Amid growing interest on the part of global corporations in becoming listed on the Cayman Islands Stock Exchange (CSX), law firms in the jurisdiction increasingly play a role as listing agents. The latest law firm to win official approval as a listing agent is Dillon Eustace.
In a discussion with IFLR1000, Derbhil O’Riordan, a partner at Dillon Eustace, enumerated a number of the advantages of being a listing agent. One obvious benefit is access to institutional capital, and, in particular, access to institutional investors who may be subject to legal or internal constraints when it comes to investing in unlisted securities. Another is HM Revenue and Customs-recognized status, which allows for the payment of interest and dividends without withholding tax. Moreover, in contrast to other stock exchanges that cater to the same issuer market, the CSX offers the flexibility of a listing regime beyond the scope of the EU Prospectus Directive, O’Riordan explained.
O’Riordan noted that a Cayman listing is possible at any time in an issuance’s life-cycle. Nevertheless, in a listing of fund securities, for example, it can be built into a fund launch efficiently, streamlining the application process at the stock exchange with a pre-launch drafting. The listing also ensures that securities will be listed from the close of the initial offer period, without disrupting the timing of the fund launch.
“It is in this streamlined process that Dillon Eustace’s longstanding listing experience has most value, as our team can anticipate, and resolve, any documentation issues before any submission for review to the Cayman Islands Stock Exchange,” O’Riordan said.
O’Riordan’s colleague, partner Jonathan Law, who moved to Dillon Eustace from Harneys in October 2014, said that different clients will always find different exchanges attractive for regulatory and cost-related reasons.
“Many of our international clients have initially reached out to our listing team in Dublin, gone through that preliminary process of considering a listing on the Irish Stock Exchange and have discovered that it does not exactly fit with their requirements. It’s important to us as a firm to be able to offer a real alternative and that is where our role as a listing agent in Cayman presents us with a key opportunity. We’ve had a great deal of interest already,” Law commented.
Law said that in order to understand the success of the CSX, it is important to understand that the financial services industry in the Cayman Islands acts in greater proximity to the exchange, the regulators, and the government generally than in other jurisdictions. Accordingly, law firms need to grasp the workings of the exchange and how best to assess applications to list. Firms that can do this are better able to pre-empt issues before they arise, he said.
“We can get more detail from the client or just flesh out the information they have provided us before we go to the exchange. The exchange are extremely efficient at turning around applications, but part of that efficiency will come from the fact that the quality and adequacy of the information the exchange receive from the professional firms acting as listing agents or advisers should already largely meet their requirements. Clients appreciate that efficiency, speed and certainty of process are key, it’s one of the key benefits of the listing process in Cayman,” Law continued.
Finally, there is the issue of third-party oversight. In Law’s view, all the offshore financial centers are subject to increasing scrutiny, and it is useful to be able to say that CSX rules call for a page-by-page, line-by-line verification of the details of a listing.
“Whilst few in number, the exchange has, in the past, refused applications to list, it is not a rubber stamp process by any means,” Law said.
“It is essential to resource the initial and ongoing compliance burden and say to the marketplace that you’ve structured your arrangements in the best possible way. That’s where we can add real value through the dedicated listing team which operates within our firm, involving attorneys and highly experienced administrative staff, many of whom have worked within an exchange, that experience is hard to over value,” he added.