The Qatar Financial Markets Authority (QFMA) has created an alternative market for public listings in Qatar, unofficially dubbed the new “ventures market.” The QFMA also has adopted a new set of listing rules (the New Listing Rules) to create a separate but parallel regulatory framework for companies seeking a public listing on the alternative market. Issuers seeking to list on the main market will list in accordance with the existing listing rules. According to senior officials at the QFMA, the purpose of the new market is to introduce a new competitive edge to Qatar and its capital markets by encouraging and enabling small to medium enterprises (SMEs) to list on the Qatar Exchange.
The New Listing Rules provide issuers who do not meet the more stringent requirements for a primary listing with the opportunity to comply with lighter eligibility criteria and disclosure requirements in order to seek a listing on the alternative market. The rules also allow for the listing of “financial instruments” on the alternative market subject to approval by the QFMA. While the precise definition and application of this term is unclear in the absence of express QFMA guidance, it would appear that in the future it may be possible to list funds on the new alternative market subject to QFMA approval. However, Qatar Financial Centre (QFC) entities remain unable to list on the Qatar Exchange.
Lighter Eligibility and Disclosure Requirements
A listing on the alternative market will not require a prospectus. Instead, the issuer will be required to publish an information memorandum containing significantly less disclosure than would otherwise be required for a prospectus for a primary listing.
Eligibility criteria for a listing applicant on the alternative market also is at a lighter standard than for a primary listing. These include:
- Audited financial statements for one financial year in accordance with IAS and IFRS (instead of three financial years for a primary listing);
- Paid-up share capital of QR 5 million (instead of QR 40 million for a primary listing);
- A minimum of 10 per cent of its share capital offered for public subscription (instead of between 40 and 80 per cent for a primary listing); and
- A minimum of 20 shareholders (instead of 30 shareholders for a primary listing).
A Positive Development–Will it be Successful?
Market observers will see this as a positive step by Qatar’s financial regulators to develop a more sophisticated capital markets architecture in Qatar and beyond. The success of the alternative market will largely depend on whether it can attract issuers to the market by offering a more streamlined listing process and creating liquidity for investors seeking investments with a higher risk profile. The potential success of the alternative market may be to the detriment of the primary market and so the key to success is to increase the number of issuers over the spectrum of listing options in Qatar.
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