The Malta Stock Exchange Act was promulgated in 1990 and it provided for the creation of the Malta Stock Exchange (MSE) which would act as market operator and regulator. In 2002, the then newly enacted Financial Markets Act transferred the regulatory function of the market onto to the Malta Financial Services Authority (MFSA), and to date, the latter remains the sole regulator of financial services in Malta. The MSE was restructured as a public limited company in 2007 and was licensed by the MFSA in terms of the Markets in Financial Instruments Directive, Directive 2004/39/EC. It now provides for the functions of a regulated market for debt and equity securities and a central securities depositary. Through the combined effort of the MSE and the MFSA, listing in Malta has become a popular option for companies seeking to raise capital.
Throughout its years, the MSE has managed not only to keep on top of international developments, but it has also proved itself to be an innovator, capable of offering inventive and advantageous solutions to international businesses, irrespective of the size of such businesses.
The MSE has become a mature, fully regulated market which has effectively managed to act as an efficient venue to raise capital finance. It has done so by creating a structured system for the admission of financial instruments to its recognised lists which may subsequently be traded on an orderly secondary market which is fully regulated and transparent. Besides catering for admission and trading, the MSE also offers a wide range of back-office services, including maintenance of share and bond registers, as well as clearing and settlement and custody services through its in-house Central Securities Depository. The MSE has also established a link with Clearstream Banking in Frankfurt, Germany and in Luxembourg which provides for international access.
Fund listings – The benefits of listing in Malta
As a European jurisdiction, Malta offers a cost-effective listing service while operating within a well-regulated framework.The MSE uses its small size to its advantage in order to provide a personalised service. It manages to provide an efficient yet tailored service and encourages preliminary meetings before a formal application is made to ensure a seamless and successful process.
Any business, of any size, seeking to raise capital can do so by giving up ownership of a small percentage of their company and listing it on capital markets which will, in turn, generate capital which can be used to promote company growth. Moreover, listing in Malta confers the benefits of EU passporting and international visibility and is deemed to be a gateway to the European market.
The MSE provides for four different listing markets, namely, the Malta Official Listing, the Alternative Companies List, the European Wholesale Securities Market and Prospects. Each listing is geared towards different businesses, thus ensuring that large multinational companies, SMEs and everything in between can avail itself of a platform that is created to cater to their specific situation and needs.
Prior to being admitted to list, any prospective issuer requires ‘Admissibility to Listing’ from the MFSA. The prospective issuer will need to find a Sponsor, such as Chetcuti Cauchi Advocates, that will guide them and co-ordinate the entire process of being admitted and of listing, and who will liaison with the MSE and the Listing Authority on their behalf.
Listing on the Malta Official Listing
The Malta Official Listing is the main recognised listing platform in Malta. It is an ideal platform for stocks and is often chosen by international companies seeking access to doing business within the European Market. In order to be eligible for listing, securities must have a minimum market value of €1m, must be duly authorised in accordance with the applicant’s place of incorporation, and must be freely transferable. When listing debt securities, the minimum share capital is of €250,000.
A successful applicant would need to be an incorporated company whose Memorandum & Articles of Association conform to listing rules and which has a fully paid up share capital of €1m. The applicant will also need to present an accounts history of a minimum of 3 years.
Collective Investment Schemes may also be listed in the Official Listing, provided that they are duly licensed. They may be either an open ended scheme or a closed ended scheme.
Listing on the Alternative Companies List
The Alternative Companies List (ACL) was created for smaller companies and investors seeking to list their stocks, and who demonstrate that they have the capacity for growth, yet which do not fulfil the rigorous requirements for the MSE Official Listing. These companies will be able to benefit from EU passporting and will gain international exposure for their stocks and increased access to international markets.
Similarly to listing on the Official List, a company seeking to list on the Alternative Companies List must be an incorporated company with its Memorandum & AoA in conformity with the Listing rules. Securities must be duly authorised in accordance with the place of incorporation and must be freely transferable. An accounts history of a minimum of 3 years is required.
Listing equity securities on the ACL requires a minimum of €1m, with a minimum subscription of at least €10,000 per investor, depending on whether one is listing equity or debt. When listing security debts, one requires a minimum of €200,000 with a minimum subscription of at least €50,000 per individual investor. A subsequent minimum holding of €50,000 must be maintained throughout his/her investment, but no trading record is required.
Listing on the European Wholesale Securities Market
Wholesale securities may be traded on the European Wholesale Securities Market, a niche trading platform created through the joint effort of the MSE and the Irish Stock Exchange which gives companies the benefit of competitive listing options with access to all other EU member states markets. The EWSM provides for an orderly listing process at a simple, transparent price and while remaining approachable and responsive to market participants. Moreover, the EWSM is also a recognised market for the purpose of exemptions on withholding tax and grants EU passporting.
The applicant must be an incorporated company or established entity with its Memorandum & AoA or the equivalent constitution document in conformity with the Listing Rules.
A minimum denomination of at least €1m is required, and the domination per unit must be at least €100,000. Asset backed securities, debt securities, derivative securities and convertible debt securities are all admissible, provided that such securities are freely transferable. Finally, the interested applicant must be willing to publish the annual report upon approval.
Listing on Prospects for SMEs
SMEs may now access capital markets through the newest recognised list, Prospects. This market is regulated as a multi-lateral trading facility which is fully compliant with EU Law and provides a cost-effective alternative to easy access to capital, without the need for security and collateral. This gives budding companies the chance to access capital which will allow them to have an increased turnover, thus resulting in more employment potential and profitability.
To benefit from this opportunity, an SME must be an incorporated company with its Memorandum and Articles of Association in conformity with Prospects rules. Such enterprises must appoint a corporate advisor and devise a business plan and must have a minimum share capital of €46,588. Through the Prospects platform, enterprises may list equities and/ or corporate bonds.
MSE Developments
In 2014 the Malta Stock Exchange won the Most Innovative Stock Exchange Award and since then it has not looked backwards. In 2015 the MSE outperformed world indicies and in 2016 the MSE embarked on an ambitious program to innovate and renew itself and launched a Capital Markets Strategic Plan which also includes the embracement of new technologies such as Blockchain.
