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By Shavasb Bohdjalian
Certified Investment Advisor and CEO of Eurivex Ltd.
Companies looking for fast-track listing on the London Stock Exchange, in Frankfurt and other stock markets may consider a listing on the Cyprus Stock Exchange and thereafter, apply for a dual listing on the EU stock exchange of their choice.
Despite all the problems encountered by the banking sector and the negative publicity generated after the island was rescued by the EC/ECB and the IMF, Cyprus remains an attractive jurisdiction in the eurozone, offering flexible structures and a very pro-business culture.
The CSE (www.cse.com.cy) operates three regulated market segments of Main, Parallel and Alternative, as well as one for Bonds, and the MTF Market, locally referred to as the Emerging Companies Market.
The main difference between these market segments is the minimum capitalisation rule, the number of years for which audited accounts should be presented, the minimum public float and degree of implementation of the corporate governance code.
PROSPECTUS
In order to apply to list on the CSE, an issuer or the applying company first needs to submit its prospectus for the listing to the Cyprus Securities and Exchange Commission (CySEC), after which the issuer then applies to list on the CSE. The examination and approval of the prospectus may take three months, while the listing process takes about a month to complete.
Under the EU single-passporting rules, a prospectus approved by CySEC is eligible to be used and circulated in other EU member states subject to minor formalities, which essentially means that an issuer whose prospectus has been approved by CySEC and is listed on the r CSE may apply for a dual listing on other major stock exchanges such as London, Frankfurt, Vienna, Berlin or Warsaw and all other EU member state stock exchanges.
MAIN VS. ALTERNATIVE
However, a number of EU stock exchanges differentiate a listing on the CSE Main market to a listing on the Alternative market or even the Bond market.
So, while HM Customs and Excise in the UK approves an issuer which lists on the regulated bond market segment of the CSE, the London Stock Exchange or the Frankfurt Stock Exchange may not allow an issuer which has listed on the Alternative market to apply for a dual listing because such an issuer will not meet the minimum criteria.
This mainly refers to the minimum market capitalisation, but more so to the minimum public float, whereby at least 25% of the share capital must be held by the wider public.
MAIN MARKET REQUIREMENTS
An issuer should have at least EUR 15 mln in market cap and equity capital exceeding EUR 8.5 mln upon listing, otherwise, it should have for each one of the two years prior to listing an equity capital exceeding EUR 13.6 mln.
At least 25% of the shares proposed for listing should be held by the wider public and by at least 1000 natural or legal persons and no shareholder alone or major shareholders together should control directly or indirectly a percentage equal to or greater than 75%.
The issuer should apply the corporate governance code, and hence appoint various internal committees such as remuneration, risk, etc.
The issuer should present audited accounts prepared according to IFRS for at least four years prior to listing with a positive net worth for the year prior to listing, and profits for at least two out of three years or three out of five years prior to listing, although the CSE Council may make exemptions.
The minimum value of the shares is EUR 0.26 per share.
ALTERNATIVE MARKET REQUIREMENTS
An issuer should have at least EUR 1 mln market cap or equity capital exceeding EUR 1 mln for each one of the two years prior to listing with at least 10% of the proposed shares held by the wider public and by at least 100 natural or legal persons. No shareholder should hold more than 90% of the capital of the company.
The issuer does not need to apply the corporate governance code.
The issuer should present audited accounts prepared according to IFRS for at least two years prior to listing, even though the CSE Council may make exemptions.
For both market segments, issuers need to employ a Compliance /CSE liason officer, a task which can be outsourced to a professional firm.
Non-Cypriot companies from other jurisdictions can apply and list on the CSE.
REGISTRY
One of the key advantages of listing on the CSE – all market segments, including the MTF – is that the registry is fully dematerialised and ready for delivery to Clearstream, Euroclear or Crest (UK, Ireland only) via a specialist firm such as Eurivex Ltd., who have the expertise and knowhow to handle the preparation and submission of the prospectus, completing the listing application and thereafter handling the share registry in the Cyprus CSD Depository on behalf of the issuers.
The handling and delivery of the registry is a complicated issue that is best entrusted to specialist firms such as Eurivex to handle, both to speed up the process and contain costs.
VERY COMPETITIVE
In today’s competitive environment, price is also important, and here as well, Cyprus has the competitive edge, both with respect to the fees that issuers need to pay to the regulator to examine the prospectus, as well as the listing fees to the CSE and the fees for the listing agent.
A listing on the CSE is estimated to cost a third to one quarter of the cost compared to other EU stock exchanges.
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Eurivex Ltd is a Cyprus Investment Firm, authorised and regulated by CySEC, license #114/10. Eurivex is approved by the CSE as Nominated Advisor for listings on the Emerging Companies Market and is a specialist Listing and Paying Agent for listings on the Vienna Stock Exchange. The views expressed above are personal and do not bind the company and are subject to change without notice.
