Listing on Emerging Companies Market of Cyprus Stock Exchange

A. Information about the Emerging Companies Market 

The Emerging Companies Market (E.C.M.) is considered as a Multilateral Trading Facility (MTF) according to “the provision of Investment Services, the exercise of investment activities, the operation of regulated markets and other related matters” Law 144(I)/ 2007. The E.C.M. operates according to the Regulative Decisions adopted by the CSE.

The Securities and Exchange Commission supervises the issuers regarding the publication of a prospectus, if required. In addition the Securities and Exchange Commission supervises the CSE as a market operator which operates a Multilateral Trading Facility (MTF).

The market is characterized as unregulated and therefore it does not come under the mandatory provisions for regulated markets which impose strict listing requirements and continuous obligations.

Shares, corporate bonds and the derivatives of these titles such as Warrants, Rights, and Convertible Bonds are traded in the Emerging Companies Market. Corporate Bonds are traded in their own market which is called “Emerging Companies Bond Market”.

B. Steps for listing

1) What are the listing requirements of the Emerging Companies Market?

• The issuer must have published audited accounts, had normal operations and related activities for at least the two years preceding the application. Newly established companies will be able to be listed if the competent body of the Cyprus Stock Exchange judges that potential shareholders are given satisfactory information that would allow them to access properly the value of the titles, from the Nominated Advisor of the issuer .

• Throughout the flotation procedure, the issuer must have a Nominated Advisor.

• The issuer must be a public company with a satisfactory number of investors. No minimum share capital must be dispersed among the general public.

2) What information shareholders need to submit?

The shares register information in Excel format and provided that the following are marked in separate columns:

a) Name
b) Surname
c) Other names (if applicable)
d) Resident or contact address
a. Number of flat/house
b. Street name
c. Area
d. City
e. Country
f. Postal code
g. Tel number (if available)
h. Fax number (if available)
i. email
e) Citizenship
f) Passport or identification details
a. Number
b. Date of issue
c. Issuing country
d. Country of tax residence

If the shareholders are legal entities, the minimum requirement is for company certificate of incorporation and list of official directors, which will require Cyprus lawyer confirmation.

3) How many persons does the Board of Directors need to have?

It’s preferred to have an executive director who knows the business and can take the spotlight of scrutiny as well as 2 independent non-executive directors. The directors may be Cypriots or non-residents. For tax reasons the majority should be from Cyprus (in order to assure management and control in Cyprus).

4) Who takes the decisions?

The board of directors is responsible for every decision of the Company.

5) What are the ways of getting a listing?

Either by public offer, which requires a Prospectus and an approval from the Securities and Exchange Commission or by private placement, which requires only an Admission Document to be submitted to the CSE. A combination of both methods is possible as well.

6) Does the Company need to submit prospectus?

If the offer is public, greater than 2.5 million Euros and is addressed to over 100 shareholders, a prospectus and an approval from the Securities and Exchange Commission will be required.

In a different case (by private placement), where the offer is addressed to institutional investors (strategic or other) or to fewer than 100 shareholders and less than 2.5 million Euros, an Admission Document is to be submitted to the CSE without any requirement for approval by the Securities and Exchange Commission.

7) Is there a minimum history requirement?

Generally two years, but for new ventures, the pre-history of at least 2 years is waived provided the business plan submitted details the future activities of the company together with 3-year business plan.

8) What information is included in admission document?

The following information is needed:

Principle shareholder (s)
Basic KYC information

Board of directors-all members
Basic KYC
CV

Business plan
History of those who started the business, who they are
What other business the main shareholders are involved with
Projection for next 3 years including financial forecast (P&L, Balance Sheet, Cash flow)
Objective of listing
Future plans

Pricing methodology

Major shareholders
Details regarding the shareholders above 5%
Details about the CEO’s stake
Details about the stake of all board members and other executives

9) How long does the process take?

Assuming the new public company is registered, it takes one week to prepare the admission document provided that all relevant information and business plan is submitted by principle shareholders and directors provide their details and CV. After filing, the Cyprus Stock Exchange (CSE) takes on average 2 weeks to respond following submission of application.

10) Once listed, are there any restrictions?

No, the emerging companies market of the CSE does not have minimum daily volume requirement. There is also no minimum share dispersion and no minimum or maximum market capitalization requirement.

11) How will the shareholders trade their shares?

The same KYC documentation will be used to open Global trading accounts at the CSE for each and every shareholder, person or legal entity, in which the CSE will credit the % of shares held in the listed company. This is necessary even though no trading is likely to occur on the shares. The CSE shall charge a relevant fee (subject to discussion and agreement with CSE because of the number of investors) per CSD account is paid.

12) Main responsibilities of companies listed on the Emerging Market of Cyprus Stock Exchange

- Always maintain a Nominated Advisor/agent/auditor/legal advisor
- Need to submit audited annual accounts of Cyprus entity within 4 months after year end
- Need to submit first half management accounts within 2 months of first half end
- Need to announce all corporate actions, including dividends, takeovers, share issues, board movement, principle shareholder dealings in company shares, etc.
- Need to settle their dues to the Cyprus Stock Exchange and nominated advisor as well as pay the audit and tax dues.

13) Is it possible for an issuer to transfer from the Emerging Companies market (E.C.M.) to the regulated market?

An issuer can be transfer for the E.C.M. to the regulated markets after an application made by the issuer if the issuer ensures that:

a. Fulfills the listing requirements of the market in which seeks to transfer.
b. Provides the approval from the Securities and Exchange Commission according to the Law 114(I)/ 2005.