Capital Markets (Debt & Equity)
The Maltese flexible but robust regulatory regime favours the expansion of capital markets in Malta. In fact, through the MFSA, Malta offers the possibility for the listing of wholesale securities issued by securities vehicles. Securities may vary from bonds (debt) to shares (equity). The Malta Financial Services Authority (MFSA) is the independent regulator of all financial services in Malta, and this includes the regulation of capital markets. In recent years, and starting from Malta’s accession to the European Union, the Maltese capital market has sustained a significant increase in business generated through new financial instruments as well as an increase in the number of listed organisations and secondary market activity. Maltese regulation achieves the balance between transparent and robust regimes at law, including European-level anti-money laundering regulation, and the development of capital markets and financial services as a whole, and this is a major benefit for investment.
The Malta Stock Exchange is the only exchange available in Malta. It provides for numerous equity and debt transactions, providing facilities for securities to be admitted to trading and to be subsequently traded. Before a financial instrument is admitted to any of the Malta Stock Exchange lists, the financial instruments may be offered to the public. This is known as an Initial Public Offering. This offer is made in terms of an approved Prospectus which contains all the relevant information necessary for the public to be able to make an informed decision on the offering. This is known as the Primary Market. In recent years, however, the Maltese financial market has been rapidly developing the Secondary Market wherein financial instruments, already admitted on the market’s Lists, are traded on the regulated market in accordance with the market rules as laid down by the Malta Stock Exchange.
The Malta Stock Exchange boasts an efficient and personalised approach to the listing of new financial instruments. It encourages preliminary meetings prior to the submission of application for admission in order to achieve a smoother and beneficial result. The financial instruments seeking admission must be freely transferable and, the issuer may seek admission of the financial instrument to the Main List, the official listing, which caters for issuers with a proven 3-year minimum track record or else the Alternative Companies List which does not require a track record proof and has less burdensome requirements. This is aimed at financial instruments which are still being developed. Importantly, issuers who have been granted admissibility to the Listing, for both the Main and the Alternative Companies Lists, may opt to have the financial instrument be traded on the Malta Stock Exchange or else have them traded anywhere else within the EU. This is because both the regulated markets enjoy passporting rights in the EU. Following admission, the issuer must comply with several disclosure requirements as well as appointing a Compliance Officer. GMX may assist in preparing all legal documentation with regards to such financial instruments and their potential access to the markets as well as provide advice with regards to the best option or options for the issuer in question.
In parallel to the above-mentioned admission, the issuer must also be approved by the regulator which is MFSA.
The Malta Stock Exchange is always developing new projects in order to continually increase international market access. The Malta Stock Exchange is also a member of various international organisations in the field of capital markets and central securities depository operations and therefore, this enables the Malta Stock Exchange to provide for further international opportunities that are not just limited to Europe but expand up to Africa and Asia.
The Malta Stock Exchange, in addition, holds a register for all securities in relation to issues of dematerialised securities by corporate or non-corporate issuers. In general, the services of the Central Securities Depository, which include distinct back-end administrative services, are available to listed and unlisted companies, as well as in general to non-corporate issuers such as unit trusts and mutual schemes.
The Malta Stock Exchange, together with the Irish Stock Exchange, created a new regulated market approved as an EU regulated market under MiFiD and as a recognised stock exchange within the meaning of the UK Income Tax Act. The European Wholesale Capital Market (EWCM), as it is known, may be accessed by potential issuers in accordance with the regulatory requirements of the MFSA. The MFSA abides by strict short timelines in order to efficiently deal with submissions of prospectuses in this regard.
A new initiative which the Malta Stock Exchange opened to small and medium sized companies (SMEs) in 2016 is PROSPECTS. In this case, SMEs are as defined under EU regulation and in order to be eligible a company must be a public limited company (plc) and with a minimum issued and fully paid-up share capital of Euro 46, 588. This is a platform which is market regulated and facilitates access to the capital markets for such SMEs. With this new venture, SMEs will be able to raise capital by issuing bonds, issuing new shares, or selling existing shares to a pool of investors removed from direct family. In order for an SME to gain access to this platform, it must appoint its Corporate Advisor who is an approved professional expert in the regulations and guidelines of the platform and its obligations and requirements. This ensures transparency and corporate governance so as to create further investor confidence in the company. The securities are traded on the Malta Stock Exchange as normal. This platform is particularly addressed to family owned businesses as it facilitates succession planning. Application and annual fees are applicable for inclusion. Investors have complete flexibility in how much they wish to invest and may enjoy the advantages of the promoted growth of the SMEs.