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PART I – Introduction

Introduction

The definitions contained in the “Definitions” section of these Listings Requirements apply to this Introduction.

Objectives
It is an integral function of the LuSE to provide facilities for the listing of securities (including securities issued by companies, domestic or foreign), to provide the LuSE’s users with an orderly market place for trading in such securities and to regulate the market accordingly.

The Listings Requirements set out in this document apply to issuers seeking a listing for the first time, presently listed issuers, all other securities that applicants may wish to list and those presently listed and, where applicable, to directors (as defined in each relevant section) of applicant issuers and to brokers. The Listings Requirements contain the rules and procedures governing new applications, all corporate actions and continuing obligations applicable to issuers. They are furthermore aimed at ensuring that the business of the LuSE is carried on with due regard to the public interest.

General Principles
It is impracticable and undesirable for the LuSE’s requirements and procedures to attempt to govern all circumstances that may arise in commercial practice.

Accordingly, the Listings Requirements fall into two categories as follows:

  • (a) general principles (“the General Principles”) which are set out below and which must be observed in all corporate actions and also in all submissions pertaining to securities listed and to be listed; and
  • (b) the main body of the Listings Requirements (“the main body”) which consists of the sections, schedules and practice notes. The main body is
    derived from the application and interpretation of the General Principles by the LuSE.

Moreover, the spirit of the General Principles and the main body may be applied by the LuSE in areas or circumstances not expressly covered in the Listings Requirements.

The LuSE has discretion to modify the application of a requirement contained in the main body in exceptional circumstances, for example when the LuSE considers that the strict application of the requirement would conflict with the General Principles.

Accordingly, users of the Listings Requirements must at all times observe the spirit as well as the precise wording of the General Principles and main body.

If there is any doubt as to the interpretation or application of the Listings Requirements, users must consult the LuSE.

The General Principles are as follows:

  • (i) to ensure the existence of a market for the raising of primary capital, an efficient mechanism for the trading of securities in the secondary market, and to protect investors;
  • (ii) to ensure that securities will be admitted to the List only if the LuSE is satisfied that it is appropriate for those securities to be listed;
  • (iii) to ensure that full, equal and timeous public disclosure is made to all holders of securities and the general public at large regarding the activities of an issuer that are price sensitive;
  • (iv) to ensure that holders of relevant securities are given full information and are afforded adequate opportunity to consider in advance and vote upon any of the following:
  • (1) substantial changes in an issuer’s business operations; and
  • (2) other matters affecting a listed company’s constitution or the rights of holders of securities;
  • (v) to ensure that all parties involved in the dissemination of information into the market place, whether directly to holders of relevant securities or to the public, observe the highest standards of care in doing so;
  • (vi) to ensure that all holders of the same class of securities of an issuer are accorded fair and equal treatment in respect of their securities; and
  • (vii) to ensure that the Listings Requirements, and in particular the continuing obligations, promote investor confidence in standards of disclosure and corporate governance in the conduct of applicant issuers’ affairs and in the market as a whole.

Competent authority
The LuSE is the holder of an exchange licence in terms of the provisions of the Act. A company wishing to have its securities dealt with on the LuSE must apply for a listing and must be in compliance with the requirements of the LuSE before being granted such listing. The Board of the LuSE is the competent authority responsible for:

  • the list of the securities which may be dealt in on the LuSE;
  • applications by applicant issuers for the listing of securities on the LuSE; and  the annual revision of the List.

The Board of the LuSE has delegated its authority in relation to the Listings Requirements, excluding termination of listings initiated at the instance of the LuSE (which authority has been delegated to the LuSE’s executive committee), to the management of the Issuer Services Division. When a listings matter is considered by the LuSE, representatives of the issuer and other advisers may accompany the relevant sponsor, any of whom may, subject to the LuSE’s consent, address the meeting. The LuSE reserves the right to limit the number of persons attending such meetings.

Companies with listings on other exchanges Attention is drawn to the fact that other exchanges may have different requirements relating to the issue of securities. Companies with a primary listing on the LuSE that are also listed on such other exchanges should therefore ensure that the requirements of both the LuSE and such other exchanges are complied with when submitting documentation to the LuSE for approval. Where an issuer’s primary listing is on another exchange, the LuSE will normally accept the listings requirements of that exchange but reserves the right to request such issuer to comply with such aspects of the Listings Requirements as it may, in its sole discretion, determine.

Application of Rules
The Listings Requirements shall not apply to the listings of Debt Securities. The Listing Requirements applicable to Debt Securities are contained in a separate body of listing requirements for Debt Securities.

PART II – Schedules

Schedules

Throughout these schedules the definitions in the “Definitions” section of the Listings Requirements are applicable, unless otherwise stated or the context requires otherwise, and an expression, which denotes any gender, includes other genders.

The following schedules form part of the Listings Requirements:
1 Application for listing by new applicants
2 Application for a listing of securities resulting from rights offers, claw-back offers and renounceable offers
3 Application for a listing of securities resulting from capitalisation issues or scrip dividends
4 Application for a listing of securities resulting from acquisitions, take-overs and mergers, share incentive schemes and convertible securities
5 Independent fairness opinions
5A Expert’s confirmation of independence
5B Expert’s confirmation of competency
5C Declaration by the issuer
6 Application for a listing of securities resulting from an issue for cash
7 General undertaking
8 Statutory declaration
9 Mechanical signatures on certificates of title
10 Requirements for articles of association
11 Requirements for certificates of title
12 Requirements for option certificates in respect of listed options
13 Rescue operations
14 Requirements for share incentive schemes
15 Repealed
16 Sponsoring Brokers
17 Declaration by sponsoring broker
18 Annual compliance certificate
19 Procedural requirements of the Securities Exchange News Service
20 Standard wording for cautionary announcements
21 Directors declaration
22 Application for the de-listing of shares arising out of a repurchase of shares
23 The use of electronic media for the delivery of investor information
24 Corporate action timetables
25 Working capital

Schedule I

Application for listing by new applicants

1.2 The application for listing by new applicants must contain the following:

(a) a statement that:

  • “It is understood that the granting of a listing pursuant to this application shall constitute a contract between this company*/or description of entity applying for listing if not a company* and the LuSE Limited (“LuSE”) and also between the directors*/description of office equivalent to
    directors*, on a continuing basis, of the company*/or description of entity applying for listing if not a company* and the LuSE, and that in giving the General Undertaking referred to in paragraph 16.10 (s) of the Listings Requirements of the LuSE (“the Listings Requirements”), the
    company*/or description of entity applying for listing if not a company* and its directors*/description of office equivalent to directors* undertake to comply with the Listings Requirements as they may exist from time to time.” * delete whichever is not applicable;

(b) full name of the applicant;

(c) the addresses of the registered and transfer offices of the applicant in the Republic of Zambia;

(d) regarding the applicant’s share capital:

(i) the amount of the authorised share capital of each class of share, and the nominal value and number of securities in each class; and
(ii) the number and amount of the share capital issued and to be issued with respect to each class of share, and the number of securities in each class for which a listing is applied for;

(e) the nominal amount and number of securities of each class:
(i) offered to the public for subscription, either by the applicant or otherwise (“the offer”), and the date the offer opened;
(ii) applied for in terms of the offer, and the date the offer closed (where this information is available at the date of application); and
(iii) issued and/or allotted, and the date of issue and/or allotment (where this information is available at the date of application) pursuant to
the offer;

(f) that monies in respect of excess applications will be refunded within 7 days of the closing of the offer;

(g) a statement whether or not it is desired to deal in any other documents prior to the issue and allotment of the securities;

(h) a statement detailing the sector of the List in which listing is applied for, and the abbreviated name of the applicant.

(i) an undertaking by the applicant in the form of a directors’, or equivalent, resolution that the documents referred to in paragraphs 16.19 to 16.21 will be submitted within the periods specified therein; and

1.2 The application must be signed by the secretary and a director, or equivalent, of the applicant and by the sponsoring broker.

1.3 The application must be accompanied by a resolution of the directors, or equivalent, of the applicant authorising the application for listing together with the relevant listing fee.

Schedule II

Application for a listing of securities resulting from rights offers, claw-back
offers and renounceable offers

2.1 The application for the listing of securities resulting from rights offers, clawback offers and renounceable offers must include:

(a) a description of and the number of renounceable letters for which a listing is applied for, and the relevant dates, in accordance with the relevant timetable in Schedule 24;

(b) a description of and the number of securities for which a listing is applied for, and the relevant dates, in accordance with the relevant timetable in Schedule 24;

(c) a brief description of the offer;

(d) the date on which the renounceable letters and the circular or pre-listing statement will be posted to securities holders;

(e) the date on which the offer closes;

(f) the authorised and issued capital of the applicant prior to the issue of the rights, renounceable or claw-back securities;

(g) the issued capital after the issue of the rights, renounceable or claw-back securities; and

(h) all renounceable letters dispatched by the applicant to registered shareholders will be sent by registered mail and by airmail wherever this is possible;

(i) the date on which the securities are to be allotted and issued; and

(j) the date on which the renounceable letters are to be allotted and issued.

2.2 The application must be signed by the secretary and a director, or equivalent, of the applicant and by the sponsoring broker.

2.3 The application must be accompanied by a resolution of the directors, or equivalent, of the applicant and any other resolution required by the Act or any other written law authorising the application for listing together with the relevant listing fee.

Schedule III

Application for a listing of securities resulting from capitalisation issues or
scrip dividends

3.1 The application for a listing of securities resulting from capitalisation issues or scrip dividends must state:

(a) the number of securities resulting from a capitalisation/scrip dividend issue for which a listing is applied;

(b) the date from which such listing is to commence;

(c) that the capitalisation/scrip dividend securities rank pari passu with the other issued securities of the applicant;

(d) the date on which the capitalisation/scrip dividend securities are to be allotted;

(e) the date on which the securities are to be issued;

(f) the authorised and issued share capital of the applicant prior to the issue of the capitalisation/scrip dividend securities; and

(g) the issued capital after the issue of the capitalisation/scrip dividend securities.

3.2 The application must be signed by the secretary and a director, or equivalent, of the applicant and by the sponsoring broker.

3.3 The application must be accompanied by a resolution of the directors, or equivalent, of the applicant authorising the application for listing together with the relevant listing fee.

Schedule IV

Application for a listing of securities resulting from acquisitions, take-overs
and mergers, share incentive schemes and convertible securities

4.1 The application for a listing of securities resulting from acquisitions, take-overs and mergers, share incentive schemes and convertible securities must contain the following:

(a) a description of and the number of securities for which a listing is applied and the date of listing;

(b) the reason for allotment and issue;

(c) the date of allotment;

(d) the date of issue of securities;

(e) a statement that when the securities are issued and listed they will rank pari passu in all respects with existing issued and listed securities of the same class;

(f) the applicant’s present authorised and issued capital;

(g) the issued capital after the issue of the securities that are subject of the application;

(h) confirmation that, in respect of an acquisition of assets, the assets have been transferred into the name of the applicant, or will be upon issue of the securities or other means of consideration settlement;

(i) with regard to shares that are being issued in respect of the achievement of a profit warranty, reference to the date and medium (e.g. publication or in the annual financial statements) in which the details of the transaction were announced; and

(j) where the application relates to a vendor consideration placing, confirmation that the issuer has complied with paragraph 5.62.

4.2 The application must be signed by the secretary and a director, or equivalent, of the applicant and by the sponsoring broker.

4.3 The application must be accompanied by a resolution of the board of directors, or equivalent, of the applicant authorising the application for a listing together with the relevant listing fee.

4.4 An application for share incentive scheme shares utilising a previously approved block listing must include the balance of shares in issue before and after the block listing. The application for block listing should also include the previous application letter submitted by the issuer to the LuSE.

4.5 Where application is made to the LuSE to list securities which are the subject of a profit warranty, a letter submitted by the issuer’s auditors confirming that the conditions required for the shares to be allotted and issued have been met, is to be submitted to the LuSE together with a reconciliation between the number of securities for which application is being made and the terms of the profit warranty.

4.6 The application must be accompanied by the relevant agreements.

Schedule V

Independent fairness opinions

Scope of this schedule
The objectives of this schedule are as follows:

  • (a) to provide sponsoring brokers and issuers with certainty, at an early stage of the process, as to the acceptability or otherwise to the LuSE of a nominated independent professional expert who will issue a fairness opinion;
  • (b) to provide guidelines regarding the required quality of independent fairness opinions generally; and
  • (c) to ensure consistent and detailed reporting practices with regard to fairness opinions.

As the issues of independence and competency will be unique to every transaction, this schedule provides guidance rather than specific rules. The overriding objective is to ensure that the board of directors receive competent and adequate advice from an acceptable independent and competent third party regarding a transaction. The board of directors must ensure that any director who is party to the transaction (being the subject
matter of the fairness opinion) is excluded from the process of mandating the expert and providing the necessary recommendations to shareholders. The issuer must confirm this in terms of the Schedule 5C declaration.

5.1 A fairness opinion must:

  • (a) be prepared by an independent professional expert, acceptable to the LuSE, who has no material interest either in the transaction or in the success or failure of the transaction;
  • (b) make appropriate disclosure where the independent professional expert has any existing or continuing relationship with the issuer and/or any other parties involved in the transaction; and
  • (c) set out all of the material factors and assumptions taken into account in the preparation of the statement (as set out in 5.8 below).

5.2 At an early stage in a contemplated transaction and preferably before engaging a party to prepare a fairness opinion, the sponsoring broker, on behalf of the issuer must submit to the LuSE:

  • (a) a declaration of independence completed by the nominated independent professional expert, in the form set out in Schedule 5A;
  • (b) a declaration of competency completed by the nominated independent professional expert, in the form set out in Schedule 5B; and
  • (c) a declaration by the issuer, in the form set out in Schedule 5C.

The above declarations must be submitted for every transaction.

5.3 The LuSE may, unless the issuer is able to provide additional information to satisfy the LuSE, require the issuer to appoint a different independent professional expert to prepare the fairness opinion if (based on the information received in terms of 5.2 above and the LuSE’s investigation thereof) the LuSE is not satisfied as to:

  • (a) the independence of the nominated independent professional expert; and/or
  • (b) the competency of the nominated independent professional expert with regard to the particular transaction; and/or (c) any reasons given by the issuer for the appointment of the nominated independent professional expert.
  • 5.4 The LuSE undertakes to give the sponsoring broker its approval or disapproval for the appointment of the independent professional expert within 48 hours (excluding weekends and public holidays) of receipt of the duly completed declarations required in 5.2 above. No documentation will be accepted for review by the LuSE until approval for the appointment has been given.

5.5 Before issuing a fairness opinion, the independent professional expert must perform a valuation of the issuer and/or the subject of the transaction. Where a valuation has been prepared by a competent third party (in respect of assets such as property or mineral reserves and rights for example), the independent professional expert should set out the manner in which he has satisfied himself that he can rely upon the valuation.

5.6 The LuSE’s request for the opinion of an independent professional expert may result in a statement that the transaction is fair. Where this is not the case and the fairness is impaired, the independent professional expert should give full reasons for his opinion in this regard. Even if the opinion is that the transaction is fair, the independent professional expert must, where appropriate, emphasise critical matters upon which it has relied upon in arriving at the opinion.

5.7 The LuSE only requires that the expert opine on the fairness of a transaction although it would allow the expert to opine on the reasonableness provided detailed disclosure is made in this regard. Fairness is based on quantitative issues and reasonableness on qualitative issues. For illustrative purposes, in the case of a disposal to a related party, the transaction may be said to be fair if the consideration payable by the related party is equal to or greater than the value of the business that is the subject of the transaction. In other instances, even though the consideration may be lower than the value of the business, the transaction may be said to be reasonable in certain circumstances after considering other significant qualitative factors.

5.8 The content of the fairness opinion is at the discretion of the independent professional expert, but must include at least the following basic elements:

  • (a) title;
  • (b) addressee;
  • (c) date of statement;
  • (d) opening or introductory paragraph with the purpose for which the report has been prepared;
  • (e) reference to the relevant LuSE or SRP rules in terms of which the statement is being issued;
  • (f) headings identifying the major sections including, but not limited to, introduction, procedures and the opinion;
  • (g) an explanation as to how the terms “fair” and if so mandated by the board of directors “reasonable”, as indicated in 5.6 above, apply in the context of the specific transaction;
  • (h) details of the information and sources of information;
  • (i) identification and discussion of both the external and internal key value drivers, sensitivities performed and assumptions used;
  • (j) if applicable, a summary of the manner in which the independent professional expert has satisfied itself as to the appropriateness and
    reasonableness of the underlying information and assumptions;
  • (k) a full explanation of the significant factors that led to the opinion given;
  • (l) any limiting conditions;
  • (m) the relationships between the issuer (and any other parties involved in the transaction) and the independent professional expert, as required by 5.1(b) above and as identified in the declaration completed in terms of 5.2(a) above and disclosure of the number and value of shares acquired if the expert’s fees were paid for in shares;
  • (n) confirmation that a valuation has been performed and identification of the valuation methodologies applied, and where there has been reliance upon a third party valuation, confirmation that the independent expert is satisfied with this valuation;
  • (o) a summary of other factors taken into account or procedures carried out in reaching the opinion;
  • (p) a statement that an individual shareholder’s decision may be influenced by such shareholder’s particular circumstances and accordingly that a
    shareholder should consult an independent advisor if in any doubt as to the merits or otherwise of the transaction;
  • (q) the opinion;
  • (r) the independent professional expert’s name, address and authorised signature; and
  • (s) any other information that the independent professional expert feels is appropriate.

5.9 The date on which the opinion is issued must be the same as the date that the directors authorise the submission of the relevant circular to the LuSE for formal approval.

5.10 The independent professional expert has a duty to evaluate all the information provided in a critical manner, as required in 5.8(i) above. This in no way implies that the information must be audited or that the accuracy of all information must be checked. There must be a statement as to how the information has been evaluated and whether or not the expert believes that such information is reasonable, particularly where the information contains forecasts prepared by the management and/or directors of the issuer. Any statement indicating that there has been no independent verification or any other similar statement would only be permissible subject to the following:

  • (a) the experts stating clearly what is meant by “no independent verification”; and
  • (b) such statement not invalidating any work that has been done in terms of this paragraph.

5.11 The LuSE has the right, but not the obligation, to request the independent professional expert to;

  • (a) clarify any aspect of the statement; and/or
  • (b) expand the statement so as to address any issues of concern to the LuSE.

Schedule 5A

Expert’s confirmation of independence

[please delete any paragraphs which are not applicable and which are the subject of a matter choice between paragraphs]

To: The Listings Committee,
LuSE
Central Park
Cairo Road
LUSAKA
……………….. 20 ……….

This declaration is completed with reference to:[insert name of listed company] (“the issuer”), the holding company, subsidiary companies, associate companies and joint ventures of the issuer (“the issuer’s related parties”);

[insert brief description of the transaction] (“the transaction”).

We acknowledge that this declaration has been requested by the LuSE for the purpose of confirming to the LuSE that we have no direct or indirect material interest in the transaction, or in the success or failure of the transaction that may mitigate against our appointment as the independent professional experts for the transaction.

We further acknowledge that the independent professional expert may be;

(a) a company or other entity that does not form part of a larger organisation;

(b) a company or other entity within a larger organisation that can potentially offer a wide range of services to the issuer; or

(c) a division within a company or other entity that falls into either of the two categories above.

This declaration is therefore made in the context that it relates to the individuals, the division and/or the company directly responsible for undertaking the work and issuing the opinion, as well as any other parties within the larger organisation (if applicable) that are involved in issuing the opinion or will directly benefit or profit from the transaction.

Full name of the independent professional expert: ……………………………………………………..(“the expert”), a division/associate/subsidiary of ……………………………………………………………………………..I, ………………………………………………………………………………………………. [insert full names] being a …………………………………………. [insert relationship to expert e.g. director/partner] and duly authorised on behalf of the expert to give this declaration, declare as follows:

1. Internal confidentiality procedures
(a) The expert and, if applicable, the group of companies to which the expert belongs or any other organisation to which the expert belongs, have
internal compliance procedures in place dealing with communication amongst their employees and contractors and amongst the different companies and divisions so as to ensure that information is kept confidential when appropriate;

(b) Through these procedures, information of a non public nature regarding the transaction is unknown to anyone outside of the expert and its larger organisation. In addition, the expert cannot be influenced with regard to the procedures that it follows and the opinion that it will express regarding the transaction;

These procedures are as follows …………………………….. [please provide full details]. In addition, the expert has no objection to the holding discussions with our legal compliance department.

2. Shareholding by directors/partners/employees etc of the expert in the issuer

(a) The persons who are directors, partners, officers, employees, consultants or contractors (“staff”) of the expert and who are involved in the activities of the expert in relation to the transaction and who further have an interest in any class of share, debt or loan capital of the issuer, the related parties to the issuer or any other party involved in the transaction or who may benefit from the transaction, are as follows:

Name of company Nature of holding Holding number of shares Kwacha value of holding as at date of Name of registered holder and
beneficial owner and relationship of beneficial owner to the expert

The expert does not believe that the above holdings will compromise the independence of the expert because ……………………….. [please provide full explanation per individual disclosure] or

(b) No persons who form part of the staff of the expert or who are otherwise directly or indirectly involved in the activities of the expert in relation to the transaction have any interest in any class of share, debt or loan capital of the issuer, the related parties to the issuer or any other party involved in the transaction or who may benefit from the transaction; and

(c) The information given in (a) and (b) above has not changed in the last 6 months; or

(d) The information given in (a) and (b) has changed to the extent of ……………………. [please provide full details of all changes].

3. Shareholding of the expert in the issuer

(a) The expert and the following companies and funds under the management of the expert have an interest (being all such interests of which the expert or the compliance department is aware) in the following shares, debt (short term or long term) and loan capital of the issuer and/or any other company which is one of the issuer’s related parties and/or any other party involved in the transaction or who may benefit from the transaction;

Issuer or group company Nature of holding Holding (number of shares and %) Kwacha value of holding as at date of letter Name of registered holder and
beneficial owner and relationship of beneficial owner to the expert

The expert does not believe that these holdings will compromise the independence of the expert because…………………………………….. [please provide full explanation per individual disclosure] or

(b) Neither the expert nor any companies or funds under the management of the expert, has any interest (of which the expert or the compliance
department is aware) in any class of share, debt (short term or long term) or loan capital of the issuer and/or any other company which is one of the issuer’s related parties and/or any other party involved in the transaction or who may benefit from the transaction; and

(c) The information given in (a) and (b) above has not changed in the last 6 months; or

(d) The information given in (a) and (b) has changed to the extent of……………………………. [please provide full details of all changes]

4. Directorships of the staff of the expert

(a) The individuals named below, who form part of the staff of the expert, or any subsidiary or associate company of the expert, or the expert’s holding company, or any company in the expert’s holding company’s group are directors of the issuer, or of a company which is one of the issuer’s related parties or any other party involved in the transaction or who may benefit from the transaction;

Name Employer Company of
which individual
is a director
Nature of directorship
(executive or non-executive
and portfolio)