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").
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:
- a change of directors (including the provision of certain information in respect of such directors – see "Issuer board changes: appointments and resignation" below);
- a change to the issuer's name;
- the filing of annual audited or non-audited accounts (see "Financial information" below);
- changes to the listing document; and
- redemption of listed eurobonds.
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:
- is necessary to allow them and the public to appraise the issuer's position;
- is necessary to avoid establishing a false market in its securities; and
- might reasonably be expected materially to affect market activity in, and the price of, its securities.
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 or the placees of the balance of a rights issue not taken up by shareholders) 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.
Issuer board changes: appointments/resignations
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 8.3.4.1(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 nine months of the end of the period to which their audited annual accounts or unaudited financial statements relate:
- If the issuer is not required under the laws of its country of incorporation to publish audited accounts, it must file a copy of its annual report and accounts with the CISE and may use the Market Data Management Service (MDMS).
- If the issuer is required under the laws of its country of incorporation to publish audited accounts, it must file a copy of its annual report and accounts with the CISE or submit a link to its publically available information. Financial information filed with MDMS will be publicly available via the CISE's website. Where issuers publish financial statements online, the CISE may be referred to relevant online data sources.
Issuers must disclose any of the following to the CISE within 14 days:
- changes in the rights, powers or privileges of any class of listed debt securities (unless otherwise agreed with the CISE), including:
- any change in their rate of interest; and
- any change in the terms of any class of listed securities into which the listed debt securities are convertible or for which they are exchangeable;
- decisions to call, purchase, redeem or cancel any listed debt securities (where applicable, issuers must apply to delist securities). The information must also state the amount of the securities to be called, purchased, redeemed or cancelled and how many debt securities will be outstanding after the transaction or series of transactions is completed;
- any decision to change the issuer's constitutional documents;
- the appointment of a new director or a resignation or removal of a director (including the appointment or a resignation or removal of a corporate director). In the case of an appointment, the issuer must also state whether the position is executive or non-executive and the nature of any specific functions or responsibilities; and
- any changes to a director's disclosed functions or executive responsibilities; such notification must also state the effective date of the change.
In addition, an issuer must also immediately disclose the following to the CISE:
- a change in its registered office;
- a change in its name; and
- a change in its auditors.
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:
- the business and affairs of the other company; and
- the rights, powers and privileges of the securities into which the listed securities are convertible or for which they are exchangeable.
At a minimum, the information provided to satisfy Section (a) of this rule must include:
- the company's annual report and accounts;
- any interim financial accounts; and
- all other information necessary to make a realistic valuation of the listed debt securities.
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.
Documents to be submitted to the CISE
The issuer must send a PDF copy of the following to the CISE as soon as possible after they are issued:
- all resolutions in relation to the listed issue, other than those passed in the ordinary course of business;
- all documents relating to a takeover of, merger by or offer to purchase the issuer;
- all notices of meetings in relation to the securities;
- forms of proxy, reports and announcements in relation to the listed issue; and
- any other similar documents.
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.
Noteholder transfer: issuer confirmation
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 £1,050 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 30 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.
Process for listing payment-in-kind notes
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:
- censure the issuer, which may include serving a formal written notice of censure on the issuer and requiring the issuer to provide a written explanation of its actions and an undertaking to rectify the breach immediately;
- publish the fact that the issuer has been censured for failing to comply with the Listing Rules;
- refer the matter to the relevant criminal prosecuting authorities if empowered to do so; and
- suspend or cancel the listing of all or any of the issuer's securities where the CISE considers it necessary for the protection of investors or the maintenance of an orderly market.
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 514 000) or email ([email protected]). The Ogier website can be accessed at www.ogier.com.
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