Cambodia Securities Exchange (CSX) new qualified investors initiative will allow companies to list with ‘relaxed’ disclosure requirements targeting only institutional or high net worth investors. The exchange confirmed last week that Royal Group subsidiary – Telcotech Ltd – has received in-principle approval to be the first bond under the new program.
HE Hong Sok Hour, Chief Executive Officer of CSX told Cambodia Investment Review that companies listed under the program however will not receive tax incentives that are currently allowed for publicly available securities.
“Qualified investors refer to an institutional investor or high net worth investors which include firms already licenses by SERC and companies and individuals that KHR2 billion ($500,00) or annual revenues KHR200 million ($50,000) investments in the local securities sector,” Sok Hour said.
“Total net assets at least KHR1 billion ($250,000) or annual income at least KHR80 million ($20,000) or investment participation in the local securities sector of at least KHR100 million ($25,000),” he added.
The exchanges regulator Securities and Exchange Regulator of Cambodia (SERC) will also not require quarterly reviewed disclosures – a common complaint amongst companies looking to list securities on the exchange.
In addition, the regulator will not release the companies annual audited reports publicly.
“Periodic disclosure obligation including quarterly report and annual report are exempted for the company issuing a corporate bond for Q1, but the company still shall submit the annual report to SERC within 90 days or a proper duration determined by SERC. For QI bond, there will be trade among only qualified investors at the secondary market,” Sok Hour said.
“The company is not entitled to tax privileges as a normal bond listed company since the company issues only for qualified investors, not for the public investors. The tax incentive will only be given to the company making a public offering,” he added.
According to Anukret on Tax Incentive in Securities Sector, Companies that list on Cambodia’s stock exchange receive a 10% reduction of the Tax on Profit and a 50% reduction on withholding taxes on dividends and interest for a period of 3 years.
Currently, the qualified investor initiative is not available for equity listings. However, SERC and CSX team have been discussing a similar feature project for equtieis listing.
Sok Hour recently told ‘Cambodia Investment Review Leader Talk’ series, that while there are currently only seven equity and six bonded companies listed, he plans to have three or more stocks listed this year and 20 or 30 more in the next five years.