Filing and documentary requirementsGeneral filing requirements
Give details of any filing requirements for public offerings of debt securities. Outline any requirements for debt securities that are not applicable to offerings of other securities.
Applicants for admissibility of debt securities to listing must submit the following documents to the Listing Authority, among others:
- a complete application for authorisation for admissibility to listing in the form set out in the Listing Rules, together with the relevant application fee;
- a prospectus and any supplements;
- one copy of the issuer’s audited annual accounts for each of the past three financial years, prepared on the basis described in the Listing Rules (where the issuer is a newly incorporated special purpose vehicle, the group guarantor must satisfy this condition);
- where the applicant forms part of a group of which the applicant is a member, the consolidated accounts of the group of which the issuer has been a member for the past three financial years prepared in accordance with either generally accepted accounting principles and practice or with equivalent standards;
- the audited annual accounts of any guarantor of the applicant for each of the past three financial years, prepared in accordance with either generally accepted accounting principles and practice or with equivalent standards;
- completed and signed directors’ declarations (as set out in the listing rules);
- a certified copy of the memorandum and articles of association of the applicant, highlighting any proposed amendments as part of the issue;
- appropriate corporate authorities allowing the application for admissibility to listing; and
- if the applicant is a property company or intends to issue debt securities which are secured on property, a valuation report prepared by an independent expert in compliance with the requirements of Listing Rules.
Further, the Listing Authority can require a copy of any other document which it deems useful, necessary or beneficial in order for it to decide on the authorisation of admissibility to listing.
The Listing Rules also cater for several scenarios which are to be excluded from the above filing requirements. For example, non-equity securities are not bound by the above filing requirements if they are issued by:
- a member state or one of a member state’s regional or local authorities;
- public international bodies of which one or more member states are members; or
- the European Central Bank or the central banks of the member states.
In a public offering of debt securities, must the issuer produce a prospectus or similar documentation? What information must it contain?
Yes, the general rule is that a prospectus is required for a public offering of debt securities. However, numerous exemptions from the prospectus requirement are set out in Section 4.7 of the Listing Rules and the EU Prospectus Regulation (2017/1129). The exemptions from publishing a prospectus in connection with the issue of debt securities apply to the issue of (among other things):
- securities fungible with securities already admitted to trading on the same regulated market representing, over 12 months, less than 20% of the number of securities already admitted to trading on the same regulated market;
- securities already admitted to listing on another regulated market (subject to satisfying several conditions).
According to the Listing Rules published by the Malta Financial Services Authority (MFSA), the prospectus must contain all information which – according to the particular nature of the issuer and of the securities being considered for admissibility to listing – is necessary to enable investors and their investment advisers to make an informed assessment of the:
- assets and liabilities;
- financial position;
- profits and losses;
- prospects of the issuer and any guarantor; and
- rights attaching to such securities.
Describe the drafting process for the offering document.
The information in the prospectus must be presented in an easily analysable and comprehensible form. Article 4.12 of the Listing Rules provides that a prospectus composed of separate documents must divide the required information into:
- a registration document;
- a securities note; and
- a summary note.
The registration document must contain the information relating to the issuer, its governance structures and its business and operations. The securities note must provide information specific to the terms and conditions of the securities to be issued. The summary note must, in a concise manner and in non-technical language, provide key information in the language in which the prospectus was originally drawn up. The format and content of the summary of the prospectus must provide, in conjunction with the prospectus, appropriate information about the essential elements of the securities concerned in order to aid investors when considering whether to invest in such securities.
Which key documents govern the terms and conditions of the debt securities? Who are the parties to such documents? How can such documents be accessed?
The terms and conditions of the debt securities are governed by the securities note forming part of the prospectus. The parties to the prospectus are the issuer and the guarantor (if applicable) and the bondholders.
The prospectus relating to the issue of debt securities is uploaded on the Malta Business Registry website and is also available on the Malta Stock Exchange (MSE) website. The prospectus and all public documents ancillary thereto are available on the issuer’s website. In order to obtain a hard copy of the prospectus, applicants may also request such a copy from the issuer. The issuer, when receiving such a request, must deliver a copy of the prospectus on a durable medium to any potential investor, free of charge. This is in accordance with Article 21(11) of the EU Prospectus Regulation.
Does offering documentation require approval before publication? In what forms should it be available?
Yes, in accordance with Section 4.35 of the Listing Rules, prospectuses relating to securities being considered for admissibility to listing must not be published unless they are formally approved by the Listing Authority. Approval is obtained by the Securities and Markets Supervision Unit (SMSU) in the MFSA.
Article 21(2) of the EU Prospectus Regulation states that the prospectus, whether a single document or consisting of separate documents, must be available to the public when published in electronic form on the website of:
- the issuer;
- financial intermediaries placing or selling the securities; or
- the regulated market where the admission to trading is sought.
Are public offerings of debt securities subject to review and authorisation? What is the time frame for approval? What are the restrictions imposed, if any, on the issuer and the underwriters during the review process?
Yes, public offerings are subject to review and authorisation by the SMSU, as stated above. The timeframe for approval is typically eight to 12 weeks from the date of submission of the draft prospectus and the accompanying financial due diligence report (which is not made publicly available post-approval).
In accordance with Section 4.55B of the Listing Rules, applicants must refrain from advertising in any manner, whether directly or indirectly, from the date of the notification submitted in terms of Listing Rule 4.1A and until it is in receipt of the final written notice of the approval of the admissibility to listing from the Listing Authority (the ‘black-out’ period on advertising).
Further, during the review process, any advertisement issued for the purpose of announcing the admissibility to listing of securities must contain a statement that a prospectus has been or will be published and the addresses and times at which copies of the prospectus are or will be available to the public.
On what grounds may the regulators refuse to approve a public offering of securities?
The SMSU may refuse to approve an application at its discretion, without the need to provide a reason for refusing to authorise an application.
Section 4.36 of the Listing Rules states that the Listing Authority must not approve a prospectus unless it is satisfied that:
- Malta is the home member state in relation to the issuer of the securities to which it relates; and
- the prospectus has been drawn up in accordance with the Listing Rules.
How do the rules differ for public and private offerings of debt securities? What types of exemptions from registration are available?
There are no material differences to note.
Describe the public offering process for debt securities. How does the private offering process differ?
Section 4.37 of the Listing Rules states that the Listing Authority must:
- notify the European Securities and Markets Authority (ESMA) of the approval of a prospectus and any supplement thereto at the same time as that approval is notified to the applicant; and
- must provide the ESMA with a copy of such prospectus and any supplement thereto.
The Listing Authority must notify the applicant of its decision to approve or refuse a prospectus within 10 working days of the submission of the draft prospectus. However, if the Listing Authority finds on reasonable grounds that the documents submitted to it are incomplete or that supplementary information is needed, the 10-day time limit will apply only from the date on which such information is provided by the applicant.
Following the black-out period, during which applicants must refrain from advertising until they are in receipt of the final written notice of the approval, widespread marketing on all channels is available at the discretion of the issuer. In terms of Section 4.55 of the Listing Rules, advertisements relating to any securities which have been authorised as admissible to listing or which are to be listed or traded on a regulated market must be clearly recognisable as such, easily readable and comprehensible. Advertising content must:
- be accurate, factual and not misleading;
- not contain any unverifiable claims; and
- be consistent with the information contained in the prospectus.
Further, hidden, surreptitious and other indirect forms of advertising which are not strictly compliant with the Listing Rules are prohibited.Closing documents
What are the usual closing documents that the underwriters or the initial purchasers require in public and private offerings of debt securities from the issuer or third parties?
In public and private offerings of debt securities, there is no requirement for law firm opinions, negative assurance letters or certificates of good standing. However, there is the practice of obtaining an auditor’s comfort letter.
Apart from an auditor’s comfort letter, the registration document forming part of the prospectus will typically include a list of documents which must be available for inspection at the registered address of the issuer or online. These documents typically include, among other things:
- the memorandum and articles of the issuer and the guarantor;
- audited financial statements of the issuer;
- audited financial statements of the guarantor, if applicable; and
- a financial analysis summary.
Bond issues are typically not underwritten in Malta.Listing fees
What are the typical fees for listing debt securities on the principal exchanges?
Typical aggregate fees – including professional fees and costs relating to publicity, advertising, printing, listing, registration, sponsor, management, registrar fees, selling commission and other miscellaneous expenses in connection with the bond issue – range from €200,000 to €450,000, depending on the value of the issuance in question.