A guide to a flotation on the Emerging Companies Market...A guide to a flotation on the Emerging...
Transcript of A guide to a flotation on the Emerging Companies Market...A guide to a flotation on the Emerging...
A guide to a flotation on the Emerging Companies Market
www.pwc.com/cy
Cyprus Capital Market Groups
October 2011
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AguidetoaflotationontheEmergingCompaniesMarket1
On30thSeptember2009theCyprusStockExchange(“CSE”)launchedanewmarketcalledtheEmergingCompaniesMarket(Νεοαναπτυσσόμενων Εταιρειών Αγορά) (“ECM”).ECMisgovernedbyasimplifiedregulatoryenvironmentwhichhasbeenspecificallydesignedfortheneedsofsmallandemergingcompanies.
Regulatory environment
ECMcompaniesaregovernedbytheregulativedecisionsoftheCSEwhichsetouttherequirementsandguidanceforcompaniesquotedorwishingtobequotedonECM.
Who is it addressed to?
ECMisaimedat:• Privatecompaniesseekingfundingandeasyaccess
tothesecondarymarket• Investorsseekingnewtypeofinvestments,taking
intoaccountthehigherriskoftheECM• Publiccompaniesunwillingtoincurthehighercosts
ofregulatedmarkets
The decision to float
Onceyouhavedecidedtofloat,youwillneedtocriticallyappraiseyourexistingbusiness,identifyingtheextenttowhichitwillmeettheECMadmissionrequirements.Theserequirementsmaybeanalysedintothefollowingareas:
• Generalsuitability-preparationandplanning• Eligibilityforadmission• Continuingobligations/filingrequirements
General suitability and initial considerations
Planningandgoodpreparationarecrucialtoasuccessfulflotation.Thefollowingarethekeysuitabilityissuesthatyouwillneedtoconsider:• Preparationofawellconstructed,attractiveinvestor
‘story’• Establishinganexperiencedboardofdirectorsand
managementteam• Corporategovernanceimplications• Suitabilityofexistingcapitalandorganisation
structure• Appropriatenessofthefinancialtrackrecord• Qualityofmanagementinformationandfinancial
reportingprocedures• Taxplanning• Legalhousekeeping
Floating on the Emerging Companies Market
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Eligibility for admission
AcompanymustmeetthelistingsrequirementsassetoutintheregulativedecisionsoftheCSE.Themainrequirementsaresetoutbelow:
Main listing requirements • Tradingrecordsandauditedfinancialstatements
foratleastthetwoyearsprecedingapplication,ifapplicable
• “Newlyestablishedcompanies”canbeadmittedtotheECM,providedthattheCounciloftheCSEissatisfiedthatinvestorsareprovidedwithadequateinformationtoenablethemtoassessproperlythevalueofthetitles
• Theissuershouldbeapubliccompany,withasatisfactorynumberofinvestors
• Nominimummarketcapitalisationrestrictions• Nominimumshareholdersequityrestrictions• AppointmentandretentionofaNominated
Advisor(“NOMAD”)*• Nominimumdispersion(Nominimumnumbersof
sharestobeinpublichands)• Productionofanadmissiondocument
*TheNOMADmustberegisteredwiththeCSE.SeetheCSE websiteforalistofapprovedNOMADs.
Cyprus tax considerations
TheprofitarisingfromthesaleofsharesbyCyprustaxresidentsisexemptfromincometaxandisnotsubjecttospecialdefencecontribution.
AlsoanygainrealisedonthesaleofsharesofacompanylistedonECM(oranyotherCSEmarket)isnotsubjecttoanyCapitalGainsTax,regardlessofwhetherthecompanyownsimmovablepropertysituatedinCyprus.
Ways of achieving a listing
• Bypublicoffer:iftheofferishigherthan2.5millionEurosANDisaddressedtomorethan100potentialinvestors,aProspectusandanapprovalfromthe CyprusSecuritiesandExchangeCommission (“CySEC”)arerequiredinadditiontotheAdmissiondocumentbeingapprovedbytheCSE.
• Byprivateplacement:iftheofferis:- onlyaddressedtoinstitutionalinvestors;or- tofewerthan100potentialinvestorsORfundsraisedarelessthan2.5millionEuros,noProspectusisrequired;onlyanAdmissionDocumentwhichneedsnoapprovalfromtheCySEC.
• Combinationofthetwomethodsabove.
• Bylistingexistingshares:anAdmissionDocumentisneeded,whichrequiresonlyCSEapproval.
Admission Document
TheissuermustprepareandsubmittotheCSEtheAdmissionDocumentwhichasaminimummustinclude:
• Historyofthebusiness• Adequatebusinessplan(shortandlongtermplans
oftheissuer),butnofinancialforecastsarerequired• Informationonthedirectorsandsignificant
shareholders• Informationabouttheplacingorofferofthe
subscription• RiskFactors• AuditedfinancialstatementspreparedunderIFRS
forthetwoyearspriortothelisting(ifapplicable)• Useofthelistingproceeds
AguidetoaflotationontheEmergingCompaniesMarket3
Continuing obligations and financial reporting
Themainrequirementsaresetoutbelow:
Continuingobligationsandfinancialreporting
• Annualauditedaccountsmustbesignedandpublishedwithinfourmonthsoftheyearend
• Half-yearlyreports(unaudited)mustbepublishedwithintwomonthsoftheperiodend
• AnnouncementofanychangesinthecollaborationbetweentheissuerandtheNOMAD,accompaniedwiththereasons
• Inordertoensuretheearlynotificationtoinvestors,listedcompanieshavetheobligationtoannouncetotheCSEimmediately,andifpossibleatleastonehourbeforetradingbegins,anydecisionrelatingtothefollowingmatters:- Decisiontopayornottopayadividend,thedistributionofprofitsorthepaymentofinterestconcerninglistedsecurities
- Approvaloffinancialresultsandaccountsandhowthesewillbepublished
- Inthecaseofbonds,anydecisiontakenforanewissueandespeciallyanymattersassociatedwithindemnitiesorcollateral
- Anydecisiontakenconcerningchangesinthecapitalstructureofthecompany
- Anysignificantchangesintheoperationsoftheissuer
- Anychangesinthepositionsofchairman,memberoftheboardofdirectors,seniormanagement,theauditorsoranyotherexecutive
- PublicationandsubmissiontotheCSEofthedispersionofsharesinthelistedentityonthelastworkingdayofthecalendaryear
Role of the NOMAD
TheinitialroleoftheNOMADistoensurethatthecompanyisappropriatetobequotedontheECMandensurethattherelevantrulesarecompliedwithonflotation.ANOMADmustberetainedatalltimestoadvisethecompanyandtoensurethatitcomplieswiththerelevantECMruleonanongoingbasis.
How can PwC help?
PwCisaCSEapprovedNOMAD.Wehaveastronganddistinct,regulatory-compliantbrandwhich,wefeel,lendsweighttoanyprospectivelistingintheeyesofboththeCSEECMteamandpotentialinvestors.
OurNOMADrolewouldinclude:
During the admission process
• “sponsoring”thecompany’sadmissiontoECM,confirmingtotheCSEtheappropriatenessofthecompanyforlisting;
• ensuringcompliancewiththeECMrules;• leadingthedraftingoftheprospectus/admission
document;and• projectmanagingtheoverallprocessleadingtoa
listing.
Post admission
• WewouldcontinuetoactasNOMADfollowingadmission,advisingyouonyourongoingobligationsasalistedcompany.
Asanindependentfinancialadvisor,weprovideourclientswithobjectiveadviceontheirstrategicoptions,includingfund-raising,take-overandexitoptions.Throughourextensiveregionalandglobalnetwork,wehaveaccesstospecialistM&Ateamswithstrongsectorandgeographicknowledgeandexperience.
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The PwC Capital Markets group
ThePwCCapitalMarketsGroupcomprisesspecialistswhoprovideabroadrangeofservicestocompaniesandinvestmentbanksinconnectionwithcapitalmarkettransactions,including:
• Preparationforbecomingapubliccompany(tax,operationalandfinancialrestructuring,managementandemployeeincentiveschemes,IPOdiagnostic)
• Actingasreportingaccountantoncapitalmarketstransactions
• Undertakingfinancialandbusinessduediligenceinvestigations
• Advisingonregulatoryissues• Selectingtherightmarketandadvisoryteam
ThePwCCapitalMarketsgroupispartofthePwC’sglobalnetworkofcapitalmarketsspecialists.
Contacts
Nicos Theodoulou [email protected]
AguidetoaflotationontheEmergingCompaniesMarket5
Comparison of admission criteria and on-going obligations of the CSE markets
Non-regulated market
Regulated markets
ECM Alternative Parallel MainAdmission criteriaMinimum Market Capitalization
No €1m €6.8m €15 m
Equity Capital No €1m(2 years before listing)
€8.5m(2 previous years)
€13.6m(2 previous years)
Dispersion (minimum investors in brackets)
No 10%(100)
20%(300)
25%(1000)
Minimum Financial Track Record
2 years (if applicable)
2 years 3 years with positive net position
4 years with positive net position in the year preceding listing
Mandatory Adoption of Corporate Governance Code
No No Partially Fully
On-going obligationsFinancial reporting • Annual audited
accounts • Semi-annual
report under IAS 34
• Annual audited accounts
• Semi-annual accounts under IAS 34
• Annual audited accounts
• Semi-annual accounts under IAS 34
• Annual audited accounts
• Semi-annual accounts under IAS 34 Quarterly accounts
Interim management statement
No During every six month period of the financial year
During every six month period of the financial year
During every six month period of the financial year
Announcement of dates of Board of Directors’ meetings
No 10 days before the meeting
10 days before the meeting
10 days before the meeting
Publication and submission of dispersion report
Last working day of the calendar year
Last working day of each quarter in the calendar year
Last working day of each quarter in the calendar year
Last working day of each quarter in the calendar year
Profit warning announcement No Within 2 months of the period end
Within 2 months of the period end
Within 2 months of the period end
Announcement of dealings between the listed entity and members of its management
No Next working day Next working day Next working day
Maintain a NOMAD Yes Not applicable Not applicable Not applicableMaintain website No No Yes Yes
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AguidetoaflotationontheEmergingCompaniesMarket7
Wearestrivingtoofferourclientsthevaluetheyarelookingfor,valuethatisbasedontheknowledgethatourteamsdrawfrom161.000expertsin154countriesandbasedonexperienceadaptedtolocalneeds.PwCCyprusfocusesontwomainareas:Assurance&AdvisoryServicesandTaxandLegalServices.Weworkcloselywithourclients.Weaskquestions.Welisten.Welearnwhattheywanttodo,wheretheywanttogo.Fromallourinternationalknowledgewesharewiththemthepiecethatismoresuitableforthemandthuswesupportthemonhowtoachievetheirgoals.
Intheoperationoftheworld’scapitalmarketsweplayanimportantroleandasbusinessadvisorswehelpourclientssolvecomplexbusinessproblems.Weaimtoimprovetheirabilitytomanageriskandimproveperformance.Atthesametimewetakeprideinourqualityserviceswhichhelptoimprovetransparency,trustandconsistencyofbusinessprocesses.
Ourpositionisstrengthenedwithouralmost1.000professionalsandourofficesthroughoutCyprus.
PwC in Cyprus
Assurance & Advisory ServicesOurFinancialAssuranceservicescompriseofstatutoryandregulatoryauditservices,whichincludeevaluationofinformationsystems,advisoryservicesforcapitalmarkettransactions,accountingandregulatoryissuesforalltypesofbusinessesthroughspecialistindustrydivisions:
FinancialServices(FS),ConsumerandIndustrialProductsandServices(CIPS)andTechnology,Information,Communications,EntertainmentandMedia(TICE).
OurRiskAssuranceConsulting(RAC)offersexpertiseoninternalauditservices,internalcontrolsoptimisation,corporategovernanceandreporting,aswellasassuranceandadvisoryservicesrelatedtosecurityandcontrolsofinformationtechnologysystemsincludingEnterpriseResourcePlanning(ERP)systems(e.g.SAP,Oracle,Navision),ProjectImplementationAssurance(PIA),ComputerAssistedAuditTechniques(CAATs),SpreadsheetIntegrityandITRiskDiagnosticandBenchmarking.Aparticularfocusoftheteamisinsupportingthefinancialservicesindustryonmattersrelatedtoregulatorycompliance,licensingandriskmanagement.
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Global Compliance ServicesComprisingthewholespectrumofcompanyadministrationandcorporatestatutorycomplianceservices,bookkeeping,accountingandpayrollservicesaswellasspecialisedservicessuchasprivateclientservices,adviceonestablishmentandadministrationoflocalandinternationalbusinesscompanies,collectiveinvestmentschemes,UCITS,investmentfirmsandtrusts.
Direct tax servicesCorporate:AdvisoryServicesfortaxplanning,internationaltaxstructuring,mergersandbuyoutsandotherbusinessissues,taxreturnsadministration,agreementwithTaxAuthoritiesandobtainingtaxrulings.
Personal:Taxplanning,completionsubmissionandagreementoftaxreturns,taxservicestoexpatriates,pensionersandothernon-Cypriotindividuals.
Indirect Tax Services VAT:AdvisoryservicesforVAT,VATrecoveryandVATminimisationandtaxcompliance(administrationofVATreturns,communicationwithVATauthorities,agreementofdisputedassessments,etc).
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PwC offices in Cyprus
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Mailing address: P O Box 21612, CY-1591 Nicosia, Cyprus
Street address: Julia House, 3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus
Tel. +357 - 22555000 , Fax +357 - 22555001
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Street address: Artemidos Tower, 7th & 8th Floors, 3 Artemidos Avenue, CY-6020 Larnaca Cyprus
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Mailing address: P O Box 60479, CY-8103 Paphos, Cyprus
Street address: City House, 58 Grivas Dighenis Avenue , CY-8047 Paphos, Cyprus
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