(MENAFN - Gulf Times) Qatar Exchange (QE) has established a separate junior bourse for small and medium enterprises, QE Venture Market.
The Qatar Financial Market Authority (QFMA) has stipulated small and medium enterprises (SMEs) with a track record of one year and a minimum subscribed capital of QR5mn (50% paid) to be eligible for listing compared to three years and a higher capital base of QR40mn (50% paid) for those in the main market.
No minimum market capitalisation has been mandated but the QFMA stipulated a minimum of 20 shareholders and a minimum float of 10% for SMEs against 100 shareholders and 20% free float in case of the main market.
SMEs can list their shares either through an initial public offering or otherwise.
Although SMEs from Qatar would be the mainstay, those from other Gulf countries and wider Middle East and North Africa region as well as small international companies, would be permitted to list in the QE Venture Market, which is billed as the first of its kind in the Arab region.
There are no directly equivalent junior markets in the GCC .
Adequacy of working capital statement should be provided by the issuer and that at least 75% of the capital must be invested in the core business activities.
The QE expects five to 10 companies initially to be listed but exchange officials said the market's size would be in line with the country's economy and its main market. The platform is ready and it was for the companies to decide when they want to list, according to officials.
"We expect it (trading of SME stocks) to materialise when we have a critical mass of reasonable number of companies, anywhere from five to 10 (initially)," QE CEO Andre Went said.
The exchange is ready in terms of legal and regulatory framework to receive the SMEs, said QE Listings director Abdul Aziz al-Emadi.
Colin Milton, deputy listings director, QE, said the junior bourse would levy a flat listing fees which would be substantially lower than in the main market.
In view of the inherent difficulties faced by SMEs in following the corporate governance and other legal and regulatory norms, the QFMA has said the listing advisers services must be required at all time whereas it is required only at the submission in the case of listed entities in the main market.
Considering the higher risk profile of the SMEs, QFMA has also made it mandatory to ensure liquidity providers, who are usually brokers; while it is not required in the case of those in the main market.
Unlike the main market, designed for larger companies with established track records, QE Venture Market is intended for smaller companies with a more flexible disclosure and corporate governance regime, according to Went.
"The criteria, set specifically for SMEs, are different from the currently-applicable requirements for listing companies in the main market.
The establishment of a junior market will give SME owners the opportunity to be listed in QE under lighter and more flexible regulations, in addition to giving them access to further finance sources to grow and expand their businesses," he said.
In practice, he said, there would be less stringent entry requirements and reduced information conditions on listing.