Qatar Stock Exchange Announces Rights Issues Selling Mechanism

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Qatar Stock Exchange Announces Rights Issues Selling Mechanism

With reference to Selling Rights Issue Rules issued by QFMA pursuant to its Board decision no. (3) for the year 2014 dated 09.03.2014, published in the Official Gazette(fifth edition dated 25.03.2014). And further to the Qatar Stock Exchange Rulebook, QSE would like to inform you of the following:
First: Purpose
The purpose of this Market Notice is to define the rights issues selling and pricing mechanism in QSE, in light of the QFMA regulations in this regards and in particular Article (7a) of the Rules.  The notice also aims at providing protection and flexibility to those investors that do not have the intention to subscribe in the listed company’s capital increase. Accordingly, the rights-holder will have two options:
1.   Exercise the rights by subscribing in the company’s capital increase.
2.   Sell the rights (fully or partially) in the market under the conditions, and within the period, specified in QFMA regulations as well as in this market notice.
Second: Definition of the Rights Issues
Rights issues are securities that entitle its holders the right to subscribe in the capital increase issued by the company and dedicated to its existing shareholders.  Rights issues can be listed and sold at the stock exchange. The number of rights issues will be equal to the number of shares in the capital increase to be issued by the company to its existing shareholders through the subscription process.
Third: Mechanism of Selling Rights Issues
·   The selling of the rights issues shall be done independently from the original share.
·   Unless provided for otherwise in the QFMA Rules, rights issues’ selling is subject to the same trading provisions applied to shares.
·   Rights selling period: shall be ten working days.
·   Prohibition of selling bought rights:
Buying investors are not allowed to sell the purchased rights during the selling period.
·    It is not permissible for the brokerage firms members of QSE to accept the selling orders of their clients for the purchased rights during the same session or during the selling period in general, the Members in this case have to adjust their systems automatically so as to prohibit the clients from selling the purchased rights through the same brokerage firm.
·   The Market Operations and Control Department of QSE will cancel any rights selling orders or trades that are entered or executed in violation of the prohibition instructions mentioned above. Cancelations of trades will be reported to QFMA and the violating party shall compensate the injured party when deemed necessary.
·   Ownership limits according to the company’s AoS:
Shareholder who buys subscription rights which, when added to the ownership of the shares will exceed the ownership limit stated in the Company’s AoS, they will lose their rights of subscription
Fourth: Mechanism of Stock reference price calculation (ex-right price)
After the company’s Extraordinary General Assembly Meeting approves the capital increase through new shares with rights issue; and after obtaining the approvals of the competent authorities on the Assembly decision; the stock’s reference price shall be adjusted on the first trading day (X-Right day) according to the following equation: 
Stock’s reference price (ex-rights) =  {(existing shares * closing “cum rights” price) (new shares * subscription price)} /(total number of shares after increase).
Fifth: Calculation of Rights’ reference price
The Right’s reference price will be calculated on a daily basis after the end of the selling session. The new calculated price will be the right’s reference price for the following day’s selling session regardless of the actual closing price. Pricing equation is as follows:
(Right’s reference price = Stock’s closing price minus the subscription price).
Sixth: Calculation of right’s price limits
QSE will also calculate the daily price limits for the rights according to the following equation:
·         Daily right’s price limits = {(Right’s reference price at closing plus or minus the allowed change in the Stock’s price value) / (Right’s reference price at closing) – 1} multiplied by 100%.
·          Price limits are calculated on a daily basis after the closing of the selling session, to update the trading system before the start of the selling session of the following day, noting that the lowest percentage of the right’s price limit shall be 1% up or down.



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