap company is a company with a minimum issue size of Rs. 10 crores and market capitalization of not less than Rs. 25 crores. A small cap company is a company other than a large cap company. a. In respect of Large Cap Companies i. The minimum post-issue paid-up capital of the applicant company (hereinafter referred to as "the Company") shall be Rs. 3 crores; and ii. iii. The minimum issue size shall be Rs. 10 crores; and The minimum market capitalization of the Company shall be Rs. 25 crores (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price). b. In respect of Small Cap Companies i. ii. iii. The minimum post-issue paid-up capital of the Company shall be Rs. 3 crores; and The minimum issue size shall be Rs. 3 crores; and The minimum market capitalization of the Company shall be Rs. 5 crores (market capitalization shall be calculated by multiplying the post-issue paid-up number of equity shares with the issue price); and iv. v. vi. The minimum income/turnover of the Company should be Rs. 3 crores in each of the preceding three 12-months period; and The minimum number of public shareholders after the issue shall be 1000. A due diligence study may be conducted by an independent team of Chartered Accountants or Merchant Bankers appointed by the Exchange, the cost of which will be borne by the company. The requirement of a due diligence study may be
waived if a financial institution or a scheduled commercial bank has appraised the project in the preceding 12 months.
2. For all companies : a. In respect of the requirement of paid-up capital and market capitalisation, the issuers shall be required to include in the disclaimer clause forming a part of the offer document that in the event of the market capitalisation (product of issue price and the post issue number of shares) requirement of the Exchange not being met, the securities of the issuer would not be listed on the Exchange. b. The applicant, promoters and/or group companies, should not be in default in compliance of the listing agreement. c. The above eligibility criteria would be in addition to the conditions prescribed under SEBI (Disclosure and Investor Protection) Guidelines, 2000.
B. Minimum Listing Requirements for companies listed on other stock exchanges The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect. 1. The company should have minimum issued and paid up equity capital of Rs. 3 crores. 2. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of non-recurring nature should be excluded while calculating distributable profits. 3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves).
4. Minimum market capitalisation of the listed capital should be at least two times of the paid up capital. 5. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. 6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians. 7. The company should have at least two years listing record with any of the Regional Stock Exchange. 8. The company should sign an agreement with CDSL & NSDL for demat trading. C. Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange The companies delisted by this Exchange and seeking relisting are required to make a fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial public offerings. D. Permission to use the name of the Exchange in an Issuer Company's prospectus The Exchange follows a procedure in terms of which companies desiring to list their securities offered through public issues are required to obtain its prior permission to use the name of the Exchange in their prospectus or offer for sale documents before filing the same with the concerned office of the Registrar of Companies. The Exchange has since last three years formed a "Listing Committee" to analyse draft prospectus/offer documents of the companies in respect of their forthcoming public issues of securities and decide upon the matter of granting them permission to use the name of "Bombay Stock Exchange Limited" in their prospectus/offer documents. The committee evaluates the promoters, company, project and several other factors before taking decision in this regard.
E. Submission of Letter of Application As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies. F. Allotment of Securities As per Listing Agreement, a company is required to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval of the basis of allotment. In case of Book Building issue, Allotment shall be made not later than 15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to the investors. G. Trading Permission As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days of finalisation of Basis of Allotment. A company should scrupulously adhere to the time limit for allotment of all securities and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the listing permissions of all the Exchanges whose names are stated in its prospectus or offer documents. In the event of listing permission to a company being denied by any Stock Exchange where it had applied for listing of its securities, it cannot proceed with the allotment of shares. However, the company may file an appeal before the Securities and Exchange Board of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.
H. Requirement of 1% Security The companies making public/rights issues are required to deposit 1% of issue amount with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in the event of the company not resolving the complaints of investors regarding delay in sending refund orders/share certificates, non-payment of commission to underwriters, brokers, etc. I. Payment of Listing Fees All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time. The schedule of listing fees for the year 2007-2008, prescribed by the Governing Board of the Exchange is given hereunder SCHEDULE OF LISTING FEES FOR THE YEAR 2007-2008 Sr. Particulars No. 1 2 Initial Listing Fees Annual (i) (ii) Companies with AboveRs. 5 listed crores
Amount (Rs.) 20,000
Listing capital* and upto
Fees Rs. 5 crores 10,000 upto Rs. 10 crores 15,000
(iii) Above Rs. 10 crores and upto Rs. 20 crores 30,000 3 Companies which have a listed capital* of more than Rs. 20 crores will pay additional fee of Rs. 750/- for every increase of 4 Rs. 1 crores or part thereof. In case of debenture capital (not convertible into equity shares) of companies, the fees will be charged @ 25% of the fees payable as per the above mentioned scales. *includes equity shares, preference shares, fully convertible debentures, partly convertible debenture capital and any other security which will be converted into
J. Compliance with Listing Agreement The companies desirous of getting their securities listed are required to enter into an agreement with the Exchange called the Listing Agreement and they are required to make certain disclosures and perform certain acts. As such, the agreement is of great importance and is executed under the common seal of a company. Under the Listing Agreement, a company undertakes, amongst other things, to provide facilities for prompt transfer, registration, sub-division and consolidation of securities; to give proper notice of closure of transfer books and record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely to materially affect the financial performance of the Company and its stock prices, to comply with the conditions of Corporate Governance, etc. The Department of Corporate Services (Listing Department) of the Exchange monitors the compliance by the companies with the provisions of the Listing Agreement, especially with regard to timely payment of annual listing fees, submission of quarterly results, shareholding pattern, maintenance of minimum public shareholding, corporate announcements, corporate actions, etc. and takes penal action against the defaulting companies. To facilitate the Companies to submit Corporate Filings, the Exchange has earmarked Ten Designated Fax Numbers for Corporate Filings. The Companies are advised to submit all Corporate Filings on these Designated Fax Numbers only. Filings on numbers other than the Designated Fax Numbers will not be construed as effective compliance and the Exchange will not be responsible for any consequent delayed uploading of the same on its website. Moreover, the Exchange may initiate such suitable action as may deem fit in this regard. K. Compliance with regard to Valuation Certificate for fixing the base price
For the purpose of commencing / re-commencing / determining the ex-price for trading in securities in cases like de-merger, amalgamation, capital reduction, scheme of arrangements, revocation of suspension (for suspension of more than 6 months), etc., the Companies are required to submit a Valuation certificate from the SEBI registered Merchant Banker indicating the price/ fair value of the shares. The indicative price/ fair value mentioned in the certificate of SEBI registered Merchant Banker provided by the company will be considered as base price for applying actual price band / circuit filters upon the commencement/ recommencement of trading and for determining the ex-price for trading in securities. The Company shall indicate to the Merchant Banker very clearly, that the fair value so calculated by them is for the purpose of setting the base price upon commencement/ re-commencement of trading and for determining the ex-price for trading in securities. L. Cash Management Services (CMS) - Collection of Listing Fees As a further step towards simplifying the system of payment of listing fees, the Exchange has entered into an arrangement with HDFC Bank for collection of listing fees, from 141 locations, situated all over India.Details of the HDFC Bank branches, are available on our website site www.bseindia.com as well as on the HDFC Bank website www.hdfcbank.com The above facility is being provided free of cost to the Companies. Companies intending to utilise the above facility for payment of listing fee would be required to furnish the information, (mentioned below) in the Cash Management Cash Deposit Slip. These slips would be available at all the HDFC Bank centres. S.No HEAD 1. Client 2. 3. 4. 5. Name Client Code Cheque No. Date Drawer INFORMATION TO BE PROVIDED Bombay Stock Exchange Limited BSELIST mention the cheque No & date date on which payment is being deposited with the bank. state the name of the company and the company code No.The last digits mentioned in the Ref. No. on the Bill is the company code
No.e.g If the Ref. No in the Bill is mentioned as : Listing/Alf6. 7. 8. 9. Drawee Bank Drawn Location Pickup Location No. of Insts Bill/2004-2005/4488, then the code No of that company is 4488 state the bank on which cheque is drawn on Mention the location of the drawee bank. Not applicable Not applicable
NSE - INDIA
Benefits of Listing on NSE
A premier market place
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Visibility Largest exchange Unprecedented reach Modern infrastructure Transaction speed Short settlement cycles Broadcast of corporate announcements Trade statistics for listed companies Investor service centers Nominal listing fees
A premier marketplace The sheer volume of trading activity ensure that the impact cost is lower on the Exchange which in turn reduces the cost of trading to the investor. NSE’s automated trading system ensure consistency and transparency in the trade matching which enhances investors confidence and visibility of our market. Visibility The trading system provides unparallel level of trade and post-trade information. The best 5 buy and sell orders are displayed on the trading system and the total number of securities available for buying and selling is also displayed. This helps the investor to know the depth of the market. Further, corporate announcements, results, corporate actions etc are also available on the trading system. Largest exchange NSE is the largest exchange in the county in terms of trading volumes. During the year 2006-2007, NSE reported a turnover of Rs. 1,945,285 crores in the equities segment.
Unprecedented reach NSE provides a trading platform that extends across the length and breadth of the country. Investors from 360 centres can avail of trading facilities on the NSE Trading Network. The Exchange uses the latest in communication technology to give instant
access from every location.
Modern infrastructure NSE introduced for the first time in India, fully automated screen based trading. The Exchange uses a sophisticated telecommunication network with over 9000 trading terminals connected through VSATs (Very Small Aperture Terminals). Transaction speed The speed at which the Exchange processes orders, results in liquidity and best available prices. The Exchange's trading system on an average processes 8000 orders per minute. The highest number of trades in a day of 63,89,264 was recorded on october 03, 2007. Short settlement cycles The Exchange has successfully completed more than 1900 settlements without any delays. Broadcast facility for corporate announcements The NSE network is used to disseminate information and company announcements across the country. Important information regarding the company is announced to the market through the Broadcast Mode on the NEAT System as well as disseminated through the NSE website. Corporate developments such as financial results, book closure, announcements of bonus, rights, takeover, mergers etc. are disseminated across the country thus minimizing scope for price manipulation or misuse. Trade statistics for listed companies Listed companies are provided with monthly trade statistics for all the securities of the company listed on the Exchange. Investor service centers Six investor-service centers opened by NSE across the country cater to the needs of investors. Nominal listing fees 15
The listing fee charged by the Exchange is much lower compared to the listing fees charged by other exchanges. Eligibility Criteria for Listing on NSE An applicant who desires listing of its securities with NSE must fulfill the following pre-requisites:
For Initial Public Offerings (IPOs) For Securities of Existing Companies
NSE staff welcome the opportunity to discuss a company’s eligibility to list before a formal application is made. On fulfillment of the eligibility criteria, the company is required to fill in the listing application form. IPOs by Companies Qualifications for listing Initial Public Offerings (IPO) are as below: 1. Paid up Capital The paid up equity capital of the applicant shall not be less than Rs. 10 crores and the capitalisation of the applicant’s equity shall not be less than Rs. 25 crores
2. Conditions Precedent to Listing: The Issuer shall have adhered to conditions precedent to listing as emerging from inter-alia from Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes.
3. Atleast three years track record of either: a. the applicant seeking listing; or
b. the promoters/promoting company, incorporated in or outside India or c. Partnership firm and subsequently converted into a Company (not in existence as a Company for three years) and approaches the Exchange for listing. The Company subsequently formed would be considered for listing only on fulfillment of conditions stipulated by SEBI in this regard. For this purpose, the applicant or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following: • The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR). • The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth • The company has not received any winding up petition admitted by a court. The applicant desirous of listing its securities should satisfy the exchange on the following: a) No disciplinary action by other stock exchanges and regulatory authorities in past three years The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) have not been in default in payment of listing fees to any stock exchange in the last three years or has not been delisted or suspended in the past, and has not been proceeded against by SEBI or other regulatory authorities in connection with investor related issues or otherwise. b) Redressal Mechanism of Investor grievance The points of consideration are:
The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances The applicant’s arrangements envisaged are in place for servicing its investor. The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection Defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company’s application for listing. The auditor’s certificate shall also be obtained in this regard. In case of defaults in such payments the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.
c) Distribution of shareholding The applicant’s/promoting company(ies) shareholding pattern on March 31 of last three calendar years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements. d) Details of Litigation The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) litigation record, the nature of litigation, status of litigation during the preceding three years period need to be clarified to the exchange. e) Track Record of Director(s) of the Company
In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes like murder, rape, forgery, economic offences etc. ” Note: In case a company approaches the Exchange for listing within six months of an IPO, the securities may be considered as eligible for listing if they were otherwise eligible for listing at the time of the IPO. If the company approaches the Exchange for listing after six months of an IPO, the norms for existing listed companies may be applied and market capitalisation be computed based on the period from the IPO to the time of listing Eligibility Criteria for Listing Securities of Existing Companies Existing Companies listed on other stock exchanges 1. Paid up Capital & Market Capitalisation a. The paid-up equity capital of the applicant shall not be less than Rs. 10 crores and the market capitalisation of the applicant’s equity shall not be less than Rs. 25 crores Provided that the requirement of Rs. 25 crores market capitalisation under this clause 1(a) shall not be applicable to listing of securities issued by Government Companies, Public Sector Undertakings, Financial Institutions, Nationalised Banks, Statutory Corporations and Banking Companies who are otherwise bound to adhere to all the relevant statutes, guidelines, circulars, clarifications etc. that may be issued by various regulatory authorities from time to time. or Checklist for Eligibility
b. The paid-up equity capital of the applicant shall not be less than Rs. 25 crores (In case the market capitalisation is less than Rs. 25 crores, the securities of the company should be traded for at least 25% of the trading days during the last twelve months preceding the date of submission of application by the company on at least one of the stock exchanges where it is traded.) or c. The market capitalisation of the applicant’s equity shall not be less than Rs. 50 crores. or d. The applicant Company shall have a net worth of not less than Rs.50 crores in each of the three preceeding financial years. The Company shall submit a certificate from the statutory auditors in respect of networth as stipulated above. 2. Conditions Precedent to Listing: The applicant shall have adhered to conditions precedent to listing as emerging from inter-alia, Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular, clarifications, guidelines issued by the appropriate authority under foregoing statutes.
3. Atleast three years track record of either: a. the applicant seeking listing; or or b. the promoters/promoting company, incorporated in or outside India or For this purpose, the applicant or the promoting company shall submit annual reports of three preceding financial years to NSE and also provide a certificate to the Exchange in respect of the following: o The company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR) 20
The networth of the company has not been wiped out by the accumulated losses resulting in a negative networth. The company has not received any winding up petition admitted by a court.
The applicant should have been listed on any other recognised stock exchange for atleast last three years
The applicant has paid dividend in atleast 2 out of the last 3 financial years immediately preceding the year in which listing application has been made or The applicant has distributable profits ( as defined under section 205 of the Companies Act, 1956) in at least two out of the last three financial years (an auditors certificate must be provided in this regard). or The networth of the applicant is atleast Rs. 50 crores While considering the profitability / ability to distribute dividend, the non recurring income/extraordinary income shall be excluded from the total income. Further in case of companies where networth criteria is satisfied on account of shares being issued at a premium for consideration other than cash, such cases be referred to the Listing Advisory Committee (LAC) for consideration. applicable for listing of: a) Equity shares and securities convertible into equity issued by i. a banking company including a local area bank (i.e. Private Sector Banks) set up under sub-clause (c) of Section 5 of the Banking Regulation Act, 1949 and which has received license from the Reserve Bank of India or ii. a corresponding new bank set up under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980, State Bank of India Act, 1955 and the State Bank of India (Subsidiary Banks) Act, 1959 (i.e. Public Sector Banks) or iii. an infrastructure company – (a) whose project has been appraised by a Public Financial Institution or Infrastructure Development Finance Corporation (IDFC) or Infrastructure Leasing and Financial Services Limited (IL&FS) and (b) not less than 5% of the project cost is financed by any of the institutions referred to in clause (a) above, jointly or severally, irrespective of whether they appraise the project or not, by way of loan or subscription to equity or a combination of both. b) Securities other than equity shares or securities convertible into equity shares at a later date issued by Government Companies, Public Sector Undertakings, Financial Institutions, Nationalised Banks, Statutory Corporations, Banking Companies and subsidiaries of Scheduled Commercial Banks.”
The applicant desirous of listing its securities should also satisfy the Exchange on the following: a. No Disciplinary action has been taken by other stock exchanges and regulatory authorities in the past three years The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) have not been in default in payment of listing fees to any stock exchange in the last three years or has not been delisted or suspended in the past and has not been proceeded against by SEBI or other regulatory authorities in connection with investor related issues or otherwise. b. Redressal mechanism of Investor grievance The points of consideration are:
The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) track record in redressal of investor grievances
The applicant’s arrangements envisaged are in place for servicing its investor
The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) general approach and philosophy to the issue of investor service and protection
defaults in respect of payment of interest and/or principal to the debenture/bond/fixed deposit holders by the applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies) shall also be considered while evaluating a company’s application for listing. The auditor’s certificate shall also be obtained in this regard. In case of defaults in such payments, the securities of the applicant company may not be listed till such time it has cleared all pending obligations relating to the payment of interest and/or principal.
c. Distribution of shareholding The applicant company/promoting company(ies) shareholding pattern on March 31 of preceding three years separately showing promoters and other groups’ shareholding pattern should be as per the regulatory requirements. d. Details of Litigation The applicant, promoters/promoting company(ies), group companies, companies promoted by the promoters/promoting company(ies)
litigation record, the nature of litigation, status of litigation during the preceding three years need to be clarified to the exchange. e. Track Record of Director(s) of the Company In respect of the track record of the directors, relevant disclosures may be insisted upon in the offer document regarding the status of criminal cases filed or nature of the investigation being undertaken with regard to alleged commission of any offence by any of its directors and its effect on the business of the company, where all or any of the directors of issuer have or has been charge-sheeted with serious crimes like murder, rape, forgery, economic offences etc. f. Change in Control of a Company/Utilisation of funds raised from public In the event of new promoters taking over listed companies which results in change in management and/or companies utilising the funds raised through public issue for the purposes other than those mentioned in the offer document, such companies shall make additional disclosures (as required by the Exchange) with regard to change in control of a company and utilisation of funds raised from public. Note: a) Where an unlisted company merges with a company listed on other stock exchanges and the merged entity seeks listing on the NSE, the Exchange may grant listing to the merged entity only if the listed company (prior to the merger with the unlisted company) meets all the criteria for listing on its own account or the unlisted company meets the requirements for listing on the Exchange, except for the market capitalisation condition, on its own account. In case either of the above conditions are not met then such company may be considered for listing after a minimum period of 18 months or after the publication of
two annual reports whichever is later, provided it satisfies the criteria at that point of time.
Listing Procedure An Issuer has to take various steps prior to making an application for listing its securities on the NSE. These steps are essential to ensure the compliance of certain requirements by the Issuer before listing its securities on the NSE. The various steps to be taken include:
• • • •
Approval of Memorandum and Articles of Association Approval of draft prospectus Submission of Application Listing conditions and requirements
In case the company fulfils the criteria, please send the following information for further processing : 1. A brief note on the promoters and management. 2. Company profile. 3. Copies of the Annual Report for last 3 years. 4. Copies of the Draft Offer Document. 5. Memorandum & Articles of Association. Listing Procedure Approval of Memorandum and Articles of Association Rule 19(2) (a) of the Securities Contracts (Regulation) Rules, 1957 requires that the Articles of Association of the Issuer wanting to list its securities must contain provisions as given hereunder. The Articles of Association of an Issuer shall contain the following provisions namely:
That there shall be no forfeiture of unclaimed dividends before the claim b. That a common form of transfer shall be used; c. that fully paid shares shall be free from all lien and that in the case of partly paid shares the Issuer's lien shall be restricted to moneys called or payable at a fixed time in respect of such shares; d. That registration of transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Issuer on any account whatsoever; e. That any amount paid up in advance of calls on any share may carry interest but shall not in respect thereof confer a right to dividend or to participate in profits; f. That option or right to call of shares shall not be given to any person except with the sanction of the Issuer in general meetings. g. Permission for Sub-Division/Consolidation of Share Certificate.
becomes barred by law;
Note: The Relevant Authority may take exception to any provision contained in the Articles of Association of an Issuer which may be deemed undesirable or unreasonable in the case of a public company and may require inclusion of specific provisions deemed to be desirable and necessary. If the Issuer's Articles of Association is not in conformity with the provisions as stated above, the Issuer has to make amendments to the Articles of Association. However, the securities of an Issuer may be admitted for listing on the NSE on an undertaking by the Issuer that the amendments necessary in the Articles of Association to bring Articles of Association in conformity with Rule 19(2)(a) of the Securities Contract (Regulation) Rules, 1957 shall be made in the next annual general meeting and in the meantime the Issuer shall act strictly in accordance with prevalent provisions of Securities Contract (Regulation) Act, 1957 and other statutes. It is to be noted that any provision in the Articles of Association which is not in tune with sound corporate practice has to be removed by amending the Articles of Association.
Listing Procedure Approval of draft prospectus The Issuer shall file the draft prospectus and application forms with NSE. The draft prospectus should have been prepared in accordance with the statutes, notifications, circulars, guidelines, etc. governing preparation and issue of prospectus prevailing at the relevant time. The Issuers may particularly bear in mind the provisions of Companies Act, Securities Contracts (Regulation) Act, the SEBI Act and the relevant subordinate legislations thereto. NSE will peruse the draft prospectus only from the point of view of checking whether the draft prospectus is in accordance with the listing requirements, and therefore any approval given by NSE in respect of the draft prospectus should not be construed as approval under any laws, rules, notifications, circulars, guidelines etc. The Issuer should also submit the SEBI acknowledgment card or letter indicating observations on draft prospectus or letter of offer by SEBI.
Listing Procedure : Submission of Application : For Issuers listing on NSE for the first time Listing of further Issues by Issuers already listed on NSE Listing Fees Security deposit (for new & fresh issues and when NSE is the Regional Stock Exchange) Supporting documents Submission of Application (For Issuers listing on NSE for the first time) Issuers desiring to list existing/new securities on the NSE shall make application for admission of their securities to dealings on the NSE in the forms prescribed in this regard as per details given hereunder or in such other form or forms as the Relevant Authority may from time to time prescribe in addition thereto or in modification or substitution thereof. Appendix 'A' - Clauses of Articles of Association. 27
Appendix 'B'- Application Letter for Listing. Appendix 'C-1' - Listing Application providing pre-issue details of securities. Appendix 'C-2' - Listing Application providing post-issue details of securities. Appendix 'D'- Checklist for supporting documents ( as applicable to the issuer) Appendix 'E' - Schedule of Distribution Appendix 'F'- Listing Agreement Submission of Application (Listing of further Issues by Issuers already listed on NSE) Issuers whose securities are already listed on the NSE shall apply for admission to listing on the NSE of any further issue of securities made by them. The application for admission shall be made in the forms prescribed in this regard or in such other form or forms as the Relevant Authority may from time to time prescribe in addition thereto or in modification or substitution thereof. Appendix 'E' - Schedule of Distribution Appendix 'G'- Application Letter for Listing of further issues. Appendix 'H' - Listing Application providing details of securities. Appendix 'I' - Checklist for supporting documents submitted (as applicable) Listing Fees The listing fees depend on the paid up share capital of the Company: Particulars Initial Listing Fees Annual Listing Fees Companies with paid up share and/or debenture capital: Of Rs.1 crore Above Rs.1 crore and up to Rs.5 crores Above Rs.5 crores and up to Rs.10 crores Above Rs.10 crores and up to Rs.20 crores Above Rs.20 crores and up to Rs.50 crores Above Rs.50 crores 4,200 8,400 14,000 28,000 42,000 70,000 Amount (Rs.) 7,500
Companies which have a paid up capital of more than Rs. 50 crores will pay additional listing fees of Rs. 1400 for every increase of Rs. 5 crores or part thereof in the paid up share/debenture capital.
Submission of Application (Security Deposit) (Payable only for new and fresh issues and only when NSE is the Regional Stock Exchange) The Relevant Authority shall not grant admission to dealings of securities of an Issuer which is not listed or of any new (original or further) issue of securities of an Issuer excepting Mutual Funds, which is listed on the NSE unless the Issuer deposits and keeps deposited with the NSE (in cases where the securities are offered for subscription, whether through the issue of a prospectus, letter of offer or otherwise, and NSE is the Regional Stock Exchange for the Issuer) an amount calculated at 1% of the amount of securities offered for subscription to the public and or to the holders of existing securities of the Issuer, as the case may be for ensuring compliance by the Issuer within the prescribed or stipulated period of all requirements and conditions hereinafter mentioned and shall be refundable or forfeitable in the manner hereinafter stated: 1. The Issuer shall comply with all prevailing requirements of law including all requirements of and under any notifications, directives and guidelines issued by the Central Government, SEBI or any statutory body or local authority or any body or authority acting under the authority or direction of the Central Government and all prevailing listing requirements and conditions of the NSE and of each recognized Stock Exchange where the Issuer has applied for permission for admission to dealings of the securities, within the prescribed or stipulated period; 2. If the Issuer has complied with all the aforesaid requirements and conditions including, wherever applicable, its obligation under Section 73 (or any statutory modification or re-enactment thereof) of the Companies Act, 1956
and obligations arising therefrom, within the prescribed or stipulated period, and on obtaining a No Objection Certificate from SEBI and submitting it to NSE , NSE shall refund to the Issuer the said deposit without interest within fifteen days from the expiry of the prescribed or stipulated period; 3. If on expiry of the prescribed or stipulated period or the extended period referred to hereafter, the Issuer has not complied with all the aforesaid requirements and conditions, the said deposit shall be forfeited by the NSE, at its discretion, and thereupon the same shall vest in the NSE. Provided the forfeiture shall not release the Issuer of its obligation to comply with the aforesaid requirements and conditions; 4. If the Issuer is unable to complete compliance of the aforesaid requirements and conditions within the prescribed or stipulated period, the NSE, at its discretion and if the Issuer has shown sufficient cause, but without prejudice to the obligations of the Issuer under the laws in force to comply with any such requirements and conditions within the prescribed or stipulated period, may not forfeit the said deposit but may allow such further time to the Issuer as the NSE may deem fit; provided that a. the Issuer has at least ten days prior to expiry of the prescribed or stipulated period applied in writing for extension of time to the NSE stating the reasons for non-compliance, and b. the Issuer, having been allowed further time by the NSE, has before expiry of the prescribed or stipulated period, published in a manner required by the NSE, the fact of such extension having been allowed; provided further that where the NSE has not allowed extension in writing before expiry of the prescribed or stipulated period, the request for extension shall be deemed to have been refused; provided also that any such extension shall not release the Issuer of its obligations to comply with the aforesaid requirements and conditions. 2. 50% of the above mentioned security deposit should be paid to the NSE in cash. The balance amount can be provided by way of a bank guarantee, in the format prescribed by or acceptable to NSE. The amount to be paid in cash is limited to Rs.3 crores 30
Submission of Application (Supporting Documents) Issuers applying for admission of their securities to dealings on the NSE shall submit to the NSE the following:
Documents and Information The documents and information prescribed in Appendix D or Appendix I (as the case may be) to this Regulation or such other documents and information as the Relevant Authority may from time to time prescribe, in addition thereto or in modification or substitution thereof together with any other documents and information which the Relevant Authority may require in any particular case;
Distribution Schedules Distribution Schedules duly completed in respect of each class and kind of security in the form prescribed in Appendix E (Table I, II & III) to this Regulation or in such other form or forms as the Relevant Authority may from time to time prescribe in addition thereto or in modification or substitution thereof.
Listing conditions and requirements All Issuers whose securities are listed on the NSE shall comply with the listing conditions and requirements contained in the Listing Agreement Form appearing in Appendix F to this Regulation or such other conditions and requirements as the Relevant Authority may from time to time prescribe in addition thereto or in modification or substitution thereof.
ASX - AUSTRALIA
Listing on ASX Organisations listing Procedure at ACX: The timetable for listing depends on the complexity and scale of the transaction, how quickly the listing can be prepared and how quickly funds are received from investors. The amount of time taken to list can range from three months to two years, with six months being typical. ADVANTAGE ON ASX In addition to these benefits, the choice of ASX as the market on which to list offers particular advantages.
Scale – As the 8th largest equity market in the world, ASX is able to attract international investors. Reputation - ASX has an international reputation for conducting markets of integrity, ensuring vital investor confidence in our markets. World class systems – ASX markets are driven by leading edge electronic trading, settlement and registry systems. Inclusion in S&P/ASX indices – organisations listed on ASX may be included in a range of S&P/ASX indices. Many institutions use indices as a benchmark for the performance of their investment funds, and portfolios will hold shares included in that index.
Organization must also meet specific requirements set out in the ASX listing rules in order to be eligible to list. These requirements include a set of minimum admission criteria, including structure, size and number of shareholders. Key criteria for organisation needed to be eligible for listing: Admission criteria or Minimum 400 investors @ A$2000 and 25% held by unrelated parties Company size A$1 million net profit over past 3 years + General requirement Minimum 500 investors @ A$2000 Number of shareholders
A$400,000 net profit over last 12 months or Profit test Asst test A$2 million Net Tangible Assets or A$10 million market capitalisation
Cost of Listing : ASX Equity Listing Fees are linked to organization’s value - that is, the amount of capital raised and the total market capitalization of organization. Most organizations listing are subject to the following three types of Equity Listing Fees: 1. Initial Listing Fees – payable at the time of listing the organization. 2. Annual Listing Fees – payable annually by the organization to remain listed 3. Subsequent Listing Fees – payable if the organization raises additional capital once listed. It should be noted that at the time of (initial) listing, the organization will need to pay an Initial Listing Fee and a pro-rata Annual Listing Fee for the remainder of the financial year. In the following financial years, the full Annual Listing Fee will apply. ASX’s Initial and Annual Listing Fees are calculated based on an organisation’s total capitalisation, whereas Subsequent Listing Fees are based on the amount of capital raised. The following example illustrates the difference: Company X decides to List. Company X has 100 shares on issue, of which the owners decide to sell 50 at $1.00 each to raise $50.00. For this IPO, Company X will pay an Initial Listing Fee and a pro-rata Annual Listing Fee. Although only $50.00 was raised, Initial and pro-rata Annual Listing Fees are calculated using Company X’s total market capitalisation of $100.00 (being 100 shares at $1.00 each).
The following year, Company X’s share rises to $1.20. The Annual Listing Fee is calculated based on the total market capitalisation of $120.00 (being 100 shares at $1.20 each). Later that year, Company X decided to raise an additional $23.00 to buy (for cash) Company Y. To fund this acquisition, Company X issues 20 new shares at $1.15 each. Company X’s Subsequent Listing Fee is calculated based on the amount of new capital raised ($23.00). One should also consider that there are other non-ASX costs associated with Listing and raising capital. This information is provided for general information purposes only. Some exceptions to the policy described above exist – different fee schedules will apply in the cases of debt listings, Foreign Exempt Listings, and those listed funds choosing to pay fees according to the Listed Managed Investments fee schedule. ASX Equity Listings Fee Calculator Choose a Fee Calculation
Number of Securities
Value Per Security $ . Total Value $1,000.00 Initial Fee Payable $ $13,310
ASX Equity Listings Fee Calculator Choose a Fee Calculation
Number of Securities
Value Per Security $
Already Listed? Total Value $1,000.00 Annual Fee Payable $ 34
$7,450 ASX Equity Listings Fee Calculator Choose a Fee Calculation
Number of Securities
Value Per Security $ . Total Value $1,000.00 Subsequent Fee Payable $ $1,200 For initial public offering (IPO) the following steps involved: Step 1: Appoint advisers Step 2: Talk to ASX Step 3: Prepare and lodge prospectus Step 4: Apply to list Step 1: Appoint advisers Professional advisers play an integral role in achieving a successful listing. They can help with a wide range of issues including legal, financial, accounting, valuation, prospectus preparation, due diligence, underwriting and marketing of the IPO. There are also specialist advisers such as independent valuation experts for specific industries such as the mining industry. Professional advisers may be able to assist with:
Corporate structure, prospectus, and legal matters - can include the structure of the management and board, Corporate governance structures, the organisation's constitution, prospectus preparation and the due diligence process
Financial matters – can include preparation of historical accounts, forecasts, taxation issues and the valuation of assets Marketing and distribution of securities – can include management of the IPO, pricing of the issue, underwriting, marketing of the issue and allocation of securities
Communication – can include investor relations, public relations and Government relations
Key advisers who can assist in these areas include:
Stockbrokers and Investment Banks - offer advisory services that can assist with the management of the listing process Underwriters – agree to purchase any shares not taken up by investors under the IPO, to ensure the receipt of sufficient funds Lawyers – assist with the legal aspects of a float Accountants – advise on such aspects of the float as financial, taxation and valuation issues Share registries – manage the register of share holders, process applications for the IPO and handle the share register on an ongoing basis Communications and Investor Relations consultants – can liaise with members of the media to ensure that the float gets sufficient press coverage, and organise investor roadshows
Other experts – depending on the nature of listing, other experts may be of assistance to provide specialist advice or reports, such as independent expert reports or real estate valuations
Step 2: Talk to ASX There are usually numerous regulatory, structural and organisation constitutional issues that need to be aware of prior to listing. ASX recognises that all organisations are different, and we encourage to meet with us to discuss specific circumstances. A. At a preliminary stage - The ASX listings business development team is able to visit to find out more about your business, and to help with general guidance on the IPO process and role in that process. B. At a more advanced stage - If one decide that listing on ASX is the correct course for his business, then experienced listings operations team can answer ther queries regarding the ASX Listing Rules and general business issues including:
Whether ASX would be likely to treat any securities as restricted and apply escrow provisions Related Party transactions Employee incentive schemes Management agreements Listing timetables Meeting initial and ongoing listing rule obligations generally
• • • • •
Step 3: Prepare and lodge a prospectus A prospectus is a document issued by a company setting out the terms of its equity issue (or debt raising). It provides the background, financial and management status of the company so that investors are able to make an informed decision about whether to invest. In most cases, a prospectus or similar disclosure document is required to list. The prospectus must be lodged with both the Australian Securities and Investments Commission (ASIC) and ASX. Amongst other things, a prospectus is required to contain all information that investors and their advisers would require to make an informed assessment of:
The assets, liabilities, financial position, profits and losses, and prospects of the organisation; and The rights attaching to the shares.
The due diligence process surrounds the preparation of the prospectus, allowing all parties to satisfy themselves of their legal responsibilities and the structure of the transaction. Step 4: Apply to list Having prepared and lodged prospectus with ASIC, one is now able to submit his listing application to ASX. The application form is contained in the ASX Listing Rules and must be received by ASX within seven days of lodging prospectus with ASIC. ASX will review the application and prospectus to ensure that it satisfies the ASX
Listing Rules. ASX Listings Advisers may seek additional information to assess the application and ensure that sufficient information is available for investors to make informed decisions once organisations shares start trading.
Bursa Malaysia - MALAYSIA
History : The first formal securities business organisation in Malaysia was the Singapore Stockbrokers' Association, established in 1930. It was re-registered as the Malayan Stockbrokers' Association in 1937. The Malayan Stock Exchange was established in 1960 and the public trading of shares commenced. The board system had trading rooms in Singapore and Kuala Lumpur, linked by direct telephone lines. In 1964, the Stock Exchange of Malaysia was established. With the secession of Singapore from Malaysia in 1965, the Stock Exchange of Malaysia became known as the Stock Exchange of Malaysia and Singapore. In 1973, currency interchangeability between Malaysia and Singapore ceased, and the Stock Exchange of Malaysia and Singapore was divided into the Kuala Lumpur Stock Exchange Berhad and the Stock Exchange of Singapore. The Kuala Lumpur Stock Exchange which was incorporated on December 14, 1976 as a company limited by guarantee, took over the operations of the Kuala Lumpur Stock Exchange Berhad in the same year. On April 14, 2004, we changed our name to Bursa Malaysia Berhad, following our demutualization exercise, the purpose of which was to enhance our competitive position and to respond to global trends in the exchange sector by making us more customer-driven and market-oriented. We are focused on various initiatives aimed at improving our product and service offerings, increasing the liquidity and velocity of our markets, improving the efficiency of our businesses and achieving economies of scale in our operations. On 18 March 2005, Bursa Malaysia was listed on the Main Board of Bursa Malaysia Securities Berhad. We accomplished double achievements when the exchange received certifications for conformance to the ISO 9001:2000 Quality Management System and ISO 14001:2004 Environmental Management System standards on 5 October 2007.
Listing on Bursa Malaysia : Advantage To List on Bursa Malaysia 1. Major investment destination for global fund managers. 2. Valuation is comparable to regional exchanges and relatively higher on niche sectors. 3. Pro-active investor relations programmes facilitated by Bursa Malaysia. 4. Mature and liquid market. 5. Established regulatory structure benchmarked internationally. 6. Cost effective listing desti.nation. 7. Excellent technology and trading platform. 8. Local institutions and retailers actively seek quality investments. 9. Access to Mid East liquidity. Listing Process : The listing process (from the time one engage an adviser to the day of listing) will normally take four to six months, depending on the structure and complexity of the listing scheme. Upon approval, one will be given 6 months to choose the right time to list. The conceptual timeline for the listing process is as follows:-
Listing Criteria : Bursa Malaysia offers three (3) boards, Main Board, Second Board and MESDAQ Market. Generally, Main Board is for more established companies, Second Board for relatively smaller companies and MESDAQ Market is for high growth and technology companies. Both the Second Board and MESDAQ Market provide an avenue for relatively smaller companies to access the capital market early to fuel their expansion plans. Once established, they can transfer their listing status to the Main Board. The summary of the relevant listing criteria as stipulated in the Guidelines on the Offering of Equity and Equity-Linked Securities issued by the Securities Commission(SC) are as follows:-
Notes:1. The complete criteria and guidelines in relation to Listing are available at Securities Commission website . 2. The Bursa Malaysia Listing Requirements for Main Board and Second Board (including Foreign Listing). 3. The Bursa Malaysia Listing Requirements for MESDAQ Market . Cost of Listing : The costs of raising equity through an initial public offering vary for Main Board, Second Board and MESDAQ Market. Some of the key components in the total IPO expenses are:Professional fees, which range from RM500,000 to RM900,000, subject to negotiation
Underwriting, placement and brokerage fees, which range from 1% to 3% of the value of the shares, subject to negotiation Regulatory fees Securities Commission Processing fee : RM50,000 + 0.05% of the enlarged issued and paid-up share capital Fee for submission of Prospectus : RM10,000 Fee for registration of Prospectus : RM5,000 Bursa Malaysia Main Board & Second Board MESDAQ Market Initial Listing 0.01% of market value of 0.01% of market value of issued Fee issued capital Minimum of RM20,000 Annual Listing Fee Maximum of RM200,000 0.0025% of market value of issued capital Minimum of RM20,000 Maximum of RM100,000 capital Minimum of RM10,000 Maximum of RM20,000 Nominal value of issued capital as at 31 December Less than RM50 million : RM10,000 More than RM50 million : RM20,000 Other expenses such as printing and advertisement which range from RM100,000 to RM400,000, subject to negotiation.
SINGAPORE - SGX
Process/Timeframe : SGX is a dedicated partner to grow with its listed companies. As a listed company itself, SGX understands the concerns and the value of a listing. It understands that its business is to help its listed companies get the most value out of a listing, which goes beyond raising capital. At every step of the joining process, SGX ensures a potential listed company has all the support and information needed to make the right decisions for the business. As such, SGX continually strives to create an international marketplace where its listed companies can realise their full potential. Pre-Joining : Step 1: Introduction to SGX
• • •
Understand the company’s capital needs Help the company understand SGX and the benefits of various listing options Support the company to decide whether joining one of SGX’s markets is right
Step 2: Pre-Submission Consultation
Provide guidance on the listing process, regulatory framework and corporate governance best practices Work with the issuer to resolve potential issues
Post-Joining : Step 3: Profile Enhancement
Help the company raise its profile in the investment community through the Research Incentive Scheme, investor seminars and overseas roadshows to meet institutional investors
Step 4: Secondary Fund-Raising
·Provide a conducive marketplace for the company to raise secondary funds efficiently to support its continual growth
Listing Process A company initiates the listing process by appointing a Singapore-based financial institution to be its sponsor and lead manager. The lead manager is usually a member company of SGX, a merchant bank or other similar institutions acceptable to SGX. The lead manager will assume an active role and prepare the company for listing. Besides managing the launch, the lead manager also submits the listing application on behalf of the company. In addition, the lead manager will liaise with SGX on all matters arising from the application for listing. Apart from the lead manager, the company needs to appoint a lawyer to oversee the legal aspects of listing. In addition, the appointed Certified Public Accountant will provide the company with an initial evaluation of its readiness to go public, assist in upgrading its management capabilities and in preparing the launch. Prior to and during the launch, the company will have to engage the service of an experienced public relations firm to help enhance its appeal and convey its corporate messages effectively to the investing public. IPO Timeline Prior to submission of the listing application, the company is advised to consult SGX to resolve any specific issues. This will speed up the listing process and reduce any additional costs that may arise due to a delay. The timeframe for a listing varies for different companies, ranging from two months to two years. On the average, the whole process should last about 12 to 18 weeks. Given that time is of the essence, the company should budget a reasonable amount of management time and appoint the appropriate professionals to assist in the listing process.
The indicative timeline for the listing process is as follows:
LISTING REQUIREMENTS Methods of Listing : 1. Primary Listing :
Companies must meet SGX’s initial listing requirements outlined below for either a Mainboard or SESDAQ listing. After listing, companies have to comply with all SGX’s continuing listing obligations
2. Secondary Listing :
Companies that are already listed on another exchange of equivalent rules as SGX are able to seek a secondary listing on SGX without having to comply with SGX’s continuing listing obligations.
3. Global Depository Receipts :
An international company that is already listed on its home exchange can also choose to list and raise funds on SGX via GDRs. As GDRs are specialist products offered only to institutional and accredited investors, GDR listing requirements are relatively less demanding compared with primary and secondary listings where retail participation is allowed.
Please click here for details.
IPO or Introduction Whether a company is listing on SGX on a primary or secondary basis, the offering at the point of listing can be done in following ways: IPO :
Issue of new shares or offer of existing shares to the investing public. A prospectus has to be lodged with MAS and prepared in accordance with the Securities and Futures Regulations (SFR). During the course of the listing process, the prospectus will be subject to public comments for approximately 3 to 4 weeks. (This may be extended at the discretion of MAS.)
No shares are offered to the investing public. Suitable for companies that may not require funds at the point of listing.
An introductory document needs to be lodged with MAS and prepared in accordance with SFR. The introductory document is not subject to public comments.
Mainboard Requirements PTO
Criteria 1 Criteria 2 Cumulative pre-tax profit of at least $7.5 mn over Cumulative pre-tax profit of at least $10 the last 3 consecutive years, with a pre-tax profit of at least $1 mn in each of those 3 years million for the latest 1 or 2 years NA
Criteria 3 NA
Market capitalisation of at least $80 mn at the time of the initial public offering, based on the issue price
25% of issued shares in the hands of at least 1000 shareholders (For market capitalisation > S$300 million, shareholding spread will varies between 12-20%). 2000 shareholders worldwide in the
case of a secondary listing Operating Track Record 3 years Continuity of 3 years Management Accounting Standard Continuing Listing Obligations
NA 1 or 2 years as the case may be
Singapore, US or International Accounting Standards Yes Yes Yes Waiver from having to comply with continuing listing obligations if listed on another recognised foreign stock exchange. At the discretion of the issuer At the discretion of the issuer No requirement for operations in Singapore At least 2 residents in Singapore
Domicile Trading and Reporting Currency Business Operations Independent Directors
Sesdaq Requirements Smaller companies may choose to list on Sesdaq, which has no quantitative requirements. Companies listed here may apply for transfer to the Mainboard when it meets the latter’s requirements in the future.
Pre-tax Profits Paid Up capital Track Record Shareholding Spread
Nil Business is expected to be viable and profitable, with good growth prospects. NA A company with no track record has to demonstrate that it requires funds to finance a project or develop a product, which must have been fully researched and costed. At least 500,000 shares or 15% of issued shares (whichever is greater) in the hands of at least 500 shareholders.
Other Qualitative Requirements:
• • •
Good growth potential; Healthy cashflow and adequate working capital; and Strong, capable and credible management team
USA - NASDAQ
NASDAQ - the largest and most renowned U.S. market. NASDAQ has more listed companies (approximately 3,200), trades more volume (approximately 2 billion shares daily) and handles more IPOs (over 500 since 2000) than any other U.S. exchange. In a recent update of a multi-year study of investors, NASDAQ was the most widelyrecognized stock market, with greater brand recognition than any other U.S. exchange. And listed companies agree — 2005 was the first time in history more companies switched to NASDAQ from the NYSE than vice versa.
NASDAQ Listing Qualifications NASDAQ® Listing Qualifications (“LQ”) is headed by Michael Emen, Senior Vice President, and reports to Edward Knight, Executive Vice President, General Counsel and Chief Regulatory Officer. LQ promotes the integrity and reputation of The NASDAQ Stock Market® by reviewing all companies for compliance with the initial and continued listing requirements. The principal groups within LQ are: the Initial Listings & Structured Financial Products team, which is headed by Will Slattery; the Continued Listings team, led by Doug McKenney; Corporate Governance & Listing of Additional Shares, headed by David Compton; and Listing Investigations, led by Gary Sundick. Each NASDAQ-listed company is assigned to a specific qualifications analyst who reviews its SEC or other regulatory filings. This individual is also available to answer questions regarding the meaning or application of NASDAQ’s listing requirements. NASDAQ’s listing requirements are set forth in the 4000 Series of the Marketplace Rules and are further explained in our NASDAQ Listing Standards and Fees and Regulatory Requirements publications. There are also over 250 NASDAQ Listing Qualifications FAQ’s, which provide additional guidance on our initial and continued listing policies and procedures.
Companies considering financing transactions or which have other questions regarding the specific application of NASDAQ’s corporate governance requirements can take advantage of NASDAQ’s written interpretations program. This is a fee-based process pursuant to which a company can request a specific written interpretation of NASDAQ’s listing rules. NASDAQ staff also review various transactions which are the subject of filings pursuant to the listing of additional shares program. Companies are encouraged to call with any questions as early as possible in that process.
How to List on NASDAQ To list securities on The NASDAQ Stock Market, a company must submit an application and meet certain initial quantitative and qualitative requirements. These listing requirements together with the basic steps of the application process below outline how to list securities on The NASDAQ Global Select Market SM, The NASDAQ Global MarketSM or The NASDAQ Capital MarketSM. Listing Standards Companies that choose to list their securities on The NASDAQ Stock Market must meet minimum initial and continued financial requirements. These requirements are designed to facilitate capital formation for companies worldwide and, at the same time, to protect investors and prospective investors in those companies. NASDAQ’s quantitative listing requirements generally call for companies to meet higher thresholds for initial listing than continued listing, thus helping to ensure that companies have reached a sufficient level of maturity prior to listing. NASDAQ also requires listed companies to meet stringent corporate governance standards, standards to which NASDAQ itself adheres. NASDAQ listing standards are transparent to companies and investors alike, and are rigorously enforced.
NASDAQ MARKETS NASDAQ Global Select Market The NASDAQ Global Select Market has the highest initial listing standards of any stock market in the world. A company must meet specific financial and liquidity requirements for initial listing and must continue to meet standards to maintain its listing on the NASDAQ Global Select Market. NASDAQ Global Market The NASDAQ Global Market, formerly the NASDAQ National Market®, has a new name that more accurately reflects the global leadership and international reach of this market and listed companies. A company must meet all initial listing criteria of one of the three listing standards for initial listing and must continue to meet standards to maintain its listing on the NASDAQ Global Market. NASDAQ Capital Market The NASDAQ Capital Market, formerly the NASDAQ SmallCap MarketSM, was renamed in 2005 to reflect the core purpose of this market — capital formation. A company must meet the minimum financial requirements for initial listing and must continue to meet standards to maintain its listing on the NASDAQ Capital Market.
NASDAQ LISTING APPLICATION GUIDE PTO
RESPONSIBLE PARTY TIMING
Submit to: *
Application (signed and dated by Company or company’s At time of application Apply Online or mail to A
Listing Agreement (signed and dated by counsel
Registration Statement (one copy) Company or company’s counsel At time of application. Note: This form need not necessarily accompany the company’s initial submission. A
Completed Corporate Governance
Certification Form. Submit:
$5,000 non-refundable application fee Entry Fee Payment Form
Company or company’s counsel
At time of application. Note: This form need not necessarily accompany the company’s initial submission. A
An estimated entry fee will be calculated by Listing Qualifications upon request. Submit:
Company or company’s counsel
The $5,000 non-refundable fee is due at time of
B – The company may wire
$5,000 non-refundable application fee
the application. The balance of the entry fee is due its fees. Please see
Entry Fee Payment Form prior to the commencement of trading. instructions below.
An estimated entry fee will be calculated by Listing Qualifications upon request. Submit:
Logo Authorization Form and Art.
Company or company’s counsel
An estimated entry fee will be calculated by Listing Qualifications upon request. Submit:
At time of application
One marked copy of any amendments Company or company’s counsel Concurrent with SEC or other regulatory authority filing A
to the registration statement
Copies of all correspondence between
the SEC and the company relating to the filing of the company’s registration statement Provide additional information Submit:
Company or company’s counsel Company or company’s counsel
Upon request by Listing Qualifications
Copy of Form 8-A
Concurrent with SEC filing
Provide notice of anticipated effective date of registration statement
• • •
Company or company’s counsel
Notify Listing Qualifications by phone at least three (3) business days prior to the anticipated effective date of the registration statement. A
Confirm security addition Register market makers Release security for trading
Underwriter syndicate and Upon effectiveness and pricing, notify Corporate all market makers Company or company’s counsel Company or company’s counsel Data Operations by phone.
Provide notice of effectiveness and pricing Submit:
Notify Listing Qualifications by phone.
Final registration statement or
As soon as available
prospectus (1 copy)
Listing on NASDAQ for International Companies Listing on NASDAQ gives international companies high visibility and access to a diverse pool of investors worldwide. In addition, NASDAQ promotes corporate growth and entrepreneurship by providing companies, market participants and investors with one of the highest quality equity markets in the world. The U.S. securities markets offer companies access to the richest source of capital in the world as a result of their size, credibility and pool of enthusiastic investors. At the same time, taking a company through a public offering in the U.S. is a major undertaking and presents challenges to companies seeking access to this capital. Recent changes in U.S. securities law require companies to show their ability to manage control of their systems, operations and financial well being, and to demonstrate integrity, transparency and accountability in all aspects of their business. However, by this same account, a U.S. listing demonstrates to the financial community that a company is among the best run companies in the world. Considerations for listing on a U.S. stock market U.S. securities markets offer companies multiple benefits, including supplying the world’s richest source of capital. Listing in the U.S. can provide a company with an infusion of cash to increase shareholder value and fuel long-term growth. Some significant benefits include:
U.S. stock exchanges provide retail and institutional investors with access to
U.S. capital markets, which are the largest and most liquid in the world.
Currency becomes available for U.S. and global acquisitions. There may also
be a lowered cost of capital through accessing U.S. debt and commercial paper markets.
Having a stock option program can help attract and retain the most talented
Listing on a U.S. exchange provides company with multiple marketing
benefits, including increased international visibility and credibility, broader brand name awareness and an enhanced reputation. 57
The stringent disclosure standards required by U.S. stock exchanges can help
generate increased investor confidence. American Depositary Receipts (ADRs) and Other Listing Strategies Many public offerings by non-U.S. companies are in the form of depositary receipts, usually as American Depositary Receipts (ADRs). ADRs support distribution and trading of existing shares of stock and capital raising. Each ADR generally represents a multiple or fraction of the underlying securities and is quoted in American dollars. ADRs transfer ownership while continuing to be the registered holder of the underlying securities. They generally are structured so that the trading price for a company’s ADR will be in the range of U.S. $10 to $30. In addition to ADRs, a company can establish other structures that will allow it to list common shares in the U.S. Listing on NASDAQ for International Companies Listing on NASDAQ gives international companies high visibility and access to a diverse pool of investors worldwide. In addition, NASDAQ promotes corporate growth and entrepreneurship by providing companies, market participants and investors with one of the highest quality equity markets in the world. The U.S. securities markets offer companies access to the richest source of capital in the world as a result of their size, credibility and pool of enthusiastic investors. At the same time, taking a company through a public offering in the U.S. is a major undertaking and presents challenges to companies seeking access to this capital. Recent changes in U.S. securities law require companies to show their ability to manage control of their systems, operations and financial well being, and to demonstrate integrity, transparency and accountability in all aspects of their business. However, by this same account, a U.S. listing demonstrates to the financial community that a company is among the best run companies in the world. Considerations for listing on a U.S. stock market U.S. securities markets offer companies multiple benefits, including supplying the world’s richest source of capital. Listing in the U.S. can provide a company with an
infusion of cash to increase shareholder value and fuel long-term growth. Some significant benefits include: U.S. stock exchanges provide retail and institutional investors with access to U.S. capital markets, which are the largest and most liquid in the world. Currency becomes available for U.S. and global acquisitions. There may also be a lowered cost of capital through accessing U.S. debt and commercial paper markets. Having a stock option program can help attract and retain the most talented employees. Listing on a U.S. exchange provides company with multiple marketing benefits, including increased international visibility and credibility, broader brand name awareness and an enhanced reputation. The stringent disclosure standards required by U.S. stock exchanges can help generate increased investor confidence. American Depositary Receipts (ADRs) and Other Listing Strategies Many public offerings by non-U.S. companies are in the form of depositary receipts, usually as American Depositary Receipts (ADRs). ADRs support distribution and trading of existing shares of stock and capital raising. Each ADR generally represents a multiple or fraction of the underlying securities and is quoted in American dollars. ADRs transfer ownership while continuing to be the registered holder of the underlying securities. They generally are structured so that the trading price for a company’s ADR will be in the range of U.S. $10 to $30. In addition to ADRs, a company can establish other structures that will allow it to list common shares in the U.S.
UK - FTSE
LISTING EQUITY : Primary listing : The Main Market offers companies the choice between a primary listing and a secondary listing. A primary listing requires a company to meet the highest standards of regulation and disclosure in Europe; it is not necessarily that company’s first or sole listing. A primary listing means the company is expected to meet the UK’s gold standard – described as super-equivalent to the EU directives and implemented as part of the Financial Services Action Plan - and as a consequence may enjoy a lower cost of capital through greater investor involvement. A company which is already listed in its home jurisdiction may choose a primary listing in the UK without relinquishing its home listing. Only ordinary shares can be primary listed (debt and Depositary receipts (DRs) cannot). Modified rules Some companies seeking a primary listing have business models that make it difficult to demonstrate compliance with the normal eligibility requirements in terms of track record and controlling interest. To help these companies, the UKLA has created modified rules for 'scientific research based companies' and 'mineral companies'.
Listing Categories The FSA assigns an listing category to all securities admitted to the Official List – i.e. primary or secondary. Please click here to access a list of all Main Market securities with details of the relevant listing category or please click here to access FSA's Official List.
FTSE UK Index Series Primary listed Main Market companies are potentially eligible for the FTSE UK Index Series, including the well-known FTSE 100 Index - one of the most widely recognised in the world. Inclusion in the FTSE UK Index Series is determined by FTSE according to published ground rules. The FTSE UK Index Series is open to eligible primary listed Main Market companies. Secondary listed companies and DRs are not eligible for inclusion in the FTSE UK Index Series. Secondary listing A secondary listing allows issuers to access the Main Market while meeting EU harmonised standards as opposed to the full ‘super-equivalent’ requirements. Equity and DRs can be secondary listed, although this option is not available to UK incorporated companies. A secondary listing does not automatically mean a company’s second listing, rather it signifies that the company has chosen to meet EU harmonised standards as opposed to the UK super-equivalent standards required by a primary listing. Secondary listings (equity & depositary receipts) are typically only offered to professional investors. The secondary listing route is also suitable for companies wishing to ‘passport’ their prospectus into the UK. Click here for more information on ‘passporting’. Fees calculator Annual fees are payable by all companies whose equity securities or certificates representing shares are admitted to trading. For companies joining the market after 1st April, a pro-rata annual fee will be due.
Fees calculator (Main Market, PSM, Specialist Fund Market and other) Fees calculator (AIM) To obtain the pro-rata annual fee, calculate the number of calendar days, including the date of admission to trading, up to and including 31 March; divide by 366 and multiply the result with the annual fee. Fees calculator for Main Market, Professional Securities Market, Specialist Fund Market and other securities admitted to trading Admission fees are payable on all applications for trading securities on the Exchange's markets. Insert the number of shares and opening price - or just insert the market capitalisation value - of the securities being admitted to trading.
Admission fees - New company issuing ordinary shares Opening price Market Admission Fee
Number of shares (£) capitalisation (£) (£) 100 50.00 5,000.00 5,870.00 Every new company joining the market after 1st April will also have to pay a prorated annual fee. To obtain the fee, the number of calendar days are taken, including the date of admission to trading up to and including 31 March, this number is divided by 365 , and the number multiplied by the fee. Date:
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Select: United Company
Pro-rated annual fee (£)
Fees calculator for AIM companies and nominated advisers An admission fee is payable by all companies seeking admission to AIM or where an enlarged entity seeks admission to AIM following a reverse takeover under Rule 14 of 62
the AIM Rules for Companies. The admission fee is based on the market capitalisation of the company on the day of admission. No admission fee is payable by AIM companies for further issues.
Admission fees Number shares 100 of Opening price (£) 50.00 Market Admission Fee
capitalisation (£) (£) 5,000.00 5,870.00
An annual fee of £4,750 is payable by all companies whose equity securities or certificates representing shares are admitted to trading. Annual fees are billed in the first week of April for the 12 months commencing 1 April and must be paid within 30 days of the invoice date. A pro-rata annual fee is payable by new applicants. To calculate the fee, take the number of calendar days, including the date of admission to trading up to and including 31 March, divide this number by 365 and multiply the result by the annual fee. No pro-rata annual fee is payable by the enlarged entity admitted to AIM following a reverse takeover under Rule 13 of the AIM Rules for companies. Annual fees Date
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Annual fee (01/04/08 - 31/03/09)
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