As of 1 June 2012 the Prague Stock Exchange has created a special market segment – START. The START market is regulated only by the Prague Stock Exchange and its rules. The aim of the START market is to provide small and medium–sized companies with easier access to capital to aid their potential growth.

Unlike entering the main market of the Prague Stock Exchange, there are no requirements for the START market concerning the company existing for a minimum of three years. In order to operate on the START market the company shall: (i) produce an information document or a prospectus for the issue, (ii) regularly file and publish annual reports and all prices – sensitive information and (iii) pay an admission fee of CZK 10,000. There are no annual fees required for the companies operating on the START market.

In order to enter the START market, the company should contact one of the Guarantors (a list of Guarantors is to be found on the Prague Stock Exchange's website). The Guarantor provides a guarantee to the Prague Stock Exchange concerning the company's ability to comply with all obligations of a publicly traded company arising under statute. Furthermore, the Guarantor shall once a year prepare an analytical report which compares the company's latest economic result with their business plans presented upon their market launch.

After contacting the Guarantor, the company shall conclude an agreement with one of the Guarantors who will cooperate with the company in the preparation of an information document or prospectus for the issue. Following the conclusion of the agreement, the company shall file an application with the Prague Stock Exchange for the admission of the issue on the START market. The process of admission (the time between filling the application with the Prague Stock Exchange and approval thereof) shall not take more than ten days.

Once the company has entered the START market, the Guarantor will start providing the issuer with the so – called "Issue Patron's service". The main purposes of the Patron's service are (i) to maintain the conditions for the liquidity of the issue and (ii) to make sure that the supply and demand prices are maintained during the course of a trading day.

As mentioned above the START market focuses primarily on small and medium-sized companies and gives them an opportunity to access capital in an easier and a more comfortable way. As the information on all stock issues traded on any of the Prague Stock Exchange markets are available to all investors worldwide (through the agencies using the trading data), the company may become known not only in the Czech Republic but wherever it operates.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 25/06/2012.