New regulation of the “Alternative Investment Market” (MAB)

Mar 01
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New regulation of the “Alternative Investment Market” (MAB)

The updated Mercado Alternativo Bursátil (MAB). More transparency always promotes trust in investors. The MAB has approved a new regulation which aims at enhancing transparency in its listed companies.

In the Spanish financial newspaper Expansión, the vicepresident and CEO of the MAB, Jesús González Nieto says that “these modifications of the Regulation and Circulars arise from finance legislation amendments made in 2015 which affect prevailing regulations.”

Furthermore, as explained in this press release by the Mercado Alternativo Bursátil (MAB), the legislation passed in Spanish Parliament in 2015, which gives rise to changes, includes the Law 5/2015 for the Promotion of Corporate Financing, changes made to the revised text of the Securities Market Act, the Audit Act, the new Clearing and Settlement Legislation as well as Market Abuse and MiFID II European regulations.

These are the main modifications to the Regulation:

1.- As from the new regulation, all companies with a capitalization exceeding 500 million euros during six months will necessarily join the main stock market within nine months. In such cases, repurchase of shares belonging to minority shareholders will no longer be mandatory.

2.- Companies in insolvency or liquidation proceedings will be excluded.

3.- Obligation to have an auditor carry out a limited review of their half-yearly accounts and the extension of the presentation deadline to 4 months of the end of the six-month period.

4.- With regard to the requirements under the Audit Act of June 2016 companies shall rely on an auditor when they are Public Interest Entities – which is the case for those listed on the MAB – and the submission of a Report by the Audit Committee, which is to be made up with a majority of independent directors and presided over by an independent director.

5.- Registered Advisers shall have to be supervised by the Spanish supervisor (CNMV), Banco de España or the ICAC.

The functions of the Registered Adviser are divided into three main groups: general functions, specific functions prior to incorporation and specific functions following incorporation.            

–    In the first group, one outstanding function is that of providing advice to issuers to help them fulfill the obligations derived from their participation in the market and the submission of information as well as verifying that the company meets the admission criteria.

–    In the second, that of assisting in the drafting of the Listing Informative Report, verifying that the information provided is in accordance with the law and does not omit relevant information and providing the Market with an accompanying report analyzing and assessing the compliance with such criteria.

–    Following incorporation, the new regulations describe how regular contact with the company will allow the Registered Adviser to examine all the information the company is to provide, whether periodical or not, and closely track its dissemination in public events or through the media. The Registered Adviser will have to provide the Market with a report verifying each action.

Ultimately, more transparency is required of the MAB and of their listed companies. At this rate, the MAB will become one of the most regulated and transparent markets in the world, which does not mean it has no risk. To the contrary, companies listed on the MAB are growing, not consolidated companies mostly, which could go bust and one could lose one’s investment, as in any risk investment, just as is sometimes the case with companies listed on the electronic market or the IBEX.

 

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