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05 November 2015
Nature of obligations
General disclosure obligation
Duty to notify
Issuer board changes: appointments and resignations
Convertible debt securities
Review of documents
Noteholder transfer: issuer confirmation
Process for listing payment-in-kind notes
This update assists company directors that have listed debt securities under Chapter 8 of the Listing Rules of the Channel Islands Securities Exchange (CISE). It sets out certain continuing obligations that issuers must observe once any of their securities have been admitted to listing (for further details please see "Chapter 8 debt listings").
Before listing, issuers must execute a listing undertaking, agreeing to comply with the Listing Rules and, in particular, with all relevant continuing obligations. Issuers must continue to observe these obligations in order to maintain an orderly securities market and ensure that all market users have simultaneous access to the same information. The CISE may take the enforcement actions described in Chapter 3 of the Listing Rules if an issuer fails to comply with any applicable continuing obligations.
Compared with other European securities exchanges, the information that issuers must annually disclose to the CISE in respect of debt listings is not onerous. The CISE will not typically make the information that issuers must provide pursuant to their continuing obligations publicly available unless, for example, such information relates to a change in listed eurobonds, the name of the issuer or another matter material to the interests of noteholders.
Typical examples of disclosable matters that might arise during the maintenance of a debt listing on the CISE include:
The Listing Rules are available on the CISE's website at www.cisx.com.
Generally – and apart from compliance with all specific requirements of the Listing Rules – an issuer must keep the public, the CISE, holders of its securities and other holders of its listed securities informed of all information (including information on any major developments in the issuer's sphere of activity that is not public) which:
Information that must be disseminated pursuant to the Listing Rules cannot be provided to a third party before the CISE is notified, except as permitted by the Listing Rules. An issuer may give information in strict confidence to its advisers, an agent employed to release the information and persons with which it is negotiating (including prospective underwriters of an issue of securities and providers of finance or loans) with a view to effecting a transaction or raising finance. In such cases the issuer must advise the recipients of such information that it is confidential and that they should not deal in the issuer's securities before the information has been made public. Issuers must occasionally notify the CISE of information through the method laid down by the CISE.
Issuers must ensure that the CISE and all other exchanges where their securities are listed are provided with equivalent information. An issuer with equity securities listed on another exchange may satisfy this requirement by stating on the CISE's website where such equivalent information may be obtained.
The CISE must be notified within 14 days of all board changes (eg, appointment, resignation or removal of directors); otherwise, a breach will be noted in the Breaches Register.
For issuer 'know your customer' or due diligence purposes, any newly appointed director must provide a signed directors' declaration (PQ) in the form prescribed by Listing Rule 126.96.36.199(1), unless otherwise agreed with the CISE.
A certified true copy of the board resolutions (or extracts therefrom) notifying any change in board members must also be provided to the CISE.
Unless otherwise agreed with the CISE, issuers must submit the following information within six months of the end of the period to which their audited annual accounts or unaudited financial statements relate:
Issuers must disclose any of the following to the CISE within 14 days:
In addition to the above, the issuer must also immediately disclose:
If the listed debt securities can be converted into or exchanged for securities of another company, or are guaranteed by another company, the issuer must ensure that adequate information regarding the following is always available to the CISE and the holders of the listed debt securities:
At a minimum, the information provided to satisfy Section (a) of this rule must include:
If the debt securities can be converted into or exchanged for securities of another company whose securities are listed on an exchange recognised by the CISE, the issuer may satisfy the requirement to publish financial information on the CISE by stating on the CISE's website where the information may be obtained in respect of the company issuing the other securities.
In addition to the specific requirements set out in the Listing Rules, issuers must provide draft copies of announcements or ads involving a change in listed debt securities or affecting arrangements regarding trading in the listed debt securities (including suspensions or cancellations of listings) to the CISE for review before they are issued.
The issuer must send a PDF copy of the following to the CISE as soon as possible after they are issued:
The issuer must submit a copy of any document sent by it (or on its behalf) to holders on its listed issue to the CISE as soon as possible after such documents are issued.
Where an issuer has given an undertaking or confirmation that it will not register a transfer of any debt securities without the CISE's prior consent (such consent not to be unreasonably withheld), it must ensure that it seeks consent before any transfer occurs.
In practice, the CISE will require such an undertaking at the time of listing in limited circumstances.
The CISE charges an annual fee of £1,000 per class of debt securities listed. The first annual listing fees will be payable in advance along with the initial listing fee. Subsequent annual fees will be payable within 42 days of the anniversary of the listing date. The CISE has indicated that debt securities may be delisted if the annual fee is not received within this timeframe.
Should an issuer whose securities are granted a listing on the CISE fail to pay the prescribed initial and annual fees in accordance with the Listing Rules, the CISE may suspend its dealings with or cancel the listing of the issuer's securities.
It is possible to list payment-in-kind (PIK) notes (also known 'funding bonds') on the CISE.
Typically, an issuer will apply for in-principle consent to list PIK notes (as and when they are issued) when making the listing application for the admission of the principal notes to be listed. Application can be made to list an unlimited number of PIK notes; alternatively, an 'up to' number or ceiling can be set.
If any PIK notes to be listed are fully fungible with the existing notes (ie, they will form a single series or the same class as the existing notes), they must be listed as soon as possible after they are issued (ideally on the same day). Otherwise, the issuer will be in breach of the Listing Rules (all eurobonds forming the same class must be listed when they are issued). If the PIK notes will not be fully fungible with existing notes, the first PIK notes that are issued can be listed following issuance. However, any further PIK notes that are issued will be fully fungible with the first PIK notes and should therefore be listed as soon as possible after they are issued.
If the CISE believes that an issuer has contravened the Listing Rules, it may do one or more of the following:
Unless the CISE considers that the maintenance of the market or the protection of investors requires otherwise, it will give advance notice to the parties involved in any action which it proposes to take and give them an opportunity to make representations in this regard.
For further information on this topic please contact Peter Longstaffe at Ogier by telephone (+44 1534 504 000) or email (firstname.lastname@example.org). The Ogier website can be accessed at www.ogier.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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