Date added: : 11.06.2014

The Emerging Company Marketplace (ECM) is considered as a multilateral trading system (MTS) in the European Union Directive on the Markets of Financial Instruments (MiFID), which operates in accordance with the regulatory decisions adopted by the Cyprus Stock Exchange.

This market is inherently unregulated and, therefore, it is not required to comply with the legislative provisions that are mandatory for regulated markets (strict rules for listing of the company and other permanent requirements).

Advantages of listing on the ECM

The ECM is recognized in accordance with EU legislation, and usually access to this market is simple, and the requirements are flexible enough:

  1. There are no requirements for a minimum market capitalization of the company.
  2. There are no requirements to the minimum amount of shareholders' equity.
  3. There is no formal requirement for a minimum number of shareholders in the company, but usually the issuing company must have at least 10 investors.
  4. There is no formal requirement for the minimum number of shares to be sold publicly, but it is usually not less than 1% of the authorized capital of the issuing company.

New companies (even those who do not have first audited accounts) may be admitted to the ECM.

The number of permanent requirements is much less than in regulated markets, which allows to save on all sorts of checks/verifications and makes access to the market even more unhindered.

There are no requirements for the residence of the company.

Appointed Advisor

The Appointed Advisor (the Listing Advisor - hereinafter referred to as the AA) plays an important role in listing and further accompanying the company on the ECM. Each company in this market must hire the AA on an ongoing basis to perform listing procedures and verify compliance with market rules. The essence of the work of the AA is custody, maintenance and assistance to the company during and after the listing procedure.

More specifically, the tasks of the AA include:

  1. Evaluation and presentation of the company to the Cyprus Stock Exchange with confirmation that all requirements for the listing have been met. He verifies the company and prepares an information memorandum for listing the company in the established form.
  2. Representation of the company during the listing procedure and conducting all its business affairs related to the Cyprus Stock Exchange.
  3. Consulting the company on compliance with requirements both during the listing procedure and after it.
  4. He monitors and helps the company fulfill its obligations in accordance with the rules and requirements of the ECM. He advises the company on its obligations and takes the necessary measures to fulfill these obligations.
  5. If the company does not fulfill its obligations, the AA takes all necessary steps to correct the violation and restore previous position, while informing the Cyprus Stock Exchange about the nature of the violation and the measures the company is taking.

Primary requirements

The main requirements for listing the company on the ECM:

Appointment of the AA.

  • If the issuing company is not a new company, it is necessary to submit activity reports and audited financial statements for at least the last two years.

  • Properly prepared memorandum in accordance with the requirements of the Cyprus Stock Exchange.

  • The issuer must be a public company with a sufficient number of shareholders (usually10 investors are required) and should be able to become a public company in accordance with the laws of the country of incorporation.

Methods of listing

The company's listing on the ECM can be implemented in the following ways:

a. Through public offering:

  • In case of public offering of shares of the company for more than 2.5 million euros and if the number of people to whom the proposal is addressed exceeds 100 people, the company must prepare the Prospectus in accordance with the European Prospectus Law and obtain permission from the Securities and Exchange Commission.

b. Through private offering:

  • If the offering is addressed only to institutional investors (strategic or other) or less than 100 individuals and the total amount of attracted investments is less than 2.5 euros, the admission document is submitted to the Cyprus Stock Exchange without permission from the Securities and Exchange Commission.

c. Listing without capital raising:

If the company's listing takes place without raising capital, then the admission document is submitted to the Cyprus Stock Exchange without permission from the Securities and Exchange Commission.

d. Combination of methods (a) and (b) is possible.

Constant duties of the issuer's company

After the listing the issuing company is obliged to:

  1. Publish audited financial statements within 4 months after the end of the year.
  2. Publish semi-annual unaudited financial statements within 2 months after the end of the semi-annual period.
  3. Inform the Cyprus Stock Exchange of any decisions related to:
  4. iAny decisions of the board of directors on the payment of dividends, distribution of profits or payments on securities admitted to trading on the stock exchange.
  5. Approval of financial results and financial statements.
  6. Any significant changes in the operating activities of the company (such as the acquisition and liquidation of assets) Any decisions regarding changes in the company's capital structure.
  7. Any decisions related to the issue of new bonds.
  8.  Any changes in the board of directors, senior manager and executive personnel, or change of chairman. Publish and submit to the Cyprus Stock Exchange information on the distribution of shares on the last day of the calendar year.

Services provided by our company (Law & Trust International)

The Company provides the services of an Appointed Advisor (AA) and has extensive experience in completing the listing procedure on the Cyprus Stock Exchange.

Some services provided for the new issuer's company:

  1. Services of the Appointed Advisor; Preparation of the admission document.
  2. Preparation of an information memorandum.
  3. After the listing, we will continue to advise the company about its current obligations.
  4. Documents and information required for initial verification.
  5. Before starting any listing procedure, the AA (Law&Trust International) must request the information from the future issuer to conduct preliminary qualification of the company.

The following documents and information are usually required for preliminary qualification:

  1. Company's documents of incorporation (Full set of certificates and company's charter).
  2. General information on the supervisory board / board of directors and shareholders who own the majority of the share capital.
  3. Corporate brochures and any marketing or promotional materials of the company.
  4. History of the company, if the company is not new.
  5. Business plan, financial forecast and / or audited accounting or management reporting of the company for the last two years (if the company is not new).

After studying the above information, our company will decide whether it can help with the passage of the listing procedure of this company. The prequalification procedure usually takes about a week.

Review of the issuer and preparation of the application

After making a decision to work with the company, our company is appointed as the AA and begins the listing procedure on the Cyprus Stock Exchange. The company will need to prepare a review of the issuing company and its activities. This review is necessary for the issuance of a certificate of admission. During this process, documents and a visit to the head office of the issuing company will be required to collect the necessary information and documents.

The level of detail of the review depends on many factors, but usually the following questions should be highlighted:

  1. Organization and structure of the company. Business of the company.
  2. Main shareholders and people related to the company. Accounting reports. Financial reporting. Tax reporting.
  3. Premises of the company.
  4. The main funds of the company.
  5. Intellectual property of the company. Information technology. Equipment and apparatus. Communication systems. Services.
  6. Software. Compliance with requirements. Data protection. Trade issues. Litigation. Personnel. Environmental issues.

Law&Trust International will help you and your company to enter the Cyprus Stock Exchange. The staff of highly qualified specialists will provide you with legal services in a qualitative way and will accompany the whole process, providing all accompanying services for the company to be able to enter the Cyprus Stock Exchange. We can also help with the creation of the fund. We are always at your service. For more detailed information, please contact our specialists.