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Listing on Exchange Small and Medium Enterprises Board

Dream Big and Make it Happen! Contents of the Presentation:

Section 1: Introduction Section 2: PSX Listing Requirements Section 3: SME Board Listing Requirements Section 4: Post Listing Section 5 :Listing Fee Section 6: Benefits And Relaxations Section 7: SME Listing Procedure Section 8: De-Listing Section 9: FAQs

2 Section 1 Introduction

3 Importance of SMEs to the Pakistani economy

There are SMEs have the potential to Approximately 3 SME output drive / stimulate growth Million SMEs in contributes 40% provided they are given an Pakistan to the annual enabling platform to flourish. GDP

SME Output contributes 25% to the total exports.

SMEs employ 80% of the non-agricultural labor force

4 Economic Survey of Pakistan 2017 Section 2 PSX Listing Requirements

5 What is the Eligibility Criteria?

Main Board SME Board

• Minimum post issue • Minimum post issue paid up capital of paid up capital of Rs.25 Rs.200 million million

6 Section 3 SME Board Listing Requirements

7 What are the SME Board Requirements?

PSX SME Board - a platform for SMEs to raise capital to fund growth QIBs: and expansion  At least 20% of post Financial Institutions; issue paid up capital Insurance Companies; Mutual/Pension Funds to be offered ONLY to QIBs and HNWIs HNWIs: through private bidding at least Rs.1 Million placement.

 Minimum five initial subscribers

SME: A public company having  Minimum Bid size of each initial a post issue Paid Up Capital subscriber: PKR 1 Million PKR 25 -200 Million

8 What are the mandatory requirements?

Financial Operational SME Website Statements Requirements

• Must prepare periodic • Must contain basic • Must be in business for at Financial statements business information least three years • Must audit statements by • Must contain Information • Must be profitable for at QCR rated chartered Memorandum least two preceding years accountants • Must post annual, half-year before getting listed • Must publish on the quarterly accounts website

9 What is the Listing Requirement?

• IM shall be circulated to QIBs and HNWIs. Information • IM shall be placed on the website of the SME, the Exchange and the Advisor/Consultant to the Issue. Memorandum • Minimum information / disclosures required in the IM: Schedule-I of Chapter 5A of PSX Rule Book.

• SME required to disclose and disseminate Price Sensitive Information. • CEO of the SME responsible for regulatory compliance: Must submit Compliance compliance report at the end of each half year. • If SME violates any provision of SME Regulations, Exchange may take (Post Listing) any disciplinary action such as: Imposing a fine, Placing SME in the Defaulters’ Segment, Suspend trading, etc. Section 4 Post Listing

11 What happens Post Listing?

 Trading shall take place through KATS.  Sponsor Shareholding Lock-in 100% (Entire) holding blocked for 1 year.  In the , the 25% holding blocked for 3 years. minimum order size for trading shall be PKR 100,000.  SME to maintain a minimum free  Clearing, settlement and risk float of 20% of post issue paid up management through NCCPL. capital.

12 Section 5 Listing Fee

13 What is the Listing Fees?

• 0.05% of Post Paid Up Capital Initial Listing Fees • Capped at PKR 50,000

• PKR 20,000 on Paid Up Capital up-to PKR 50 Million Annual Listing Fees • PKR 30,000 on Paid Up Capital between PKR 50-100 Million • PKR 40,000 on Paid Up Capital exceeding PKR 100 Million

14 Section 6 Benefits And Relaxations

15 Why should you list on PSX?

. Growth and expansion needs Raise Term . Invest or carry out merger & acquisition plans . Invest in new projects Low-cost Capital . Enhance current capacity . Diversify business . Meets working capital requirements

Publicly listed companies achieve a higher valuation than private enterprises since greater disclosures Higher Valuation and market pricing lead to a companies /worth.

Reduces long term liabilities by enabling: Balance Sheet • Payment of its long term loans Optimization • Reducing its dependence on debt Why should you list on PSX?

• IPOs add a level of prestige to a Company Enhances Company’s Public • IPOs can be used as a branding and marketing Profile tool as they attract media interest, attention and scrutiny

A listed company has to disclose and disseminate all material and price sensitive financial information Improved Relations with which adds to: Bankers and Suppliers • The business transparency • Improved relations with Bankers, lenders and clients

Listing bridges any discord that may arise during a Business Continuity and transition from the first generation to the next, by Succession Planning introducing • Corporate Governance Structures • Succession Planning

17 Why should you list on PSX?

Liquidity Listing brings in liquidity and ready marketability of the company’s securities.

HR Capital Attract and retain the best talent for your company because of enhanced reputation.

Feasible and Effective Public listing creates a market for the Company’s shares and sponsors can sell their shares in the Exit Strategy secondary market.

18 What are the extra benefits and relaxations for SME?

• 20% on tax payable in the first tax year of listing Tax Benefits • 20% on tax payable in the subsequent tax year • 10% on tax payable in the following two tax years respectively

SME need not comply with the • Provisions of Chapter 5, “Listing of Companies Relaxations and Securities Regulations” of PSX Rule Book. • Code of Corporate Governance

19 Section 7 SME Listing Procedure

20 Procedure to get your company listed on the Exchange?

• Your company chooses a consultant, who does the initial due diligence in regards to Appoints Advisor and Consultant financials, corporate structuring, legal and regulatory requirements etc., and formulates your company’s business plan moving forward.

• The business case is evaluated by the consultant using different methodologies and its Business Plan evaluation demand is gauged for the “Final Offer Structure” to get maximum value for the shares to be offered.

• After the terms of underwriting have been finalized. bankers to the issue and share registrar are appointed. Finalization of Underwritings • The Central Depository Company (CDC) checks for eligibility and induction into their virtual share depository system. • Finalize pre-IPO with the help of your consultant

• Submit requisite regulatory documents for PSX and SECP and obtain the necessary Regulatory Filings approvals.

• Conduct road-shows, investor presentations and other marketing and sales events to create Marketing awareness about the upcoming IPO.

Subscriptions and Balloting • Share registrar and balloter collect subscription results form all bankers to the issue.

Post IPO Clearance • The bank will transfer the money from the subscriber to the issuers. • PSX allocates dates for trading of shares on the Exchange and trading begins. 21 Section 8 De-Listing

22 What will be your Exit Strategy?

Voluntary De-listing Involuntary De-listing Migration to Main Board Your company can be removed from When paid up capital exceeds PKR You can delist your company through the listed companies list due to 200 Million And SME has been buy-back of shares by the sponsors violation of PSX’s Listing of listed on the SME Board for at least at a price approved by the Exchange Companies & Securities Regulations Three years

23 Contact Information

Raeda Latif General Manager - Marketing and Business Development Email: [email protected] Telephone: +92-2135274580 Ext: 4580 Help Desk (92-21) 111-011-122 Office Ext: 4580, 4582 Office Ext: 4653 Haris Saeed Office Ext: 4666 Business Development Manager Email: [email protected] Web: psx.com.pk Telephone: +92-2135274574 Ext: 4582 Email: [email protected]

Mariam Mehtab Marketing and Business Executive Email: [email protected] Telephone: +92-2135274572 Ext: 4572

24 Contact Information

Serving Investors & Industry Building, Stock Exchange Road, Karachi-74000, Pakistan. Tel: (+92)111-001-122, Website: www.psx.com.pk