Listing on the Stock Exchange

In Malta at the end of 2009, we had some 48,520 companies and partnerships registered with the Registry of Companies. The number of companies registered in Malta has been rising steadily over the past few years, rising by an average of some 2,800 each year since 2005.

Thus, when one considers that there are only 19 equities listed on the Malta Stock Exchange, it becomes immediately apparent that there is a great disparity between the number of "targets" and the actual "hits". When one further considers that the number of Maltese companies which can be legally defined as "public" account for only a fraction of total registrations, then it becomes clear that the main reason for the lack of listed equity is not the Exchange with its rules and disciplines, but rather the reluctance of our family companies to go public. In fact, once a company actually takes the plunge and goes public, the decision to list is almost regarded as a natural consequence.

So any discussion related to the paucity of companies listing their shares on our market must inevitably first consider the reasons why our family companies show such a strong reluctance to go public.

Going Public

Why would a private company want to go public, what are the advantages, as well as the disadvantages, that come with going down this path? Can it be beneficial for smaller companies to go public, or is this only territory for the large, well-established firms? Small, family run companies are such a common feature in Malta, that we can consider them as one of the pillars of our economy. Indeed this is not a phenomenon unique to Malta. The Small and Medium Sized enterprises are a very important feature in the Gross Domestic Product of all EU countries. Clearly what is considered as small or medium-sized in Italy, Portugal or Spain is not necessarily of the same size as a small or medium sized company in Malta. However, the general profile is still that of a small family-run company producing essentially for domestic consumption.

If we look at the relatively small number of companies that have come to the Exchange's Alternative Company List (ACL) which has been available since 2001, it is evident that such companies have been generally reluctant to consider listing as a viable solution. And yet, going to the market may be the ideal vehicle for a lot of these companies, enabling them to invest, to grow and to compete. By going public, companies can gain enough strength to reach the size...