2004 No. 43.

THE CAPITAL MARKETS (CROSS BORDER INTRODUCTIONS) REGULATIONS, 2004.

ARRANGEMENT OF REGULATIONS.

Regulation.

1.                      Citation.

2.                       Interpretation.

3.                       Application for approval of an Introduction.

4.                       Contents of Information Memorandum.

5.                       Fees not refundable.

6.                       Repeal of S. I. No.17 of 2001.

SCHEDULES.

FIRST SCHEDULE—Eligibility Criteria for Applicants. SECOND SCHEDULE—Contents of Information Memorandum.

2004 No. 43. The Capital Markets (Cross Border Introductions) Regulations, 2004

(Under section 101 of the Capital Markets Authority Act, Cap. 84)

In exercise of the powers conferred on the Capital Markets Authority by section 101 of the Capital Markets Authority Act, these Regulations are made this 13th day of May, 2004.

1.           Citation

These Regulations may be cited as the Capital Markets (Cross Border Introductions) Regulations, 2004.

2.           Interpretation

(1)       In these Regulations, unless the context otherwise requires—

“Act” means the Capital Markets Authority Act, Cap. 84;

“eligible applicant” means a body corporate, which satisfies the criteria for eligibility specified in the First schedule;

“Information Memorandum” means a document accompanying an application for approval of an Introduction, and containing the information outlined in the second schedule;

“Introduction” means the listing of securities, which are already listed and trading on a stock exchange in another jurisdiction;

“primary exchange” means the stock exchange i n the jurisdiction where the applicant’s s hares were first listed;

“primary jurisdiction” means the jurisdiction in which the applicant first listed its securities on a stock exchange;

“primary regulator” means the securities regulator in the primary jurisdiction.

(2)                    Any word, term or expression used in these Regulations, and which has been defined in the Act, has the meaning assigned to it by the Act.

3.           Application for approval of an Introduction

(1)         An eligible applicant may apply to the Authority for the approval of an Introduction.

(2)   An application under subregulation (1) shall be accompanied by—

(a)   an Information Memorandum;

(b)                  a letter of ‘‘No Objection” from the applicant’s primary regulator;

(c)                  a letter of ‘‘No Objection” from the applicant’s primary exchange;

(d)                   in the case where the applicant is a bank or an insurance company or

any other regulated corporate body, a letter of ‘ ‘No Objection” from the relevant regulatory authority; and

(e)                  the fees specified in the Third Schedule.

4.          Contents of Information Memorandum

(1)       An Information Memorandum submitted to the Authority for approval of an Introduction shall contain the information specified in the Second Schedule.

(2)                    The Authority may, in its discretion, waive, modify or dispense with any criterion specified in the First Schedule or any requirement to disclose any of the information specified in the Second Schedule.

(3)                      The Authority may require an applicant to furnish such further information or documentation, as the Authority may deem necessary for purposes of the application for an Introduction.

(4)                     An Information Memorandum shall not be published or distributed without compliance with any amendments, directions made or issued by the Authority, unless any such amendments or directions have been withdrawn in writing by the Authority.

(5)                     An Information Memorandum shall include a declaration by the applicant stating that to the best of the applicant’s knowledge and belief—

(a)                      all the information required to be included in the Information

Memorandum under these Regulations or by an amendment or directive made or issued by the Authority has been so included; and

(b)                     there are no other facts bearing on the application, which in the

applicant’s knowledge and belief should be disclosed to the Authority.

5.          Fees not refundable

(1)          The Authority shall not receive an application for approval of an Information Memorandum unless it is accompanied by the prescribed fees.

(2)                        Any fees paid under these Regulations are non refundable notwithstanding that—

(a)                  the Authority does not approve the Information Memorandum; or

(b)   the applicant withdraws the Information Memorandum before it is approved.

6.               Repeal of S. I. No.17 of 2001

The Capital Markets (Prospectus Requirements) (Amendment) Regulations, 2001, is repealed.

FIRST SCHEDULE ELIGIBILITY CRITERIA FOR APPLICANTS

Regulation 2, 3(1)

An applicant for the approval of an Introduction shall meet the following criteria—

1.         The applicant must either be—

(a)           a company limited by shares and registered as a public company under the

companies law of its primary jurisdiction; or

(b)           a foreign company registered as operating in Uganda in accordance with the

Companies Act, Cap 110.

2.          The applicant must have—

(a)          a minimum authorized, issued and fully paid up capital of not less than Uganda

Shillings One Billion upon currency conversion at the prevailing exchange

rate;

(b)            net assets of not less than Uganda Shillings Two Billion upon currency

conversion at the prevailing exchange rate; and

(c)          at least one hundred thousand shareholders comprising at least 20% of the total

shareholding.

3.      The applicant’s shares must b e freely transferable and not subject to ay restrictions on marketability of pre-emption rights.

4.      (1) The applicant must have published audited financial statements complying with International Financial Reporting Standards for an accounting period of at least five years ending on a date not longer than three months prior to the proposed introduction.

(2)               If more than three months have elapsed since the end of the applicant’s last accounting period for which financial statements have been prepared, the applicant must prepare unaudited interim financial statements from the end of the last accounting period.

(3)               The period covered by the unaudited interim financial statements should not exceed six months.

(4)               The applicant must have prepared audited financial statements for the latest accounting period on a going concern basis and the accompanying audit report must not contain any emphasis of matter or qualifications.

(5)              At the date of the application, the applicant must not be in breach of any loan covenants (if it has any).

5.      As at the date of the application and for a period of at least two years prior to the date of the application, none of the directors of the applicant should have—

(a)            any petition under bankruptcy laws filed against him or her (for individual

directors) or any winding up petition pending (for corporate directors);

(b)           any criminal proceedings in which he or she has been convicted of fraud or any

felony;

(c)             been a subject of any ruling of a court of competent jurisdiction or any

governmental body, the effect of which is to permanently or temporarily prohibit him or her from acting as a fund manager, director, broker, dealer or employee of any financial institution or engaging in any business practice or activity.

6.      The applicant must have declared profits after tax attributable to shareholders in at least three of the last five completed accounting periods prior to the proposed date of the introduction.

7.           The applicant must not be insolvent.

SECOND SCHEDULE

Regulation 2, 4(1), 4 (2) CONTENTS OF INFORMATION MEMORANDUM.

1.          Caution statement

An Information Memorandum shall contain, on its first page, a caution statement to the effect that—

(a)             the Information Memorandum has been delivered to the Capital Market

Authority for approval, but that the securities that are the subject of the Information Memorandum have neither been approved nor disapproved by the Authority;

(b)          the information Memorandum has been delivered to the Registrar of Companies

for registration;

(c)            permission has been granted by the Authority to introduce the securities which

are the subject of the Information Memorandum, through the listing on an approved stock exchange;

(d)            approval of the Information Memorandum by the Authority is not an indication

of the merits of the Company nor its shares;

(e)             the directors of the applicant have taken reasonable care to ensure that the

information contained in the Information Memorandum is in accordance with the Regulations issued by the Authority and that there are no other facts bearing on the application, which, in the directors’ knowledge ad belief, should be included in the Information Memorandum; and that the directors take responsibility for the information in the Information Memorandum;

(f)            that the Information Memorandum does not constitute an offer or invitation to

any person to subscribe for or purchase any new shares in the applicant;

(g)           that the Information Memorandum is not marketing any new shares held by the

applicant;

(h)           that prospective investors must pay due attention to the risk factors outlined in

the Information Memorandum.

2.            Executive summary

An Information Memorandum must contain an accurate executive summary of all its key contents and information.

3.           Key information

An Information Memorandum must contain key information pertaining to the applicant’s share ad capital structure including—

(a)           the authorised share capital;

(b)           the extent to which the authorised share capital is fully paid up;

(c)           the registered number of shareholders in the primary market;

(d)           the par value and classes of the shares;

(e)            the form in which the shares are evidenced, whether by bearer certificate or

otherwise.

4.            Business of the applicant

An Information Memorandum must contain a clear summary of the applicant’s business, its corporate structure, details of its key products and services and those of its subsidiaries if any, as well as alliances and joint ventures.

5.            Risk factors

An Information Memorandum must contain all the risks pertaining to the business of the applicant and to any of its subsidiaries.

6.            Rights and obligations of shareholders

(1)       An Information Memorandum must contain a summary of the rights attaching to the shares of the applicant, and in particular—

(a)the extent of voting rights, entitlement to share in profits of the applicant, and, in

the event of liquidation, rights to surpluses and other special rights as well as any shareholder obligations;

(b)  any material limitation or qualifications on the rights of the applicant’s shares

and details of such limitation or qualification;

(c)   in the event of more than one class of shares, information required under

paragraph 3 shall be given for each class.

7.           Mergers and acquisitions

(1)      An Information Memorandum must include details of any mergers and acquisitions agreed upon but not concluded or not reflected in the accounts of the issuer.

(2)                In the case of subparagraph (1), the applicant shall include the following details—

(a)              the date of the acquisition or agreement;

(b)              the consideration and payment terms;

(c)               any outstanding payments;

(d)               details of the value of the property and valuation methods employed;

(e)               any goodwill paid and how the goodwill was accounted for;

(f)               the nature and title of interest acquired or to be acquired; and

(g)               details of the vendors.

8.           Information on bankers and other advisers.

An Information Memorandum must include details of the bankers of the applicant and the names of advisors of the applicant.

9.           Information on service providers

An Information Memorandum must include details of custodians, registrars and paying agents in the jurisdiction of primary listing, in Uganda and in any other jurisdiction where the applicant is seeking admission on a stock exchange.

10.  Legal opinion

An Information Memorandum must include a legal opinion on the status and operations of the applicant, including—

(a)  any bankruptcies, receiverships or similar proceedings in the preceding three

years;

(b)  the nature and results of any mergers and acquisitions in the preceding three

years;

(c)   a summary of the relevant provisions of the memorandum and articles of

association;

(d)               an opinion on major licenses and consents;

(e)an opinion on the validity of ownership of any land, plant and equipment;

(f)                          any material litigation within and outside Uganda;

11.   Trading and settlement procedures

An Information Memorandum must include details of the modalities and procedures of trading and settlement o f the applicant’s shares in the Uganda market.

12.   Information relating to directors and senior management

An Information Memorandum must include details of all the applicant’s directors ad members of senior management, including their qualifications, business experience, expertise and number of shares held in the applicant.

13.   Capital of the applicant

An Information Memorandum must include details of the applicant’s authorised capital, including a statement of opinion by its directors on whether the capital is adequate for the purposes of the business of the applicant and its subsidiaries, any extent of inadequacy and the proposed manner in which those inadequacies are to be financed.

14.   Borrowing powers of the applicant

An Information Memorandum shall include details of the