Jersey: The International Stock Exchange Authority - Listing Debt Securities Including Eurobonds Under Chapter 5 Of The Listing Rules

Introduction

This is a summary of the main listing requirements and the listing application process for companies seeking admission to the Official List of The International Stock Exchange Authority Limited ("TISEA").

This Memorandum is intended as an overview of the subject matter and should be used as a starting point for a more detailed and comprehensive discussion of the issues based on the particular circumstances or transactions envisaged. Memos on other listing topics are also available on request and includes continuing obligations guides for listed entities.

TISEA overview

TISEA aims to offer a service and structure unique in the European time zone and has become the exchange of choice for a growing number of international issuers.

TISEA's mission is to be a leading international stock exchange in the European time zone. TISEA offers a personalised approach to listing applications within a highly regulated and innovative marketplace.

TISEA offers the advantages set out below:

  1. Competitive pricing (a typical listing fee of £4,200 for a standalone issue by an SPV).
  2. A willingness to work with the issuer and its advisers to accommodate innovative structures.
  3. Existing documentation (for example, prospectus, offering memorandum, scheme particulars, pricing supplements) may be used, with the addition of a wrapper, to form the listing document (the "Listing Document"), increasing the potential to save on costs.
  4. Listing sponsor's fees which are significantly less than other major exchanges.
  5. No requirement to appoint a Nominated Adviser (Nomad) (although an issuer must appoint a listing sponsor).
  6. Listing Rules (as defined below) which meet international standards and are easy to understand.
  7. Premier location. The Channel Islands are in the premier league of international financial centres and continue to demonstrate their commitment to the highest of regulatory standards.
  8. As TISEA operates outside the EU, and no EU directives apply, the regulatory burden is less onerous than on other major exchanges.

TISEA approach to listing

In accordance with its pragmatic, business oriented approach to regulation, TISEA is flexible as concerns the disclosure requirements in respect of the issuer and its debt securities within the Listing Document. Disclosure requirements are intended to provide investors with enough information to enable them to make an informed assessment as to whether or not to invest in the listed securities but without imposing unnecessarily onerous demands on an issuer.

The Listing Document must disclose such information relating to the issuer and the debt securities to be listed as is specified in chapter 6 of the TISEA Listing Rules (the "Listing Rules").

On application to TISEA, it may authorise the omission of certain information from the Listing Document where it considers such information not to be applicable or appropriate to the issue, or that it is of minor importance. Derogation may also be permitted if disclosure would be seriously detrimental to the issuer or contrary to the public interest.

However, the Listing Rules contain an over-arching requirement that a Listing Document contain such other information as is necessary to enable an investor to make an informed assessment of the activities, assets and liabilities, financial position, management, prospects and the profits and losses of the issuer and of the rights attributable to the securities for which a listing is sought. TISEA may also waive, modify or not require compliance with Listing Rules in individual cases.

It is important to liaise with us (and TISEA) at an early stage to seek informal and confidential guidance as to the eligibility of a proposed listing application.

Conditions for listing of debt securities

The following conditions apply to listing debt securities on the exchange:

In relation to all debt issuers - Listing Rule 5.1

An issuer must be duly incorporated or otherwise validly established according to the relevant laws of its jurisdiction of incorporation or establishment or as may be otherwise acceptable to the Authority.

In relation to all debt securities - Listing Rule 5.2

  1. Admission to listing and admission to trading will together constitute admission to the Official List of the Exchange.
  2. Securities shall be freely transferable and tradeable. Securities may be subject to transfer restrictions or compulsory redemption:

    1. where the holding of such securities may result in a regulatory, pecuniary, legal, taxation or material administrative disadvantage for the applicant or the holders of its securities as a whole;
    2. to maintain a minimum holding per holder, as specified in the Listing Document;
    3. where such transfer restrictions would not disturb the market in those securities; or
    4. as otherwise agreed by the Authority.
  3. Partly paid securities will be regarded as fulfilling Listing Rule 5.2.2 provided that investors have been provided with all appropriate information to enable dealings in such securities to take place on an open, fair and objective basis.
  4. For classes of securities not already listed, the application must relate to all securities of that class, whether already issued or proposed to be issued.
  5. Except where securities of the same class are already listed, the expected aggregated principal amount of debt securities to be listed must, unless otherwise agreed by the Authority, be at least £1,000,000 (or equivalent in a foreign currency).
  6. If it is proposed that an issuer's security be deposited in a clearing and settlement system, such settlement system must be disclosed in the Listing Document and be acceptable to the Authority. Alternatively if the securities are not to be settled through a settlement system, disclosure as to how the securities will be settled must be disclosed in the Listing Document.
  7. The issue and marketing of the securities must be made to appropriate persons and conducted in accordance with any applicable laws, rules and regulations the issuer is subject to.
  8. For classes of securities that are already listed, a Listing Document is not required for any further issues of securities (including such securities of the same class which are constituted pursuant to a supplemental document) that were pre-empted in the initial Listing Document and any document constituting the debt securities.

Documents available for inspection - Listing Rule 5.3

The following documents must be made available, at the time of listing, for inspection for a reasonable period of time (no less than 14 days) and the location disclosed:

  1. The constitutional documents of the issuer, for example the memorandum and articles of association, or equivalent document.
  2. Any trust deed or other document constituting the securities.
  3. All reports, letters or other documents, valuations and statements by any expert, any part of which is extracted or referred to in the Listing Document.
  4. The financial information provided to the Authority pursuant to Listing Rule 5.5 (to the extent such information is publicly available).
  5. The Listing Document.

Conditions in relation to directors of all debt issuers - Listing Rule 5.4

  1. An issuer must have a minimum of two directors. In exceptional circumstances, with the exception of a retail debt issuer, the Authority may consider a sole director provided a suitable rationale is presented to the Authority.
  2. Directors must collectively have sufficient and satisfactory experience and technical expertise relevant to the issuer's activities.
  3. A corporate director may be appointed by an issuer, provided it is permitted by legislation in an issuer's place of incorporation. The majority of directors of the corporate director must be natural persons unless otherwise agreed with the Authority.
  4. All directors of the issuer (i) who are natural persons or (ii) who are natural person directors of an issuer's corporate director and who regularly act on behalf of that issuer must complete a Director's Declaration in a form set out in Appendix V, unless one of the following exemptions applies:

    1. the Authority has an up to date Director's Declaration for such director, whether as a director of the issuer or another listed entity. Where more than 12 months has passed since such Director's Declaration was submitted to the Authority, the Authority requires that the director submit a supplement thereto in the form set out in Appendix VI; or
    2. that director or the issuer is appropriately regulated in a jurisdiction acceptable to the Authority (however the Authority may request a copy of the declaration most recently provided to that regulator); or
    3. the Authority has otherwise agreed that a Director's Declaration is not required.
  5. Where an alternate director regularly performs the function of a director of an issuer, a Director's Declaration for such alternate will be required by the Authority.

In relation to financial information of all debt issuers - Listing Rule 5.5

  1. An issuer must provide its audited annual accounts for the previous three years unless:

    1. the issuer has been established for a period of less than three years but more than twelve months in which case the audited annual accounts must cover the period since the issuer was established; or
    2. has been recently incorporated and not commenced any activities prior to the date of listing.
  2. An issuer must provide financial information to the Authority as a condition to listing and such financial information can be any one of the following:

    1. audited annual accounts which, where an issuer has subsidiaries, have been consolidated in respect of the issuer and its subsidiaries; or
    2. where an issuer has provided financial information to investors in the offering document relating to the securities to be listed, a copy of such financial information; or
    3. any other financial information as agreed with the Authority, including for example unaudited annual accounts, monthly or quarterly reports, or management accounts.
  3. An issuer is not required to provide consolidated accounts in respect of itself and its subsidiaries if it is exempt from doing so in its jurisdiction of incorporation. The Authority may require the Listing Document to include information on where consolidated group accounts are available for inspection by the holders of the securities and bona-fide transferees.
  4. An issuer must prepare its audited annual accounts according to a recognised international standard (such as United Kingdom Generally Accepted Accounting Principles, United States Generally Accepted Accounting Principles or International Accounting Standards) or in line with what is commonly accepted for the jurisdiction in which it is based, clearly disclosing the basis for preparation.
  5. Any qualification of the audited annual accounts during the most recent period must be clearly disclosed and explained in the Listing Document unless otherwise agreed by the Authority.
  6. If half-yearly financial reports are prepared these should be prepared on a basis consistent with that of the audited annual accounts.
  7. Where the debt securities of an issuer have the benefit of a third party or parent company guarantee, the latest audited accounts of the guarantor must be provided to the Authority unless otherwise agreed by the Authority.

Auditors of all debt issuers - Listing Rule 5.6

Auditors must be independent of the issuer, a member of a recognised professional body acceptable to the Authority, be permitted by that body to engage in public practice, be bound by rules governing the conduct of the audits which they are undertaking, and be subject to the applicable systems of oversight, quality assurance, investigation and penalties issued by their relevant professional body.

Additional conditions relating to retail debt issuers - Listing Rule 5.6

  1. A retail debt issuer must prepare audited annual accounts without exception.
  2. The financial information provided to the Authority pursuant to Listing Rule 5.5 (to the extent such information is not otherwise publicly available).
  3. Retail debt securities must not be partly paid.
  4. Where a listing of asset backed retail debt securities is sought, a trustee or other appropriate independent representative must be appointed to represent the interests of the holders of asset backed securities and the appointed trustee or other appropriate independent representative must have the right to access information relating to the assets.
  5. Each material contract disclosed as per Listing Rule 6.4.19 must be publicly available for 14 days.

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