The International Stock Exchange (formerly known as The Channel Islands Securities Exchange Authority Limited or CISEA): Chapter 8 Debt Listings

Transcription

1 The International Stock Exchange (formerly known as The Channel Islands Securities Exchange Authority Limited or CISEA): Chapter 8 Debt Listings Publication - 06/04/2018 Executive summary The purpose of this briefing is to highlight the principal requirements and key issues to be considered when considering the listing of debt securities on The International Stock Exchange (TISE or the Exchange). The Exchange offers: competitive pricing: (see section entitled Listing fees below); recognised stock exchange status for "quoted Eurobond" and other purposes; and a pragmatic approach to disclosure requirements. Introduction The Exchange commenced operations on 27 October 1998 with the intention of providing recognised facilities for the listing and trading of a broad range of debt securities. Current listings on the Exchange include equity-linked notes, convertible notes, PIK notes, Eurobonds and warrants. As at March 2018, there are over 2,200 listings on the Exchange. TISE is licensed to operate as an investment exchange under the Protection of Investors (Bailiwick of Guernsey) Law 1997 and is regulated and supervised by the Guernsey Financial Services Commission. International recognition TISE or its predecessor has since 2002 been designated by the UK Inland Revenue as a recognised exchange under Section 1005 of the Income Tax Act (2007). This designation was significant because qualifying debt securities listed on TISE are eligible for the 'Quoted Eurobond Exemption'. This allows an issuer within the UK tax net to make payments of interest on listed securities gross without deduction for tax. TISE: is an Affiliate Member of the International Organisation of Securities Commissions (IOSCO); is officially recognised by the Australian Securities Exchange; and is officially recognised by the German Federal Financial Supervisory Authority, BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht). 1

2 While complying with international standards for recognised stock exchanges, TISE has adopted a flexible and pragmatic approach to regulation. This business oriented approach is similar to that which has contributed to the development of the Channel Islands as a top tier finance centre. The International Stock Exchange Authority Limited (the Authority) has developed listing rules (the Listing Rules) which place a premium on clarity and an appropriate level of corporate governance. Unlike European stock exchanges, TISE is not bound by or subject to any European Union Directives and, as a result, is able to be considerably more flexible in its approach. TISE does not require an issuer to appoint a local paying agent in the Channel Islands and does not typically require securities to be entered into a clearing system. In certain circumstances it may also list an issuer without audited accounts. The fees levied by TISE for listing debt securities are competitive with other Eurobond exchanges based in the European Union. All Exchange listing and trading information can be accessed from TISE's dedicated pages via TISE's "Market Data Management Service" (MDMS) and on its website at Trading Members of TISE may display orders for listed securities by sending their prices via MDMS and these prices are then disseminated to all Reuters users (access via TISE's MDMS background information platform pages). Appointment of listing agent In order to proceed with a listing a proposed issuer must appoint a listing agent to assist in relation to the listing procedure. The listing agent will be responsible for all communications and dealings with (including seeking approval of the Authority for the form and content of the Listing Document and for the preparation and filing with the Authority of the formal listing application and supporting documentation including director's declarations). In addition, a listing agent is able to apply to the Authority for derogations in the formal disclosure requirements applicable to the contents of the Listing Document. TISE's approach to listing TISE recognises that debt securities issued by special purpose vehicles and intra-group holding companies tend to be purchased and traded by a limited number of sophisticated, intragroup and/or institutional investors. TISE endeavours to adopt a pragmatic approach to regulation. It is flexible in its requirements regarding the detailed information describing the issuer and its debt securities required to be included in a prospectus (the Listing Document) which is therefore a relatively short form document. Disclosure requirements have been set at a level which is intended to provide investors with sufficient information to enable them to make an informed investment decision regarding the listed securities but without imposing unnecessarily onerous demands on an issuer. A Listing Document should disclose such information relating to the issuer and the debt securities for which a listing is sought as specified in Schedule 1. Where any such information would not be applicable or appropriate to a particular issue an application for derogation from the formal requirements may be made to the Authority. The Authority may authorise the omission of certain information from the Listing Document where it considers such information not to be applicable or is of minor importance. Derogation may also be permitted if disclosure would be seriously detrimental to the issuer or contrary to the public interest. As a general approach, however, the Authority would normally expect a Listing Document to disclose all such information as may be necessary to enable an 2

3 investor to make an informed assessment on the financial position, activities, management and prospects of an issuer and of the rights (and any liabilities) attached to the debt securities for which a listing is sought. Within the meaning of the Listing Rules, a 'special purpose vehicle' is any company, unit trust or limited partnership formed for the specific purpose of issuing one or more classes or series of debt securities or asset-backed securities. General principles for listing on TISE The Listing Rules are designed to ensure that investors have and maintain confidence in the securities market. In particular, in relation to the issuer and the debt securities for which application for listing has been made: the securities are suitable for listing; the issuer is suitable for listing - this is also an assessment OCFL will make; investors are given sufficient information to enable them to make an informed assessment of the issuer and the debt securities; the listing of the debt securities is conducted in a fair and orderly manner; all holders of listed debt securities of the same class are treated fairly and equally; following a listing, there is sufficient disclosure of information to investors to ensure that they are kept fully informed of all factors which might affect their interests; and debt securities issued under chapter 8 are by their nature usually purchased and traded only by a limited number of investors who are knowledgeable about investment matters. The Authority encourages prospective issuers and their listing agents to contact it at an early stage to seek informal and confidential guidance as to the eligibility of a proposed listing application. However, the Authority will charge a fee of 1,500 for this service (see section entitled Listing fees below). Special requirements for listing of debt securities The following requirements apply to listing debt securities on TISE: Rule (Accounts): please see Schedule 2, part A for TISE's requirements in relation to accounts and possible waivers from such requirements. Rule (Clearing and Settlement): the debt securities to be listed must be eligible for deposit in a clearing and settlement system acceptable to TISE. A clearance system may be either: (a) Euroclear; (b) Clearstream; or (c) other clearing and settlement arrangements acceptable to TISE (for example, cash settlement via the issuer). Rule (Rights of Access to Information - Asset Backed Debt Securities): a security trustee (or other appropriate independent representative) should be appointed to represent the interests of the holders of asset-backed debt securities. The representative should also have rights of access to appropriate information relating to the underlying assets. Rule (Transferability): the debt securities to be listed must be freely transferable (except to the extent that any restrictions on transfer are approved by TISE) and tradeable and fully paid securities must be free from all lien. 3

4 Rule (Contents of Listing Documents): the Listing Document should contain the information referred to in Schedule 1 (or an appropriate derogation from such disclosure should be obtained). Accounts (continuing obligations post-listing) Please see Schedule 2, part B for TISE's continuing obligations requirements in relation to accounts. 4

5 The listing process Stage 1: satisfying listing conditions An issuer seeking a listing of debt securities on TISE must satisfy all the conditions for listing, including the provision of the following documents/information (amongst other things): director's declarations (however there are certain circumstances where a director's declaration will not be required, for example where an individual is also a director of an entity listed on an exchange that is recognised by the Authority); additional background information on the issuer and the transaction including, for example, a structure chart showing the issuer, its parent, the noteholder(s) and funds flow; the rationale for listing and who set up the structure; and information on the noteholder(s). The issuer's professional advisors and the listing agent to the application are encouraged to discuss the suitability of the listing proposals with the Authority prior to making any formal application. See section entitled Listing fees below in relation to fees. Stage 2: preparation of draft documentation The listing agent, in conjunction with the issuer's professional advisors, will prepare drafts of the formal listing documentation for review and comment by the Authority. The application documents include the following: the Listing Document; the listing application (Appendix IB); the listing agent's declaration (Appendix B); the listing undertaking (Appendix III); a non-applicability & omitted information letter; a formal notice; a copy of the document constituting the debt securities (for example, the loan note instrument); copies of the certificate of incorporation and memorandum and articles of association of the issuer (or equivalent constitutional documents); copies of the authorising resolutions approving the issuance and listing; copies of any document securing, guaranteeing or subordinating the securities; and such additional documentation as may be required by the TISE. Stage 3: initial application Once the application documents are in substantially agreed form and the documents and background information have been provided, the listing agent will make the initial application on behalf of the issuer. The Authority will then issue its initial listing invoice. Once the Authority has reviewed the initial application it will provide comments to the listing agent. The listing agent will then discuss the comments with the Authority and amend the documents if necessary. 5

6 Please note that the Authority will not release its comments on the initial application until its initial fee (referred to below) has been paid. Stage 4: listing If the Listing and Membership Committee approves the application and they have no further comments on the initial application, the listing documentation is then signed (where applicable) and filed and the debt securities are admitted to the Official List of TISE. 6

7 Continuing obligations Once a listing has occurred an issuer must comply with the chapter 8 continuing obligations specified in the Listing Rules. The continuing obligations are intended to ensure that all market users have simultaneous access to the same information and to maintain an orderly market in the listed debt securities. For more information on continuing obligations, please refer to our client briefing entitled "The International Stock Exchange (formerly known as The Channel Islands Securities Exchange Authority Limited or CISEA): Continuing Obligations Chapter 8 Debt Securities". Listing fees TISE fees for the listing of debt securities under Chapter 8 of the Listing Rules are currently as follows: initial listing fee: 4,200 (special purpose vehicles and asset backed debt securities), 5,000 (individual corporate debt), 6,000 (investment grade debt) or 7,000 (high yield bonds) plus 1,000 per tranche or class for a stand-alone issue; Formal notice fee: 150; and annual listing fee: 1,150 per tranche/class of debt securities. The initial and first annual listing fees referred to above are payable in advance by the issuer. In addition, TISE also charges the following: a bulk issuer fee of 1,000 where an application is made for more than one class/tranche of debt securities and a separate suite of application documents is proposed for each class/tranche a partial redemption/delisting fee of 375 per class/tranche and a full delisting fee of 500 per class/tranche The following fees may also be charged: a fee of 1,500 which may be charged where an issuer seeks preliminary guidance on suitability from the Authority; and a fee of 2,000 which may be applied in more complex cases/applications. Services offered by Ogier Corporate Finance Limited / Ogier Legal Ogier Corporate Finance Limited (OCFL) is a market-leading listing agent and sponsor, wholly owned by Ogier Legal, and is able to act as a listing agent or sponsor for all listing purposes. Ogier Legal is experienced in the provision of high quality and cost effective professional legal services in relation to special purpose vehicles. We have experience in all aspects of structuring and documenting debt issuance transactions, from initial design to public offerings and listings of debt securities. Full details of the services provided by OCFL/Ogier Legal are available on request. 7

8 Client briefings on establishing special purpose vehicles and on other aspects of Channel Islands company law have been prepared by Ogier Legal and are available on request. If you would like further information about TISE/the Authority and the services that we are able to provide, please speak to one of the contacts listed at the end of this briefing or your usual contact at Ogier Legal. 8

9 Schedule 1 Listing document disclosure requirements The Listing Document for debt securities should contain the following information (all paragraph references are to Appendix IX, Part D of the Listing Rules). General information about the Issuer Para. 1:the full name, registered number (where applicable) and registered office address of the issuer. Para. 5: the date and country of incorporation or other establishment of the issuer, the authority under which the issuer was incorporated or otherwise established and (if not indefinite) the length of life of the issuer. Para. 9: a summary of the nature of the business of the issuer. Para. 10: in respect of every company the whole, or a substantial proportion, of whose capital is held or intended to be held (either directly or indirectly) by the issuer, or whose profits or assets make or will make a contribution to the figure in the accountants' report or the next published accounts, particulars of the name, date and country of incorporation or other establishment, general nature of business, issued capital and the proportion of capital held or intended to be held. Para. 24: where the issuer is a member of a group the Listing Document should include the following (or contain a link to where the information can be found): (a) a brief description of that group covering the issuer's position within it and, if the issuer is a subsidiary, the name of and the number of shares held (directly or indirectly) by each holding company of the issuer; (b) a brief history of, and a description of the general objectives and nature of the business of the group; (c) the latest consolidated and audited accounts of the group. Information about the Issuer's advisers and management Para. 3: the names and addresses of the issuer's listing agent, legal advisers, registrars, paying agents and custodian (if any) and any expert to whom a statement or report included in the Listing Document has been attributed. Para. 4: the names, addresses and professional qualifications of the current auditors and, if different, the auditors who have audited the issuer's annual accounts in accordance with the relevant applicable law for the last three financial years. Para. 22: the full name, date of appointment and residential or business address of every director or proposed director. Information relating to the preparation of the Listing Document Para. 2: the following statements should be included: "Subject as set out below, the issuer accepts responsibility for the information contained in this Listing Document and to the best of the knowledge and belief of the issuer (which has taken all reasonable care to ensure that such is the case) the information contained 9

10 in this Listing Document is in accordance with the facts and does not omit anything likely to affect the import of such information." Also: "These securities are only intended to be offered in the primary market to, and held by, investors who are particularly knowledgeable in investment matters." And: "Neither the admission of the (notes/units/warrants) to the Official List nor the approval of the Listing Document pursuant to the listing requirements of the Authority shall constitute a warranty or representation by the the Authority as to the competence of the service providers to or any other party connected with the issuer, the adequacy and accuracy of information contained in the Listing Document or the suitability of the issuer for investment or for any other purpose." Para. 6: where the Listing Document includes a statement purporting to be made by an expert, a statement: (a) specifying the qualifications of such expert and whether such expert has any financial interest in the issuer; (b) that the expert has given and has not withdrawn his written consent to the issue of the Listing Document with the expert's statement included in the form and context in which it is included; and (c) the date on which the expert's statement was made and whether or not it was made by the expert for the purpose of incorporation in the Listing Document. Para. 7: where the Listing Document includes any financial information including tables or graphs the source of these should be clearly disclosed. Para. 8: details of other exchanges (if any) where admission to listing is being or will be sought and the names of the exchanges (if any) on which securities of the same class are already listed. Para. 11: Where there have been material adverse changes to: (a) the issuer; or (b) the issuer s group structure; or (c) the issuer s business or accounting policies; or (d) the financial or trading position of the issuer; during the period from the end of the period covered by the latest audited accounts or interim accounts to the date of the application, a statement by the issuer detailing such changes together with an accompanying accountants report (when available) must be included in or appended to the Listing Document, or an appropriate negative statement. Where such report is required, it must contain a statement as to whether or not the accountants report is qualified and, if so, give details of the reasons for such qualification, or an appropriate negative statement. Para. 12: Information on any legal or arbitration proceedings (including such proceedings that are threatened of which the issuer is aware) that may have or have had in the recent past (covering at least the previous 12 months) a significant effect on the issuer s financial position, 10

11 or an appropriate negative statement. Para. 13: Where a profit forecast appears in the Listing Document, the principal assumptions, including commercial assumptions upon which it is based, must be stated. The accounting policies and calculations for the forecast must be examined and reported on by the reporting accountants (or auditors) and their report must be set out. There must also be set out a report from the listing agent. Para. 14: the dates of and parties to all material contracts relevant to the securities, together with a summary of the principal contents of such contracts and particulars of any consideration passing to or from the issuer or any member of the group. Para. 15: details of all material interests and any potential conflicts of interest of all interested parties to the application including advisors and service providers. Details of agreements in place between the directors or principals of the issuer and any parties to which the directors are related. Para. 16: any relevant risk warnings in respect of the debt securities to be listed to be given to potential investors. Para. 17: where the issuer has entered into transactions other than in connection with the issue of debt securities for which application for listing is being sought, where more than nine months have elapsed since the end of the financial year to which the last published accounts relate, an interim financial statement covering at least the first six months following the end of that financial year must be included in or appended to the Listing Document; and (a) if the interim financial statement is unaudited, that fact must be stated; and (b) where an issuer prepares consolidated annual accounts, the interim financial statement must either be consolidated or include a statement that, in the opinion of the issuer's directors, the interim financial statement is sufficient to enable investors to make an informed assessment of the results and activities of the issuer's group for the period that it covers. Information about the debt securities for which listing is sought Para. 18: a statement that application has been made to the Authority for the listing of and permission to deal in the debt securities. Para. 19: a description of or the text of the terms and conditions of the issue containing: (a) the nominal amount of the issue or, if this amount is not fixed, a statement to that effect, the nature and number of the debt securities and their denomination(s); (b) a summary of the rights conferred upon holders of the debt securities; (c) the issue price (or if different, offer price), the redemption price and the nominal interest rate and, if floating, how it is calculated; (d) if several rates of interest are provided for relating to the debt securities, an indication of the conditions for changes in the rate; (e) details of the method of payment of the issue or offer (as the case may be) price including a description of any instalment arrangements; (f) a statement detailing the rate, if any, of withholding tax withheld at source on the debt securities and an indication as to whether the issuer assumes responsibility for the 11

12 withholding of tax at source and any redemption option in the event of a withholding tax being introduced on or in respect of payments under the debt securities; (g) details of the arrangements for the amortisation or early redemption of the issue and procedures to be adopted, including whether exercisable at the issuer's or the holder's option; (h) details of the arrangement for transfer of the securities (if not in bearer form) or legal restrictions in relation thereto including details of any fee payable in relation to transfers or other documents relating to or affecting the title to or registration of the debt securities; (i) the currency of the issue. If the issue is payable in any currency other than the currency of issue, this fact should also be disclosed; (j) details of the following time limits: (i) final payment date and early repayment dates; (ii) the date from which interest accrues and the interest payment dates; (iii) the prescription period for claims for payment of interest and repayment of principal; and (iv) procedures and time limits for delivery of the debt securities, whether there will be temporary documents of title and, if so, the procedures for the delivery and exchange of documents. Para. 20: the following legal information: (a) the nature and scope of the guarantees, security and commitments intended to ensure that the debt securities will be duly serviced with regard to both the principal of and the interest on the securities and an indication of the places where the holders of the securities may have access to copies of such guarantees, security and commitments. This information should include any limits on the life of the guarantees, security and commitments as well as details as to whether they are intended to cover either the principal or the interest of the securities, or both, and should highlight if any are provided by group entities' (b) details of the custodian, if any, trustee or of any other representative for the debt securities holders as a whole, the name and function or description and head office of such representative of the holders of the debt securities, the conditions under which the representative may be replaced together with an indication of where the public may inspect copies of the documents detailing how the representative is to act; (c) a description of any subordination of the issue to any other debt of the issuer already incurred or to be incurred; (d) an indication of any legislation under which the debt securities have been created, the governing law and of the competent courts in the event of litigation; (e) an indication of whether the debt securities are in registered or bearer form; (f) details of any legal restrictions on the free transferability of the debt securities; and (g) an indication of whether it is possible to split the debt securities. Para. 21: details of any selling or marketing restrictions relevant to the debt securities. 12

13 Documents for inspection Para. 26: details of where the annual or any interim reports are available and how often interim reports are published. Para. 27: details of the location and where for a reasonable period of time (not being less than fourteen days) following the listing, the following documents may be inspected: (a) the memorandum and articles of association of the issuer (or equivalent constitutive documents); (b) any trust deed or other document constituting the debt securities; (c) where an accountants' report is included in the Listing Document, a written statement signed by the reporting accountants or auditors setting out the adjustments made by them in arriving at the figures shown in their report and stating their reasoning; and (d) where publically available under the law of the country of incorporation of the issuer or required under the listing rules of any other exchange on which the issuer's securities are listed, the audited accounts of the issuer, if any, or, where appropriate, the consolidated audited accounts of the issuer and its subsidiaries for the last financial year immediately preceding the issue of the Listing Document. Para. 28: where any of the documents listed in paragraph 27 are not in the English language, translations into English must be available for inspection. In the case of any document mentioned in paragraph 27 a translation of a summary of such document may be made available if the Authority so agrees. Listing Documents relating to trading companies issuing debt securities should contain the following additional information (where relevant) Para 25: where the issuer is a trading company, the following must be included in the Listing Document or if the information can be found in the issuer's group accounts, a link to where these are available may be included: (a) a brief history of and a description of the general objectives and nature of the business of the group. Details of the main products sold and/or securities performed and an indication of any significant new products and or activities must also be given and the name of any other stock exchange where the equity of the issuer is listed; (b) details of the principal investments (if any) of the issuer including details of new plant, factories and research and development, being made or planned by the issuer group together with the location of such investments (if relevant); and (c) where further information on the parent company/group can be obtained (e.g. the website address) including audited accounts if published. Listing Documents relating to convertible debt securities should contain the following additional information Para. 23: the terms and conditions of and procedures for conversion, exchange, subscription or purchase and details of the circumstances for or in which they may be amended, including the following information: (a) the total number of equity securities subject to such rights; 13

14 (b) the period during which such rights may be exercised and the date when these rights commence; (c) the amount payable on the exercise of such rights; (d) the arrangements for transfer or transmission of such rights; (e) the rights of the holders on liquidation of the issuer, the equity securities of which are subject to such rights; (f) the arrangements for the adjustment of the conversion price or number of equity securities or other property to take account of alterations to the share capital of the company, the equity securities of which are subject to such rights; (g) the details of the exchange on which the equity into which the convertible debt securities convert is listed and details of where the corporate announcements of the company into whose equity the securities convert are available; and (h) the following statements: "That [name of the issuer of the shares] confirms that it complies with its obligations in respect of the requirements imposed on it by the [name of exchange on which underlying shares are listed]." And where the issuer is a special purpose vehicle: "The information relating to [name of the issuer of the shares], the shares and its subsidiaries has been accurately reproduced from information published by that company. So far as the issuer is aware and/or is able to ascertain from information published by [the name of the issuer of the shares], no facts have been omitted which would render the reproduced information misleading." That if [name of the issuer of the underlying shares into which the convertible securities convert] ceases trading on a Recognised Exchange that application will be made for the [convertible debt securities] to be delisted from the Exchange." "The Issuer will not be, and is not intended to be, disposed of or sold while the [convertible debt securities] are in issue and listed on the Exchange." Listing Documents describing Asset backed Securities should contain the following additional information With respect to the underlying assets the Listing Document must include the following information set out in Appendix IX, Part E. Para. 1 The geographical location or legal jurisdiction of the financial assets. The pool size and any specified minimum or maximum. The types of financial assets. The maturity of financial assets. The size of financial assets. 14

15 Where the financial assets in the pool are themselves secured or backed by other assets, if available, the loan to value ratio at origination. The principal lending criteria and extent to which financial assets may be included which do not meet these criteria. A description of any significant representations and warranties given to the issuer relating to the financial assets. The method of origination. Any collateral substitution rights. Any rights or obligations to make further advances. The principal insurance policies (if any), including the names and (where appropriate) the addresses and a brief description of the providers and, where concentration with one insurer is material to the transaction, this should be disclosed. Para. 2: a description of the method and a statement of the date of the sale, transfer or other assignment of the financial assets or of any rights in the financial assets to the issuer. Para. 3: a description of the structure of the transaction and a full explanation of the flow of funds including: how the cash flow from the financial assets is expected to meet the issuer's obligations to holders of the listed debt securities and, in particular, information on any credit enhancements, an indication of where material liquidity shortfalls are expected to occur and the availability of any liquidity supports and indication of provisions to cover interest shortfall risks; the investment policy for the investment of any temporary fund surpluses; how payments are collected from the borrowers of the financial assets in the pool; the order of priority of payments made by the issuer (where relevant) to the holders of the class of debt securities in question; any fees or other charges payable by the issuer out of cash flows received; the details of any other arrangements upon which payments of interest and principal on the listed debt securities are dependent; information on whether or not there is any intention to accumulate surpluses in the issuer; and the details of any subordinated debt financing. Para. 4: the name, address and brief description of any originator of the financial assets backing the issue. Para. 5: the name, address and sufficient information to demonstrate the suitability of the person or entity which will hold any of the underlying financial assets or have custody, 15

16 possession or control of any funds flowing from them to the issuer or the holders of the debt securities together with a summary of the responsibilities of the manager or administrator of the issuer and a summary of the provisions relating to termination of the appointment of the manager or administrator and how a replacement will be appointed. Para. 6: the names and addresses and brief description of any swap counterparties and any providers of material forms of credit enhancement and the banks with which the main accounts relating to the transaction are held. 16

17 Schedule 2 Part A Rule (Accounts) Rule : unless the issuer is not required to produce audited accounts under the law of its country of its incorporation or as otherwise agreed with the Authority, an issuer of debt securities, which is not already listed on TISE, must have published audited accounts, that: (a) except as provided in Listing Rule , cover at least three years and the period to which the accounts relate must not end more that 12 months prior to the date of the Listing Document; (b) are produced for the issuer and, if the issuer has subsidiaries, consolidated in respect of the issuer and its subsidiaries. In exceptional circumstances, and upon application to the Authority, an applicant may be relieved of the obligation to produce consolidated accounts (e.g. where consolidated accounts would be misleading for investors in relation to the debt securities for which listing is sought); (c) have been prepared in accordance with the applicant's national law and, in all material respects, with United Kingdom Accounting Standards, United States Accounting Standards or International Accounting Standards or other accounting standards acceptable to the Authority; (d) have been independently audited in accordance with the auditing standards required in the United Kingdom or the United States or International Standards on Auditing Standards or other auditing standards acceptable to the Authority; and (e) subject to Listing Rule , have been reported on by the auditors without qualification or modification, save as approved by the Authority and subject to such conditions as the Authority may impose. Rule : in relation to Listing Rule (a) the Authority may waive, in whole or in part, the requirement for three years of audited accounts: (a) if the Authority is satisfied that the acceptance of accounts covering a shorter period is desirable in the interests of the new applicant or of investors and investors have the necessary information available to make an informed judgement concerning the new applicant and the securities for which listing is sought; or (b) where the issuer has been established for a period of less than three years but more than twelve months, in which case the audited accounts (if any) must cover the period since the issuer was established; or (c) where the issuer has been established for a period of less than twelve months, in which case the Authority may instead require the publication of an audited six monthly statement where the issuer has undertaken any trading or significant transactions, other than those in connection with the issue of securities for which listing is sought. Rule : where an issuer is not required to produce audited accounts under the law of the country of incorporation, the Authority may require unaudited financial information or statements or consolidated audited group accounts of a quality acceptable to the Authority to be submitted to the Authority. 17

18 Rule : notwithstanding that an issuer's accounts are qualified or modified the issuer may still be suitable for listing if the qualification or modification does not relate to a matter of significance for investors. Any qualification or modification in the audited accounts in the previous three years of an applicant's operations should be brought to the attention of the Authority. The Authority will require to be satisfied that any such qualification has been suitably resolved and has no impact on the suitability of an applicant for listing. Rule : the auditors must be independent of the applicant and comply with guidelines on independence issued by their relevant accounting body. Rule : unless otherwise agreed with the Authority, where the debt securities of an issuer are guaranteed the guarantor must also provide copies of its latest independently audited accounts to the Authority. Part B Rule (Accounts) Rule : unless otherwise agreed with the Authority, the Issuer shall within nine months of the end of the period to which the audited annual accounts or unaudited financial statements relate: (a) if the issuer is not required under the law of its country of incorporation to publish audited accounts, provide one copy of the annual report and accounts to the Authority; or (b) if the issuer is required under the law of its country of incorporation to publish audited accounts, publish them on the Authority's website or include a link to publicly available information placed on the internet. Rule : unless the issuer is exempted from publishing audited accounts under the law of the country of incorporation or as otherwise agreed with the Authority, the annual report and accounts must: (a) have been prepared in accordance with the issuer's relevant applicable law and, in all material respects, with United Kingdom Accounting Standards or United States Accounting Standards or International Accounting Standards or other accounting standards acceptable to the Authority; (b) have been independently audited, and reported on, in accordance with the United Kingdom Auditing Standards, United States Auditing Standards or International Standards on Auditing or other accounting standards acceptable to the Authority; (c) be in respect of the issuer and be in consolidated form if the issuer has subsidiaries, unless the Authority otherwise agrees; and (d) if they do not give a true and fair view of the state of affairs, profit or loss and cash flows of the issuer, provide more detailed and additional information. About Ogier Ogier provides practical advice on BVI, Cayman Islands, Guernsey, Jersey and Luxembourg law through its global network of offices. Ours is the only firm to advise on these five laws. We regularly win awards for the quality of our client service, our work and our people. 18

19 Disclaimer This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations. Regulatory information can be found at ogier.com 19

20 Meet the Author Peter Longstaffe Counsel Jersey T M Key Contacts Lucy Chambers Senior Associate Jersey T Raulin Amy Partner Jersey T M Niamh Lalor Partner Jersey T M Marcus Leese Partner Guernsey T M Daniel Richards Partner Jersey, Luxembourg T M

21 Related services Listing Services Banking and Finance Structured Finance 21