The salient points in the Yangon Stock Exchange’s (YSX) listing criteria22 Oct 2020
A listing on a stock exchange refers to the company’s shares being admitted on the board of stock exchange that are officially traded by a large number of investors including individuals and institutional investors in the market. Once a company’s shares are listed, the shares will be available for investment to general public. An applicant company is required to know listing criteria, a set of basic requirements or standards for a public company for listing on YSX. Listing criteria differ among stock exchanges in the world, however, it serves the same purpose which is to ensure qualify shares for the investors. An applicant company must follow 17 criteria issued by YSX to list on YSX.
Whether or not a public company lists on YSX, understanding criteria enables not only to improve the company, but it also to be well prepared for listing on the stock market in the future.
Preparing for listing on the stock exchange is not easy as expected. To be able to meet the criteria in a short time is not possible, but it has to take time for at least one year. It can be known by learning six listed companies.
Emergence of 17 criteria
YSX issued the criteria, a set of basic requirements or standards for a public company for listing on YSX when YSX started operation in December in 2015. 16 criteria came from Japanese advisers who provided technical assistance. Officials concerned made minimal amendments to some criteria and supplemented a new criterion to be appropriate for the country. At that time these criteria were criticized for being lessened too much when they were compared with those from neighbouring countries. Now 17 criteria corresponding with the current status of stock exchange have become official basic standards.
The companies listed on YSX are six in total and these companies had to make preparations to be in line with the official criteria. They received permissions only after they were scrutinized.
The first criterion states that an applicant company must be a public company formed in accord with Myanmar Companies Act. The public companies formed with the 1950 Special Companies Act are also entitled to the first criterion. One out of the six listed companies is a public company constituted with the 1950 Special Companies Act.
The second criterion describes number of shareholders that the applicant company shall have at least 100 shareholders and above. It means that the number of shareholders must be according to the said number by the date of the official listing.
This is because the applicant companies can do initial public offering and they can issue and sell out shares to their employees. The initial founders of the six listed companies had to begin applying for the YSX listing with the lesser number of shareholders and they had to perform these measures said above until the date of official listing.
The third criterion states that paid-up capital shall be the minimum of 500 million kyats on the date of application. This benchmark is a small amount for some companies, but it is aimed at improving small-and- medium enterprises having competitiveness and development potential.
The fourth criterion says that it shall have the profit at least two years during the period of before the date of application. The profit means that a sum of money exceeding zero coming from the addition of loss and profit. The fifth criterion describes that the business shall have the stable basic income and conduct in accordance with the existing laws.
The sixth criterion mentions that the Board of Directors and the heads of the company shall be in good character and not have been punished by a court, in addition, have not been facing any lawsuits. They shall perform their duties and responsibilities with well-prepared, in good-faith and fairly in line with the laws.
The seventh criterion expresses that the Board of Directors and the heads of the company shall not act any deceptive manners by the public for the interest of the company and self-interest. It is required to be a company performing the tasks in accordance with rules and regulations, orders and directives. The eighth criterion says that each Director of the public company shall not do any business which has the same interest carrying out by the public company, except with the approval of Shareholder meeting.
The ninth criterion describes that the company, the Board of Directors and the heads of such company shall not be included in the black list of any public and government organizations. The tenth criterion states that book-keeping of accounts and auditing of the company shall be undertaken in accordance with the Myanmar Financial Reporting Standards (MFRS) and International Financial Reporting Standards (IFRS). The accounts must be kept in accordance with the directives of Myanmar Accountancy Council. When the accounts are submitted to the Yangon Stock Exchange, any budget report must be Unqualified Opinion or Qualified Opinion of the external auditor.
The eleventh criterion points out that the company shall fulfill tax duties in accordance with existing tax laws of Myanmar.
The twelfth criterion mentions that the disclosure of relevant corporate information and the facts that the public should be known, shall be disclosed and submitted to the Securities Exchange Commission of Myanmar and Yangon Stock Exchange, besides it shall be disclosed and announced to the public by means of easy understandable and best suitable ways in timely manner. For disclosure of corporate information, it shall prescribe especially and precisely on the matters which have a considerable impact on investment decisions of the investors, such as the risk factors for the potential loss and the basic potential business activities.
The thirteenth criterion indicates that it shall set up an effective system to comply with laws, rules and regulations by appointing the compliance officer. The fourteenth criterion shows that it shall have business plan containing business design, business process environment and the risk factors. It is required to draft the business plan from the year of submitting application until next five years. It must be reviewed year on year.
The fifteenth criterion describes that it shall set up a system to prevent the insider trading as the stock share market plays a major role. The awareness of laws, rules and regulations as to the share trading shall be raised among all the staffs including members of board of directors and managers.
The sixteenth criterion says that it shall continuously operate and manage stably without any influence by keeping soundness of good corporate governance, internal management and internal control system. The seventeenth criterion states that it shall have rational expectation to get a profit based upon stable revenue.
(The Global New Light of Myanmar: https://www.gnlm.com.