A review of listing on Tunisia's debt and equities markets

The Tunis Stock Exchange (Bourse des Valeurs Mobilières de Tunis, BVMT) was created in February 1969 and as of April 2018 listed 81 companies.

Stock exchange regulations were significantly revised by Act No. 117 of 1994, which reorganised the financial market. This law was accompanied by other legislative measures, including regulatory changes to the public prosecutor’s office and the Financial Market Council (Conseil du Marché Financier, CMF), which is charged with oversight and regulation of the financial services industry.

Improvements are still being made to clarify certain legal clauses so they can be more practically applied, but most importantly, reforms are giving operators more freedom to diversify financial products. Authorities at the BVMT, namely the CMF, seem aware of this need and recently commissioned a number of studies to this end.

The Basics

In order to give a brief overview of the Tunisian financial market, we have outlined:

• A short presentation of financial instruments offered on the market;

• The conditions for admission to the market of equity securities;

• The consequences of acquiring an amount of securities of a publicly listed company that crosses certain thresholds; and

• The most recent legislation relating to the financial market.

Financial Instruments

Traded shares are divided into two types: shares that are listed on the exchange and those traded over the counter.

Financial securities can be listed on the stock exchange on the equity market, which consists of a main market and an alternative market; or the debt market, which consists of a market for bonds and another for special purpose vehicles (fonds communs de créances, FCCs). On the equity exchange, the alternative exchange has much simpler admission requirements than those required for the main market, and was created to encourage small and medium-sized enterprises to raise capital by listing publicly. The bond market is open to debt securities issued by the state or local public authorities, as well as to all other debt securities issued by private bodies that are permitted by the CMF to trade, while the FCC market is open to securities issued by FCCs. The over-the-counter market is open for trading in equity and debt securities of any PLC that is not admitted to the stock exchange.

Admissions Requirements

The following are a list of admissions requirements for companies wishing to list on the equity market:

• The publication of audited annual accounts for the last two financial years, with the possibility of an exception for companies whose entry into business is less than two years old;

• The public distribution of 10% of the firm’s capital, with the possibility of an exception if the amount exceeds TD1m (€384,000);

• The presentation of a valuation report on the company’s assets;

• Adequate organisation, including internal audits and management control;

• The presentation of forecasting information over the last five years drawn up by the executive board and accompanied by the auditor’s opinion; and

• The production of an admissions prospectus which has been approved by the CMF. The following are specific conditions for companies wishing to list on the main market:

• Profit in the last two consecutive financial years, although this condition is not required if the company enters through the direct registration system following a capital increase;

• Public distribution of the company’s shares among at least 200 shareholders on the date of issue at the latest; and

• A minimum capital requirement of TD3m (€1.2m) on the date of issue at the latest. For companies wishing to list on the alternative market, neither the profit or minimum capital requirement conditions apply. However, the company must meet the following prerequisites:

• There must be public distribution of the company’s shares among a minimum of 100 shareholders or five institutional shareholders on the date of issue at the latest.

• A minimum of 20% of the firm’s capital must have been held for more than one year by at least two institutional investors.

• Admission may be requested by a company being incorporated through a public offering in the case of large projects.

• The firm must present a certificate of due diligence for the admission of securities to the alternative market by a listing sponsor.

• The firm must designate a listing sponsor whose term of office has not been less than two years during the entire period of residence on the alternative market according to its permits.

Securities Acquisition

Acquiring securities of a publicly traded company subjects the acquirer to a certain number of obligations based on the proportion of securities acquired or to be acquired, under the following conditions.

Any person intending to acquire a block of securities conferring voting rights exceeding 40% of the firm’s capital must submit a file to the CMF, which will henceforth make a decision taking into account the interests of the rest of the shareholders.

The applicant will then be ordered to make an offer to purchase the remainder of the capital they do not yet hold, either in the form of a takeover bid or by buying out minority shareholders at a fixed price per share. However, it is important to note that the CMF may exempt the applicant from purchasing the remaining shares under two conditions: first, if the company’s shares are not publicly traded; and second, if this transaction does not affect the interests of shareholders.

Failure to comply with the decision of the CMF may result in payment of a fine and/or the forfeiture of voting rights of the securities acquired.

In certain cases, the rules requiring the filing a draft public offer can be waived as per the stock exchange’s general regulations in particular, where the acquisition results from the privatisation of public undertakings or the sale of securities by public bodies. Lastly, if the acquisition of listed securities reaches a proportion of more than 95% of the company’s voting rights, it may result in an obligation to file a public repurchase offer.

Securities Thresholds

Regarding the acquisition of securities that result in the crossing of certain limits, the law obliges any purchaser acting alone or in concert to declare to the CMF and the BVMT when exceeding the following thresholds of the firm’s capital, within five working days from the date of the purchase and to declare the total number of shares and voting rights the acquirer holds: 5%, 10%, 20%, 33%, 50% and 66% .

Failure to make a declaration shall result in the loss of voting rights for the stakeholder at any shareholders’ meeting held within the following three years.

Legislative Measures

On January 19, 2017 new CMF legislation relating to the financial market and practical measures to combat money laundering and the financing of terrorism was approved by ministerial decree. In addition, March 28, 2017 saw an additional ministerial decree adopt CMF regulations pertaining to the prevention of market failures.

OBG would like to thank Meziou Knani & Khlif for its contribution to THE REPORT Tunisia 2018