IC Insider understands that Proven Wealth received a letter from the Jamaica Stock Exchange (JSE) indicating that Knutsford Express failed to be approved for listing under the junior market rule 501 governing listings.
Christopher Williams, CEO of Proven Wealth, stated that the brokerage firm received the letter from the JSE to which their lawyers have responded. According to Williams, “the lawyers pointed out in their response that the company qualified under section 502 of the listing” amongst other issues. This is in keeping with IC Insider’s report of Tuesday December 31, the day the listing was turned down. The stock exchange is being given the opportunity to respond before more drastic action, if needed, is taken, Williams stated.
The development is black eye on the Jamaica Stock Exchange, the sponsoring broker and an embarrassment to all concerned with the capital market. The stock exchange and the Financial Services Commission would have reviewed the prospectus and ought to have been aware of any deficiencies that could have derailed the listing before giving the approval. Nevertheless the JSE gave their approval subject to the listing committee meeting. The process is backhanded, which is a view that Williams is in agreement with. The approval of the powerful listing committee should have been done ahead of the IPO and not after, with the JSE executive to ensure that administratively all the post-IPO conditions were met.
The Rules | The preamble to the rules states: For the purposes of initial admission, an eligible company shall issue its participating voting shares by way of an initial public offering in accordance with the requirements set out in Rule 502.
Section 502 states: An eligible company shall, for the purposes of its initial admission, issue participating voting shares by way of an initial public offering subject to a prospectus seeking a minimum subscription of new shares (or allotment of existing shares) of not less than J$50 million and not more than J$500 million only.
Rule 501 Minimum Requirements differs from 502 with the former saying: No request for the initial admission of any eligible company will be considered by the JSE unless the eligible company has demonstrated to the satisfaction of the JSE that, following its initial public offer:
- It has not less than 25 participating voting shareholders who hold, in aggregate, not less than 20% of the fully paid, subscribed participating voting share capital; and
- The fully paid, subscribed participating voting share capital is not less than J$50 million and not more than J$500 million, and such capital is fully paid.
Discretion of the JSE | (a) Initial admission of any eligible company to the Junior Market shall be in the absolute discretion of the JSE. (b) For the purposes of (a) above, the JSE may waive or supplement the provisions of certain of these Junior Market Rules as it sees fit.
In summary, the JSE had the power to use the discretionary clause with conditions for the company to increase the issued capital.
Related posts | JSE rejects Knutsford Express | Knutsford Express share allotment | Knutsford IPO gets in before door closes
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