A Company generally lists is shares on the board of the BSE to raise capital. This capital is raised usually to :-
Some of the advantages attached to listing of shares on the BSE are:-
Special rules apply and specific information about the company and its securities is requested in order to adequately inform and protect the prospective investor. In most cases a document called a "Prospectus" is required in which the company must provide comprehensive information and details. The company must ensure that the prospectus complies with the Companies Act and the Securities Act Cap 318A. No binding transactions can be made until the prospectus is reviewed and approved by the BSE. The Exchange does not, however, guarantee completeness or accuracy of the prospectus and it is up to the investors and their advisors to weigh the risk of investment in relation to the calculated return.
Companies applying for listing on the BSE should meet the following basic criteria:
There are several benefits associated with investing in listed securities. These include, but are not limited to:
There are also risks attached to Investing, e.g. a company may have an unprofitable year and not declare a dividend or the market price of the securities can decline.
Non-nationals and Barbadians who are permanently residing abroad must obtain Exchange Control approval to trade securities. Caricom residents are treated as nationals. Property Transfer Tax and Stamp Duty are waived if securities are traded on the Exchange. It is recommended that inflows of foreign currency for investment be registered through the Central Bank of Barbados in order to facilitate easy repatriation of dividends and capital. It must be noted, however, that there are fees attached to Exchange Control approval.
After the Company is listed, it has to meet certain on-going requirements. These requirements must be communicated same to the Exchange for addition to the public records. Shareholders of Public Companies who own voting class stock/shares are entitled to vote at shareholders’ meetings and are therefore entitled to receive regular information about the Company. As part of its mandate to promote an efficient and transparent market, the BSE publishes key information about its Listed Companies in its daily Trading Report.
To buy or sell most securities, a prospective investor should contact a firm or person registered with the BSE as a Registered Broker. Presently, in Barbados, most Dealer Members with the active brokers, come from the Commercial Banks, their respective Trust Companies and also Financial Services Companies. These brokers are sales persons for buying and selling securities. To protect investors, the BSE has requirements for the Members and their personnel who engage in trading securities. It is prudent for investors to become informed regarding the integrity and reputation of dealers and investment advisors as well as the services they provide, the fees charged and their track record particularly ensuring their authenticity and registration with the BSE.
At the conclusion of every trade day each brokerage firm will be emailed a transaction summary showing the transactions completed for that day. The Transaction Report will show a net-to-pay or net-to-receive position. This will let the brokerage know what is required of them for settlement. Settlement is facilitated using the REAL TIME GROSS SETTLEMENT SYSTEM of the Central Bank. Each brokerage firm has a bank account with the system and on days when they are in a net-to-pay position the firm funds this account with the Central Bank. The BCSDI also has an account with the system and makes payments to the accounts of those individuals who are net-to-receive so that they can pay their clients.
Directors, officers, employees and other persons having close business relationships with the company, may sometimes, by virtue of their positions, have access to confidential information that has not yet been revealed to the shareholders and the public. It is against the law for an officer or director to use the information before it as been communicated to the public. The disclosure of such information is known as tipping for insider trading and is prohibited.
The Barbados Stock Exchange Inc. (BSE) and its wholly owned subsidiary, the Barbados Central Securities Depository (BCSDI) are designated as Self Regulatory Organizations (SROs) under the Securities Act 2001-13 but are regulated in turn as well by the Financial Services Commission (FSC). These organizations work in tandem to promote an efficient marketplace for the trading of stocks and bonds in Barbados. The following pieces of legislation are used to govern the activities of all Market Actors - SROs, Listed Companies, Registered Brokers and Shareholders: