National Capital Markets Strategic Plan: Capital markets in Malta are increasingly experiencing growth and liquidity. Malta has proved to be successful in the various financial services sectors and is committed to developing its capital markets. Indeed, the Malta Stock Exchange (MSE) launched the ‘National Capital Markets Strategic Plan’ (NCMSP) aiming to enhance the potential of the capital markets and promote Malta’s international profile as a proactive financial centre. The NCMSP includes various proposals and initiatives as part of the MSE’s overall long-term strategy to develop an efficient securities market, benefitting issuers and investors.

Malta’s capital markets: Malta has five regulated markets: (i) the Main Market, which is targeted to issuers operating in compliance with Chapter 3 and the Listing Rules issued by the Listing Authority (LA); (ii) the Alternative Companies List, introduced for issuers who do not fulfil all the Main Market requirements; (iii) the European Wholesale Securities Market, a market relating wholly to wholesale debt securities, acting as a joint venture between the MSE and the Irish Stock Exchange; (iv) the Institutional Financial Securities Market, the first fully Maltese regulated wholesale securities market; and (v) Prospects MTF, a Multilateral Trading Faci­lity (MTF) specifically targeted for smaller SMEs.

Main Market vs Prospects: Admitting finan­cial instruments to the Main Market starts with a prospective issuer seeking admissibility to list from the LA, while the admission process on Prospects MTF is managed and regulated by the MSE. Approval for admissibility to listing is obtained directly from the MSE’s listing committee.

Prospectus vs Company Admission Document: A company wanting admission to Prospects MTF has the obligation to draw up a Company Admission Document fully compliant with the Prospects MTF Rules falling under the remit of the MSE. Offers to the public would result in the requirement to publish a prospectus fully compliant with the EU Prospectus Directive and the Listing Rules. Such authorisation would fall under the remit of the Malta Financial Services Authority, not the MSE.

Applications for Main Listing require a Registration Document, a Securities Note and a Summary Note. On the other hand, the Prospects MTF Rules include an appendix, providing the building blocks of the Company Admission Document.

Sponsor vs Corporate Advisor: While a company seeking to list securities on the Main Market is obliged to appoint a Sponsor in terms of Chapter 2 of the Listing Rules, Prospects MTF Rules stipulate that an issuer needs to appoint a Corporate Advisor.

The Sponsor mainly liaises between the applicant, its advisory team and the LA. It must perform all its responsibilities in connection with the application process. Essentially, a Sponsor must ensure that the company satisfies all conditions for listing; it must inform the company and its directors of the responsibilities attached to a listed company; and it must ensure that all matters have been duly disclosed in the Prospectus or to the LA, as applicable.

The Corporate Advisor’s role is mainly to guide the applicant through the listing process and consistently ensure adherence to the company’s compliance obligations. Consequently, the role is very onerous. It includes drafting and submitting all required documents; carrying out the necessary due diligence on the applicant; assessing whether the applicant has adequate corporate governance in place and the financial sustainability forecasts are realistic and attainable. The relationship between the applicant and the Corporate Advisor must be retained for the admission process and for the duration of the security’s term.

Capital requirements: A company seeking admissibility and listing of securities on the Main Market must have a minimum share capital of €1 million in equity listings. €250,000 is required in the case of debt listings. Regarding the admission of equity or debt securities to Prospects MTF, a company must have a minimum paid-up share capital of €46,588.

Publicly-owned shares:  Companies listing equity securities on the Main Market must have at least 25 per cent of the listed equity securities in public hands. Equity securities admitted on Prospects MTF require no minimum value of shares to be publicly-owned.

The future of capital markets in Malta: The Maltese financial markets have grown remarkably. The MSE has a sound reputation internationally for its high standard of operation and for providing effective facilities for the trading, settlement and registration of securities.

By launching the NCMSP, the MSE has taken a structured approach, geared towards modernising the Maltese capital markets to compete on the same level as other European markets. The major players in the Maltese capital markets are encouraged to continue the posi­tive trend initiated by the MSE.

It is essential that all parties in the value chain are geared towards modernising the Maltese capital markets by being proactive in developing next generation technology, such as blockchain. Indeed, blockchain technology will positively change capital markets and the financial services industry as we know them. Avant-garde players will find themselves at the centre of this emerging economic ecosystem.

Nicholas Warren is a senior manager and Alistair Cuschieri is an assistant manager in the Financial Services Practice Group at Chetcuti Cauchi Advocates.

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