An introduction to Prospects MTF
As one of Malta's leading accountancy and advisory companies, Grant Thornton is able to offer such service which covers not only all the requirements as set by the Malta Stock Exchange, but would also follow the process through from origination, to admission and subsequent ongoing compliance so as to adhere to the Prospects' Rules. Grant Thornton can also supplement its services by offering assistance with all taxation, legal and accounting requirements.
As of 2016, small and medium-sized enterprises (SMEs) in Malta can access the capital market through Prospects MTF, a multilateral trading platform of the Malta Stock Exchange. Designed specifically for SMEs, Prospects MTF offers a cost-effective opportunity for entities seeking to raise up to €8 million per issue.
With over ninety per cent of all companies in Europe falling under the SME category, one of the challenges that these companies face is the difficulty to access capital. The same applies to Malta and whilst the island has its fair share of smart and industrious entrepreneurs, their capacity to grow, either organically or through merger and acquisition, is very often curtailed due to difficulties faced in accessing capital.
Prospects MTF can be the perfect venue for SMEs to raise capital either by way of equities or bonds. Prospects MTF aims at facilitating access to fund raising, potentially offering a more cost-effective and easier-to-access alternative to other traditional means.
The costs associated with admission on Prospects MTF are significantly less when compared to the costs incurred by companies listed on the main market of the Malta Stock Exchange.
Besides Prospects MTF's cost-effectiveness, the time to market is another advantage. It is envisaged that the admission time is around 12 weeks, covering the compliance, preparation and review time. In order to be admitted on Prospects MTF, the applicant will need to appoint a Corporate Adviser to carry out the necessary due diligence on the applicant, also ensuring that proper compliance, transparency and accounting protocols are adhered to.
Prospects MTF is a Maltese market, however the financing platform is also available for overseas companies seeking funding for their business ventures, and in fact foreign companies have been admitted on Prospects MTF.
With Malta's positioning as a reputable financial services provider, a well-qualified, English speaking workforce, excellent economic growth prospects and a sound banking system, Malta is the ideal choice for foreign SMEs looking for a trusted and affordable financing mechanism.
Strict guidelines are applied to ensure proper uptake and compliance by the applicant, and to ensure proper protection of the investor. Prospects MTF is fully compliant with the Markets in Financial Instruments Directive (MiFID) which harmonizes the regulation of investment services and Multilateral Trading Facilities (MTFs) at European Union level.
Six key benefits when raising finance with Prospects MTF
- Cost effective access to finance
With an admission fee set at €5,000 plus document handling fee of €3,000 (excl. VAT), on-going annual fees starting from €3,500 and capped at €29,000 (excl. VAT), this form of financing is a very favourable alternative for SMEs.
- Fast turnaround
The admission process is managed and regulated by the Malta Stock Exchange and approval for admission is obtained directly from the Malta Stock Exchange's Prospects Committee. Subject to the application and admission of documents being complete and satisfactory, the Malta Stock Exchange shall approve or refuse an application within ten business days from full submission.
- Simplified admission requirements
A simplified admissions document, referred to as the Company Admission Document, can be submitted instead of a Prospectus. Such document is drafted and submitted by the Corporate Advisor.
- No minimum value of IPO
No minimum percentage of shares required to be floated, with a maximum capping of €8 million.
- Appointment of a Corporate Advisor
In order to be admitted on Prospects MTF a Corporate Advisor must be appointed, whose role is to draft and submit all relevant documents, as well as to carry out the necessary due diligence as highlighted in the Prospects Rules.
- International admission
Prospects MTF is a Maltese market, operating under a MIFID MTF structure, but which is accessible to both Maltese as well as non-Maltese companies seeking to be admitted.
Eligibility to Prospects MTF
(i) The entity must be an SME as defined by Section 2 (I) of the Companies Act, Chapter 386 of the Laws of Malta. Small and medium-sized enterprises or SMEs means companies which, according to their last annual or consolidated accounts, meet at least two of the following three criteria:
a) an average number of employees, during the financial year, of less than 250;
b) a total balance sheet not exceeding €43 million;
c) an annual net turnover not exceeding €50 million.
(ii) The company must be a public limited company with a minimum issued and fully paid up share capital of €46,588.
(iii) Capping of financing is limited to €8 million per issue.
(iv) Appointment of a Corporate Advisor.
(v) Submission of all required documentation as indicated in the Prospects Rules.
Cost of admission and annual listing costs
Admission fees as well as annual listing costs are significantly less when compared to the costs incurred by companies trading on the Malta Stock Exchange, as set out below:
€5,000 (excl. VAT) applicable for admitting securities to Prospects MTF. An additional document handling fee of €3,000 (excl. VAT) should apply when the proposed issue is secured by tangible assets.
Where the MSE requires additional skills and resources in order to process an admission application, additional costs may apply.
Our role as your Corporate Advisors
As your corporate advisors we would be responsible to ensure that your company achieves the right level of corporate governance and transparency. We will also assist with applying for admission to Prospects MTF through the submission of the Company Admission Document and any other documentation required by the Prospects Rules. Our role is also that of carrying out the necessary due diligence processes on the applicant (including owners, directors and key management personnel), as well as ensuring that proper compliance, transparency and accounting protocols are adhered to. As your corporate advisors we will maintain independence, impartiality, objectivity, confidentiality and ethical standards all throughout our engagement.
At Grant Thornton we hold a sound international standing with a demonstrable and credible track record of working with some of the world's most dynamic companies. We are an advisory firm which can be more than just your corporate advisor, offering you a depth and breadth of advisory solutions to help deliver your company's growth aspirations. Grant Thornton can provide a full range of services connected with the Malta Stock Exchange's listing, as well as assistance with all taxation, legal and accounting requirements. We are highly experienced in the field of raising finance, with a deep involvement and understanding of the local market. We also hold close relationships with key stakeholders, including both the financial intermediaries and the regulators.
We guarantee direct and active involvement from senior team members and partners. Our team of trained accountants and lawyers adopt a hands-on approach, complemented by rigorous internal training programmes and secondments. Thanks to this, our organisation has accumulated an excellent knowledge base and expertise in the field of raising finance, whilst staying abreast with all market trends.
Our team of marketing specialists will also assist to make the admission of your securities a success by better communicating your company's value story to the market.
We have more than 53,000 Grant Thornton people across 135 countries, working with privately owned, publicly listed and public sector clients each day. Our strong global organisation combined with our understanding of both the local market and dynamic economies across the world means Grant Thornton can support you no matter where you choose to do business.
The admission process:
- Engagement - 2-3 Weeks
- Carrying of due diligence on the company, its shareholders, directors and key management personnel
- Appointment of Corporate Advisors and briefing sessions
- Setting of timetable and deliverables.
- Preparation - 4-8 Weeks
- Advice on the ideal corporate structure and financing options, whilst ensuring that the company satisfies all eligibility requirements
- Advice and support of the drafting of an investment teaser and setting meetings with brokers in order to appoint a placement agent
- Advice and support on the drafting of the Company Admission Document and all the required documents
- Preparation of accounting and other disclosure information
- Setting of procedures to ensure compliance and disclosure, where/as required
- Notifying the MSE of the company's intention to submit an application for admission on Prospects MTF at least four weeks before submitting the application.
- Application - 1-2 Weeks
- Compilation of all required documentation
- Submission of final application to the MSE for admission on Prospects MTF
- Assistance with the preparation of marketing documents for investors.
- Approval - 1-2 Weeks
- Review of the application by the MSE Prospects Committee
- Approval of application subject to company meeting all requirements.
- Opening of trading
Additional benefits that Prospects MTF offer:
- Admission to Prospects MTF will raise brand awareness and prepare for the issue, or sale, of equity as part of a succession planning process
- SMEs will enjoy the benefits of good corporate governance and the enhance efficiency and effectiveness that this brings
- Admission to Prospects MTF opens up the opportunity of eventual migration to a listing on a regulated market.
In its role as Corporate Advisor to prospective Issuers on Prospects MTF, and in line with Rule 3.01.09.06 under Chapter 3 of Prospects MTF Rules, Grant Thornton Limited declares that it will at all times maintain:
(a) Independence, impartiality, objectivity, confidentiality and ethical standards ensuring that it can identify, mitigate and, if not possible to eliminate, disclose any conflicts of interests and how such conflicts are managed;
(b) To the extent allowed a process by which the Corporate Advisor or its Connected Person may invest or trade in securities issued by their client Prospects MTF Companies and the immediate disclosure of any such investment or trading therein; and
(c) Quality assurance in respect of its services to client Prospects MTF Companies.