Astana International Exchange (AIX)
What additional capital raising opportunities does AIX offer to SMEs in Kazakhstan and Central Asia?
In July 2020, AIX launched the Regional Equity Market Segment (REMS) to provide small and medium-sized businesses in Kazakhstan and Central Asia with simplified access to equity finance. REMS allows these companies to raise equity capital by listing on AIX on more flexible terms than the main market.
In particular, for companies whose free float has a market capitalisation of less than US$200 million, simpler listing criteria (no need to demonstrate historic net profit and audited accounts are only required for one year) and the ability to submit a short version of a prospectus are provided.
REMS Rules are available here (https://www.aix.kz/rules-regulations-2/rules-regulations/).
How much financing can be raised in the REMS segment?
The minimum offer of shares is US$1 million and the offer should not exceed US$200 million in the REMS segment. The price of the offering and the total amount of potential funding from investors will depend on the demand for shares of a particular issuer.
What are the risks associated with a placement in the REMS segment?
The risks associated with an issuer's business and offering are set out in the prospectus. The responsibility for the contents of the prospectus, the quality of the information disclosed, its reliability and relevance lies entirely with the issuer.
What taxes must investors who purchase shares in the REMS segment pay?
For investors (both individuals and companies), all gains from the sale of shares which are traded on the REMS segment (and generally on the AIX) and dividend payments are exempt from individual and corporate income tax in Kazakhstan. If an investor is tax resident in other jurisdictions, such investor should consult a tax adviser on applicable taxes in its tax residence jurisdiction.
How much does it cost to list on the REMS segment for issuers?
AIX fees depend on the capitalisation level of the company. Information on AIX fees is available on the stock exchange's website at www.aix.kz, under equity instruments.
Does the AIX exchange give its assessment and recommendations for listing on AIX?
AIX is available to provide all necessary advice to issuers in preparation for a listing. The first step is to contact the Markets team by email at firstname.lastname@example.org or by phone at +7 7172 23 53 679
If a Kazakhstan company is seeking a non-Kazakhstan listing for its shares, can the requirement for a dual listing in Kazakhstan be satisfied by an AIX listing?
Yes. A Kazakhstan company which intends to be listed on a foreign exchange can satisfy dual listing requirements under Article 22-1 of the Kazakhstan Law on Securities Market by being listed and offered on AIX. In that case this company would be considered as compliant with this statutory requirement. In addition, if an issuer decides to choose AIX as a single venue for listing equity securities, it is possible to list on AIX both shares and GDRs.
Disclaimer: This document is designed to assist actual and potential AIFC Participants (‘Participants’) to be familiar with benefits provided to actual Participants. Neither this document nor any of the answers to the questions in this document constitutes legal advice and should not be acted upon as if advice had been given. If there is any inconsistency between any statement in this document and the relevant AIFC Regulations and Rules or associated Guidance, the AIFC Regulations, AIFC Rules and Guidance prevail. Participants should, where they consider it necessary, obtain their own legal advice in relation to their specific situations.
This document does not cover each and every aspect of the AIFC Regulations and Rules. It selectively addresses frequently asked questions in relation to the AIFC.
This document is a living document – as we become aware of new or changing issues, we will amend the document as appropriate.
How can an investor buy or sell AIX-traded securities?
Please visit the AIX website or contact any of the AIX trading members.
How to become an AIX trading member?
STEP 1: AFSA
a) incorporation of a new legal entity/subsidiary in the AIFC (e.g., as Private Company or Limited Liability Partnership); or
b) the establishment of a “branch” in the AIFC (e.g., a Recognised Company or a Recognised LLP).
Authorisation and Supervision:
In order to conduct Regulated Activities of Dealing in Investments as Principal and/or Agent, Arranging Deals and Advising on Investments, the applicant needs to obtain a licence from the AFSA.
Recognized Non-AIFC Member (RNAM) whereby the AFSA will recognize the broker’s home jurisdiction licence without requiring a legal presence in the AIFC.
STEP 2: AIX
Contact the AIX Markets team as the first step at email@example.com. The AIX Markets team will provide you with an overview of the application process.
What kind of investors operate on AIX?
Currently, private and institutional investors are able to participate in initial issues and secondary trading of listed securities via AIX trading members. As of July 2019, there are 20 brokers participating in AIX’s trades, including almost all local brokers and four international brokers (Chinese and European).
Which audit companies are acceptable for listed companies?
AIX does not maintain a list of required or recommended audit firms. Issuers are free to engage an external auditor based on their needs. However, the audit must be performed in accordance with IFRS, US GAAP, Swiss GAAP or other standards acceptable to AIX.
If an issuer has been more recently established how can it comply with the 3-year requirement?
Each applicant for listing on AIX and each listing will be considered on a case-by-case basis. In the case of a newly established entity AIX may consider other material factors (e.g. history and performance of an underlying business, nature of an applicant’s business). As such, as an example, newly established subsidiaries or newly established holding companies of existing business (e.g. a newly established company established in the AIFC as the parent company of a Kazakhstan based group of operating companies) may be able to be eligible for listing taking into account various other circumstances.
How can I predict a demand for a security and fix its pricing/yield?
Prior to listing on the AIX, applicants are recommended to consult with their financial adviser on issues pertaining to the potential demand for the proposed securities and their terms.
Where can I find the requirements of AIX for the content of the prospectus?
The prospectus requirements are set out in the AIFC legislation (the AIFC Market Rules) and AIX Business Rules.
What are the main advantages of listing shares and or debt on AIX?
An AIX listing (on a sole or dual basis) allows eligible Kazakhstan and international companies as well as state bodies to raise funds via IPOs, SPOs and private placements by providing them access to local and international retail and institutional investors. The main benefits arising out from AIX listing include, but not limited to:
the special legal/regulatory regime based on the principles of common law;
tax benefits for investors – no Kazakh tax on capital gains and/or interest/dividend payments on AIX listed securities;
issue and settlement in any currency;
issuers must comply with disclosure requirements, which make company more transparent for investors, and with international-standard continuing obligations for investor protection and effective operation of the market.
If we intend to list our securities on AIX, is it mandatory to establish an entity in AIFC or to become an AIFC Participant?
For its securities to be eligible for listing on the AIX, the issuer does not need to be established in the AIFC nor otherwise to be an AIFC Participant. However (1) if the issuer is carrying on regulated activities in the AIFC it needs to be an AIFC Participant and (2) if the issuer is not an AIFC Participant (e.g., not incorporated or recognised in the AIFC) it will not be eligible for certain benefits available only to AIFC Participants.
What legal form is acceptable for an issuer which wishes to list on AIX?
An issuer of debt securities (e.g, bonds) to be listed may be a legal entity in any form (e.g. a limited liability partnership) subject to its home jurisdiction.
An issuer of equity securities must be incorporated in a legal form allowing free transferability of its equity securities (e.g. a company limited by shares).
In order to have equity securities listed on AIX, a Kazakhstan-incorporated limited liability partnership would need to convert into a Kazakhstan joint stock company or establish a corporate holding company (potentially incorporated in AIFC) whose securities would be listed.
What are the main requirements to legal entities to be listed on AIX?
The main requirements for listing can be found in the AIX Business Rules published on AIX’s website. Key requirements include:
consolidated and audited financial statements for three years (please see Question 43 if the applicant does not have a three year trading record) prepared in accordance with IFRS, US GAAP, Swiss GAAP or other standards acceptable to AIX;
minimum public float of at least 25% for issuers of equity securities (AIX may accept a lesser percentage subject to its sole and absolute discretion);
a minimum market cap of at least $1M for issuers of equity securities and $500K for issuers of debt securities at the time of listing.
AIX Business Rules provide customized requirements for certain different categories of issuers such as funds, mining companies and companies eligible for pre-IPO listing, listing at the Belt and Road Market of AIX. Further information on these listing sectors is set out in the AIX website.