Part 3: Disclosure, the new trading platform, and "Corporate and Sovereign Debt Securities"
The Cayman Islands Stock Exchange (CSX) recently amended its Listing Rules to raise the standards of operation and governance of CSX listed investment funds. Here we look at changes in Chapters 2, 3 and 12 of the rules, the changes made due to the move to the XETRA trading platform, and the removal of the waiver concession in Chapters 8, 11 and 12.
Publication of documents and disclosure
There is a general ban on misleading information in listing documents, and any promotional statements which are included must be capable of being supported by fact. Information supplied by the issuer in the listing document and any promotional material must be consistent.
It is now possible to satisfy CSX requirements for distribution by electronic means, provided you let those who hold existing securities have a hard copy if they ask for one. If the CSX rules require that something is published then CSX needs to be consulted in advance, and Investors need to be told how to get an electronic copy.
There is a new requirement for the publication and circulation of annual financial statements and any interim financial statements. These must be published by the issuer by making them available to the public for inspection at CSX, and by circulating them to existing holders of the listed securities. They must also be available for public inspection at the issuer's registered office or such other place (including the issuer's website) acceptable to the Exchange for a period of at least one year.
Publication, circulation and availability for inspection by electronic means
The rules on publication of listing documents have been slightly altered - there now needs to be enough listing documents available to satisfy public demand, they must be printed and available free of charge. The list of where such a document can be published now includes the issuer's website.
New procedure for suitability guidance
Not every application for listing will be granted simply because a prospective issuer complies with the Listing Rules. If there is any doubt as whether an issuer will be listed, then the prospective issuers and their listing agents should apply first apply to CSX staff for informal and confidential guidance. This guidance now has a formal procedure: an application should be in writing, deal with all the listing conditions in Section II and provide relevant background. Where significant work is involved then CSX has the right to charge US$1,500 for such suitability guidance, but any guidance given is not binding on the CSX.
De-listing following full redemption or liquidation
The requirements for issuers de-listing following a full redemption or liquidation have been relaxed. An issuer may withdraw its listing if it notifies the Exchange that the interests of the holders of all of its listed securities have been redeemed or, where an issuer is in liquidation or other winding up proceedings, the Exchange receives a written request from the liquidator or other insolvency practitioner to withdraw listing. In each case the issuer, liquidator or insolvency practitioner must give the Exchange written notice and an explanation of the decision to withdraw listing without delay.
Corporate and Sovereign Debt Securities
Chapter 12 sets out the conditions for listing and the information which is required to be included in the listing document for corporate and sovereign debt securities including those securities issued under a programme (such as Eurobonds). Any issuer of these securities must also comply with any relevant provisions of Section 1 of the Rules, unless they have agreed otherwise with the CSX. The Rules define corporate and sovereign debt securities as "debt securities which are by their nature usually bought and traded by a limited number of investors who are particularly knowledgeable in investment matters" (corporate debt securities). Sovereign debt securities having the added definition of being "…guaranteed or issued by a supranational body or which benefit from the guarantee of a government…".
XETRA trading platform
As the CSX has now moved to the XETRA trading platform, all listed securities will now need an international identifier code (ISIN). Most will need to be eligible for electronic clearing and settlement, although there will be a grace period during which the CSX will facilitate the allocation of ISINs to previously listed securities. All new listings will have to comply.
Consolidated financial statement waiver
The waiver concession for issuers whose financial statements are consolidated into those of a listed parent has been removed, although in appropriate circumstances waivers will still be available.
These rule changes demonstrate the continuing commitment of the Cayman Islands regulators to ensuring good corporate governance and adequate disclosure to investors.
This brief is provided for informational purposes only. For specific advice on your listing requirements or querires, please contact us firstname.lastname@example.org.