Logo
Contact Us | Site Map | Photo Gallery | Search:
PROPOSED NEW CAPITAL REQUIREMENTS FOR BROKERS AND LISTING REQUIREMENTS FOR SME's Printable Version

07 Oct 2016

The Trinidad and Tobago Securities and Exchange Commission has published two proposals by the Trinidad and Tobago Stock Exchange (TTSE) and invited interested persons to comment on same on or before October 24, 2016. 

Proposed New Capital Requirements:
Under the first proposal, available here, the TTSE is seeking to implement a risk based approach to determine the capital requirements to be met by its member firms.

The change will require a number of changes to the TTSE Rules.  In particular, the proposed new Capital Requirement Rule provides that:

(a)  A member firm shall maintain at all times a minimum Total Capital (less: investments in and amounts owed by subsidiary, negative fair value reserves, goodwill, start-up expenses and other intangible assets) that is the greater of either: 

(i) 10% of the sum of its Total Risk Weighted Assets (the sum of the value of the on-balance sheet assets and converted off balance sheet items of a member firm as at the end of the reporting period multiplied by the risk weight for the asset or converted off balance sheet item); or

(ii) the capital requirements prescribed by the Securities Act, 2012 (the ‘Act’) and the Securitites (General) By-Laws, 2015 (the ‘By-Laws’) for broker-dealers of the relevant class, as may be modified from time to time, taking into consideration any other guidelines issued by the Commission in respect of the capital requirements for its registrants.


Total Capital is defined as being the sum of the Tier 1 Capital (the sum of the common equity and the retained earnings or losses of a member firm as at the end of the reporting period) and the Tier 2 Capital (the sum of the value of the preferred shares, the revaluation reserves and any other reserves from the balance sheet of a member firm as at the end of the reporting period of the member firm) of the member firm. 

 

(b)  A member firm shall maintain at all times a minimum Tier 1 Capital (less: investments in and amounts owed by subsidiary, negative fair value reserves, goodwill, start-up expenses and other intangible assets) of the greater of either: 

(i) 7% of the sum of its Total Risk Weighted Assets; or 

(ii) 70% of its capital requirements prescribed by the Act and the By-Laws as may be modified from time to time and to take into consideration any other guidelines issued by the Commission in respect of the capital requirements for its registrants. 


(c)  Member firms will be required to submit a monthly capital requirement report to the TTSE in the prescribed form (within ten (10) working days from the end of each month) together with a copy of the member firm’s management accounts.  The report is also to be simultaneously submitted to the member firm’s auditors. Moreover, a member firm will be required to immediately notify the TTSE if its:

(i) Total Capital (less: investments in and amounts owed by subsidiary, negative fair value reserves, goodwill, start-up expenses and other intangible assets) becomes equal to or less than 15% of the sum of its Total Risk Weighted Assets, or;

(ii) Tier 1 Capital (less: investments in and amounts owed by subsidiary, negative fair value reserves, goodwill, start-up expenses and other intangible assets) become equal to or less than 10% of the sum of its Total Risk Weighted Assets.


(d)  Members firms will also be required to report to the TTSE on any contingent liabilities and the likelihood of such liabilities being realized, upon which the TTSE in its own discretion, will be permitted to assess the exposure in order to determine the impact, if any, on the total capital required to be held by the member firm.


Proposed New Small and Medium Enterprises (SME) Listing Requirements: 
Under the second proposal available here, the TTSE seeks to clarify certain provisions relating to the SME listing requirements to bring same in line with Section 3 (subsections 2 and 3) of the Corporation Tax Act.  The Corporation Tax Act provides significant tax incentives for companies listing on the Stock Exchange as a SME.

Whereas previously there was a requirement that following an initial public offering, the issuer must have a minimum of 25 shareholders holding at least 30% of any class of securities issued, the proposed change provides that following the initial public offering, the issuer must have a minimum of 25 unconnected shareholders who hold at least 30% of the new issued share capital of the company.  The TTSE provides that “new issued share capital” is interpreted as the SME adding new shares to its existing issued share capital, where 30% of the new shares must be held by a minimum of 25 unconnected shareholders (persons not connected to the SME as a reporting issuer – as outlined in Section 4(3) of the Securities Act).

The TTSE is also proposing that the minimum (TT$5,000,000) and maximum (TT$50,000,000) issued share capital following the initial public offering will only refer to issued share capital and will not include retained earnings and accounts transferred from such issued share capital or retained earnings to a reserved account.
Company Law | Doing Business in T&T | Intellectual Property | Tax | The Firm | Practice Groups | Attorneys | E-Commerce | Maps | MHS Forum | Links | Careers
© 2013 M. Hamel-Smith & Co. | Webmaster | Designed by GCASoft Lex Mundi - The World's Leading Association of Law Firms
IMPORTANT NOTICE: trinidadlaw.com contains general information about doing business in Trinidad and Tobago. Nothing in these pages constitutes legal advice. Always consult a suitable qualified lawyer on any legal problem or issue. As a service to you, we also provide numerous links to other web sites. We have no control over such sites and are in no way responsible for their contents.