Mauritius has established itself as a leading international financial services centre and has made it to the pantheon of successful developing economies by adopting international norms, best practices and promoting a business friendly environment. The Stock Exchange of Mauritius Ltd (the "SEM") is today one of the leading exchanges in Africa. The Official Market of SEM took off with 5 listed companies and as at December 2016, there were 51 companies representing a market capitalization of nearly US$ 9.2 billion. The ability to raise capital for expansion of a business is essential to every company. Mauritius is an increasingly attractive jurisdiction for capital raising. In this connection, we have listed below 10 key things to know on the regulatory framework applicable to initial public offerings ("IPOs").
- Regulation of Initial Public Offerings ("IPOs")
Offerings of securities is regulated in Mauritius and falls within the purview of the Financial Services Commission ("FSC") which is the regulator for non-banking financial services. The governing legislation is the Securities Act 2005 (the "Act") and the rules and regulations made thereunder, in particular, the Securities (Public Offer) Rules (the "Securities Law").
An IPO in Mauritius or from Mauritius triggers a prospectus obligation. A person cannot make an offer of securities to the public unless:
- the issuer is in existence at the time of the offer;
- the offer is made in a prospectus which complies with the Securities laws; and
- FSC has registered the prospectus.
A prospectus is valid for 6 months from the date of registration.
- Contents of the Prospectus
The overriding principle is that a prospectus must imperatively provide full, true and plain disclosure of all material facts concerning the securities to be offered and the person offering the securities, without omitting anything that would be required to allow investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the issuer of the securities, as well as the rights and liabilities attaching to the securities. A prospectus must be signed by at least 2 directors of the issuer.
The filing for registration of the prospectus with the FSC is MUR 100,000. Upon filing, the FSC issues an acknowledgement of filing. The FSC reviews the prospectus based on the disclosure requirements of the prospectus and not the merits of the offer and may grant a provisional registration. The FSC may also direct that amendments be made and upon all required changes requested by the FSC is made, a final registration is granted when the FSC is satisfied that the prospectus meets disclosure requirements.
- Liability concerning the Prospectus
An issuer has an obligation to keep the prospectus up to date during the offer period. Making a misleading or deceptive statement in a prospectus or omitting information or a statement from a prospectus is both a criminal offence and a civil wrong. As a result, any director of the issuer or other person making such a statement in the prospectus to the extent that the said person has consented to his statement being included may be held liable.
IPOs on the SEM must comply with the Listing Rules governing the admission, the continuing obligations and the enforcement powers of SEM. The listing process generally entails preliminary consultation with the SEM and thereafter submission of listing particulars to the Listing Division of the SEM who then advise/recommend to the Listing Executive Committee of the issuer's listing eligibility. Following this pre-approval stage, the final documents are submitted for final approval of the Listing Executive Committee.
Two markets are available for those IPOs seeking listing: the Official Market of the SEM and the Development & Enterprise Market ("DEM"), targeted towards small and medium-sized enterprises. Each market has different eligibility requirements.
- Requirements for listing
The key listing requirements for the Official List are: an adequate trading record with published accounts over three years immediately preceding the application for listing, an expected market capitalization of not less than MUR 20 million, and at least 25% of the shares to be listed in the hands of a minimum of 200 shareholders. It is possible for the SEM to waive certain conditions for listing.
With respect to a listing on DEM, the requirements are that the issuer should have a minimum market capitalization of MUR 20 million, at least 100 shareholders, a minimum of 10% of its shareholding in public hands and published financial statements for at least 1 year. Newly set-up companies which possess a sound business plan and demonstrate good growth potential may also be admitted for listing.
- Listing of specialist companies
The SEM offers a listing regime which caters for not only domestic issuers but also international issuers and a variety of other asset classes such as Mineral and Exploration Companies, debt securities, depositary receipts as well as the listing of securities of corporations holding a Category 1 global business licence ("GBL1"). GBL1s are Mauritius resident entities which propose to conduct business outside Mauritius. While issuers are expected to follow the provisions of the Listing Rules generally, there are some exceptions depending on the asset class. The SEM may also allow more relaxed rules regarding track record, market capitalization and number of shareholders.
- Ongoing obligations of an issuer post-offering/listing
An IPO or a listing on the SEM results in the issuer being a "reporting issuer" and becoming subject to certain ongoing reporting and disclosure obligations. For instance, an issuer is required to disclose/report to the FSC, the SEM and relevant stakeholders (through press releases) on any material change or development likely to have a significant influence on the value or market price of its securities and also make periodical financial disclosures such as quarterly and annual financial statements.
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.