finance

1. Listing Eurobonds on the CISX
Introduction
In order to qualify as quoted Eurobonds, and
therefore enable interest to be paid gross
without deduction of income tax, securities
have to meet the conditions set out in section
349(4) Income and Corporation Taxes Act 1988
("ICTA"); namely quoted Eurobond means any
security that: (i) is issued by a company; (ii) is
listed on a recognised stock exchange; and (iii)
carries a right to interest.
A recognised stock exchange is a stock
exchange designated as such by HMRC under
section 841 ICTA and section 1005 Income Tax
Act 2007. The Channel Island Stock Exchange
("CISX") is a designated exchange for these
purposes.
This guide contains a summary of the main
requirements for the admission of quoted
Eurobonds by private issuers to a primary
listing on the CISX. A more detailed Client
Guide on listing specialist debt securities
(which also covers listing of debt by public
issuers and listing asset backed securities
and warrants), together with client guides on
listing debt and equity of trading companies
and investment funds have been prepared by
Mourant Ozannes and are also available on
request.
Why use the CISX rather than any other
recognised exchange for a quoted
Eurobond listing?
The CISX offers the following key advantages:
• a fast document turnaround time and
an efficient service (a listing of a quoted
Eurobond can typically be achieved in
two weeks);
• competitive pricing (a typical listing fee of
£3,925, with a further £125 per issue);
• sponsor's fees which are significantly less
than other major exchanges; and
• a pragmatic approach to disclosure
requirements.
The CISX Approach to Listing
In accordance with its pragmatic, business
oriented approach to regulation, the CISX is
flexible as concerns the disclosure required in
respect of an issuer and its debt securities in
a Listing Document, particularly in relation to
SPV issuers. A Listing Document must disclose
such information relating to the issuer and the
debt securities to be listed as is specified in
Appendix IX, Part D of the CISX Listing Rules or
otherwise required by Chapter VIII of the CISX
Listing Rules (the "Listing Rules") a summary
of the key requirements of which appears
below. Where any such information would not
be applicable or inappropriate to a particular
issue an application for derogation from the
requirement to include such information
may be made to the CISX. The CISX may also
waive, modify or not require compliance with
Listing Rules in individual cases. Consideration
is given in the paragraphs which follow to
the main derogations typically granted when
listing quoted Eurobonds.
Main Requirements for Listing of Quoted
Eurobonds
Rule 8.1.2
The issuer must, inter alia, be an SPV or a
company.
An SPV is defined as, inter alia, a company
formed for the specific purpose of issuing one
or more classes or series of debt securities.
It is upon this definition that the ease with
which it is possible to list a quoted Eurobond
turns (for reasons which will become apparent
in the paragraphs which follow). Generally,
most of the quoted Eurobonds that are being
listed represent intra-group debt, usually a
subsidiary issuing a loan note to a parent. In
this sort of case the CISX is generally flexible
about what will qualify as an SPV (although
it will make an assessment in each case). For
BRIEFING
JAN 2011
For more briefings visit
mourantozannes.com
This briefing is only intended
to give a summary and general
overview of the subject
matter. It is not intended to
be comprehensive and does
not constitute, and should not
be taken to be, legal advice.
If you would like legal advice
or further information on any
issue raised by this briefing,
please contact one of your
normal Mourant Ozannes
contacts.
Contacts:
Jonathan Rigby
Managing Partner
John Rainer
Partner, Jersey
Tim Herbert
Partner, Jersey
James Hill
Partner, Jersey
For contact details, please see
the end of this briefing.
mourantozannes.com CAYMAN GUERNSEY JERSEY LONDON

2. BRIEFING
mourantozannes.com CAYMAN GUERNSEY JERSEY LONDON JANUARY 2011
these purposes, the fact that an issuer has
subsidiaries or that it holds investments will
not usually prevent it from qualifying as an SPV.
However, the issuer should not be a trading
company.
Rule 8.2.2
With the exception of securities issued by an
SPV, a private issuer of debt securities listed
must normally have produced independently
audited accounts for the two financial years
preceding the application for listing. In
exceptional cases the CISX may accept a
shorter period, for example where the issuer
may be more recently incorporated. Where
such an issuer is guaranteed the guarantor of
the issuer must also provide copies of its latest
independently audited accounts to the CISX.
It is therefore key that any issuers unable
to meet the above accounts' requirement
qualify as SPVs. In addition, if an issuer
does not qualify as an SPV the Exchange
may, depending on the details of the issue,
determine that the debt securities must
be listed under Chapter VI of the Listing
Rules, rather than Chapter VIII. Chapter VI is
considerably more burdensome than Chapter
VIII. For these reasons most Eurobond listings
involve SPV issuers, and if the issuer is not
an SPV it may be necessary to replace it with
a new SPV issuer in order to complete the
listing.
Rule 8.2.3
The issuer's securities must be eligible for
deposit in a clearing and settlement system
acceptable to the Exchange. The Market
Authority will, in consultation with the issuer's
sponsor, designate an approved clearance
system to be used for each security. This
information will be published by the Exchange
on its trading system. A clearance system
may be one of the following (i) Euroclear, (ii)
Clearstream or (iii) cash settlement via the
Sponsor.
In our experience, in the context of listing
intra-group debt, the CISX will usually grant a
derogation from this requirement so that cash
settlement by the issuer will be permitted.
Rule 8.2.5
Listed securities must be freely transferable
and tradable and fully paid securities must be
free from all lien. Securities may, however, be
subject to transfer restrictions or compulsory
redemption (a) where the holding of such
securities may result in a regulatory, pecuniary,
legal, taxation or material administrative
disadvantage for the applicant or the holders
of its securities as a whole or (b) to maintain
a minimum holding per holder, as specified
in the Listing Document. In exceptional
circumstances approved by the Exchange,
an applicant may take power to disapprove
the transfer of securities provided that the
exercise of such power would not disturb the
market in those securities.
In our experience, free transferability is not
a requirement which is generally considered
to be problematic to comply with. However,
where notes are not freely transferable,
the transfer restrictions would need to be
disclosed in the Listing Document and a
derogation would need to be applied for.
Key Listing Document Disclosure
Requirements
Rule 8.4.7
Debt securities issued by SPVs are by their
nature usually purchased and traded only
by a limited number of investors who are
knowledgeable about investment matters.
The Listing Document or notice must
contain such information as is necessary for
investors to make an informed assessment
of the activities, assets and liabilities, financial
position, management and prospects of the
issuer and of its profits and losses and the
rights of such debt securities, including the
information required by the following Rules.
One of the benefits of a Chapter VIII listing is
that SPVs do not have to make any financial
disclosure in the Listing Document. The
above overarching requirement may appear
to compromise this position. However, in the
case of an SPV issuing loan notes to a parent,
the CISX is generally prepared to grant a
derogation from this requirement on the basis
that a parent will be aware of the condition of
its subsidiary. Where loan notes are not issued
to a parent, then issuers will need to consider
what level of financial disclosure is appropriate
given their particular circumstances.
Appendix IX Part D - Paragraph 9
The Listing Document needs to contain a
description of or the text of the terms and
BRIEFING
mourantozannes.com CAYMAN GUERNSEY JERSEY LONDON

3. BRIEFING
mourantozannes.com CAYMAN GUERNSEY JERSEY LONDON JANUARY 2011
conditions of the issue including the following
information:
a. the nominal amount of the issue or, if this
amount is not fixed, a statement to that
effect, the nature and number of the debt
securities and the nomination(s);
b. a summary of the rights conferred upon
holders and particulars of the security;
c. except in the case of continuous issues,
the redemption price and the nominal
interest rate and, if floating, its mode of
calculation (in the case of convertibles
the issue price should also be given);
d. if several rates of interest are provided for
in the case of specified in paragraph (c)
above, an indication of the conditions for
changes in the rate;
e. details of the method of payment of the
issue or offer (as the case may be) price
including a description of any instalment
arrangements;
f. details of the rate, if any, of withholding
tax withheld at source on the debt
securities and an indication as to whether
the issuer assumes responsibility for the
withholding of tax at source and any
redemption option in the event of a
withholding tax being introduced on or
in respect of payments under the debt
securities;
g. details of the arrangements for the
amortisation or early redemption of
the issue, including procedures to be
adopted;
h. the names and addresses of the paying
agent(s) and any registrar and transfer
agent(s) for the debt securities in the
Channel Islands or in such other place
and the Exchange may agree to;
i. details of the arrangement for transfer
of the securities (if not in bearer form)
including details of any fee payable in
relation to transfers or other documents
relating to or affecting the title to or
registration of the securities;
j. the currency of the issue. If the issue is
payable in any currency other than the
currency of issue, this fact should also be
disclosed;
k. details of the following time limits; (i)
final payment date and early repayment
dates, specifying whether exercisable
at the issuer's or the holder's option; (ii)
the date from which interest accrues
and the interest payment dates;(iii)
the prescription period for claims for
payment of interest and repayment of
principal; and (iv) procedures and time
limits for delivery of the debt securities,
whether there will be temporary
documents of title and, if so, the
procedures for the delivery and exchange
of documents; and
l. except in the case of continuous
issues, an indication of yield and a brief
description of the method of calculation
of the yield.
Appendix IX Part D - Paragraph 10
The Listing Document needs to contain, inter
alia, the following information:
a. a description of any subordination of the
issue to other debt of the issuer already
incurred or to be incurred; and
b. details of any legal restrictions on the free
transferability of the debt securities.
Appendix IX Part D - Paragraph 15
With regard to every company the whole, or
a substantial proportion, of whose capital is
held or intended to be held (either directly
or indirectly) by the issuer, or whose profits
or assets make or will make a material
contribution to the figures in the accountants'
report or the next published accounts,
the Listing Document needs to contain
particulars of the name, date and country of
incorporation or other establishment, general
nature of business, issued capital and the
proportion of it held or intended to be held.
The CISX has granted derogation from the
need for an issuer to show indirect subsidiary
holdings provided that direct subsidiary
holdings are disclosed and information in
relation to the indirect subsidiaries is included
within some other document eg the most
recent audited accounts.
Appendix IX Part D - Paragraph 21
The Listing Document should include details
of the location and where for a reasonable
period of time (being not less than 14 days) the
following documents may be inspected:

4. BRIEFING
mourantozannes.com CAYMAN GUERNSEY JERSEY LONDON JANUARY 2011
a. the memorandum and articles of
association of the issuer;
b. the loan note or other document
constituting the debt securities; and
c. the audited accounts of the issuer or,
where appropriate, the consolidated
audited accounts of the issuer and its
subsidiaries for the last financial year
immediately preceding the issue of the
Listing Document.
The Procedure for Listing
Stage 1: Seek Exchange's approval in principle
to the listing
The issuer or its sponsor or adviser should
approach the Exchange to discuss the
suitability of the listing proposals prior to
making any formal application. This will
probably not be necessary for most Eurobond
listings.
Stage 2: Initial Application
The sponsor, in conjunction with the
applicant's professional advisers, will prepare
drafts of the formal listing documentation for
review and comment by the Exchange. An
initial application is made to give the Exchange
an opportunity to comment on draft
documentation. All applications for listing will
be processed by the Listing Department of the
Exchange.
The application documents will include the
following:
• formal application for listing;
• sponsor's declaration;
• listing undertaking;
• directors' declarations if specifically
requested by the Exchange (this would be
unusual);
• Listing Document;
• if necessary, application for derogation
from any formal listing requirements;
• formal notice setting out the material
terms of the proposed issue;
• copies of the certificate of incorporation
(or equivalent document) and
memorandum and articles of association;
• authorising board and other relevant
resolutions of the issuer;
• a certified copy of the executed note
instrument;
• payment of listing fees; and
• such additional documentation as may be
required by the Exchange.
Stage 3: Final Application and Listing
The documents referred to above are filed
with the CISX in final form and signed where
necessary. If the Market Authority approves
the application (it meets daily to consider
applications for listing), the securities are
admitted to the Official List.
Continuing Obligations
A limited number of continuing obligations
apply to issuers which have listed quoted
Eurobonds. In particular Rule 8.5.5 of the
Listing Rules provides that as soon as
practicable following the publication of the
annual report, relevant annual accounts
or interim financial statements, the issuer
shall send two copies of such annual report,
relevant annual accounts or interim financial
statements to the CISX, or refer the CISX to
publicly available information placed on the
internet or central depository.
Appointment of Sponsor
Every issuer must appoint a sponsor to
assist in the listing process. The sponsor will
be responsible for all communications and
dealings with the Exchange. This will include
seeking approval of the Exchange for the
Listing Document (and any derogations
from disclosure requirements) and for the
preparation and filing with the Exchange of
the listing application and other supporting
documentation. Mourant Ozannes Securities
Limited is a Category 1 sponsor of the CISX
and is able to act as a sponsor for all listing
purposes.
Contacts:
Jonathan Rigby, Managing Partner
+44 1534 676 232
jonathan.rigby@mourantozannes.com
John Rainer, Partner, Jersey
+44 1534 676 679
john.rainer@mourantozannes.com
Tim Herbert, Partner, Jersey
+44 1534 676 339
tim.herbert@mourantozannes.com
James Hill, Partner, Jersey
+44 1534 676 145
james.hill@mourantozannes.com