WHY A COMPANY ISSUES SHARES AND LISTS
THEM ON THE SECURITES EXCHANGE OF BARBADOS
A Company may wish to raise capital to :-
Some of the advantages attached to listing of shares on the SEB are:-
e.g. securites traded on the SEB are exempt from
Property Transfer Tax and Stamp Duty.
HOW A COMPANY ISSUES SECURITIES
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 Exchange Act. No binding transactions can be made until the prospectus is reviewed and approved by the SEB. 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 SEB should meet the following
basic criteria:
REGULATORY FRAMEWORK
In addition to the Securites Exchange Act, By-Laws and Rules pertaining to Members and Dealers, there are listing requirements, disclosure, and reporting requirements.
INFORMATION ABOUT YOUR INVESTMENTS
After the company is listed, it has to meet on-going requirements Communicating same to the Exchange for addition to the public records. Shareholders of public companies who own voting class stock/securities Are entitled to vote at shareholders’ meetings. Accordingly, they too, are entitled to regular information about the company.
TOPPROS AND CONS OF INVESTING IN LISTED SECURITIES
(1) Profits
(2) Tax Incentives
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.
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INSIDER TRADING
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.
DEALERS/BROKERS
To buy or sell most securities, a prospective investor should contact a firm or person registered with the SEB. Presently, in Barbados, most Dealer Members with the active brokers, come from the Commercial Banks and their respective Trust Companies and from Financial Service Companies. These brokers are sales persons for buying and selling securities.
To protect investors, the SEB 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 SEB.
CLEARING AND SETTLEMENT
Stocks traded on Tuesdays and Fridays are settled by physical delivery of cheques and documents on Friday of the following week prior to the opening of the trading floor.
FOREIGN PORTFOLIO INVESTMENTS
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.
These are fees attached to Exchange Control approval.
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