IPO(s) and Public Listings on the BSX
Initial Public Offering
An economic venture seeking to raise capital from the public is required to publish and file a prospectus in Bermuda with the Registrar of Companies or obtain a listing on an approved stock exchange. Bermuda companies seeking to launch an Initial Public Offering (IPO) are required to comply with the prospectus requirements prescribed by Part III of the Companies Act, 1981 which regulates the offering of shares to the public by Bermuda companies.
The prospectus must contain material information on the company and other information that a reasonable investor would need to know when considering an investment in a security, such as details on promoters, officers and directors; the business of the company; the minimum subscription that must be raised; any rights or restrictions on the shares; all commissions payable on the sale of the shares; any shareholding in the company of an officer; financial statements (audited); the date and time of the opening and closing of subscription lists; use of Proceeds and working capital.
If a prospectus has been approved by an appointed stock exchange or competent regulatory authority located outside Bermuda, it can be filed in Bermuda without having to satisfy any additional legal requirements.
Public Listings on the Bermuda Stock Exchange
The Bermuda Stock Exchange is a financial institution on island that is regulated by the Bermuda Monetary Authority. A listing on the Bermuda Stock Exchange has many advantages to issuers, institutions and investment houses, including:
- International public confidence in the banking and regulatory environment in Bermuda gives added prestige to issuers that have gained approval for listing on an exchange.
- The broad exposure of listed securities that are marketed worldwide.
- A wide security holder base, often from multiple domiciles.
- It offers lenders better collateral for loans than unlisted securities and better trade credit if the market places a premium on the securities above book value.
- It is more practicable for the listed company to add warrants or conversion features to a subsequent debt issue, thereby lowering its cost of borrowing.
- Institutions favour listed securities. For example, institutional investors such as insurance companies and mutual funds control large pools of investment funds. Those tend to deal in large blocks of securities and therefore a listed company enjoys access to an important source of investment funds.
To secure a listing on the Bermuda Stock Exchange, a company (if not already listed on one of the Appointed Stock Exchanges outside Bermuda) must make an application to the Exchange through one of the BSX-approved sponsors, who are generally trading members or financial institutions. The application for a listing should be accompanied by a prospectus containing information on the promoters, directors, officers, business activities, up-to-date audited financial statements, details of classes of shares or units and conditions attaching to such shares or units and the total number of shareholders or investors (minimum 25).
For assistance with IPOs and Public Listings, please contact us. For further information on IPO(s) and Public Listings on the BSX, please review our Memorandum on IPO(s) and Public Listings on the BSX.