When a company is to be admitted to trading on the regulated market, the process leading up to the first day of trading involves several different actors.
Before a company can be admitted to trading on the exchange there is a comprehensive and resource demanding process, which requires great effort from the management of the company. The process is often lengthy and includes normally various sub-processes of which not all involves direct contact with the exchange. From the perspective of the exchange, there is initial process in which the company and its advisor(s) prepare the company for being a publicly listed company and prepare the documentation which forms the basis of admittance to trading.
The company must conduct a start-up meeting with Nasdaq Surveillance early in the process to give an introduction of the company, the organization and its business.
When the company and its advisors have prepared the necessary documentation and the decision to apply for admission to trading has been made, the actual process of admission to trading will begin, in which the company must be approved by Nasdaq Copenhagen.
The rulebook of the exchange – Rules for issuers of shares – includes the conditions for admission to trading with explanatory comments.
The company’s auditors
The company’s auditors play a key role in the preparation work prior to admission to trading. The auditors can help the company structure its audit function and organization to conform to the demands posed to a company admitted to trading. Further, the auditors must ensure that the company’s accounting principles fulfil all regulatory demands.
Prior to and during the process of admission to trading, companies usually use various other advisors, for instance lawyers, whom can advise the company on legal matters, company law, preparing a prospectus, the forthcoming ownership structure of the company and preparing for instance internal rules etc., and financial advisors, whom can advise the company on for instance the timing of admission to trading of existing shares and/or a prior offering of new shares. In cases where the offering of new shares exceeds the number of existing shares or it is not possible to borrow existing shares, there is, with reference to VP Securities’ (VP) rules, a need to admit the existing and new shares in two different ISINs that are traded simultaneously. Read about the procedure for trading of temporary purchase certificates on Decisions and Statements 2016
Description of the Process
The exchange will process the documents provided by the company as the foundation of whether the company can be admitted for trading by the exchange including a concrete, precise and detailed description of how the Issuer fulfils each listing requirement, draft prospectus and other relevant documents.
In the assessment, the exchange will put most weight on the company’s description of how the Issuer fulfils each listing requirement. In the description, the company’s management must describe how the company fulfils every single requirement. Besides the formal requirements, for instance the transferability of the shares and valid incorporation of the company, the exchange prioritizes precise and detailed descriptions of whether the company fulfils the more qualitative requirements for admission to trading, which, for instance, refers to the company’s profitability and working capital, liquidity, suitability, the management of the company, and the company’s capacity for providing information to the market.
Afterwards there will be a process in which the exchange and the Danish FSA will submit comments and receive replies and markup-versions of revised draft prospectuses and other documents on an ongoing basis to approve the company’s admission to trading regarding the prospectus. The duration of this process can vary depending on whether certain conditions regarding the company or the transaction requires further information from the company.
When the exchange finds that the company fulfils all requirements for listing, the formal approval for admission to trading will be conducted based on the formal application, which the company must send to the exchange. In case there is an offering of new shares and/or existing shares prior to the company’s admission to trading with the purpose of fulfilling the requirement for sufficient demand and supply, the exchange will approve the admission to trading of the company’s shares on the condition that the company, after the completion of an offering of shares, fulfils all the requirements for listing.
By sending the formal application, the issuer is committed to comply with the disclosure requirements and other requirements for issuers of financial instruments which are admitted to trading on the exchange in compliance with MAR, rules set by the competent authority and the exchange.
The approval by the exchange is typically given after the prospectus has been approved by the Danish FSA. After the Danish FSA has approved the prospectus, the prospectus must be disclosed in accordance with the rules on this matter stated in the executive order on Prospectuses.
When an offering of shares has been concluded and the company has disclosed a company announcement regarding the course of the offering, hereunder disclosed information regarding liquidity, i.e. number of investors in the company, subscription price, possible reduction etc., the exchange will assess if the company hereafter fulfils all requirements for admission to trading. If this is the case, the company will be able to be admitted to trading as soon as possible.