Listing on Pakistan Stock Exchange Small and Medium Enterprises Board Dream Big and Make it Happen!
Contents of the Presentation: Section 1: Introduction Section 2: PSX Listing Requirements Section 3: SME Board Listing Requirements Section 4: Post Listing Section 5 :Listing Fee Section 6: Benefits And Relaxations Section 7: SME Listing Procedure Section 8: De-Listing Section 9: FAQs 2
Section 1 Introduction 3
Importance of SMEs to the Pakistani economy There are SMEs have the potential to SME output Approximately 3 drive / stimulate growth contributes 40% Million SMEs in provided they are given an to the annual Pakistan GDP enabling platform to flourish . SME Output contributes 25% to the total exports. SMEs employ 80% of the non-agricultural labor force 4 Economic Survey of Pakistan 2017
Section 2 PSX Listing Requirements 5
What is the Eligibility Criteria? Main Board SME Board • Minimum post issue • Minimum post issue paid up capital of paid up capital of Rs.25 Rs.200 million million 6
Section 3 SME Board Listing Requirements 7
What are the SME Board Requirements? PSX SME Board - a platform for QIBs: SMEs to raise capital to fund growth At least 20% of post Financial Institutions; and expansion Insurance Companies; issue paid up capital Mutual/Pension Funds to be offered ONLY HNWIs: to QIBs and HNWIs Investor bidding at least through private Rs.1 Million placement. Minimum five initial subscribers Minimum Bid size of each initial SME: A public company having a post issue Paid Up Capital subscriber: PKR 1 Million PKR 25 -200 Million 8
What are the mandatory requirements? Financial Operational SME Website Statements Requirements • Must prepare periodic • Must contain basic • Must be in business for at Financial statements business information least three years • Must audit statements by • Must contain Information • Must be profitable for at QCR rated chartered Memorandum least two preceding years accountants before getting listed • Must post annual, half-year • Must publish on the quarterly accounts website 9
What is the Listing Requirement? • IM shall be circulated to QIBs and HNWIs. Information • IM shall be placed on the website of the SME, the Exchange and the Advisor/Consultant to the Issue. Memorandum • Minimum information / disclosures required in the IM: Schedule-I of Chapter 5A of PSX Rule Book. • SME required to disclose and disseminate Price Sensitive Information. Compliance • CEO of the SME responsible for regulatory compliance: Must submit compliance report at the end of each half year. • If SME violates any provision of SME Regulations, Exchange may take (Post Listing) any disciplinary action such as: Imposing a fine, Placing SME in the Defaulters’ Segment, Suspend trading, etc.
Section 4 Post Listing 11
What happens Post Listing? Trading shall take place through KATS. Sponsor Shareholding Lock-in 100% (Entire) holding blocked for In the secondary market, the 1 year. minimum order size for trading 25% holding blocked for 3 years. shall be PKR 100,000. SME to maintain a minimum free Clearing, settlement and risk float of 20% of post issue paid up management through NCCPL. capital. 12
Section 5 Listing Fee 13
What is the Listing Fees? • 0.05% of Post Paid Up Capital Initial Listing Fees • Capped at PKR 50,000 • PKR 20,000 on Paid Up Capital up-to PKR 50 Million Annual Listing Fees • PKR 30,000 on Paid Up Capital between PKR 50-100 Million • PKR 40,000 on Paid Up Capital exceeding PKR 100 Million 14
Section 6 Benefits And Relaxations 15
Why should you list on PSX? Growth and expansion needs Invest or carry out merger & acquisition plans Raise Long Term Invest in new projects Low-cost Capital Enhance current capacity Diversify business Meets working capital requirements Publicly listed companies achieve a higher valuation than private enterprises since greater disclosures Higher Valuation and market pricing lead to a companies market capitalization/worth. Reduces long term liabilities by enabling: Balance Sheet • Payment of its long term loans Optimization • Reducing its dependence on debt
Why should you list on PSX? IPOs add a level of prestige to a Company • Enhances Company’s Public • IPOs can be used as a branding and marketing Profile tool as they attract media interest, attention and scrutiny A listed company has to disclose and disseminate all material and price sensitive financial information Improved Relations with which adds to: Bankers and Suppliers • The business transparency • Improved relations with Bankers, lenders and clients Listing bridges any discord that may arise during a Business Continuity and transition from the first generation to the next, by Succession Planning introducing • Corporate Governance Structures • Succession Planning 17
Why should you list on PSX? Liquidity Listing brings in liquidity and ready marketability of the company’s securities. Attract and retain the best talent for your company HR Capital because of enhanced reputation. Public listing creates a market for the Company’s Feasible and Effective shares and sponsors can sell their shares in the Exit Strategy secondary market. 18
What are the extra benefits and relaxations for SME? • 20% on tax payable in the first tax year of listing Tax Benefits • 20% on tax payable in the subsequent tax year • 10% on tax payable in the following two tax years respectively SME need not comply with the • Provisions of Chapter 5, “Listing of Companies and Securities Regulations” of PSX Rule Book . Relaxations • Code of Corporate Governance 19
Section 7 SME Listing Procedure 20
Procedure to get your company listed on the Exchange? • Your company chooses a consultant, who does the initial due diligence in regards to financials, corporate structuring, legal and regulatory requirements etc., and formulates Appoints Advisor and Consultant your company’s business plan moving forward. • The business case is evaluated by the consultant using different methodologies and its Business Plan evaluation demand is gauged for the “Final Offer Structure” to get maximum value for the shares to be offered. • After the terms of underwriting have been finalized. bankers to the issue and share registrar are appointed. Finalization of Underwritings • The Central Depository Company (CDC) checks for eligibility and induction into their virtual share depository system. • Finalize pre-IPO investors with the help of your consultant • Submit requisite regulatory documents for PSX and SECP and obtain the necessary Regulatory Filings approvals. • Conduct road-shows, investor presentations and other marketing and sales events to create Marketing awareness about the upcoming IPO. • Share registrar and balloter collect subscription results form all bankers to the issue. Subscriptions and Balloting • The bank will transfer the money from the subscriber to the issuers. Post IPO Clearance • PSX allocates dates for trading of shares on the Exchange and trading begins. 21
Section 8 De-Listing 22
What will be your Exit Strategy? Involuntary De-listing Migration to Main Board Voluntary De-listing Your company can be removed from When paid up capital exceeds PKR You can delist your company through the listed companies list due to 200 Million And SME has been buy-back of shares by the sponsors violation of PSX’s Listing of listed on the SME Board for at least at a price approved by the Exchange Companies & Securities Regulations Three years 23
Contact Information Raeda Latif General Manager - Marketing and Business Development Email: raeda.latif@psx.com.pk Help Desk (92-21) 111-011-122 Telephone: +92-2135274580 Ext: 4580 Karachi Office Ext: 4580, 4582 Lahore Office Ext: 4653 Haris Saeed Islamabad Office Ext: 4666 Business Development Manager Email: haris.saeed@psx.com.pk Web: psx.com.pk Telephone: +92-2135274574 Ext: 4582 Email: listing@psx.com.pk Mariam Mehtab Marketing and Business Executive Email: mariam.mehtab@psx.com.pk Telephone: +92-2135274572 Ext: 4572 24
Contact Information Serving Investors & Industry Stock Exchange Building, Stock Exchange Road, Karachi-74000, Pakistan. Tel: (+92)111-001-122, Website: www.psx.com.pk
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