Listings

WHY AND WHO SHOULD BE SEEKING TO LIST ON THE NSX?

The purpose of listing is very often, but not always to raise capital. Other examples of when companies apply for a listing are as follows.
Management involved in a buy-out of a company may examine the possibility of listing the company to fund part of the equity.
Companies that are growing rapidly and feel constrained by inadequate funding can issue shares to outsiders to improve gearing and provide funds for expansion.
Companies that wish to provide employees with a stock in ownership may wish to list.
Shareholders of companies who wish to realise some of their investments in the company.
Takeovers and mergers can be facilitated by a listing due to the transparency of a listed company's accounts as well as the continuous value placed on the shares by the market.
Parastatals or government controlled corporations may make use of the stock exchange to broaden their shareholder base.

BASIC REQUIREMENTS

The requirements of the NSX are as follows:

Share capital amounting to a minimum of N$ 1 million
A minimum of 1 million shares must be in issue
A profitable trading record for three years, with a current audited profit before tax of at least N$ 500 000 (Companies which do not comply with this requirement may list on the Development Capital Board).
An acceptable record in its field of business and adequate management to maintain business. Satisfactory evidence must be supplied to prove that the management as a whole has the required expertise.
Other criteria such as the vulnerability of a company to specific factors or events will be taken into consideration.
The company may not have qualified auditor's report for the preceding 3 years.
The Namibian Stock Exchange has established a Development Capital Board for listings of companies that do not comply with some or all of the above criteria. The purpose of this sector is specifically to facilitate listings of new ventures/businesses that do not have an adequate track record. (such companies should have a fully researched projects and at least 10% of the capital raised must be provided by management)

WHAT ARE THE ADVANTAGES FOR LISTING ON THE NSX?

FINANCING

The main reason for listing is usually to increase the equity base of a company, thus allowing for future expansions and growth without the interest burden associated with borrowed funds. Also, the availability of future funds is enhanced, as a rights issue may be used to secure further equity if the need arises. A listing can thus facilitate and lower the cost of raising fresh capital.
A listing creates the possibility of using the company's shares to finance acquisitions, as sellers are more likely to accept marketable listed shares in exchange for their investments.
A listing may make it easier to obtain other forms as finance, such as bank loans, as the company has shown that it is capable of meeting listing requirements, and its actions are subject to NSX and public scrutiny.
A listing provides a basis for the valuation of a company's shares, which is important for acquisitions, by the issue of shares.

ORIGINAL SHAREHOLDERS

All shareholders will benefit from the establishment of a market for their shares, leading to a potentially higher demand and higher prices than would have been the case in a limited market.
A listing enables original shareholders to realize part or all their holdings.
Original shareholders may benefit from the increased liquidity of their investment brought about by a listing.

EMPLOYEES

The implementation of share incentive schemes may result in a significant improvement of the motivation of both staff and management. A listing would make such a scheme more attractive to employees, and facilitate its operation.
The public attention focused on the company by the media may boost the morale of employees, as they share in the enhanced status of the company.

PUBLIC IMAGE

The enhanced status brought about by a listing may favourably affect relations with banks, suppliers, customers and the Government.
Stock exchange bulletins and reports in the financial press result in the greater publicity for the company and its product.

PROCEDURE FOR LISTING

All applications will always have to be brought through a Namibian sponsoring broker. (For a list of local stockbrokers, see section on "Buy and Sell & quot;)
Documentation is sent to the NSX, with copies of the application and other details as set out in the NSX check-lists (available on request). The NSX Listings Manager will vet documentation and only when s/he is satisfied the documentation is complete can it be forwarded to the Listing Committee. Seven days should be allowed for this.
Once the NSX Listings Manager is satisfied the documentation is complete, s/he will inform the Executive Committee of the application and inform the Chairperson of the Listing Committee to convene a meeting.
In the case of a dual-listing of a company already listed on another stock exchange, at least a further 21 days should be allowed for the Listing Committee to meet and give its approval if no serious problems arise. For a new listing, 63 days should be allowed for the Committee to consider documentation and give its approval if no major problems arise. (See below for longer procedure in the case of a public/private placing of shares before the offer).
After the Listing Committee has approved the application, then the Executive Committee should also give approval. Another one day should be allowed.
Only when the Executive Committee has approved, may a company announce the fact that it will list on the NSX, send out invitations, etc. Under no circumstances should any publicity go out before the final approval is received from the Executive Committee although a company may confirm that it has applied once a full application has been received. At least another seven days are usually required for the company to make preparations for the listing ceremony.

For detailed information, including the costs of listing, required documentation, etc., call +264-61-227647 or email John Mandy or Margot Gebhardt