Initial Public Offerings (IPOs)
An Initial Public Offering (“IPO”), the process whereby a public company offers for the first time securities to the general public, provides various benefits for capital financing. Nevertheless, a company should only consider undergoing an IPO if it has reached a certain level of progress, integrity and maturity and is furthermore desirous of expanding to greater levels.
The raising of capital and liquidity through the issue of shares is certainly one of the main characteristics of an IPO. By using proceeds from the share issue in a positive manner, listed companies ensure constant growth, through increased investment in research and development, capital expenditure, acquisitions or the payment of existing debt.
The Maltese Stock Exchange was awarded the Most Innovative Stock Exchange Award in 2014; it offers various admission to listing options, multi-currency options and a full-value chain of services from IPO up to the registration of securities in book-entry form within its depository. This, together with its proven track-record makes it an ideal gateway for international listings.
GTG has assisted a number of Maltese companies in their IPO process and continues to offer legal assistance not only on day-to-day matters but also in other processes such as the issue of bonus shares, increases in share capital
Benefits under Maltese Law Malta provides various fiscal advantages to stimulate trade in quoted securities. In accordance with the provisions of the Income Tax Act, the transfer of securities in a company listed on the Malta Stock Exchange is exempt from capital gains tax.
Apart from capital financing, a successful IPO signifies a major landmark in the development of a particular company. The regulatory scrutiny that the listed company would have to face in order to safeguard the integrity of the market raises the company’s status considerably.
There are undoubtedly various other benefits that a company can achieve through an IPO strategy. These include better liquidity, the ability of the company to make acquisitions of other companies using the company’s securities and the retention and recruitment of employees through share option schemes.
Although an IPO is a challenging and demanding process, the final outcome and rewards for the right candidates outweigh any hardship faced.