As was widely expected in the market, ICAP Securities & Derivatives Exchange (ISDX) issued a consultation on 22 January 2015 proposing to overhaul its admissions criteria for companies applying for admission to the ISDX Growth Market as well as other changes to its Rules for Issuers and Corporate Adviser Handbook. Responses are due by 20 February 2015.
The consultation follows less than two years after ISDX launched
new admissions criteria for ISDX growth companies. It coincides
with the expiry of the 18 month period after the current Rules came
into force at which time existing issuers on the ISDX Growth Market
were supposed to be assessed against the existing Rules and, if
found to be non-compliant, their securities would have been
withdrawn from the market. On 12 January 2015 the exchange
announced that they would not proceed with the assessment of
issuers' compliance and that non-compliant issuers would not be
withdrawn from trading pending the review of the ISDX Rules. The
draft Rules for Issuers published in the consultation now propose
to remove the requirement for such an assessment entirely.
The ISDX is further proposing to remove the prescriptive
'eligibility matrix' for entry from the existing Rules and
to replace it with the following admissions criteria:
- A minimum one year's trading history;
- 10% free float of shares; and
- One year's working capital.
The exchange is given discretion where an issuer does not meet
the 10% free float requirement and may grant a derogation from the
requirement to publish or file audited financial statements
covering a 12 month period demonstrating the minimum one year's
trading history.
As part of the consultation the ISDX is also proposing to amend the
Corporate Adviser Handbook. In relation to due diligence, the
Exchange is planning to replace the current prescriptive regime
with a draft practice note on due diligence providing guidance for
corporate advisers as regards due diligence on admission, legal and
financial due diligence and due diligence of directors.
The proposed move away from a prescriptive to a risk-based
approach, especially in relation to due diligence will be more
suitable for companies looking to access the ISDX Growth Market and
avoids the risk of it becoming a box-ticking exercise for companies
and advisers.
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