The Alternative Companies List : its applicability to Maltese companies

Abstract

The Alternative Companies List (ACL) is the Malta Stock Exchange's (MSE) public stock market for new ventures, young and fast-growing companies and family-owned companies. The main objective of the ACL is to provide companies with an opportunity to access equity or loan capital from the Stock Exchange. The ACL also provides this opportunity for existing companies, which do not meet the listing requirements of the Official List. Since the launching of the ACL, back in 1999, only one company has obtained a listing on the ACL. The objective of this study is to examine the applicability of the ACL to Maltese companies. Questionnaires were mailed to a sample of eligible Maltese registered companies and to all the Financial Intermediaries and Members of the MSE. Face-to-face interviews were also conducted with the general manager of Datatrak Systems Ltd., a fully owned subsidiary of Datatrak Holding Plc. and the chief executive officer of the MSE. It was agreed by the majority of interviewed parties that it is justified to have a second-tier market in Malta. The business community seems to have lack of knowledge about the ACL, because the MSE has not adequately promoted the ACL. It appeared from this study that the local corporate culture does not encourage companies to go public. It has also been concluded that borrowing through the banking system is much cheaper than obtaining a listing on the ACL. The MSE should launch a promotional campaign to promote the ACL among entrepreneurs, individual companies and prospective investors. The MSE should identify ways in order to reduce costs involved to obtain a listing on the ACL. The government should also give a helping hand to companies obtaining a listing on the ACL by offering them substantial tax reductions.