PROSPECTS – a new tool for SMEs to access capital markets
Small and medium-sized enterprises (SMEs) represent a substantial percentage of the total businesses in Malta. In the EU the percentage is as high as 99% of all the businesses, so it is crucial that measures are undertaken to support their growth and innovation. However, one of the most important issues facing SMEs all over the European Union is their difficulty to access finance.
As from 2016, Maltese SME’s can access the capital markets through ‘Prospects’ - a platform operated by the Malta Stock Exchange (MSE) which is specifically designed for SMEs. ‘Prospects’ offers a cost-effective opportunity for entities looking to raise from €1 million up to €5 million per issue. ‘Prospects’ opens up new capital market opportunities, create economies of scale and will help businesses become more competitive and sustainable.
‘Prospects creates an opportunity for SMEs to access capital markets in a relatively easy and efficient way and to benefit from the advantages which so far, have been available only to much larger companies.
Maltese businesses mainly consist of family businesses and such businesses have passed on from one generation to another for a number of years. However, it is a well known fact, that on average, most businesses do not manage to make it past the third generation. The reason being that such family owned businesses will not manage to grow further due to the limited access to finance and cost effective capital.
Furthermore, Maltese family owned businesses are reluctant to allow third parties to invest in their business, fearing that they will not manage to retain control over what they have built over the years. On the other hand, they also fear the fact that their descendants might not have the knowledge, the expertise, the ability and the finance to continue growing their business. Succession planning is an important part of a business strategy to grow and to ensure continued growth.
For such Maltese SME’s, ‘Prospects’ can be the perfect opportunity to raise capital either by issuing new equity or bonds. ‘Prospects’ aims at facilitating access to fund raising, potentially offering a more cost-effective and easier-to-access alternative to other traditional means, such as bank loans. Moreover, admission to ‘Prospects’ opens up the opportunity of eventual listing on the main market.
Costs and time
The application fee for admission to ‘Prospects’ is €5,000 whilst annual fees applicable for companies with a market capitalisation of up to €5 million, is €5,000 per annum. Consequently, admission fees as well as annual listing costs are significantly less when compared to the costs incurred by companies whose stocks and shares are traded on the main market of the Malta Stock Exchange.
Besides costs, the time to list the equity or bonds is another important factor. It is expected that the listing time on ‘Prospects’ will be between four to twelve weeks, taking into account the compliance requirements, preparation and submission to the MSE of the application and supporting documentation and discussions with the MSE amongst other things.
The Corporate Advisor
For a company to list on ‘Prospects’, it must appoint a corporate advisor who would have already been approved by the MSE. The role of such a corporate advisor is to draft and submit the Company Admission Document, prepare all the required relevant documents, as well as carry out the necessary due diligence checks on the applicant SME. The corporate advisor must ensure that the SME company will at all times have proper compliance procedures in place, it is transparent and all accounting, legal, corporate and regulatory rules are adhered to.
‘Prospects’ is not only available to Maltese companies, but is also available for foreign companies seeking alternative finance. Malta has a number of advantages which attract other foreign SMEs. These include a tax efficient system, a leading global financial centre, a good education and health system, a stable Government, EU membership and a member of the Euro zone, an English speaking work force, reasonable costs and fees, a good pool of professional people in the legal, tax and finance sectors together with a sound banking system amongst other factors. Malta is the ideal choice for foreign SMEs to relocate their business and workforce to.
The company must be an SME as defined by the European Union
The Initial Public Offering shall not exceed €5 million
The issue is to be subscribed from less than 150 investors from any single jurisdiction
A Company Admission Document, together with the other supporting documentation including a business plan must be submitted
The applicant for ‘Prospects’ must have a minimum issued share capital of €46,587
How can we help?
ACT Prospects Limited, a company which forms part of the ACT group of companies has been approved by the Malta Stock Exchange to act as a Corporate Advisor on its ‘Prospects’ platform.
ACT is able to offer to a one stop shop to advise and assist SME’s in listing their bonds and shares and obtain new financing by means of ‘Prospects’. We will be able to follow through the whole process and then assist in the various compliance requirements. Through its in-house expertise, ACT also offers accountancy, tax, corporate, business advisory services and other subsequent ongoing compliance services so as to be able to adhere to the ‘Prospects’ rules.
For further information, please contact the firm’s tax and corporate services partner Stephen Balzan on firstname.lastname@example.org.
Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria. For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on email@example.com.
This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.
29th March 2017
Maltese companies are subject to tax at the rate of 35% on their world wide income and capital gains. Malta grants various fiscal incentives to both companies and their shareholders upon distribution of a dividend. Malta is a membe...Learn More
Setting up a Company
Setting up a company in Malta is a relatively straight forward procedure and can be set up within 2 working days, provided we are in receipt of all the information, funds and due diligence documentation we need. The Act that regulates Malte...Learn More
Taking up Residence
Warm climate, friendly people, excellent communication infrastructures, low criminality and many other features of the Maltese islands have made Malta an excellent destination for people to take up residence in. Moreover low rates of taxati...Learn More
Malta was the first EU Member State to specifically regulate the remote gaming industry in 2004 and has ever since established itself as one of the prime jurisdictions for remote gaming operators. The Malta Gaming Authority (“MGA”) is the regulatory of gaming in Malta. The success o...Learn More
Malta has become a destination of choice for the setting up of Payment Institutions (also referred to as Payment Services Providers or PSPs). A number of advantages has contributed to this success, mainly but not limited to the fiscal incentives granted not only to the payment institutions ...Learn More
Electronic Money Institutions
Malta has recently seen an increase in the number of Electronic Money Institutions (EMIs) looking to set up their operations in Malta. This has been largely due to the growth in the e-commerce and the i-gaming industries. Such EMIs are regulated by the Financial Institutions Act and t...Learn More
Initial Coin Offering (ICO) Services
Malta has always been on the forefront of technology and innovation. In the past months, a number of initiatives have been launched, aimed at establishing an innovative and attractive regulatory framework for entities operating in blockchain (and distributed ledger technologies), virtual cu...Learn More
Prospects – Services of a Corporate Advisor
‘Prospects’ is a new platform set up by the Malta Stock Exchange in line with its commitment to open up new capital market opportunities, create economies of scale and to afford businesses more competitiveness and sustainability. Through ‘Prospects’, SME’s wil...Learn More
Assistance to Family Businesses
Malta has recently introduced legislation to encourage good governance in the management of family businesses, to assist family businesses to operate their business in an efficient way and to assist such family businesses to transfer their business from one generation to the other. Malta is...Learn More