The implications of going public : a Maltese study

Abstract

Purpose: This study examines the main reasons why companies change their status to a Public Limited Liability Company (PLC), or obtain a Listing, and delineates the observed benefits and limitations of going public. It outlines the main roles and responsibilities of the finance department, and other key participants, in this process of change. Furthermore, this study analyses the legislative requirements governing Maltese PLCs and their effects upon the companies. Design: The objectives of the study were achieved using a qualitative study, by conducting 18 semi-structured interviews with professional individuals. Two preliminary interviews were held with MFSA and MSE representatives. Six interviews were held with PLC officials, two with representatives from a Private Company, and six with financial advisors. Findings: The process of change in status does not require extensive procedures on the part of the company. Whilst, the process to obtain a Listing involves rigorous requirements and obligations. The finance department’s role in the company becomes even more vital and the workload increases drastically. The Listing status enhances the company’s public image and profile, however, this is relatively expensive to maintain. It appears that companies and advisors, find the Listing Rules difficult to understand. Conclusion: This study concludes that conversion to a PLC is a positive step forward that a company may make. However, the Maltese market and culture do not support the idea of operating through a PLC, and shareholders in family-businesses prefer to maintain the ownership of the company in their hands. Value: This study appears to be the first to evaluate the implications of a company going public in Malta. It may prove valuable, to companies that are considering the option to either change their status to a PLC and/or obtain a Listing, and even to the Regulator in order to obtain a better understanding of the Maltese market.