Cayman Islands: CSX - Guide To Listing Equity Securities

Last Updated: 27 May 2016
Article by Antonia Hardy and Philip Paschalides

Most Read Contributor in Cayman Islands, November 2017


Over the last 40 years the Cayman Islands has matured into one of the world's largest international financial centres, providing institutionally-focused, specialised services to a global client base. The Cayman Islands' competitive strength in global financial services lies in its ability to provide an effective and cost-efficient tax neutral platform for international capital flows in an environment of economic and political stability.

Since 1997, the Cayman Islands Stock Exchange ("CSX") has provided a specialised listing and trading facility for the specialist products of the Cayman Islands financial industry.

On March 2013 the Cayman Islands Stock Exchange went live on the Deutsche Boerse's XETRA® trading platform.

In April 2013 the CSX published new listing rules to facilitate listings by start-ups, mineral companies and specialist companies for sophisticated investors.

By acquiring XETRA technology and launching rules targeting equity listings the CSX offers an alternative international venue for listing and trading the shares of growth and specialist companies.

The CSX's listing rules are sophisticated and designed to contemplate innovative structures, combining reasonable and appropriate disclosure requirements with the flexibility necessary for the specialised instruments that list on the CSX. The listing rules have been drafted and procedures implemented to ensure that the CSX meets all international regulatory standards while ensuring that listing and continuing obligation requirements are appropriate for the sophistication of the investor pool. The objective is for listing on the CSX to be a straightforward and speedy process.

This guide contains a summary of the main requirements for the admission of equity securities of issuing companies listing on the CSX.

It is recognised that this guide will not completely answer detailed questions which clients and their advisers may have. It is intended to provide a sketch of the subject matter covered. This guide is therefore designed as a starting point for a more detailed and comprehensive discussion of the issues. Particular circumstances or transactions should be the subject of specific legal advice given on the relevant facts at the relevant time.

Information of the CSX

The CSX commenced its operations on 2 January 1997 with the aim of providing facilities for the listing and trading of equity and debt securities.

While complying with international standards for recognised stock exchanges, the CSX adopts a flexible and pragmatic approach to regulation. Consequently, the CSX provides issuers of securities with fast, efficient and cost effective listing facility. In terms of listing requirements and procedures, the CSX offers a more flexible less onerous alternative to the other exchanges.

Why use the CSX:

  1. Fast and efficient listing services from an experienced and highly qualified team that understands the complexities of the specialist products listed on the CSX and is committed to meeting each issuer's listing deadline.
  2. Competitive pricing.
  3. Listing Committee convene as often as necessary to approve listing.
  4. International standards of issuer regulation.
  5. Sophisticated listing rules that are easy to understand and commercially driven.
  6. The CSX does not insist on the adoption of International Accounting Standards/International Financial Reporting Standards, provided that an appropriate accounting standard is used.
  7. As the CSX operates outside EU, and no EU directives apply, the regulatory burden is less than onerous than listing on other major stock exchanges.
  8. CSX is not bound by US SEC regulations.
  9. Synergies from listing on an exchange in the leading domicile in the world for investment funds and structured debt products, providing access to the full range and top calibre of service providers in a jurisdiction that has fashioned its legislative, regulatory and administrative approach to enable the utmost efficiency in specialist product operations.

Deutsche Börse XETRA® trading platform

XETRA is Deutsche Börse's international cash market platform for trading equities, bonds, warrants, exchange traded funds and other instruments.

Based on the industry-driven and international messaging standard FIX protocol (Financial Information exchange protocol), the XETRA FIX Gateway offers simple and flexible access to all XETRA markets based around the world.

The New Market - 'XCAY'

The CSX will be accessible through the FIX Gateway under the Market Identification Code 'XCAY'. Those wishing to trade on XCAY will be able to do so through existing CSX broker members or can access a network of approximately 400 banks and brokers worldwide who are currently authorised to trade on one or more XETRA markets. International XETRA participants can be passported through a simple process as CSX broker members. Trading on XCAY is Monday to Friday continuous with main trading between 12:00pm to 5:30pm (GMT), pre- and post-trading and opening and closing auctions.

Listing Requirements

CSX Listing Rules are based on IOSCO disclosure standards and since the CSX is not subject to the European listing directives the rules can be applied flexibly.

Building on its expertise for listing hedge funds and other specialist products the CSX is targeting in particular specialist companies with sophisticated investors (investing at least US$100,000) that may be looking for the transparency and regulatory oversight of a listing rather than a liquid share market. For such companies the CSX can offer a flexible approach to listing and some of the basic suitability requirements can be flexed in return for enhanced risk disclosure.

The basic requirements are:

  1. Companies can be incorporated in any internationally recognised jurisdiction although must have a corporate advisor that can liaise with the CSX during its business hours.
  2. New applicants must have a minimum market capitalisation of US$5 million and sufficient shares in public hands. The normal 25 percent free-float requirement can be reduced significantly for specialist companies provided it is made clear to investors that there may not be an active secondary market.
  3. For specialist companies, start-ups and mineral companies the normal requirement for an established track record can be waived in return for independent expert reports, forward projections and key shareholder lock-ins.
  4. Boards must have appropriate experience and expertise and (except in the case of specialist companies) a majority of independent directors.
  5. CSX listed companies are subject to a takeover code and must implement a share dealing code for directors and key employees.
  6. Companies are required to meet basic constitutional requirements for directors' conduct and shareholder rights.
  7. Companies without a three year trading record must demonstrate at least twelve months working capital. There is an exemption for specialist companies provided they can adequately explain how any shortfall will be met.
  8. Financial statements must be prepared under IAS or an acceptable local GAAP, which includes UK GAAP.

Listing documents can be based on existing offering documents and it is possible to passport or incorporate by reference documents filed with another exchange recognised by the CSX. The CSX can offer a fast-track secondary listing to companies which have a primary listing on a recognised exchange (should you require any information about secondary listings please do contact us in order to obtain our client briefing).


Securities must have an ISIN and be eligible for electronic clearing and settlement. There is a pathway for all CSX listed securities to be settled through Clearstream via a suitable paying agent of the company's choice.


The CSX operates a listing fee based model where listed companies pay an application fee (ranging from US$10,000 to US$20,000) based on initial market capitalisation and a fixed annual fee of US$10,000. There are no trading fees. The fees are halved for secondary listings.


An application for a primary listing can be expected to complete in four to six weeks provided that the initial application and documentation are in substantially complete form. Secondary listings can be processed in one to two weeks.

International Recognition

The CSX has attracted the following international recognition:

  1. In July 1999, the CSX became the first offshore stock exchange to be granted approved organisation status by the London Stock Exchange. As a result securities listed on the CSX are eligible for trading in the LSE's international equity market and for quotation on the SEAQ (Stock Exchange Automatic Quotation) international trading system.
  2. In June 2001, the CSX became the first offshore exchange to join the Inter market Surveillance Group (a group of 23 North American, European, Asian and Australian stock exchanges committed to the co-ordination of regulatory efforts across the markets represented).
  3. In 2004, the UK Inland Revenue (now "HM Revenue & Customs") designated the CSX as a Recognised Stock Exchange under Section 841 of the Income and Corporation Taxes Act, 1988 (ICTA). Consequently, qualifying debt securities listed on the CSX are now eligible for the Quoted Eurobond Exemption. This allows an issuer liable to pay UK tax to make payments of interest on the listed securities gross without deduction for tax. In the UK, there are also capital gains and inheritance tax benefits to investing in shares listed on a recognised stock exchange such as the CSX. In designating the CSX as a recognised stock exchange under section 841 of ICTA it was necessary for the UK Inland Revenue to determine that:

    1. the CSX is a stock exchange undertaking the normal business of a stock exchange regulated as an investment exchange in a major economy or in a significant financial centre; and
    2. the Cayman Islands have proper and effective arrangements for financial regulation which meet internationally accepted modern standards in this area.
  4. The CSX is also an affiliate member of IOSCO and a full member of AIMA.


In accordance with its pragmatic, business oriented approach to regulation, the CSX is flexible as concerns the disclosure required in respect of an equity issuer and its securities in a listing document. The CSX listing rules are intended to provide investors with enough information to enable them to make an informed assessment as to whether or not to invest in the listed securities but without imposing unnecessarily onerous demands on an issuer.

The CSX must be of the view that the issuer and its business are suitable for listing and that there is an adequate and open market in the securities for which listing is sought.


The following special requirements apply to listing equity securities on the CSX issued by an issuing company.

Sufficiently liquid market (Rule 6.2(a) and (b))

The market value of the securities for which listing application for listing is made must be at least US$5 Million but further issues of securities of a class of securities already listed are not subject to this limit.

At least 25 percent of the class of securities to be listed must be in the hands of the public (persons who are not directors or substantial shareholders of the issuer or directors of a substantial shareholder of the issuer or an associate of any of them) with a minimum of fifty shareholders. A percentage lower than 25 percent may be acceptable to the CSX if the market in the shares will be sufficiently liquid and will operate properly with a lower percentage in view of the large number of shares of the same class and the extent of the distribution to the public or if the issuer is a specialist company.

History of operations (Rule 6.3)

The issuing companies must have an adequate operating record under substantially the same management. For this purpose, an adequate trading record will normally be at least three financial years in the case of equity securities or two years in the case of debt securities.

The normal requirement for three years prior operations can be varied for certain specialist issuers such as technology or mineral companies which are able to supply instead a satisfactory business plan and expert report on the company's operations.

The directors of the issuer must collectively have appropriate expertise and experience for the management of its business. The issuer must be able to demonstrate that it has arrangements in place to ensure that the private business interests of its directors are not detrimental to the business of prospects of the issuer.

6.3 - Issuers must have an adequate trading record under substantially the same management which must be of known character and integrity, and which collectively must have appropriate experience and technical expertise to manage the issuer's operations. For the purpose of this rule, an adequate trading record will normally be at least three financial years but the CSX may accept a shorter period for issuers which meet the CSX's definition of a specialist company, start-up mineral company or shipping company or in exceptional circumstances.

Financial information (Rule 6.5 - 6.8)

A new applicant must have published audited consolidated financial statements which cover at least three years and the period to which the accounts relate must not end more than twelve months prior to the date of the listing document.

It is possible for the CSX to waive this requirement in part if it 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 issuer and the securities for which listing is sought.

Working capital (Rule 6.9)

An issuer which is applying to list with less than three years trading record which is not a specialist company must demonstrate to the CSX that the working capital available to the group, including guaranteed proceeds from any new securities offering, will be sufficient for at least twelve months from the date of listing.

Directors (Rule 6.4)

The board of an issuer which is not a specialist company must have at least three directors, the majority of whom must be independent.

Independent auditor (Rule 6.10)

An applicant must appoint an independent auditor acceptable to the CSX to carry out the audit of its financial statements.

Transferability (Rule 6.11)

The equity securities must be freely transferable except to the extent that any restrictions are approved by the CSX.

Nil or partly paid shares may be subject to restrictions provided that the restrictions are not such as to prevent dealings in the securities from taking place on an open and proper basis.

Whole class to be listed (Rule 6.12 - 6.13)

All the securities of a class must be listed.

Clearing and settlement (Rule 6.15)

To be admitted to listing on the CSX, securities must have an ISIN and be eligible for deposit in an acceptable electronic clearing and settlement system including Clearstream, Euroclear, The Depositary Trust Company or any acceptable alternative system agreed in advance with the CSX.

Registrar and paying agent (Rule 6.16)

The Issuer must maintain a share transfer agent or registrar and paying agent in the Cayman Islands or other financial centre acceptable to the CSX.


1. Start-ups

An issuer which is a start-up must be able to meet the following requirements:

  1. provide a detailed business plan which must identify, as appropriate:

    1. strategic objectives;
    2. key products, services and markets;
    3. development milestones;
    4. current and expected market competitors;
    5. risks and assumptions upon which the plan is based; and
    6. details of reliance upon any key individuals;
  2. provide an explanation of capital expenditure plans and financial commitments together with the funding requirements of the business for a period of at least two years following the listing and a statement explaining how these requirements will be met from existing resources, any anticipated revenue, and the proceeds of any new securities offering at the time of listing;
  3. where appropriate the CSX may ask the issuer to provide a report by a suitably qualified independent expert assessing the viability of the issuer's commercial objectives and business plan;
  4. provide a confirmation that the issuer's directors, senior managers and substantial shareholders will not dispose of the issuer's securities for at least twelve months following admission to listing, without the prior approval of the CSX; and
  5. in addition, where the issuer's business relates to the development of innovative technology or products the issuer must demonstrate its ability to attract funds from qualified investors.

2. Mineral companies

An issuer which is a mineral company must be able to meet the following requirements:

  1. Demonstrate that where it does not hold controlling interests in a majority of the properties, fields, mines or other assets in which it has invested the issuer has rights to participate actively in their extraction whether by voting or other rights which give it influence in the timing and extraction of resources.
  2. Provide a formal legal opinion confirming or otherwise demonstrate the title to or validity and enforceability of any assets, licences or concessions.
  3. Provide a confirmation that the issuer's directors, senior managers and substantial shareholders will not dispose of the company's securities for at least twelve months following admission to listing, without the prior approval of the CSX.

3. Shipping companies

An issuer which is a shipping company must be able to meet the following requirements:

  1. Provide a formal legal opinion confirming or otherwise demonstrate the title to each material vessel directly or indirectly leased or owned.
  2. Provide a confirmation that the issuer's directors, senior managers and substantial shareholders will not dispose of the company's securities for at least twelve months following admission to listing, without the prior approval of the CSX.


Details of the listing documents disclosure requirements can be found in the Rules which are attached as an Appendix to this memo.


Essentially the listing process involves the review and approval of an offering document which must comply with the listing guidelines relevant to the particular securities.

The listing process can be summarised into a number of steps as follows:

Step 1 – Appoint Listing Agent and seek CSX's approval in principle to the listing

An issuer appoints Walkers as its listing agent responsible for the coordination of the listing process.

Walkers is responsible for guiding and advising the Issuer as to the application of the listing requirements. If there is any question as to the suitability of the transaction to list, we will consult with the CSX.

Step 2 – Initial Application

Walkers, as listing agent, in conjunction with the applicant's professional advisers, will prepare drafts of the listing application documentation for review and comment by the CSX.

An initial application is made to give the CSX an opportunity to comment on draft documentation.

Step 3 – CSX Review

Walkers acts as an intermediary between the CSX and the Issuer during the review process and is responsible for interpreting comments raised by the CSX and proposing amendments to the offering document to address such comments. Further submissions are filed with the CSX until such comments have been satisfactorily addressed.

Step 4 – Final Application and Approval of Offering Document

All applications for listing are dealt with by the CSX's Head of Listing, and the Listing Department of the CSX. Walkers agrees a date with the Issuer on which final approval of the offering document is sought. A number of support documents, which Walkers will have prepared during the review process, accompany the approval submission. The Market Committee of the CSX meets to consider applications for listing as often as necessary.

Step 5 – Admission to Listing and Trading

Following approval of the offering document, the CSX admits the securities to listing and trading. Once listed, an issuer is obliged to comply with the continuing obligations requirements of the CSX.

Listing Fees

CSX fees for admission of equity securities are:

According to monetary/market value of securities Initial Annual Total
(payable on application)
Up to $10 million US$10,000 US$10,000 US$20,000
Up to $100 million US$15,000 US$10,000 US$25,000
Over $100 million US$20,000 US$10,000 US$30,000

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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