REVISED LISTING RULES
The Market Authority, in conjunction with the Rules Committee of the CISX Board, has completed a review of the CISX Listing Rules. A number of amendments have been made which take account of practical matters which the Exchange have experienced since the Listing Rules were last amended on 31 March 2010.
This update highlights the key changes made to the Listing Rules and briefly summarises such changes. The revised Listing Rules came into effect on 1 March 2012. The CISX website (www.cisx.com) has been updated with the revised Listing Rules.
In short, the Listing Rules have been amended to:
- make CISX listings of investment funds more accessible to unregulated closed-ended investment funds;
- confirm the notice requirements in respect of general meetings;
- provide clarity in relation to notification requirements for purchases, early redemption and cancellations of securities;
- in respect of debt securities, delete reference to an exemption to report in the case of aggregated transactions of more than 5 per cent and to reflect the requirement to notify the Exchange of any changes in the composition of the board of directors of an issuer; and
- publish guidance notes in respect of: (i) capitalisation issues; (ii) results of AGM; (iii) draft documents; (iv) dividend notifications and announcements; and (v) valuation reports for property funds.
The CISX Listing Rules can be found at the hyperlink below where they are available in PDF format: http://www.cisx.com/cisx/documents/rules/Listing_Rules_March_2012.pdf
Broadly speaking, the key revisions are focussed on listings of securities under Chapter VI (Equities, Non- Investment Funds), Chapter VII (Investment Funds) and Chapter VIII (Specialist Category of Securities) of the Listing Rules. The impact of the rule changes for Chapter VI, Chapter VII and Chapter VIII issuers is summarised in the Schedule of Amendments below.
Schedule of Amendments
The following is a brief summary of the key revisions made to the Listing Rules:
Unregulated Funds - Investment Funds
Generally, the CISX Listing Rules within Chapter VII are designed primarily with regulated funds in mind (Guernsey or Jersey approved or authorised funds).
To be eligible for listing as an investment fund, a fund must be an authorised fund; or be duly incorporated or otherwise validly established and regulated in a jurisdiction recognised for the purpose by the Exchange; or be otherwise acceptable to the Exchange (Rule 7.3.2(a)).
An "authorised fund" is defined as an investment fund authorised or registered by the Guernsey Financial Services Commission under The Protection of Investors (Bailiwick of Guernsey) Law, 1987 (as amended); or recognised or certified by the Jersey Financial Services Commission under the Collective Investment Funds (Jersey) Law 1988 (as amended).
The Market Authority has recently introduced changes to Chapter VII of the Listing Rules to make the Listing Rules more accessible to unregulated closed-ended investment funds, in particular that such a fund will be "otherwise acceptable to the Exchange" for the purposes of Listing Rule 7.3.2(a) where:
- the fund is incorporated in a jurisdiction recognised by the Exchange; and
- the fund has a separate investment manager which is regulated in a jurisdiction recognised by the Exchange with a minimum of two years track record achieved whilst being regulated; and
- reviews carried out as part of the application process on the principals of the fund (including the investment manager) are satisfactory.
The Market Authority will review unregulated, closed ended, self-managed funds that have no regulated investment manager on a case by case basis.
In addition, the Exchange has indicated that an unregulated property fund may not be required to have a minimum two year track record or to be regulated in a recognised jurisdiction pursuant to (b) above. The Exchange should be approached at an early stage to determine the requirements for an unregulated property fund which shall be determined on a case by case basis.
It should be noted that unregulated open-ended funds are not acceptable to the Market Authority.
Notice of General Meetings - Equities
Listing Rule 6.9.10 has been revised in order to maintain consistency with Chapter VII of the Listing Rules and now provides that "The issuer shall give notice of every annual general meeting to all registered holders of its securities with sufficient notice as required under its constitutive documents".
Notification of Purchases, Early Redemption and Cancellations - Equities and Investment Funds
The Listing Rules applicable to Chapter VI and Chapter VII listings have been amended to reflect the requirement to notify the Exchange of any and all purchases, early redemption and cancellations, rather than only those "when an aggregate of 10% of the initial amount of the relevant class of securities has been purchased, redeemed or cancelled and for each 5% in aggregate of the initial amount of that class acquired thereafter".
Exemption for Aggregated Transactions of more than Five Per Cent - Debt Securities
Listing Rule 8.6.5(b) previously provided that an issuer must immediately disclose to the Exchange any decision to call, purchase, redeem or cancel any of the listed debt securities by the issuer of an aggregate amount of more than five per cent. Reference to an exemption to report in the case of aggregated transactions of more than 5 per cent. has been deleted and therefore it will be necessary in all cases to make immediate disclosure to the Exchange but only where listed debt securities are being called, purchased, redeemed or cancelled at the option of the issuer. Such disclosure shall not include the provision of detail in respect of any change of ownership of the listed debt securities.
Disclosure in relation to Changes in Directors - Debt Securities
There is a need for disclosure to the Exchange in relation to any change in director in respect of a listed issuer in order for the Exchange's records to be kept up-todate and for any future correspondence with the issuer, as required. Listing Rule 8.5.6 has been updated accordingly.
Guidance Note - Capitalisation Issue Equities and Investment Funds
Listing Rules 6.2.20 and 7.2.20 provide that no issuer shall proceed with a capitalisation issue involving a payment up of securities out of reserves, unless it has obtained the prior written confirmation of its auditors that its reserves are sufficient for this purpose. Where an auditors' confirmation is not required under the relevant laws of the issuers' country of domicile, the Exchange will consider requests for derogation from the above Listing Rules provided that all other statutory and constitutional requirements of the issuer have been met (e.g. an opinion on whether the issuer satisfies a solvency text may be required to be completed by the directors of the issuer).
Guidance Note - Results of AGM - Investment Funds
Under Listing Rules 7.9.20, the issuer must forward to the Exchange one copy of all resolutions passed by the issuer in general meeting other than those passed "in the ordinary course of business". Whilst the Exchange considers that the interpretation of resolutions not passed in the ordinary course of business rests with the directors of listed issuers, it is considered good practice to announce that all resolutions at a general meeting have been passed, whether in the course of ordinary business or otherwise. With regard to resolutions which are passed outside the ordinary course of business, failure to notify the Exchange and to make an announcement is a breach of the Listing Rules. Further, as a matter of good practice, where resolutions which are in the ordinary course of business are not passed, it would be prudent to notify the Exchange and make an announcement as a follow up to the general meeting.
Guidance Note - Draft Documents
The Listing Rules set out what information needs to be notified to the Exchange and what documents need to be submitted to the Exchange in draft form for clearance before they are finalised. Inevitably there are changes made to documents which are routine or for which there is no separate obligation to report the changes to the Exchange under the Listing Rules. In such situations, the Exchange will not comment upon these documents but the Exchange should still be sent a final and black-lined version of the document with a cover note stating that only routine changes are being made and that there are no material matters to report.
However, if under the Listing Rules, there is a separate obligation to report but no requirement for a draft version of that document to be submitted to the Exchange, then the cover note should set out the reportable matters to the Exchange. Where material changes are being made that affect the disclosure requirements set out in Appendix IX, Part B or Part C of the Listing Rules as determined by the issuer or the Listing Rules, which may affect the status of the listed security, a draft copy of that document is required under the Listing Rules. The Exchange expects a black-lined version of the document to be submitted with a cover note setting out a summary of all the material changes before that document is finalised.
Guidance Note - Dividend Notifications and Announcements - Investment Funds
Where a dividend is declared in accordance with Listing Rule 7.9.27, the Exchange would expect this dividend information to be notified to the Exchange and an announcement made prior to the ex dividend date. As a matter of good practice, the following information should appear in the announcement:
- the dividend amount;
- the currency (this currency should match the base currency on MDMS, for example, if the base currency is GBP (Pound Sterling), then the announcement should set out the dividend in GBP and not in GBp (pence));
- the dividend type;
- the period date (financial year of the company);
- the ex dividend date;
- the record date;
- the payment date; and
- any additional information (for example, if it is an annual or interim dividend).
It must be noted that when the ex dividend is set out in the announcement, the Exchange would expect the ex dividend to take place on or before the record date. If this is not the case, then a reason for the anomaly should be forwarded to the Exchange. In the absence of a stated ex-dividend date from the issuer, the Exchange will set the ex-dividend date at two business days before the record date.
If the publication of the announcement is after the ex dividend date, then this is a breach of the listing rules.
Guidance Note - Valuation Reports for Property Funds
Under the disclosure requirements for closed-ended property funds, a valuation report on the issuer's land and buildings is to be included within a Listing Document which shall be dated no more than 3 months prior to the date of the Listing Document.
Ordinarily, this requirement, particularly for a new application for listing, is not a problem unless there is a delay in launching the fund. The Market Authority would prefer, if possible, for the valuation report to be dated no more than 3 months before the date of listing; however, it is recognised that this may not be practical and could, conceivably, be quite costly. As a rule of thumb, the Market Authority will seek to achieve a more current valuation where the timeframe is beyond the 3 month period to the date of listing by way of a side letter - to be included within the
Wrapper Document to the Listing Document from the expert which sets out any material changes to their valuation report (or negative statement).
It should be noted that in the case of an application for listing of an existing fund with audited accounts or in the case of an existing listed issuer wishing to issue further shares of more than 10% requiring a new Listing Document, the Market Authority will consider the valuation report in the context of the timing of the publication of the audited accounts.