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The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
The Bermuda Stock_Exchange.Conyers Dill Pearman
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The Bermuda Stock_Exchange.Conyers Dill Pearman

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The Bermuda Stock_Exchange.Conyers Dill Pearman, parxtc@gmail.com

The Bermuda Stock_Exchange.Conyers Dill Pearman, parxtc@gmail.com

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  • 1. The Bermuda Stock Exchange
  • 2. ForewordThis Mem orand u m has been p rep ared for the assistance of anyone w ho requ iresinform ation abou t the Berm u d a Stock Exchange. It d eals in broad term s w ith theBerm u d a Stock Exchange’s requ irem ents for listing and other ru les. It is not intend edto be exhau stive bu t m erely to p rovid e general inform ation to ou r clients and theirprofessional advisers.We recom m end that ou r clients seek legal ad vice in Berm u d a on their sp ecificproposals before taking any steps to implement them.This Mem orand u m has been p rep ared on the basis of the law and p ractice as at thedate referred to below.Conyers Dill & PearmanJuly 2012 Page 2 of 15
  • 3. TABLE OF CONTENTS1. INTRODUCTION1.1 About Bermuda1.2 About the Bermuda Stock Exchange1.3 Benefits2. LISTING2.1 BSX Listing Regulations (a) Section 1 of the BSX Listing Regulations: All Issuers (b) Collective Investment Vehicles (c) Specialist Debt Listings2.3 Listing Application2.3 Prospectus Requirements2.4 Timing3. FOREIGN DIRECT INVESTMENT IN BERMUDA4. CONTINUING OBLIGATIONS5. SECONDARY LISTINGS6. THE MEZZANINE MARKET7. CONCLUSION Page 3 of 15
  • 4. 1. INTRODUCTION1.1 About BermudaMod ern com p any, tru st, banking, insu rance and other related law s have m ad eBerm u d a a lead ing offshore financial centre. The governm ent’s attitu d e tow ard s andop en com m u nication w ith the p rivate sector encou rages the p rom otion andm aintenance of Berm u d a’s offshore bu siness. The island enjoys a sop histicatedtelecom m u nications system , an abu nd ance of p rofessional service p rovid ers, as w ellas economic and political stability.1.2 About the Bermuda Stock ExchangeThe Berm u d a Stock Exchange (the “BSX”) w as established in 1971. The BSX is a fu llm em ber of the World Fed eration of Exchanges and enjoys recognition by thefollowing regulatory bodies: the U.S. Secu rities and Exchange Com m ission (“SEC”), as a Designated Offshore Securities Market (DOSM); the Berm u d a Monetary Au thority, as a Recognised Investm ent Exchange and an Approved Stock Exchange; the London Stock Exchange, as a Registered Organisation; IOSCO, as an Affiliate Member; and the Financial Services Authority in the UK, as a Designated Investment Exchange.In ad d ition, the BSX is recognised u nd er Au stralia’s Foreign Investm ent Fu nd s (FIF)taxation rules. Page 4 of 15
  • 5. The BSX is the worlds largest offshore, fully electronic securities market offering a fullrange of listing and trad ing op p ortu nities for international and d om estic issu ers ofequ ity, d ebt, d ep ository receip ts, insu rance secu ritization and d erivative w arrants.The BSX is internationally recognised as a p articu larly attractive venu e for the listingof hedge funds, fixed income structures and investment fund structures. A significantfactor in the BSX’s grow th and su ccess is its focu s on p rovid ing u niqu e p rod u cts forthe offshore m arket, su ch as its Mezzanine Market, information abou t w hich isprovided below.The BSX has a com p rehensive regu latory regim e (the “Regu lations”) w hich p rovid esclear gu id ance on the listing p rocess and ongoing requ irem ents of the exchange. Inad d ition, the BSX retains consid erable d iscretion to w aive certain of theirrequ irem ents or to take a m ore flexible or innovative ap p roach to any p articu larmatter as may be appropriate.1.3 BenefitsThere are a nu m ber of benefits to listing on the BSX. The BSX em p loys a fu llyau tom ated electronic trad ing system (Berm u d a Electronic Secu rities Trad ing or BEST)based on a central lim it ord er book w hich allow s trading m em bers to trad e bothequity and fixed income securities on an equal, real-time first come, first served basis,making trad ing efficient, tim e sensitive and cost effective. Throu gh the Berm u d aSecu rities Dep ository (the “BSD”), shares can be d em aterialised , elim inating the needfor p hysical settlem ent. Once a trad e is execu ted , trad e inform ation is d issem inatedelectronically to key financial inform ation p rovid ers, inclu d ing Bloom berg andReu ters, for w orld w id e d istribu tion. Another benefit is the BSX’s com m erciallysensible regu latory environm ent w hich m akes it cond u cive to new and innovativep rod u ct listings, esp ecially institu tional only secu rities. The BSX is bou nd by theEu rop ean Union Listings Directive, nor United States Secu rities ExchangeCom m ission (SEC) regu lations. As a fu ll m em ber of the World Fed eration ofExchanges, how ever, the BSX has been acknow led ged by its p eers to m eet the highestregu latory and op erational stand ard s. The BSX is located in an OECD ‘w hite listed ’Mem ber State, m eaning the OECD Global Foru m on Transp arency and Exchange of Page 5 of 15
  • 6. Inform ation for Tax Pu rp oses consid ers that Bermuda has su bstantially im p lem entedOECD internationally agreed stand ards w hich is a p oint of p articu lar interest to anumber of jurisdictions in Asia, particularly Japan.2. LISTING2.1 The BSX Listing RegulationsSection 1 of the BSX Listing Regu lations (a brief overview of w hich follow s) ap p lies toall p rop osed issu ers. In ad d ition to the Regu lations of general ap p licability, d om esticand international issu ers of equ ity secu rities and d ebt secu rities are regu lated u nd eradditional listing regu lations, as are collective investm ent vehicles, internationalissu ers of d ep ository receip ts, insu rance related secu rities and d erivative w arrants. Itis beyond the scop e of this m em orand u m to p rovid e a d etailed analysis of all of thevarious listing regulations ap p licable to each of the d ifferent typ es of issu ersm entioned above. What follow s, how ever, is a brief su m m ary of the listingregulations that ap p ly to all issu ers and those that are of m ost interest for collectiveinvestment vehicles and specialist debt listings.(a) Section 1 of the BSX Listing Regulations: All IssuersSponsorshipN ew ap p licants m u st be sp onsored by a Trad ing Mem ber or Listing Sp onsor w hich ison the ap p roved list of sp onsors m aintained by the BSX. The Listing Sp onsor m u stensure that the relevant applicant for listing has been provided with fair and impartialad vice and gu id ance as to the ap p lication of the ap p licable listing regulations, that allof the necessary d ocu m ents requ ired in su p p ort of the listing ap p lication are d u lylod ged w ith the BSX, and m u st be resp onsible for com m u nicating w ith the BSXd u ring the listing ap p lication p rocess. The Listing Sp onsor m u st su bm it a d eclarationto the BSX before any trading of the relevant issuers securities occurs. Page 6 of 15
  • 7. Authorised Representatives or Ongoing SponsorshipEvery listed issu er m u st ap p oint an au thorised rep resentative or a sp onsor to act asthe issuer’s primary channel of communication with the BSX at all times.ProspectusIssu ers w ho w ish to list their secu rities on the BSX m u st p rep are and issu e ap rosp ectu s, the contents of w hich w ill vary d ep end ing on the typ e of issu e involved .This p rosp ectu s w ill be review ed by the BSX to ensu re com p liance w ith theRegulations prior to listing.UndertakingsIssu ers seeking a listing on the BSX m u st enter into an Issu er’s Und ertaking w ith theBSX to comply with any continuing obligations imposed by the BSX.FeesIssu ers w hose secu rities are granted a listing on the BSX are requ ired to p ay listingfees (and in certain lim ited circumstances, a new issu e levy and /or a subsequ ent issu efee). The initial fee for issu e of u nits in a u nit tru st, shares in a m u tu al/investmentfu nd com p any or interests in a lim ited p artnership is $2,000 p er class p ayable on or inadvance of ap p lication. Discou nts are granted for ap p lications for m u ltip le listings.There is also an annu al fee of $2,500 for single class listings and significant bu lkd iscou nts are ap p licable w here the sam e vehicle or fu nd fam ily issu es and listsmultiple vehicles or classes of secu rities. The Listing Sp onsor’s fee is negotiateddirectly with the Sponsor and there is no advertising or publication fee.(b) Collective Investment VehiclesCollective investm ent vehicles w ishing to ap p ly to list secu rities on the BSX m u st bed u ly incorp orated or otherw ise established in conform ity w ith the app licable law s in Page 7 of 15
  • 8. Berm u d a or another recognised ju risd iction. The term “collective investm ent vehicle”is d efined as any collective investm ent schem e w hether stru ctu red as a com p any, aunit trust, limited partnership or other legal entity which engages in the investment ofcap ital (a "fund"). The fund m u st either be incorp orated or otherw ise established inBerm u d a or another recognised ju risd iction and have at least 25% of its listedsecu rities in p u blic hand s at all tim es; or restrict its secu rities to qu alified investors (asd efined in the Regu lations); or have a p rim ary listing on another stock exchangew hich is recognised for this p u rp ose by the BSX. The fund m u st have appointed atru stee, cu stod ian or p rim e broker that is accep table to the BSX, d irectors, a m anager,investm ent ad viser or ad m inistrator which has ad equ ate exp erience and exp ertise inthe m anagem ent of collective investm ent vehicles and an ind ep end ent au d itoracceptable to the BSX.(c) Specialist Debt ListingsDebt issu ance p rogram s (su ch as m ed iu m term notes or cred it-linked notes), asset-backed secu rities, convertible bond s, insu rance secu ritisation bond s and other bond sw hich are generally p u rchased by very know led geable and sop histicated investors,can be listed on the BSX. Given the level of sop histication that is reasonably exp ectedof investors in these areas, the listing regulations ap p licable to su ch instru m ents arem ore stream lined . Debt secu rities are eligible for listing provided they are fu llynegotiable and freely transferable. In addition, the issuer of debt securities must: (a) be a supranational body recognised by the BSX; or (b) be a governm ent (or a governm ent agency w hose obligations are guaranteed by a government); or (c) be an exem p ted com p any incorp orated in Berm u d a w ith consolid ated net tangible assets of at least $10 million; or (d) have a primary listing for its share capital on a recognised stock exchange; or (e) restrict investm ent in its listed d ebt secu rities to qu alified investors in accordance with terms acceptable to the BSX. Page 8 of 15
  • 9. Su ch issu ers m u st m aintain a p aying agent in Berm u d a or another location agreed bythe BSX for the d u ration of the listing. The d ebt secu rities m u st also be eligible fordeposit in a recognised clearing and settlement system.2.2 Listing ApplicationEach listing application must include the following: a form al letter of ap p lication in the form set ou t in the Regu lations ap p licable to the relevant issu er, w hich m u st be signed by an au thorised officer of the ap p licant and by the relevant Listing Sponsor; su p p orting d ocu m entation w hich inclu d es (bu t is not lim ited to) a certified cop y of the applicant company’s certificate of incorporation (or equivalent document), a certified copy of the applicant company’s constitution, audited annual reports and accou nts (in the case of som e issu ers, the collective investm ent vehicles for the previous 3 years or since incep tion), certified cop ies of any resolu tions requ ired to have been ap p roved by the ap p licant com p any in ord er to be listed , certified cop y of a signed Issu er’s Und ertaking (as m entioned in 2.1.1(d ) above), a cop y of any tem p orary d ocu m ent of title and any d efinitive d ocu m ent of title to be u sed in resp ect of the secu rities to be listed , certified cop ies of any d ocu m ents referred to in the relevant p rosp ectu s and any fu rther d ocu m entation as m ay be requ ested by the BSX; a conforming prospectus; and the appropriate fees payable to the BSX.The Regu lations p ertaining to listing ap p lications are not exhau stive and the BSX isable to w aive certain requ irem ents or seek ad d itional inform ation as it d eem snecessary on a case by case basis. The BSX em p hasises a flexible ap p roach to ensu rethat only the necessary information is submitted and considered in a timely fashion.2.3 Prospectus RequirementsGenerally, the p rosp ectu s m u st contain inform ation that enables an investor to m akean inform ed assessm ent of the activities, assets and liabilities, financial p osition, Page 9 of 15
  • 10. management and p rosp ects of the relevant issu er. The Regu lations p rovid e gu id anceon the following prospectus related matters: the standard form of disclaimer; general required inform ation abou t the relevant issu er, its ad visors and the prospectus; information required abou t the relevant secu rities as w ell as the term s and conditions of their issue and distribution; information required about the relevant issuer’s capital; information required about the relevant issuer’s investments; information required about any investment managers or advisors; financial inform ation required abou t the grou p and its p rosp ects (w here appropriate); details required about the relevant issuer’s management; particulars about the use of the proceeds of the issue and its distribution; information required about any material contracts; and details about the provision of relevant documents for inspection.2.4 TimingThe BSX u nd ertakes to p rovid e a resp onse from its Listing Com m ittee w ithin sevenbu siness d ays from the d ate of su bm ission of the com p lete listing ap p lication. TheBSX seeks to resp ond w ithin two bu siness d ays w ith com m ents on each d raft of thep rosp ectu s. In m ost cases the entire ap p roval p rocess can be com p leted within threeweeks from the date of submission of the complete listing application.3. FOREIGN DIRECT INVESTMENT IN BERMUDAIn ord inary circu m stances, all local Berm u d a com p anies m u st be 60% ow ned andcontrolled by Berm u d ians. H ow ever, p u blic com p anies listed on the BSX in a“p rescribed ind u stry” w ill be eligible to ap p ly for relief from the 60-40 ru le. Thep rescribed ind u stries are telecom m u nications, energy, insu rance, hotel op erations,banking and international transp ortation services (ship or aircraft). This flexibility Page 10 of 15
  • 11. encou rages foreign d irect investm ent in Berm u d a and p erm its p u blicly listed andreporting companies the option and freedom to seek capital on a global scale.4. CONTINUING OBLIGATIONSThe exact natu re and extent of the continu ing obligations ap p licable to each issu erwill depend on the type of issuer and the type of security involved. As a general rule,however, an issu er m u st keep the BSX and hold ers of its listed secu rities inform ed ofanything relating to the issu er (or the grou p ) (i) that is necessary to enableap p raisem ent of the financial p osition of the issu er, (ii) that is necessary to avoid theestablishment of a false market in the issuer’s securities and (iii) that might reasonablybe exp ected to m aterially affect m arket activity in and the valu e of the issu er’ssecurities.In addition, where applicable, an issuer must: notify the BSX of its net asset valu e calcu lations and of issu e and red em p tion p rices w henever they are calcu lated and of any p ercentage change in the net asset value of a fund; p rovid e notice of annu al general m eetings to the BSX (concu rrent w ith notice being sent to the members/shareholders); send au d ited annu al accou nts to all m em bers/shareholders inclu d ing a rep ort by the d irectors on its op erations and p rovid e ten cop ies of the accou nts and the directors report to the BSX within six months of its financial year end; d eliver to the BSX any interim financial accou nts and p relim inary annou ncem ents or results; ad vise the BSX if its secu rities cease to be listed on another stock exchange or if it is the su bject of d iscip linary action by another stock exchange and/or regu latory body; send to the BSX for review any d rafts of p rop osed am end m ents to the relevant prospectus and any relevant announcements or advertisements; Page 11 of 15
  • 12. report any decision to declare, recommend or pay any dividend or make any other distribution to investors to the BSX for d issem ination at least five bu siness d ays prior to the record date for the payment of such distribution; make arrangements acceptable to the BSX to facilitate the efficient settlement of all trades and registrations of transfers of securities; keep and m aintain a com p lete file of all relevant ad vertising and other m arketing materials which must be produced to the BSX at any time on demand; ad op t by board resolu tion and enforce an internal cod e of d ealing for d irectors and execu tive officers w hich p roscribes their ability to trad e on the basis of unpublished price sensitive information; and notify the BSX of the hap p ening of any of the sp ecified events listed in the Regulations pertaining to the relevant type of issuer.There are no d iversification requ irem ents im posed by the BSX, nor are there anyborrowing restrictions. Independent directors and paying agents are not required andit is not a requ irem ent of the BSX that significant sharehold ers be d isclosed .Independent auditors are required.For collective investm ent vehicles, the fu nd m anager and cu stod ian m u st beaccep table to the BSX. Su b-cu stod ians are p erm itted . Su ch vehicles are also requ iredto ad vise the BSX of their net asset valu e calcu lations and to p rovid e cop ies of allshareholder notices or circulars.Debt secu rities issu ers m u st notify the BSX of changes in the term s of d ebt secu rities,d ecisions to p ass interest p aym ents, any p u rchase, red em p tion or cancellation of d ebtsecu rities, im p ortant changes, p rop osed d raw ings, the closu re of books, w ind ing u por liqu id ation. If the issu e carries conversion rights for, or a gu arantee by, anothercom p any, ad equ ate p articu lars m u st be available for that com p any. Once a d ebtissu ance p rogram has been ap p roved by the BSX, su bsequ ent issu es can beaccom p lished im m ed iately by filing a sim p le term sheet containing the basicnecessary information. Page 12 of 15
  • 13. 5. SECONDARY LISTINGSSecu rities that have a p rim ary listing on a recognised exchange m ay obtain asecond ary listing on the BSX. In such cases, initial fees are red u ced by 50%. To beeligible, the issu er m u st be su itable for listing in the op inion of the BSX and the issu erwill generally be required to meet the BSX’s ongoing disclosure obligations (which areu su ally m et by p rovid ing the BSX w ith cop ies of all filings m ad e w ith the p rim aryregulatory exchange).6. THE MEZZANINE MARKETThe BSX Mezzanine Market is intend ed to offer grow ing e-com m erce, high tech andd evelop m ent stage com p anies the op p ortu nity to list at a m u ch earlier stage thanm ight otherw ise be p ossible. Those seeking to list on the Mezzanine Market are notrequired to have a track record , m arket cap italisation, free float or p rofitability inord er to qu alify. The Mezzanine Market, how ever, is restricted to “Qu alifiedInvestors”. A Qu alified Investor is an investor w ho has signed the necessaryd eclaration and is either one w hose investm ent is not less than $100,000 or w ho isotherw ise d em onstrated to be a su itably sop histicated and know led geable investor inaccord ance w ith the requ irem ents of the Regu lations. The Qualified Investorrequ irem ents m ay be w aived at the d iscretion of the BSX for Berm u d a d om iciledexempted companies.This m arket p rovid es a form of ‘listed p rivate equ ity’ that has the visibility andm arketability of a p u blicly trad ed secu rity w ithou t the need for a fu ll blow n IPO.Issu ers on the Mezzanine Market have fu ll exp osu re on Bloom berg and Reu ters.Secu rities on the Mezzanine Market qu alify as “listed ”, and are therefore u su allym ore attractive to institu tional investors ou tsid e of the U.S. (w ho m ay be lim ited inthe amount they can invest in non-listed securities).The Mezzanine Market is not intend ed to fu nction as a highly liqu id m arket, bu t thelisting d oes create the m echanism for trad ing. This m ay be im p ortant to certaininstitu tional investors w ho w ill w ant to have the m eans in p lace to facilitate any ‘exitstrategy’ they may devise. Page 13 of 15
  • 14. The listing fees for the Mezzanine Market are based on m arket cap italisation and areavailable on the BSX’s web site, w ww.bsx.com, or from Conyers Dill & Pearm an u ponrequest.7. CONCLUSIONA nu m ber of factors m ake the BSX an attractive offshore secu rities m arket. Itsrecognition by the SEC and the UK Financial Services Au thority, together w ith itsow n com m ercially sensible regu latory environm ent, create a highly resp ectableinstitu tion that is u niqu e in its ability to m eet the need s of the offshore m arket. TheBSX’s electronic trad ing system and secu rities d ep ository m ake the BSX the w orld ’sfirst fu lly electronic offshore secu rities m arket, a factor w hich is p articu larly attractiveto those in e-com m erce and high-tech field s. The BSX is internationally recognised asan attractive venu e for the listing of hed ge fu nd s, investm ent fu nd stru ctu res,equ ities, fixed incom e stru ctu res and d erivative w arrants. Anyone consid ering ap ossible listing on the BSX shou ld contact Conyers Dill & Pearm an for m oreinformation. Page 14 of 15
  • 15. This publication is not a substitute for legal advice nor is it a legal opinion. It deals in broadterms only and is intended merely to provide a brief overview and give general information.About Conyers Dill & PearmanConyers Dill & Pearm an ad vises on the law s of the Caym an Island s, British VirginIslands, Bermuda, Mauritius and Cyprus. Conyers lawyers specialise in company andcommercial law, commercial litigation and private client matters.The com bination of Conyers stru ctu re, cu ltu re and exp ertise enables the highestqu ality, resp onsive, tim ely and thorou gh legal ad vice. Conyers’ strategic globalpresence in major international business centres allows a seamless 24 hour service.Conyers’ sop histicated client base inclu d es FTSE 100 and Fortu ne 500companies. Working w ith lead ing local and international firm s, Conyers ad vises onhighly complex multi-jurisdictional projects.Affiliated com p anies (Cod an) p rovid e a range of tru st, corp orate secretarial,accounting and management services.Founded in 1928, Conyers has 600 staff, including more than 150 lawyers.www.conyersdill.com Page 15 of 15

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