Impact of restructuring

On 20 December 2013, the Channel Islands Stock Exchange (CISX) transferred the securities of all issuers listed on the Official List of the CISX to The Channel Islands Securities Exchange Authority Limited (the Exchange or CISE).  The CISE is the successor exchange to the CISX.The impact of the transfer of listed securities to the CISE is, in summary, that:

  • all affected securities are no longer listed on the Official List of the CISX but instead listed on the CISE.  Issuers will be subject to the Listing Rules and other mandatory requirements of the CISE;
  • any obligations owed by the issuers of the affected securities to the CISX shall be owed to the CISE; and
  • any issuers of securities admitted to listing on the CISE shall comply with any requirements/ requests made of them by the CISE.

Purpose

This Client Briefing has been prepared for the assistance of the directors of companies which either have or are listing “debt securities” as defined in Chapter 1 of the listing rules (the Listing Rules) of the Exchange under Chapter 8 of the Listing Rules.

The Briefing sets out certain of the continuing obligations which an issuer is required to observe once any of its securities have been admitted to listing. This Client Briefing should be read in conjunction with the ‘Channel Island Securities Exchange Authority (CISE) - Debt Listing’ Briefing.

Nature of obligations

It is a prerequisite of listing that an issuer executes a listing undertaking, undertaking to comply with the Listing Rules and, in particular, with all relevant continuing obligations. Observance of the continuing obligations is essential to the maintenance of an orderly market in securities and to ensure that all users of the market have simultaneous access to the same information. Failure of an issuer to comply with any applicable continuing obligation may result in the Exchange taking the enforcement actions described in Chapter 3 of the Listing Rules.

Compared with other European securities exchanges, the information that is required to be disclosed on an annual basis to the CISE in respect of debt listings is not onerous . Any information to be provided pursuant to an issuer's continuing obligations under the Listing Rules will not normally be made publicly available by the CISE unless, for example, such information relates to a change in the Eurobonds listed, the name of the issuer or another matter material to the interests of Note holders.

Some typical examples of disclosable matters which might arise during the maintenance of a debt listing on the CISE follow: change of directors (including the provision of certain further information in respect of such directors - see 'Issuer board changes: appointments' below), change of issuer's name, the filing of annual audited or non-audited accounts (see 'Financial information' below), changes in the Listing Document and redemption of Eurobonds listed. If an issuer is ever in doubt as to whether circumstances relating to Eurobonds listed must be disclosed to the CISE, we advise the issuer to contact us regarding this.

The Listing Rules are available on the website of the Exchange - www.cisx.com.

What is the process for listing payment in kind notes ('PIK' Notes, also known as Funding Bonds)

It is possible to list PIK Notes on the CISE.

Typically, Ogier Corporate Finance Limited (OCFL) will apply for in principle consent to list PIK Notes, as and when they are issued, at the time of making the listing application for the admission of the principal Notes to be listed. Application can be made to list an unlimited number of PIK Notes or alternatively an "up to" number or ceiling can be set.

Please note that if any PIK Notes to be listed are fully fungible with the existing Notes (i.e. they are to form a single series / the same class as the existing Notes), then the PIK Notes must be listed on the same day as they are issued. Otherwise, if they are not the issuer will be in breach of the CISE Listing Rules (all Eurobonds forming the same class must be listed when they are issued). If the intention is for the PIK Notes not to be fully fungible with the existing Notes, then the first PIK Notes that are issued can be listed following issuance. However, any further PIK Notes that are issued will be fully fungible with the first PIK Notes and should therefore be listed on the same day as they are issued. We can advise on the most efficient process to deal with listing PIK Notes on an ongoing basis.

General disclosure obligation

Generally and apart from compliance with all the specific requirements of the Listing Rules, the issuer shall keep the public, the Exchange, the holders of the securities of the issuer and other holders of its listed securities informed as soon as reasonably practicable of any information relating to the issuer (including information on any major new developments in the issuer’s sphere of activity which is not public knowledge) which:

  • is necessary to enable them and the public to appraise the position of the issuer;
  • is necessary to avoid the establishment of a false market in its securities; and
  • might reasonably be expected materially to affect market activity in and the price of its securities.

Duty to notify the Exchange

Information that is required to be disseminated pursuant to the CISE Listing Rules must not be given to a third party before it is notified to the Exchange except as permitted by the Listing Rules. An issuer may give information in strict confidence to its advisers, an agent employed to release the information, and to persons with whom it is negotiating with a view to effecting a transaction or raising finance, including prospective underwriters of an issue of securities, providers of finance or loans or the placees of the balance of a rights issue not taken up by shareholders. In such cases, the issuer must advise the recipients of such information that it is confidential and that they should not deal in the issuer’s securities before the information has been made available to the public. An issuer shall notify information to the Exchange by the method laid down by the Exchange from time to time.

An issuer whose securities are listed on the Exchange and on any other Exchange must ensure that equivalent information is made available at the same time to the Exchange and such other Exchanges.

Issuer board changes: appointments/resignations

All issuer board changes (appointment, resignation or removal of directors) must be notified to the CISE.

For issuer 'Know Your Customer' (KYC) or due diligence purposes, upon notification of any change in members of the board of an issuer the CISE is requiring that the following documents are made available for current and new directors of the issuer:

  • a signed Directors' Declaration (PQ) in the form prescribed by Listing Rule 8.3.4.1(k)
  • a certified true copy of the director's passport (including proof of date of birth)
  • a certified true copy of a utility bill issued in the name of the director (within 3 months currency  including proof of residential address); and
  • an employment history or CV covering a period of not less than ten years.

Financial information

Listing Rule 8.5 requires issuers to issue annual reports and accounts.

As soon as practicable following the publication of the annual report and accounts or unaudited financial statements (if the issuer is exempted under the law of its country of incorporation from preparing audited accounts), the issuer shall send a PDF copy of such annual report, relevant annual accounts or interim financial statements to Ogier Corporate Finance Limited (OCFL) who will file them with the Exchange using the Market Data Management Service (MDMS).  MDMS filing of such financial information will mean that it is publicly available via the Exchange's website.  Where issuers publish financial statements online the Exchange may be referred to relevant online data sources.

Unless an issuer is exempted from publishing audited accounts under the law of the issuer's country of incorporation (or as otherwise agreed with the Exchange), the annual report and accounts must:

  • Have been prepared in accordance with the issuer's relevant applicable law and, in all material respects, with United Kingdom Accounting Standards or United States Accounting Standards or International Accounting Standards.
  • Have been independently audited, and reported on, in accordance with the United Kingdom  Auditing Standards, United States Auditing Standards or International Standards on Auditing.
  • Be in respect of the issuer and be in consolidated form if the issuer has subsidiaries, unless the Exchange otherwise agrees.
  • If they do not give a true and fair view of the state of affairs, profit or loss and cash flows of the issuer, provide more detailed and additional information.

Notification

The issuer shall immediately disclose to the Exchange by instructing OCFL to make an MDMS filing:

  1. Any change in the rights, powers or privileges of any class of listed debt securities, including any change in their rate of interest, and any change in any of the rights, powers or privileges of any class of securities into which the listed debt securities are convertible or for which they are exchangeable.
  2. Any decision to call, purchase, redeem or cancel any of the listed debt securities by the issuer. The information must also state the amount of the debt securities to be called, purchased, redeemed or cancelled and the amount of debt securities to be outstanding after the transaction or series of transactions is completed. The exemption which meant that no report needed to be made until five per cent of the outstanding amount has been subject to such transactions (or a decision made to enter into such transactions for five per cent or more of the outstanding amount of listed debt securities), has been removed.  The impact of this is that aggregated transactions involving Chapter 8 listed debt securities must be reported.
  3. Any proposed changes in the constitution or capital structure of the issuer.
  4. Any change in the composition of the board of directors of the issuer.

If the listed debt securities may be converted into or exchanged for securities of another company, or are guaranteed by another company, the issuer must ensure that adequate information is at all times available to the Exchange and the holders of the listed debt securities:

  • concerning the business and affairs of the other company; and
  • concerning the rights, powers and privileges of the securities into which the listed securities are convertible or for which they are exchangeable.

As a minimum the information provided to satisfy Listing Rule 8.6.3.8 must include the annual report and accounts of the company, any interim financial accounts, and all other information necessary for a realistic valuation of the listed debt securities to be made.

Review of documents by the Exchange

In addition to the specific requirements set out in the Listing Rules, the issuer shall submit to the Exchange, for review, copies of drafts before they are issued of any announcements or advertisements the subject matter of which involves a change in or relates to or affects arrangements regarding trading in the listed debt securities on the Exchange, including suspensions or cancellations of listings.

The issuer shall send to the Exchange, as soon as practicable after they are issued, one copy of the following:

  1. All resolutions of the issuer in respect of the listed issue passed other than in the ordinary course of business.
  2. Any document relating to a take-over of, merger by or offer to purchase the issuer.
  3. All notices of meetings in relation to the listed issue.
  4. Forms of proxy in relation to the listed issue.
  5. Reports.
  6. Announcements.
  7. Any other similar documents.

The issuer shall submit two copies to the exchange of any document sent by the issuer (or on its behalf) to holders on the issuer’s listed issue as soon as practicable after such documents are issued.

Enforcement actions

If the Exchange considers that an issuer has contravened the Listing Rules it may do one or more of the following:

  1. Censure the issuer, which may include a formal written notice of censure being served upon the issuer and the requirement that the issuer provide a written explanation of its actions to the Exchange and an undertaking to rectify the breach immediately.
  2. Publish the fact that the issuer has been censured for failing to comply with the Listing Rules.
  3. Refer the matter to the relevant criminal prosecuting authorities if empowered to do so.
  4. Suspend or cancel the listing of all or any of the issuer’s securities where the Exchange considers it necessary for the protection of investors or the maintenance of an orderly market.

Unless the Exchange considers that the maintenance of the smooth operation of the market or the protection of investors otherwise requires, the Exchange will give advance notice to the parties involved on any action which it proposes to take and will give them an opportunity to make representations to the Exchange.