The Cyprus Stock Exchange offers Issuers from any jurisdiction the opportunity to seek a fast-track dual listing on the London Stock Exchange, Frankfurt Stock Exchange and other EU stock exchanges provided the listing is done on the Main Market of the CSE.
Despite all the problems encountered by Cyprus’ banking sector and the negative publicity generated after the island was rescued by the EC/ECB and the IMF, Cyprus continues to remain an attractive jurisdiction in the eurozone, offering flexible structures and a very pro-business culture ready to accommodate entrepreneurs from around the globe.
The Cyprus Stock Exchange (CSE) operates three regulated market segments of Main, Parallel and Alternative as well as a market segment for Bonds in addition to the MTF Market, which is locally referred to as the Emerging Companies Market (www.cse.com.cy).
The main difference between the various market segments is the minimum capitalization 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.
In order to apply to list on the regulated market segments of the Cyprus Stock Exchange (CSE), an Issuer or the applying company first needs to submit its prospectus for the listing to the Cyprus Securities & Exchange Commission (CySEC), after which the Issuer then applies to list on the CSE. The examination and approval of the Prospectus may well take 3 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 regulated market segment of the CSE may apply for a dual listing on other major EU stock exchanges such as London Stock Exchange, Frankfurt Stock Exchange, Vienna Stock Exchange, Berlin Stock Exchange, Warsaw Stock Exchange and all other EU member state stock exchanges.
Main vs. Alternative
A number of EU stock exchanges however differentiate a listing on the Main market segment of the CSE to a listing on the regulated Alternative market segment or even the Bond market segment.
So while the HM Customs and Excise in the UK approves an Issuer which lists on the regulated bond market segment of the Cyprus Stock Exchange, the London Stock Exchange or the Frankfurt Stock Exchange may not allow an Issuer which has listed on the Alternative market segment to apply for a dual listing because such an Issuer will not meet the minimum criteria.
This mainly refers to the minimum market capitalization, but more so to the minimum public float, whereby at least 25% of the share capital is held by the wider public.
Main Market listing requirements
An Issuer should have at least EUR 15 mln market capitalization and equity capital exceeding EUR 8.5 mln on 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 as well as all the major shareholders together should not 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 4 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 listing 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 2 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 are welcome to apply and list on the CSE.
One of the key advantages of listing on the CSE –all market segments including the MTF Emerging Companies Market 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 (www.eurivex.com), 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.
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 one third to one quarter of the cost compared to other EU stock exchanges in addition to the fast and flexible approach of the CSE.
(About the author- Shavasb Bohdjalian ([email protected]) is a certified Investment Advisor and CEO of Eurivex Ltd., a Cyprus Investment Firm, authorized and regulated by CySEC, license #114/10. Eurivex is approved by the Cyprus Stock Exchange 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.)