NASDAQ DUBAI PROPOSES RULE CHANGES TO ENCOURAGE RETAIL IPOs, ATTRACT SMALL AND MEDIUM ENTERPRISES AND FAMILY COMPANIES
* Prospectus disclosure required for equity IPOs
* Flexible criteria to attract family and small cap companies
NASDAQ Dubai today announced proposals for wide-ranging changes to its listing rules, including steps to increase participation by individual investors in initial public offerings (IPOs).
All IPOs would be required to reserve at least 10% of the offer for individual investors, or else have a minimum of 400 institutional or individual security holders, under the proposals. The current rules contain no minimum requirements.
Jeff Singer, Chief Executive of NASDAQ Dubai, said: “These proposals would bring new dynamism to our market by ensuring that IPOs have a broad investor base from day one and can be easily bought by individual and other investors after listing. We are also proposing new and more flexible rules aimed at attracting family companies small and medium enterprises. The changes would promote economic activity as well as create new investment opportunities.”
Under the proposals, NASDAQ Dubai’s existing rule that accepts companies with a minimum market capitalisation of 50 million dollars would be retained. In addition, a new rule would allow listings by companies with a market capitalisation as low as 20 million dollars, provided that in such cases the pre-IPO shareholders undertake not to sell their shares within a year of the IPO.
The rule changes would also allow companies to list without any minimum market capitalisation, provided they meet specific criteria of profitability (of 1 million dollars for the most recent 12 months, and an aggregate of 10 million dollars over the most recent three years), or else hold net tangible assets of 10 million dollars. Specific rules are proposed for listing mining, oil and gas companies.
The exchange’s existing free float requirement of 25% would be retained, as would its rules allowing bookbuilding.
Lanae Holbrook, Head of Market Regulation of NASDAQ Dubai, said: “While accommodating a wider range of issuers, the exchange would maintain the international regulatory standards that underpin its market. Supported by the merger last July of NASDAQ Dubai’s liquidity pool with that of Dubai Financial Market (DFM), the changes would strengthen Dubai’s growing role as a listing and trading hub.”
NASDAQ Dubai outsourced its trading and other operational functions for equities to DFM in July 2010, enabling DFM’s more than 500,000 individual investors to trade on the same platform as NASDAQ Dubai’s institutional investors.
In addition, the new proposals would require all equity IPOs to be offered via a prospectus in the Dubai International Financial Centre (DIFC). The prospectus would be filed with Dubai Financial Services Authority (DFSA), the regulator of NASDAQ Dubai. This structure is in line with international standards and ensures that investors receive adequate disclosure about issuers.
The proposed rule changes were published today on NASDAQ Dubai’s website for public consultation lasting 60 days. NASDAQ Dubai welcomes feedback on the proposals.
The changes would also promote transparency and investor protection, including a requirement for equity issuers to publish financial results quarterly, instead of half yearly as now.
The rule changes would also strengthen NASDAQ Dubai’s framework for listing exchange traded funds (ETFs) and Real Estate Investment Trusts (REITS). The rules for listing exchange-traded commodities (ETCs) and Sharia securities have been revised.
To support NASDAQ Dubai’s debt sector, issuers of Sukuk and conventional bonds would be encouraged to obtain an investment grade credit rating before listing.
The new rules would also streamline the listing approval process, to enable NASDAQ Dubai to normally make its decision within one week of receiving all application documents.
NASDAQ Dubai expects to finalise its new listing rules after studying feedback from the public received during the consultation period. They will be the first revision to the rules since the exchange opened in 2005.