The Float Guide How to float a company on the Belgian Securities Exchange

Transcription

1 The Float Guide How to float a company on the Belgian Securities Exchange Contact: Benoît Feron Belgium benoît.feron@nautadutilh.com Marie-Laure De Leener Belgium marielaure.deleener@nautadutilh.com

2 INTRODUCTION his guide gives an overview of T what is involved in listing a Belgian company on the NYSE Euronext Stock Exchange Brussels. It is a practical manual covering all aspects of a float from prerequisites through to life after the float. 2 / 35

3 CONTENTS 1. INTRODUCTION ON NYSE EURONEXT MARKETS PUBLIC OFFERING OF SECURITIES LISTING REQUIREMENTS LISTING TIMELINE NYSE ALTERNEXT (BRUSSELS) LISTING PROCESS FREE MARKET (BRUSSELS) LISTING PROCESS LIST OF ABBREVIATIONS: / 35

4 1. INTRODUCTION ON NYSE EURONEXT MARKETS Going public is a real driver for a company s development, enabling it to increase its equity while also reinforcing its structure and reputation, as well as diversifying its sources of financing and facilitating ownership s transfers. Companies listed on the European regulated markets of NYSE Euronext are subject to a number of European rules applicable to all regulated markets within the European Union. This harmonised environment, particularly in terms of financial reporting and accounting standards, provides direct access to a very large investor base. When going public on NYSE Euronext, companies have the choice of their point of entry: Belgium, France, Portugal, the Netherlands or the UK. Belgium offers three markets to companies considering a listing. The Brussels regulated market of NYSE Euronext, Euronext Brussels, is segmented according to market capitalisation: Compartment A companies with a market capitalisation of more than 1bn; Compartment B companies valued between 150m and 1bn; Compartment C companies with a market capitalisation of less than 150m. NYSE Alternext (Brussels) is a market which offers simplified access and fewer requirements. Listing requirements and post-listing obligations have been streamlined while respecting investors needs for information. Intended primarily for midcap companies, it is open to both professional and individual investors. The market is controlled by NYSE Euronext (through a body of rules applicable to intermediaries and listed companies) but not regulated in the sense of the European Union directives. In addition to these two markets, the Free Market ( Marché Libre/Vrije Markt) (Brussels) is targeted at small and medium-sized companies looking to access the financial market to finance their development and benefit from the reputation bestowed on listed companies without having to meet the eligibility criteria of other NYSE Euronext markets. This market targets primarily sophisticated or professional investors. The major part of this contribution focuses on a listing on the regulated market Euronext Brussels. Two smaller chapters at the end will set out the rules for the two additional markets available in Belgium. 4 / 35

5 2. PUBLIC OFFERING OF SECURITIES A public offering of securities means a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities, and which is made by the person authorised to emit or sell the securities or on this person s account. The Prospectus Act, implementing the Prospectus Directive, regulates: the public offering of securities in Belgium; the admission to trading of securities on a Belgian regulated market; the prospectus and the communications with a promotional character regarding the public offering of securities for a total amount of no less than 2.5m or the admission to trading of securities taking place on the territory of one or more Member States of the European Economic Area (with the exception of Belgium) when Belgium is the Member State of origin. An offering of securities shall not qualify as public if: the offering is directed exclusively at professional investors; the offering is directed at fewer than 100 [150]* people, other than professional investors, per Member State of the European Economic Area; the offering requires a minimum investment of 50,000 [100,000] per investor and per separate offer; the offering has a nominal value per unit of at least 50,000 [100,000]; or the total amount of the offering is less than 100,000. *These criteria will be soon amended in order to comply with the changes to the Prospectus Directive adopted at the end of 2010 at European level (see numbers in [ ]). There is no need for a foreign company offering securities in Belgium to be locally registered or licensed or to have any formal local presence or agent to accept legal process. In the event of a public offering, however, a foreign issuer must appoint a financial intermediary to act as its paying agent for Belgian investors, and the FSMA shall require and ensure that the Belgian public receives the same financial information provided abroad (particularly in the issuer's home country). 5 / 35

6 3. LISTING REQUIREMENTS In order to be admitted to trading on Euronext Brussels, issuers must meet the following main requirements: See NYSE Euronext Publication, European Markets Public listing on NYSE Euronext (2010), p 7. The financial statements must have been reviewed by the issuer's statutory auditors or the person in charge of the supervision thereof. If the most recent financial year ended more than nine months prior to the application, interim statements must be submitted. If these interim statements have not been reviewed by the statutory auditors, it should be mentioned. The statutory annual accounts of an issuer having its headquarters in a state (party or not to the European Economic Agreement) must be established in accordance with the International Financial Reporting Standards (IFRS) if the national law allows them or the accounting standards of its national law. Consolidated accounts of an issuer having headquarters in a state which is party to the European Economic Agreement shall be prepared in accordance with the IFRS or the accounting standards of its national law and this even in case of private placement or direct admission. An issuer having headquarters in a state which is a third party to the European Economic Agreement may use: (i) the IFRS; or (ii) the accounting standards considered equivalent to these standards (US Generally Accepted Accounting Principles (GAAP), Canadian standards, Japanese standards, Chinese standards, South-Korean standards and Indian standards); or (iii) the accounting national standards of its home state, subject to the production of a IFRS reconciliation table. 6 / 35

7 4. LISTING TIMELINE Preliminary phase IPO readiness Pre-IPO phase structuring the transaction IPO phase introduction formalities Post-IPO phase life after admission to trading When? Up to 18 months Three to six months Two months What? Selection of float team (lead bank and other advisors) Preparation: - business plan - legal, tax and financial restructuring Nomination of syndicate members Due diligence process and prospectus drafting (legal, business, financial) Determination of price range Informal contacts with authorities: FSMA and Euronext Brussels Final prospectus and approval by FSMA Negotiations with authorities Marketing Book-building Signature of the underwriting agreement Pricing and allocation Listing Admission to listing Publication of the results of the offering Payment, settlement and delivery Ongoing information obligations during the listed life of the company Who? Management Lead manager Management Shareholders Legal advisors Auditors Other advisors Syndicate Management Shareholders Legal advisors Auditors Other advisors Management Auditors Banks 4.1. IPO readiness Float team A company will need the assistance of a team of advisers on an initial public offering (IPO) including one or several investment banks, lawyers and accountants. The type of advisers and their roles and responsibilities varies depending on the nature of the company's business. For example, in addition to the core team of advisers, market standards may require the production and publication of specialist reports or comfort letters and therefore the company may need to involve business consultants, patent and trademark agents or regulatory experts. Investment services provider The investment services provider is a financial intermediary, generally a bank that acts as an intermediary between the company and other market operators to sell the company s shares to the public. 7 / 35

8 Depending on the size of the offer, the company chooses one or more investment services providers. If there are several investment banks involved, the investment bank that organises and runs the offering is commonly referred to as the global coordinator. In smaller offerings, especially where such offerings are not international in nature, the investment bank leading the offering may simply be referred to as the lead manager. The investment bank generally plays a leading role in the IPO process. The principal tasks of the global coordinator are to: advise the management of the issuing company throughout the process; assess the company's suitability for listing. The investment bank together with the lawyers often acts as the intermediary between the company and the regulator and may have to demonstrate to such a regulator and/or a stock exchange that the company is suitable for listing; market the offering and book-building (if required). During the early stages of the process, the investment bank can already carry out pre-marketing to test out investors appetite for the company s shares and their position on the chosen valuation; participate in drafting the prospectus and coordinating the due diligence process in collaboration with the legal counsel; determine the price and coordinate the underwriting of the securities; liaise with regulatory authorities; and oversee settlement, including underwriting and the exercise of any over-allotment option and price stabilisation mechanisms, as required. In addition to being responsible for the marketing of the offer, the investment bank will as mentioned above act as an underwriter to the offer, commonly with one or more other investment banks in a syndicate, undertaking that the company and any selling shareholders will sell the total number of shares offered and will raise the amount of money that it or they intend to raise. Such an undertaking can either be a best efforts undertaking based on the appetite of the market (referred to as a soft underwriting ) or a firm undertaking to underwrite the securities offered regardless of market conditions and investors appetite (referred to as a hard underwriting ). The underwriters obligations are contained in an underwriting agreement entered into with the company. The underwriting agreement will set out their undertaking to underwrite the offer, to sell the offered shares and the percentage commission charged for doing so. The underwriting agreement will typically be conditional upon the satisfaction of certain conditions precedent, including eg, the outcome of the offering and the payment of the securities. In addition, the underwriting agreement will contain representations, warranties and indemnities to be given to the underwriters by the company that relate to the company, its business and the contents of the prospectus. The investment bank may require the company and probably any selling shareholders to abstain from any further sale of shares for a set period following the IPO. This so-called lock-up arrangement can also be included in the underwriting agreement. Finally, the underwriters may request either the company or the selling shareholders to grant a greenshoe or over-allotment option. This is a call option, provided to the underwriter, requiring the company to issue (or a selling shareholder to sell) a certain percentage of additional stock to the underwriter for a 30-day period to cover over-allotments. 8 / 35

9 Advisors The listing process requires issuers to meet a number of legal and accounting requirements. Most companies find it worthwhile to hire special advisors to assist them during this process: legal advisors; accountants; statutory auditors; tax advisors; financial advisors; and communications advisors. The company s lawyers help the company to prepare for the listing, by assisting and advising on, inter alia, any corporate restructuring required for the offering, by producing a full legal due diligence report regarding the company, by drafting and commenting on the prospectus or offering circular, press releases and any other publicity materials relating to the offer and by negotiating the transaction documents including the engagement letters, underwriting agreement and all ancillary documentation. The company's lawyers will also advise the directors on their legal and regulatory duties, obligations and potential liabilities on becoming directors of a listed company. The accountants engaged by the company are normally one of the international accountancy firms. The terms of their engagement and the scope and purpose of their work are often set out in a detailed engagement letter. The accountants carry out the financial review of the company. This review may cover a wide range of areas including historical trading information, projected working capital, profit forecasts and internal management and accounting systems and control. The accountants typically issue certain private comfort letters for the benefit of the company and the investment bank. These comfort letters are often required by the company and/or the investment bank to demonstrate that they have complied with certain of their regulatory obligations (eg, the financial accounts available are stated in local GAAP rather than in IAS/IFRS and need to be drawn up again to fulfil the prospectus requirements). In any event, the accountants' review will assist all parties in ensuring that the financial information included in the prospectus is correct and not misleading. It is also common for a financial PR/IR company to be hired to generate press interest/positive publicity and to monitor the content and wording of any public statements. Liquidity provider Liquidity providers act as market makers in the NYSE Euronext system. Liquidity providers must be members of the NYSE Euronext marketplace in which they want to provide liquidity, and be authorised to trade in the capacity of either dealer or broker/dealer. The role of the liquidity provider is to: protect against variations in volatility on the market; guarantee transactions at all times at the best price; and support the volume of transactions in the order book. In this way the liquidity provider is a market specialist for its instruments offering a placing, analysis and advisory service, and as a result is often the principal point of contact for the 9 / 35

10 issuing company. The liquidity provider agreement for equities is combined in many cases with a liquidity contract (the liquidity provider undertakes to quote two-way bid and offer prices with a minimum volume size or capital amount, gauged either by the number or the value of instruments, and within a minimum price range or spread). Liquidity Providers mainly concentrate on small and mid-caps, since listed companies with large market capitalisation generate greater liquidity. The criteria for liquidity provision on large-cap stocks are more restrictive and liquidity provider agreements are not permitted for any of the stocks in the Euronext 100 index (the index comprising the largest and most liquid stocks traded on Euronext) Preparation of the structure of the issuing company During the preliminary phase, a number of important actions have to be taken by the company planning to list on the Euronext Brussels market. The following actions are amongst the most important ones: the drafting of a shareholders agreement and a lock-up undertaking. Points of attention should be the control by reference shareholders post IPO, the defensive measures against hostile takeover bid and the implications under the Belgian takeover regulations if the reference shareholders own in excess of 30 per cent of the company's voting rights; the amendment of the articles of association to include amongst others the following facts: the company will be a publicly held company, there should be no restrictions on the transfer of shares and the operation is happening within the limits of the authorised capital; the application of the corporate governance rules to listed companies (the need of a corporate governance charter, an insider dealing code, the organisation of several committees, etc); the verification of the structure of the capital of the company: the situation of redeemed shares, the fulfilment of the listing criteria, etc; and the issue of new shares (with the accompanying formalities) and the verification of the liquidity of the shares (free float, over-allotment option, greenshoe) and the ownership of the shares (institutional/retail tranche, priority/preferential tranche, employee tranche) Structuring the transaction IPO Due diligence A due diligence is generally organised before the IPO of a company although there is no statutory requirement to perform one. It is the first step towards making a decision about entering the market. It takes the form of an audit report screening the company on all information to be contained in the offering documentation. It involves an in-depth examination of a company s operations to establish whether it meets formal stock exchange requirements and international best practices. Following this audit, the company may be deemed to review its financial and administrative organisation, to put in place internal control and reporting procedures, to reorganise its decision taking organs, etc. This due diligence exercise also allows a company to choose how to present itself to the market, in order to maximise its business value and ensure that procedures are carried out in a timely manner, thereby reducing its IPO costs. 10 / 35

11 At the same time of the due diligence organised by the listing candidate in order to conform its by-laws and its structure to those of a listed company, the lead manager will organise its own audit of the company (i) to verify the real nature of the data and projections contained in the business plan of the company; (ii) to collect all information necessary to draft the prospectus and prepare the financial analysis; (iii) to test the quality and the integrity of the management of the company, the stability of its business model and its strategy, etc. Banks may be held liable for failure to perform due diligence Offering documentation: the prospectus A public offering of securities in Belgium and the admission to trading of securities on a Belgian regulated market require beforehand the publication of a prospectus by the issuer. This prospectus will be filed with the FSMA (to the attention of the Supervision of Financial Information and Markets Department, Supervision of Financial Transactions unit) for approval. A prospectus is traditionally drafted by the bidder, with the assistance of its bank, legal counsels to the bank and the bidder, and its auditors. All of these parties usually take part in meetings organised with the FSMA prior to submission of a draft prospectus and during the examination process. The FSMA must ensure that the prospectus complies with the applicable regulations and contains all necessary information, depending on the characteristics and nature of the offering, to enable the public to make a properly informed assessment of the proposed investment. The minimum of information to be included in a prospectus, the format of the document and the rules regarding the publication of a prospectus or the dissemination of advertisements are set out in the Prospectus Regulation. The FSMA may not give any appreciation on the opportunity or the quality of the securities or on the situation of the issuer. The FSMA will approve the prospectus within ten days of the presentation of a complete file by the issuer. Once approved, the prospectus will be valid for 12 months following publication, provided, however, that it is duly updated (eg, mention of a new fact or correction of an error). The prospectus must also mention the identity and capacity of those persons responsible for it and a statement by the latter that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that there are no omissions likely to affect the content of the prospectus. These persons are always directors of the issuer. Advisors (eg, banks) can also be held liable for misleading information in a prospectus, but such cases are rare if not non-existing in Belgium. Content of the prospectus At the issuer's discretion, the prospectus may consist of a single document or may be composed of several separate documents. In the latter case, the information required is divided into: a registration document containing information on the issuer; a securities note relating to the securities offered to the public or admitted to trading; and a summary note. The issuer can also incorporate certain information in the prospectus by reference. The FSMA may (but is not obliged to) authorise the omission of certain information required by the Prospectus Act or the Prospectus Regulation in the event that (i) the disclosure of such information would be contrary to the public interest; (ii) the disclosure of such information would 11 / 35

12 be seriously detrimental to the issuer, provided the omission is not likely to mislead the public with regard to facts and circumstances essential to an informed assessment of the issuer or guarantor, if any, and of the rights attached to the securities to which the prospectus relates; or (iii) such information is of minor importance and relates to a specific offer or admission to trading on a regulated market and is not such as to influence the assessment of the financial position and prospects of the issuer or guarantor, if any. In addition, the FSMA can grant permission to replace certain information with equivalent adequate information when the requirements of the Prospectus Regulation are inappropriate to the issuer's scope of activity or corporate form or to the securities to which the prospectus relates. The minimum information that, in accordance with the Prospectus Regulation Annexes I (minimum disclosure requirements for the share registration document) and III (for the share securities note), must be included in a prospectus for public offering of shares may be summarised as below. 12 / 35

13 In all three documents Registration document Securities note Summary note Information required at least identification of the persons (in general the directors of the issuer) which are responsible for the information given in the prospectus and of the statutory auditors of the company that are responsible for the financial statements given in the prospectus; section wherein the risks factors that are specific to the company or its industry are prominently presented. description of the company: (i) identification of the company (legal and commercial name, registration place and number, date of incorporation, legal form, country of incorporation, registered office and, if applicable, principal place of business); (ii) important events in the development of its business; (iii) principal investments (already made, in progress and future on which firm commitments exist); (iv) description of principal activities, products made or services provided, principal markets in which it competes; (v) if applicable, short description of the group, position within the group and significant subsidiaries; and (vi) existing or planned properties, plants and equipments and any environmental issues that may affect the utilisation of such assets; description of the financial condition with selected key financial data: (i) financial statements and related audit reports, consolidated financial statements, if applicable, interim financial information, information on accounting rules and auditing principles, dividend policy, statements of the auditors and other financial information; (ii) in the case of significant changes, pro forma financial information ; (iii) operating results and description of factors that have affected this financial condition and the results of operations; (iv) liquidity, capital resource and financing; (v) research and development policies; (vi) description of any trends that have affected or could affect in future the financial condition of the company; and (vii) profit forecasts or estimates; description of the administrative, management, supervisory bodies: (i) directors and managers of the company, information on their experience and qualification, relationship with the issuer and potential conflicts of interest; (ii) remuneration of directors and managers; and (iii) board practices; information about the number of employees of the company and their possible share ownership; information regarding the major shareholders and others that may control or have an influence on the company; information regarding transactions the company has entered into with persons affiliated with the company; any additional information which is not given elsewhere in the prospectus such as information on the share capital, the act of incorporation and the articles of association, material contracts, statements by experts, documents on display, information on the holdings of the company. information about the capitalisation and the indebtedness and the reasons for the offer; comprehensive description of the offered securities (nature, currency, attached rights, applicable legislation, etc); terms and conditions of the offer (information on the offer conditions, statistics, expected timetable, pricing, etc.); information on markets where the offered securities will be traded; information on the expenses of the offer, the dilution resulting from the offer, and any additional information relating to the source of the information, the involved auditor, experts and third parties. description of the essential characteristics and the risks associated with the offer: (i) summarised terms and conditions of the offer; (ii) key information concerning the company; (iii) key information concerning the selected financial data and significant changes; (iv) information on employees, major shareholders and related-party transactions; (v) details on the relevant markets, information on dilution, and expenses, and (vi) any additional information relating to the share capital, the memorandum and articles of incorporation and the documents available for inspection. 13 / 35

14 Due to the uncertainty of market conditions, the offer price and number of securities to be offered are often not mentioned in the prospectus. Mention must however be made of the maximum offer price and the criteria and/or conditions in accordance with which the offer price and number of offered securities will be determined. Investors can withdraw their acceptance of the offer or subscription within a period of two working days following the announcement of the final offer price. This announcement shall be made public in the same way as the prospectus. In the event a significant factor arises or a material mistake or inaccuracy occurs in the period between approval of the prospectus and the close of the offer or the admission to trading, the issuer must prepare a supplement to the prospectus. This supplement must be approved by the FSMA within a maximum period of seven working days. The summary and any translations should also be amended to take into account the new information included in the supplement. Language The prospectus must be drafted in French or in Dutch or in a usual language of the international financial markets accepted by the FSMA, such as English. If the offer is taking place totally or partially on Belgian territory, the summary will have to be prepared in Dutch and French, provided however that if the advertisements and other documents relating to the offer are prepared only in one official language in Belgium, the summary may be prepared in such language. Method of publication of the prospectus The prospectus must be made available to the public at least three working days before the end of the public offering and no later than the opening of the offering. In the event of an admission to trading on a regulated market without a public offering, the prospectus must be made available to the public at least one working day before the date of admission to trading. If it is the first admission to trading for the securities, the prospectus must be made available at least six working days before the end of the offering. Publication shall be accomplished in accordance with the Prospectus Directive. A prospectus shall be considered to have been made public when it is made available in any of the following ways: publication in one or more daily newspapers with nationwide or extensive circulation; in a printed document made available free of charge to the public at the offices of the market on which the securities are being admitted to trading, the issuer's registered office and the offices of the financial intermediaries placing or selling the securities; or on the website of the issuer, the FSMA and/or Euronext and, if any, the financial intermediary. European passport If the issuer s home Member State is Belgium, the prospectus will qualify for the European passport if it contains a summary translated into the language(s) required by the host Member State(s). At the issuer s request, the FSMA will address the notification referred to in the Prospectus Directive to the competent authorities of the host Member State(s). A prospectus approved by the competent authority of another Member State will also be valid within the framework of a public offering on the Belgian territory or an admission to trading on a Belgian regulated market, provided the other Member State is the issuer s home country and the FSMA has received the notification referred to in the Prospectus Directive from the competent authorities, along with a translation into Dutch and French. 14 / 35

15 4.3. IPO phase Review process for Euronext Brussels listing Simultaneously with the filing of a draft prospectus with the FSMA, an application must be submitted to Euronext Brussels including, inter alia, the issuer s articles of association, the draft prospectus, a written commitment from a financial intermediary to act as paying agent, the issuer's annual accounts for the last three financial years prepared in accordance with IAS, a description of the business sectors in which the issuer operates and expects to operate, a financial forecast for at least the coming three years, an overview of the issuer's technical and human resources, copies of any liquidity agreements, etc. Traditionally the filing of a prospectus with the FSMA, and of an application with Euronext Brussels, are preceded by informal contacts between the FSMA and Euronext Brussels, on the one hand, and the issuer and its team, on the other. Additional meetings with the supervisory authorities may take place during the examination process to present specific points of attention that may draw some difficulties (latest restructuring and translation of it in the company's accounts, specific litigation files, etc). Euronext Brussels and the applicant jointly agree on a timetable for the listing process. Euronext Brussels then rules on the application for listing as soon as possible and, in any event, always within the regulatory time limits (ie, within 90 days from receipt of all required documentation and information for a first admission and 30 days in all other cases). Euronext publishes the date on which the admission of the relevant securities to listing on Eurolist shall become effective, as well as the particulars for the trading of such securities. The offering may not start as long as the prospectus (if any) has not been approved and distributed. Listing costs Euronext admission fees range from 10,000 to 3m, based on the issuer's market capitalisation at the time of the IPO. Centralisation fees amount to 0.3 per cent of the capital raised. Annual fees range from 3,000 to 20,000, depending on the number of securities admitted to trading. Primary market practices With a view to promoting the integrity of the markets, a number of measures have been introduced in 2007 with a view to safeguarding the fair treatment of retail investors, including: (i) the conditions for the offering must be identical for retail and institutional investors, in particular with respect to pricing; and (ii) in any offering not limited to a particular group of investors, at least ten per cent of the financial instruments must be allocated to retail investors, unless an exemption has been granted by the FSMA. Secondly, the over-allotment and greenshoe options may not exceed 15 per cent of the amount actually subscribed for in the offering, unless an exemption has been granted by the FSMA. On the other hand, save for certain exceptions, any party that has acquired financial instruments in the year preceding the first listing of these instruments is (except as part of a public offering), at a price below the offer price, subject to a one-year lock-up effective as from the listing of the financial instruments Offer price The offer price will be determined within the offer price range. The offer price range will be determined by the company and the selling shareholder in an agreement with the global coordinator(s) taking into account market conditions and factors such as: conditions on the financial markets; a qualitative assessment of demand for the offered shares; 15 / 35

16 the company s financial information; the history of, and the prospects for, the company and the industry in which it competes; an assessment of the company s management, its past and present operations and the prospects for, and timing of, its future revenues; the present state of the company s development; the above factors in relation to other companies engaged in activities similar to the company s; and all other factors deemed appropriate. The offer price will as well be determined on the basis of a book-building process conducted during the offering period, in which only institutional investors will participate. In this bookbuilding period, various relevant qualitative and quantitative elements will be taken into account, including such orders and the prices at which the orders were made, as well as the market conditions at that time. The offer price will be determined as soon as possible after the end of the offering period, and will be published in the Belgian press no later than on the first business day following its determination and no later than one business day thereafter. The offer price will be expressed in euro and will be exclusive of any taxes and expenses, which must be borne by the investors. The offer price will be the same for all investors. Retail investors will purchase shares at the offer price and will be legally bound to purchase the number of shares indicated in their share application form at the offer price. The offer price could be lower than the lower-end of the offer price range. The maximum price for retail investors will not exceed the upper-end of the offer price range. 16 / 35

17 Positioning ( equity story ) Book-building process Preparation by underwriting banks of the management presentation Preparation of equity sales forces from underwriting banks Institutional investors identification and ranking Management presentation for underwriters sales forces in-house Pre-marketing Determination of price range Road-show Group meetings One-on-ones with selected institutional investors Retail marketing R E V I E W B O O K Pricing Allocation When all orders have been gathered and the books are being closed 14 days 14 days 1day 1day 5 days C L O S E LISTED COMPANY Marketing the float Nowadays, where listings have become a tricky exercise, investors have become more difficult to convince. The success of an IPO will depend on the credibility of the valuation of the company and its ability to persuade investors of the seriousness of its projects. The underwriters need to integrate this difficulty when marketing the IPO through press releases, road-shows, etc. The main marketing initiatives undertaken by the underwriters will be pre-marketing to a select number of their key investor clients, followed by investor presentations and road-shows in which the company's senior management will be integrally involved. In addition, one of the investment bank s analysts will meet the company and write an independent research report, based solely on the information that the company will publish in the process. The analyst's research is per se not part of the marketing, given the analyst's independent status Offering period and application procedure The offering period is the period during which investors, whether retail or institutional, may submit a share application form. The offering period may close earlier, in which case the early closing will be announced in the Belgian financial press, and the dates for pricing, allocation, listing and closing of the offering may be adjusted accordingly. The offering period will in any event be open for at least six business days following publication of the prospectus. The allocation among applications from retail investors will be made on the basis of objective allocation criteria (such as the use of a relative or absolute amount of shares with respect to each subscription which may, but will not necessarily, be grouped in certain tranches and in which preferential treatment may be given to subscriptions submitted through the retail underwriters and their affiliates, rather than through other financial intermediaries). The underwriters will reserve the right to reject, cancel or modify orders from institutional investors in whole or in part. If the underwriters determine, or have reason to believe, that a single investor has submitted several orders through one or more underwriters, they may reduce or disregard any or all such orders. In addition, the underwriters may reduce or disregard any unusually large subscription if they believe that it could disrupt the market. 17 / 35

18 Only in the case of new developments, material errors or incorrect statements which could have an influence on the consideration of the shares and which must be reflected in a supplement to the prospectus, investors who have submitted an application for the shares prior to the publication of a supplement to the prospectus have the right to withdraw their application for at least two business days after the publication of such supplement. Once the application for the listing and admission to trading on Euronext Brussels of all new shares and existing shares (including all shares resulting from the exercise of the over-allotment option) is made, trading may commence on the listing date, being the first trading day following the allocation date, but before the closing date when the offered shares are delivered to the investors, subject to acceleration or extension of the offering period. The closing date will be published in the Belgian financial press together with the announcement of the offer price and the results of the offering Life after admission to trading: on-going obligations of listed companies Continuing requirements for listed companies (on Euronext or, with certain variations, on Alternext Brussels but not on the Free Market) are set forth in the Belgian Company Code and the several pieces of legislation resulting from the implementation of the Transparency Directive. An exemption system is available to third-country (non-eu) issuers which are subject to equivalent disclosure rules in their home country. Companies admitted to trading on a Belgian regulated market must therefore post on their website at least the following information: occasional information (in the form of a press release), any changes to the company's shareholder structure, annual information in brochure form, annual and half-yearly financial reports, quarterly reports (if published), the company's articles of association, information needed by the holders of financial instruments in order to exercise their rights, information concerning rights attached to the holding of financial instruments, the financial service offered, the financial year, etc Obligations relating to periodic information Several documents on the listed company s activities and financial position have to be drafted over the year: the annual financial report; the half-yearly financial report; interim management statements twice a year which can however be replaced by quarterly financial reports; and the annual announcement which has become optional. The deadlines for publication, the required publicity measures and the content of these documents can be found in the table below. Since 1 January 2005, Belgian issuers listed on the Euronext regulated market have been required to draw up their annual, half-yearly and quarterly financial reports in accordance with IAS/IFRS. Issuers subject to the legislation of an EU Member State or issuers governed by the legislation of a non-eu country can prepare their financial statements in accordance with the accounting standards applicable in their home country. However, the FSMA may request such issuers to submit, within 15-day period, a declaration from their auditor or the financial supervisory authority of their home country indicating that the financial data in the issuer's annual, half-yearly and quarterly reports have been prepared in accordance with the applicable accounting standards. 18 / 35

19 According to Euronext's Rule Book, the issuer's annual consolidated financial reports must be audited by its accountants in accordance with the standards of the International Federation of Accountants or national GAAP. The half-yearly financial reports for the first six months of the financial year must be subjected to a limited review by the issuer s auditors. The report on this limited review shall be published along with the half-yearly report. Listed companies must also publish, as any company submitted to the Company Code, its annual accounts and consolidated accounts. A copy of the documents must be made available to each shareholder, holders of bonds or warrants at the latest 15 calendar days before the annual shareholders meeting. The National Bank of Belgium (Central Balance Sheet Office) is entrusted with the task of centralising the above mentioned documents and making them available to the public. 19 / 35

20 When published? Publication means Content Annual financial report Half-yearly reporting requirements Interim management statements OR Quarterly financial reports Annual announcement OPTIONAL no later than four months after the close of the financial year within two months (four months if the company is listed on Alternext) after the end of the first six-month period of the financial year twice a year; within the period starting ten weeks after the beginning of the concerned six-month period and ending six weeks before the end of the considered sixmonth period. at the latest, two months after the end of the first and third quarters during the period between the drawing up of the financial statements and the publication of the annual financial report communication to the media through a press release mentioning the website on which the report will be available (and kept for at least five years); and FSMA and Euronext informed at the latest on the day when the information is made available to the public and the securities holders. Communication to FSMA; Euronext; and the media through a press release mentioning the website of the company on which the report will be available (and kept for at least five years). audited financial statements (statutory and consolidated); management report (information with respect to the company s strategy and business, discussion and analysis of financial conditions and the results of operations, corporate governance disclosures, list of material contracts the company has entered into during the past year, the auditor's report, etc); statement made by the persons responsible within the company (whose names and functions shall be clearly indicated) certifying that to their knowledge (i) the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer and the undertakings included in the consolidation (ii) the management report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation, together with a description of the principal risks and uncertainties that they face; report of the auditor; and corporate governance statement. condensed set of financial statements; interim management report; and indications on the status of the external audit. explanation of the material events and transactions that have taken place during the considered period and their impact on the financial position of the company; and general description of the financial position and performance of the company during the considered period. condensed set of financial statements; interim management report; and indications on the status of the external audit. figures exclusively on the performance; comments on the evolution of the business, the performance and the position of the company as well as any specific indication having had an impact on those elements during the period under review; anticipated development of the company for the current financial year; and indication on whether the financial statements have, or have not, been audited by the auditor and, as the case may be, indicate the state of progress of the audit work. 20 / 35

21 Corporate governance obligations Principles of corporate governance for all companies admitted to trading on a Belgian regulated market are set forth in the Company Code and the Corporate Governance Code which has been adopted in 2004 and reviewed in The Code has been imposed as the reference code for listed companies in April Until then the principles of the Code were considered as soft law. The Company Code reflects the one-tier board model. All Belgian public limited liability companies (SA/NV) must appoint a board of directors responsible for managing the company. The board is entrusted with general managerial authority and may take legal action on the company's behalf. Members of the board of directors are accountable to the company's shareholders for the performance of their duties and may be removed from office by the latter at any time. The board is led by a chairperson and is composed of both executive and nonexecutive directors, including independent non-executive directors. The board may delegate the day-to-day management of the company to one of its members (CEO) or to a management committee. They are responsible for running the company, implementing internal controls, preparing the company's financial statements and all information necessary for the board to perform its duties properly, presenting to the board a balanced and comprehensible assessment of the company's financial situation, etc. Persons entrusted with daily managerial authority are accountable to the board for the performance of their duties and may be removed from office by the latter at any time. The Corporate Governance Code requires a clear division of authority within a company between the board of directors and those responsible for running the company's business. The chairman of the board and the chief executive officer must not be the same person. The division of authority between the chairman of the board and the CEO must be clearly established, set out in writing and approved by the board. Any company admitted to trading on a regulated market must, in accordance with the Corporate Governance Code, draw up two documents: a corporate governance charter describing its corporate governance policy; and a corporate governance statement. Corporate governance charter Corporate governance statement When? Publication Content regularly updated once a year posted on the website of the company included in a separate section of the company s annual report description of the company's governance structure and policies on matters such as its structure, the terms of reference of the board of directors and its committees as well as related-party transactions, remuneration and insider trading, and market manipulation among other things: a reference to the corporate governance code to which the company is subject / which the company may have voluntarily decided to apply; to the extent that a company departs from a corporate governance code, an explanation by the company as to which parts of the code it departs from, and the reasons for doing so; a description of the main features of the company s internal control and risk management systems in relation to the financial reporting process; the operation of the shareholder meeting and its key powers, and a description of shareholders rights and how they can be exercised; the structure of the shareholding of the company according to the notifications of substantial shareholdings received; and the composition and operation of the administrative, management and supervisory bodies and their committees. 21 / 35

22 According to the Corporate Governance Code, all companies admitted to trading on Euronext Brussels must set up specialised committees to analyse specific issues and advise the board, in particular an audit committee, composed exclusively of non-executive directors, a nomination committee and a remuneration committee. The obligation to set up some of these committees was finally transposed in legislation: First, since 2009 and the implementation of the Audit Directive, listed companies on Euronext Brussels and regulated financial institutions meeting the established criteria must establish a mandatory audit committee. The rules with respect to the duties and responsibilities of the audit committee have been incorporated into the Company Code; Secondly, under the Act of 6 April 2010 on Corporate Governance and Remuneration in listed companies, companies whose shares are admitted to trading on Euronext Brussels are, subject to certain limited exceptions, compelled to set up a remuneration committee within the board of directors Obligations relating to inside information In order to be considered privileged, information must not be public and must (i) be sufficiently precise, (ii) relate to one or more issuers of securities or to one or more classes of securities, and (iii) be such that its publication would likely have a material effect on the price of the securities or their derivatives. An insider is a anyone in possession of privileged information who knows or should be aware of the privileged nature of such information in his or her capacity as (i) a member of management or of a controlling body of the issuer or of a company closely related to the issuer, (ii) a holder of the securities in question or (iii) due to access to such information through his or her work, profession or function. Insiders may also be anyone who comes into possession of privileged information through criminal activities, any natural person who takes part in the decision to enter into a transaction or to pass an order on behalf of a legal entity, or any other person knowingly in possession of information that s/he knows or should know is privileged and which originates, directly or indirectly, from any of the persons mentioned above. Anyone in possession of privileged information must refrain: from using such information in order to acquire or sell, directly or indirectly, for his or her own account or for a third party, any of the securities concerned; on the basis of this information, from recommending that a third party, directly or indirectly, should acquire or sell any securities to which the information pertains; from disclosing it to any third party, except in the ordinary course of business or in the exercise of his or her profession or function. The applicable criminal sanctions include a prison term ranging from three months to one year and fines from 50 to 10,000, capped at three times the capital gain derived from the insider trading. The FSMA can also impose administrative fines up to 2.5m. The criminal sanctions are applicable to financial instruments admitted to trading on Euronext Brussels, the Free Market and Alternext. The administrative fines, however, only apply to the Euronext Brussels and Alternext markets. This inside information must be published immediately and in principle after the closing of the markets by means of a communication to the media through a press release posted also on the website of the issuer and a communication to the FSMA and to Euronext. If the issuer decides to delay the publication, because such disclosure may prejudice its legitimate interests but provided that such delay would not be likely to mislead the market, the issuer must inform the FSMA promptly of the delay (without having to communicate the content of the information) and assure the confidentiality of the concerned information, which implies (i) limiting the disclosure of that 22 / 35

23 information only to the persons who need it to perform their duties (while informing these persons of the provisions concerning insider trading) and (ii) ensuring an immediate disclosure in the event of a leak. There are on the other hand safe harbours to protect transactions such as buy-back programmes and stabilisation of financial instruments (subject to the fulfilment of several conditions). Preventive measures have been enacted since 2006 and relate to the identity of any person with access to inside information, the notification of transactions in financial instruments by persons entrusted with managerial authority within an issuer, and intermediaries' obligation to report any suspicious transactions. These obligations are applicable to financial instruments admitted to trading on Euronext and Alternext. Issuers whose financial instruments are admitted to trading on a Belgian regulated market or which are in the process of being admitted to such a market must provide a list of all persons working for them (whether under an employment contract or otherwise) who have access, on a regular or incidental basis, to inside information directly or indirectly concerning the issuer. This list must mention the identity of any person with access to such inside information, the reason for including that person on the list, and the date on which that person received access to the inside information and on which the list was created and updated. Persons on these lists must be made aware of their statutory and regulatory obligations and the sanctions that can be imposed for abuse or improper disclosure of inside information. The list of insiders must be kept for five years after being drawn-up or updated and the FSMA has an inspection right. Persons entrusted with managerial authority (ie, members of the issuer's administrative, management or supervisory bodies or senior executives who are not members of the foregoing bodies but who have regular access to inside information relating directly or indirectly to the issuer and the power to take managerial decisions affecting the future development of the issuer's business and business prospects) and, if relevant, any persons closely associated with them (ie, the spouse or any partner of that person considered under national law to be a spousal equivalent, dependent children, other relatives who have shared the same household as that person for at least one year on the date of the transaction or any legal entity, trust or partnership for which any of the foregoing persons exercise managerial responsibility or which is directly or indirectly controlled by such a person or which has been set up for the benefit of such a person or whose economic interests are substantially equivalent to those of such a person) must notify the FSMA of transactions performed for their own account involving shares of the issuer or any derivatives or other financial instruments related to these shares. Notification must be made within five working days following the settlement of the transaction, although a deferral is possible as long as the total value of the transactions completed during the current calendar year does not exceed 5,000. Once this threshold is attained, all previously completed (but undeclared) transactions must be reported within five working days from the date of the last transaction. If the total value of the transactions is below 5,000 for the current calendar year, the transactions in question must be reported before 31 January of the following year. Notifications communicated to the FSMA by means of a model form available on its website are posted on the authority's website Obligations relating to the publicity of substantial shareholdings The Act of 2 May 2007 (the Act ) on the disclosure of major holdings in listed companies implementing the Transparency Directive applies to all issuers whose securities are admitted to trading on a regulated market within the European Union, regardless of whether their registered office is located in Belgium. The specific rules that apply, however, depend on whether Belgium is the home or the host Member State and whether the company is listed on Euronext, Alternext or the Free Market. The legislation on the disclosure of large shareholdings in listed companies and the regulation of public takeover bids requires that any person acquiring or disposing voting securities issued by a 23 / 35

24 Belgian company admitted to trading on a regulated market in an EU Member State, so that this person s percentage of voting rights in that company exceeds or falls below five, ten, 15, 20 per cent, etc, must inform the FSMA and the company as soon as possible and in any case no later than four trading days from the first trading day following the date on which the holder of the significant shareholding learns, or should have learned, of the acquisition or disposal, the number of securities held. These notification thresholds have been set at 25, 30, 50, 75 and 95 per cent for companies listed on Alternext. The notification obligation is also triggered if a threshold is reached or crossed: (i) as a result of a corporate event changing the breakdown of voting rights (eg, an increase in the issuer s share capital or the cancellation of redeemed shares) or (ii) as a result of the conclusion, amendment or termination of an agreement providing for concerted action in respect of the exercise of voting rights. Notwithstanding the above, the company's articles of association may provide thresholds of one, two, three, four and 7.5 per cent. The notification, made on the basis of the standard form drafted by the FSMA, must contain the information prescribed in the Act and may be drafted in French, Dutch or English. It may be sent by electronic means. The issuer must make the notification public within three trading days by providing it to the press and making it available on its website (where it is kept during five years). The FSMA may, at the request of a company, grant an exemption in exceptional circumstances if publication could be seriously detrimental to the company (provided the exemption does not mislead the public) Other disclosure obligations The Company Code also sets forth procedures for dealing with conflicts of interest. If a director has a direct or indirect financial conflict with a decision to be taken by the board, that director must inform the other directors accordingly. If the company is listed and if the decision is likely to result in a financial advantage to one or more major shareholders, the board must appoint three independent directors and an expert to draft a report on the decision and its financial implications for the company and its shareholders, on the basis of which the board shall take its decision. A new procedure, directed in particular at intra-group transactions, was recently introduced to extend the scope of application of the conflict-of-interest rules and strengthen the criteria used to assess the independence of directors. 24 / 35

25 5. NYSE ALTERNEXT (BRUSSELS) LISTING PROCESS The NYSE Alternext listing process is similar to that of Euronext, but is often quicker and more straightforward. The rules for Alternext are less stringent than those applicable to regulated markets, with listing requirements adapted to small and mid-cap companies and on-going requirements sized to meet their needs General conditions for the admission to trading Any company, regardless of its sector or country of origin, can apply for the admission to listing on NYSE Alternext provided that the securities of this company are freely negotiable and transferable and the company has fulfilled other conditions such as described in the table below. Moreover, the securities must be eligible for the operations of a central securities depositary so that some or all of the transactions done on NYSE Alternext can be processed automatically by the clearing systems and the directly generating settlement instructions systems recognised to this effect by Euronext Brussels. MEANS OF LISTING ELIGIBILITY CRITERIA Public offering (IPO) Private placement Direct Listing Statutory accounts and Two preceding years in Two preceding years in consolidated accounts accordance with IFRS accordance with IFRS if any Financial intermediaries Minimum free float Information document Investors Listing sponsor and, if applicable, the broker responsible for the placement 2.5m Prospectus approved by FSMA Institutional and retail 5.2. Float team: an additional member Listing sponsor Capital increase of at least 2.5m in a single operation within a period of no more than one year prior to admission Offering circular prepared by the company and the listing sponsor Institutional investors only for the capital increase Transfer from a regulated market of NYSE Euronext: the issuer is already admitted to trading on an eligible market with no additional capital raise Securities worth at least 2.5m have been placed with public through the company's home market Transfer from a regulated market of NYSE Euronext A company seeking listing on NYSE Alternext must have a listing sponsor to help it with its listing preparations and guide it throughout its life on the exchange. Listing sponsor status is granted to investment services providers, as well as audit firms or corporate finance specialists by NYSE Euronext which checks its suitability and later ensures that the listing sponsor adheres to its commitments. The listing sponsor performs a due diligence to ensure that the prospectus or offering circular provides a true and fair view of the company. Once a company is listed, the listing sponsor helps the company to meet its legal requirements (eg, its reporting and transparency requirements) and to comply with NYSE Alternext rules. It informs NYSE Euronext if these requirements are not met. The listing sponsor shall refrain from submitting an application from the issuer with NYSE Alternext that would put it in a conflict of interest situation. Such situations include, but are not limited to, the following: where the listing sponsor provides an audit function on the issuer's financial statements without the appropriate Chinese Walls ; 25 / 35

26 where a partner, manager or employee of the listing sponsor holds a management or administrative position with the issuer; and where the listing sponsor or any of its partners, managers or employees holds a participation in the capital or voting rights of the issuer, whether severally or in concert. This restriction does not apply to the authorised investment companies that have set up the so-called Chinese walls procedures. Euronext Brussels must be informed of potential conflict of interest situations to allow for prior examination, and the listing sponsor may be required to prove that such situations will not affect the performance of its duties. For each application made by an issuer under its supervision, the listing sponsor must certify in writing to Euronext Brussels that: it has provided the issuer with all pertinent information about any legal and regulatory requirements stemming from the planned listing; the issuer has met all the conditions pertaining to the application laid down in these rules; the issuer reaches, or has a reasonable chance of reaching, the levels of equity ownership required for admission; if there is no prospectus reviewed by the competent authority, an information document exists containing all the information that will allow potential investors to assess the financial position and general prospects of the issuer; when drafting the information document the listing sponsor has conducted due diligence, following standard procedures accepted by Euronext Brussels; the issuer has taken measures to ensure compliance with its on-going and periodic obligations. 26 / 35

27 5.3. Listing timeline See NYSE Euronext Publication, European Markets NYSE Alternext The tailor-made market for small and mid-caps (2010), p Alternext rules and obligations NYSE Alternext has adopted a set of rules with the aim to organise the market and to ensure that investors benefit from the required transparency. These rules are enforced by NYSE Euronext and the regulatory authorities. The issuer must inform Euronext Brussels of the publication on its website, at the latest at the time required for its publication, of all information that must be made public according to the national regulations, due to the admission of its securities on Alternext. NYSE Alternext listed companies undertake to: use the services of a listing sponsor throughout their listed life; publish periodic information such as audited annual and unaudited half-yearly financial reports, within four months of the period close; publish all price-sensitive information immediately; publish any breaches of the 25, 30, 50, 75 and 95 per cent ownership thresholds; report directors' dealings in accordance with the market abuse preventive measures applicable on NYSE Alternext; pay the annual subscription fees and commissions to Euronext Brussels; inform Euronext Brussels on changes in the number of listed securities; and inform Euronext Brussels on corporate actions (eg, subscription, bonus or distribution rights, opening of an option period for scrip or cash dividends, contractual redemption of debt securities, stock split and reverse stock split) that may affect the management of the trading system at least two trading days before they take effect. An issuer that breaches its disclosure requirements can be disciplined in the following ways: 27 / 35