The Beirut Bourse becomes
a joint stock company
To be privatized within a year
The Council of Ministers has issued a decree to establish the Beirut Stock Exchange SAL (BSE) as a joint stock company. The new BSE will replace the existing bourse, which will be liquidated.
The initial capital of the new company is set at LL100 million ($66,000) divided into 100,000 shares, each with a nominal value of LL1,000. It could be increased in the future by issuing new shares, or by converting reserves into stocks, or by other legal means.
The shares of the new BSE will be first owned by the State, then they will be offered for subscription to private sector investors within one year from its founding, according to the company’s bylaws.
The shares could be sold in an initial public offering (IPO), in a private placement, or by other means. The potential shareholders should have the financial capabilities and technical knowhow to operate the stock exchange, said Firas Safieddine, Vice Chairman of the Capital Markets Authority (CMA).
Institutional investors such as banks and financial institutions are the best qualified to acquire BSE shares.
A private sector shareholder is not allowed to own more than ten percent of the company’s capital, unless they obtain the prior approval of the Council of Ministers.
The operators of the BSE could be required in the future to sell part of their shares to individual investors.
All rights, obligations, and activities of the present bourse will be transferred to the new company, including contracts and agreements with third parties. The new BSE will retain its current employees and advisors.
The main reason for corporatizing and privatizing the bourse is to boost its operations as private operators will actively seek to list more securities and commodities once the changes have been made.
The new BSE will be operated as a private company, decision making will be faster as its management will have more control and will not be fettered by bureaucratic routine, Safieddine said.
The owners will be required to set up an electronic trading platform (ETP).
The majority of BSE board members after privatization must be Lebanese nationals.
The bourse will accept listings of shares, bonds, certificates of deposits, units (shares) of collective investment schemes (investment funds), securitization instruments, and any other securities or financial instruments that can be listed and traded on bourses. Commodities can also be listed, such as raw materials and metals, in addition to precious metals like gold. It will also allow the listing of shares in small and medium enterprises (SMEs).
The interim board of directors of the BSE that will be in charge until the company’s shares are sold will carry out two main tasks. The first is to ensure a smooth transition without halting the operations of the bourse. The second task will be to conduct a thorough study of the current situation surrounding the bourse and the plans for developing its operations. The study will tackle such issues as the ETP and incentives and programs to boost the BSE’s activity.
The interim board will comprise seven members, two from the existing BSE to ensure continuity, three executive board members from the CMA with financial and banking knowhow, and two members from the Ministry of Finance, according to Safieddine.
Reported by Shikrallah Nakhoul
Date Posted: Sep 27, 2017