A P P E N D I X II
CHAPTER 4 - TRADING, SETTLEMENT & CENTRAL SECURITIES
DEPOSITORY
One of the Group of Thirty recommendations immediately adopted by the Malta Stock Exchange (MSE) was the setting up of a Central Securities Depository (CSD) and the consequent dematerialisation of certificates for listed securities.
This system allows investors to hold and transfer
listed securities without the need for physical certificates or special
transfer forms. Each listed security is represented by a computerised register
of accounts which is updated following settlement to reflect the day’s
transactions. The CSD also provides for the settlement of off-market
transactions and has been designed so as to be fully compatible with the
trading, clearing and settlement systems utilised within the Exchange.
The CSD meets the following major objectives :
-
integrity;
-
confidentiality;
-
provisions for all major market activities relating to the ownership of
securities; and
-
compliance with international standards.
The system operated at the CSD consists mainly of a
large database able to identify individual holdings by issue and which can be
readily accessed by authorised officials. Security holders who become
registered for the first time will be assigned an MSE Account Number otherwise
also referred to as the Folio Number.
The Malta Stock Exchange has also adopted the use of
an International Securities Identification Number (ISIN) for listed securities.
The ISIN Number consists of a country code, a security’s domestic code number,
and a check digit to validate the code. Each security, upon listing, is
immediately assigned an ISIN number and thus acquires a unique code which can
be quoted on a world-wide basis. This system is in line with one of the Group
of Thirty recommendations and is particularly useful in the case of
cross-border transactions.
The CSD
shall be responsible to keep, maintain and continue to update the Issuer’s
Register with all details relative to the transfers, transmissions, pledges of
and rights of mandates or of usufruct on the securities for as long as the
Register is maintained by the CSD and to provide the services described in this
Appendix.
The Issuer
shall continue to be responsible for due compliance with all the relevant
provisions of the Companies Act, 1995 and the Issuer’s Memorandum and Articles
of Association. The Issuer shall be
responsible to ensure that it will satisfy all obligations and duties obtaining
under all relevant laws, statutes, rules and regulations that may apply from
time to time.
The Issuer
shall pay to the MSE the relevant charges referred to in this booklet as may be
due from time to time and as duly announced by the Exchange from time to time.
The CSD
will not receive instructions or requests to supply information to anyone other
than upon the written request of the Company Secretary or his appointed
delegate.
1.
Transfers
The MSE effects transfer of title between individual
holders of securities whose Registers are maintained by the CSD, in the
following circumstances :
Transfers resulting from trades taking place during
trading sessions will be handled by the CSD. Registration of transacted
securities will take place on Settlement Day via a movement of the MSE’s
Registration System.
Transfers
resulting from trades taking place in accordance with the Off-Exchange Trading
Regulations, 2004 and verified and confirmed through the Off-Exchange Trade
Validation and Reporting System will be handled by the CSD. Registration of
transacted securities will take place via a movement in the MSE’s Registration
System.
(i)
Causa Mortis Account Freeze
Upon notification of death
of a holder of securities, his MSE account/s or of the spouse of the deceased
or other accounts jointly held or co-owned by deceased and / or the spouse (as
a holding between spouses or between them and other third parties) will be
immediately blocked (“frozen”) pending further clear instructions on the “causa
mortis” transfer.
(ii) Release
of Estates
Upon notice made on the
appropriate forms as agreed between the MSE and the Issuer regarding the
distribution of the holdings of the deceased, the CSD will effect the transfer
on the Register.
The MSE’s Legal Office may
provide the Issuer with the service of processing and vetting of papers leading
to the final release and transfer “causa mortis”.
Donations will be processed by the CSD based upon the information provided on the donation document subject to the receipt of a valid deed in accordance with Bye-law 4.02.01.
If a holder and spouse wish to amalgamate holdings
which have been registered individually, the transfer into a joint account can
be effected upon the written and signed instructions of both parties, and upon
the production of the relative authenticated documentation.
N.B. : The CSD informs the holder directly of any
movements in respect of any transfer by means of a Registration Advice.
2. Amendments to Static Details
Since client data is not static and is subject to change from time to time, the CSD shall maintain the Issuer’s Register as up-to-date as possible.
Amendments to registered holders’ details (name,
surname, address) will be effected on the written and signed instructions of
the holder. These have to be accompanied by the relevant documents where
applicable, e.g. Identity Card, Birth Certificate or Marriage Certificate.
The MSE will be informed of the changes to be
effected as follows :
·
holder calls at the MSE and completes a change of address form;
·
by the Company through the Registrar’s Office*;
·
in writing to the MSE stating his MSE Account Number and the changes to
be effected; and
·
through the Broker’s Client Notification Form.
N.B. : Since the holder’s account may contain
holdings other than those of the listed company, amendments to the static
details will be reflected across the individual’s holdings.
Categories are maintained as specified by the Issuer in terms of prevailing legislation, e.g. indicating that a client is a non-resident, minor, employee or director of the company, etc.
3. Corporate Actions
Corporate Actions will be handled as follows :
Dividends
When dividends are due the MSE will identify the security holders, calculate the payment due and will print the details on the cheques and vouchers supplied by the Issuer. The CSD will forward the printed instrument to the Issuer in bulk. The Issuer will be responsible for reconciling dividend warrants and interest payments and for signing and mailing the warrants.
As part of the dividend payment procedure the CSD will :
- indicate on a separate report payments withheld due to unresolved Estates or Garnishee Orders; and
- provide dividend warrant details on magnetic media to facilitate the reconciliation process.
Mandates
The CSD will record the request made by the holder for the payment of any dividends due from holdings held by a security holder to be issued either to a third party recipient (e.g. mandatory, usufructuaries / legal guardians, curators, etc.) or directly to a bank account, upon written authorisation from the security holder involved or such third parties themselves, subject to the production of relevant authenticated documentation.
Direct Credit Facilities can be made available on all registers after discussions with the Issuer who requests this service. Direct Credit Facilities are issued in conformity with file formats common to all banks.
Redemptions
When a security matures, the CSD will identify the relevant security holders and will prepare on the stationery provided by the Issuer cheques for the amount redeemed. The Issuer will assume responsibility for the reconciliation and for the mailing on the relevant cheques.
New Issues
The CSD is capable of dealing with Primary Issues and can assume responsibility of all stages i.e. from the processing of the applications to the allotment stage and the printing of refund cheques (if any) in relation to unsatisfied subscriptions.
The Issuer may assume responsibility for the management of New Issues independent of the Exchange, however on allotment the Issuer will be required to supply the CSD with all the relevant information to enable the CSD to enter the relative information on the respective Register on the Issuer’s behalf.
Rights and Bonus Issues
Such issues may be handled by the CSD on behalf of
the Issuer and in accordance with the Issuer’s instructions.
4.
Pledges and Garnishee Orders
As part of its obligations to maintain the Register of the Issuer, the CSD will maintain a record of Pledges (or part pledges) and Garnishee Orders against the respective accounts.
The maintenance of Pledges or Garnishee Orders will
be as follows :
Details of a pledge for either registration and / or
release, as the case may be, will be notified directly by the pledgee to the
CSD on the authorised form. The CSD will record the details of the pledge
against the pledgor’s account and the action taken regarding the pledge is
acknowledged to both parties.
Upon instructions from issuers of listed securities,
the CSD shall record the execution of garnishee orders against holders of
listed securities in respect of those securities issued by the same issuers
served with garnishee orders.
In these cases, no dividends will be printed in
respect of such securities, pending receipt of further instructions. However,
disposals of these securities are not restricted.
No responsibility is assumed vis-à-vis the garnishee
creditor or the garnishee debtor.
5. Notification to Security Holders
Security holders are notified at the security
holders’ sole risk of any movements regarding their holdings in the securities
listed on the MSE as follows :
On Settlement Day a ‘Registration Advice’ is issued to the investor on a per-security
basis and is related to sales and / or purchases in the security holder’s
account arising from the relevant trading session or in respect of off-exchange
trades which have been verified and confirmed on the Off-Exchange Trade
Validation and Reporting System. Registration Advices are also issued for any
movement in each security, including purchases through IPOs and are dispatched
from the MSE directly to the security holder at the latter’s risk.
A ‘Statement
of Holdings’ shows details of the individual’s holdings in all securities
and will be dispatched by the MSE to all registered holders annually at the end
of each calendar year. Statements of Holdings are only sent directly to the
registered holder’s address. Security holders may request from the MSE
additional Statements during the year.
6. Remote Access
In its endeavours to provide Issuers with the best
possible service, the MSE can provide the technology with the necessary
authorisations and security set-ups for the Issuer to make use of a remote
workstation to establish a link solely to his Register/s including facilities
such as on-screen analysis and printing of reports.
7. Register Monitoring
The MSE provides the Issuer with the reports necessary or as requested in order to enable the Issuer to monitor holdings in accordance with any restrictions that may exist. The format and timing of these reports will be agreed upon with the respective Issuer.