Recognized Representatives

Directive Recognized Representatives

I. GENERAL PROVISIONS

Art. 1 Purpose

This Directive defines the framework for Recognized Representatives (RRs), including qualifications, responsibilities, obligations, and disciplinary processes. It aims to ensure adherence to the highest professional standards, foster market integrity, and maintain investor confidence in the MERJ Exchange.

Art. 2 Definitions

Recognized Representative (RR): A person or entity approved by MERJ Exchange to act on behalf of issuers in listing applications, ongoing compliance, and communication with MERJ Exchange.

Sponsor Advisor: A category of Recognized Representative providing independent advisory services, conducting due diligence, and ensuring compliance with primary listing obligations.

Competent Specialist: A natural person employed or contracted by an RR with requisite expertise in corporate governance, securities laws, and Listing Rules.

Art. 3 Scope

This Directive applies to all persons or entities acting as Recognized Representatives on behalf of issuers listed or seeking listing on MERJ Exchange.

II. CATEGORIES OF RECOGNIZED REPRESENTATIVES

Art. 4 Categories

Recognized Representatives are classified as follows:

  1. Issuer Representative:

    1. Represents the issuer directly in all listing-related matters.

    2. Allowed only for issuers with at least three years of listing on a recognized primary exchange, with no material breaches of Listing Rules.

    3. Excluded from primary equity listings unless otherwise approved by MERJ Exchange.

  2. Sponsor Advisor:

    1. An independent third-party entity with expertise in compliance and due diligence.

    2. Required for issuers seeking primary equity listings or where MERJ Exchange deems additional oversight necessary.

Art. 5 Responsibilities Based on Category

  1. Issuer Representatives are limited to ensuring compliance for their own listing obligations.

  2. Sponsor Advisors provide additional services, including due diligence and suitability assessments, as detailed in Appendix B.

III. QUALIFICATIONS AND RECOGNITION

Art. 6 General Qualifications for Recognition

Recognition may be granted to:

  1. Natural persons:

    1. Must demonstrate in-depth knowledge of securities laws, corporate governance, and MERJ Exchange Listing Rules.

    2. Must provide evidence of at least three years of relevant professional experience in listing-related matters.

  2. Legal entities and partnerships:

    1. Must employ at least one Competent Specialist with signing authority who meets the requirements for natural persons.

    2. Must demonstrate organizational capacity to fulfill obligations under this Directive.

Art. 7 Independence Requirements

  1. Recognized Representatives and their staff must:

    1. Be independent of the issuer’s external auditor;

    2. Not hold more than 5% direct or indirect equity interest in the issuer;

    3. Avoid direct or indirect financial relationships that may compromise objectivity.

  2. Sponsor Advisor firms, their employees and any individuals involved in provision of the duties of the Recognized Representative must not hold more than 5% of the equity interest in any issuer they represent. For Sponsor Advisors, this 5% is cumulative amongst the firm, its employees and individuals involved in carrying out the duties in relation to an issuer.

Art. 8 Exceptions and Special Cases

  1. MERJ Exchange may grant exemptions to independence or experience requirements under exceptional circumstances, provided written justification is submitted.

  2. Any exemptions granted must be disclosed in the public register.

IV. FUNCTIONS AND DUTIES

Art. 9 General Responsibilities of Recognized Representatives

All Recognized Representatives shall:

  1. Serve as the primary communication channel with MERJ Exchange;

  2. Submit complete, accurate, and timely applications and documentation for listing and compliance;

  3. Monitor issuer adherence to Listing Rules, including corporate governance standards and disclosure obligations;

  4. Notify MERJ Exchange promptly of material changes to the issuer’s circumstances or non-compliance.

Art. 10 Sponsor Advisor-Specific Obligation

In addition to the responsibilities in Article 9, Sponsor Advisors must -

  1. Conduct thorough due diligence as outlined in Appendix C, including:

    1. Independent verification of directors’ qualifications, financial controls, and compliance history;

    2. Site visits and analysis of the issuer’s operational and financial capacity;

    3. Assess the suitability of issuers for listing based on MERJ Exchange criteria;

    4. Oversee the preparation and review of all listing documentation; and

    5. Monitor post-listing compliance and provide guidance on disclosure obligations.

Art. 11 Reporting Obligations

Recognized Representatives must:

1. Provide annual compliance confirmations to MERJ Exchange;

2. Report changes in personnel, ownership, or organizational structure within 10 business days; and

3. Notify MERJ Exchange of any conflicts of interest or breaches of independence requirements.

V. APPLICATION, APPROVAL, AND MONITORING PROCESS

Art. 12 Application Procedure

  1. Applicants must submit a formal application, including:

    1. Documentation of qualifications, independence, and organizational capacity.

    2. A signed declaration of adherence to Listing Rules and ethical standards.

    3. Payment of a non-refundable application fee.

    4. Incomplete applications will be returned with instructions for rectification.

Art. 13 Evaluation and Decision Process

  1. MERJ Exchange shall evaluate applications within 30 days.

  2. Decisions may include conditional recognition, requiring the applicant to meet specified criteria within a set timeframe.

  3. Appeals against rejection must be submitted within 10 trading days.

Art. 14 Ongoing Monitoring

MERJ Exchange may conduct periodic audits of Recognized Representatives to ensure compliance with this Directive.

VI. DISCIPLINARY MEASURES AND SANCTIONS

Art. 15 Grounds for Disciplinary Action

MERJ Exchange may impose sanctions for:

  1. Failure to fulfill obligations under this Directive.

  2. Providing false or misleading information to MERJ Exchange.

  3. Breaches of independence or ethical standards.

Art. 16 Types of Sanctions

Sanctions may include:

  1. Written warnings or reprimands.

  2. Fines up to SCR 100,000 for intentional breaches.

  3. Suspension or withdrawal of recognition.

Art. 17 Appeal Process

Recognized Representatives may appeal sanctions within 10 trading days, providing detailed justifications and supporting evidence.

See also:

- Rules of Procedure

VII. REGISTER OF RECOGNIZED REPRESENTATIVES

Art. 18 Public Register

MERJ Exchange shall maintain a public register of Recognized Representatives, which will include:

  1. Name and contact information.

  2. Scope of recognition (e.g., product categories).

  3. Status (active, suspended, or deregistered).

VIII. FINAL PROVISIONS

Art. 19 Entry into Force

This Directive shall enter into force on 1 March 2025.

Art. 20 Transitional Provisions

Recognitions granted previously remain valid, but issuers and applicants must comply with updated requirements by 30 June 2025.

Appendix A: General Responsibilities of Recognized Representatives

  1. Timely submission of complete listing applications.

  2. Management of issuer disclosures and filings.

  3. Prompt notification of changes in compliance status.

Appendix B: Sponsor Advisor-Specific Tasks

  1. Evaluate the issuer’s suitability for listing.

  2. Conduct detailed due diligence (see Appendix C).

  3. Monitor compliance with disclosure and governance obligations.

Appendix C: Sponsor Advisor Due Diligence Duties

Sponsor Advisors must conduct comprehensive due diligence to ensure the issuer and its securities meet the listing requirements for the applicable standards under MERJ Exchange Listing Rules. Their primary role is to assess the issuer's suitability and compliance with all obligations prior to and during the listing process. These responsibilities include:

  1. Assessment of Issuer Suitability

    1. Evaluation of Listing Requirements: Confirm that the issuer meets all requirements applicable to the listing standard being applied for, including but not limited to:

      1. Incorporation and valid existence.

      2. Capital resources.

      3. Financial reporting and governance standards.

    2. Readiness for Listing: Assess whether the issuer is prepared for listing, including its operational capacity, compliance framework, and ability to fulfill ongoing obligations under the Listing Rules.

    3. Key Risks and Gaps: Identify any potential deficiencies, risks, or gaps in the issuer's ability to meet listing standards and recommend corrective actions where necessary

  2. Review of Issuer and Management

    1. Governance and Board Review:

      1. Assess the issuer’s governance framework and ensure its alignment with the requirements of the relevant listing standard.

      2. Review the composition of the Board of Directors to confirm compliance with independence and governance obligations.

    2. Management Suitability:

      1. Evaluate the qualifications, experience, and track record of key management and directors.

      2. Verify that management and directors are suitable to oversee the issuer’s operations and fulfill regulatory expectations.

    3. Independence and Competence: Ensure that the governance structures provide sufficient independence and oversight of management actions.

  3. Securities and Disclosure Compliance

    1. Legal Validity of Securities

      1. Confirm that the issuer’s securities are legally issued, fully paid, and freely transferable as required by the applicable listing standards.

      2. Ensure that the securities comply with all relevant legal and regulatory frameworks in the jurisdictions where they will be listed or traded.

    2. Disclosure Standards:

      Review the issuer's Listing Particulars and other disclosure documents to ensure they meet the required standards of accuracy, completeness, and transparency under MERJ Exchange rules.

    3. Consistency with Listing Standards: Verify that the structure and terms of the securities align with the listing requirements (e.g., free float, tradability, and compliance with settlement systems).

  4. Financial Suitability and Risks

    1. Meeting Financial Requirements: Confirm that the issuer satisfies the financial requirements for the relevant listing standard.

    2. Audit Review Coordination:

      1. Ensure that financial statements have been audited or auditor review as applicable by an auditor that meets the requirements of the Listing Rules.

      2. Coordinate with auditors to verify that any material financial risks or deficiencies have been addressed.

    3. Independent Audit Role: Sponsor Advisors are not required to independently assess the adequacy of financial controls or systems. This is the responsibility of the issuer’s auditors.

  5. Legal and Regulatory Compliance

    1. Corporate Status and Legal Standing: Confirm that the issuer is duly incorporated, validly existing, and authorized to conduct its operations under applicable laws.

    2. Material Agreements and Obligations: Review material agreements and contracts to ensure no terms exist that may conflict with the issuer’s listing obligations.

  6. Post-Listing Obligations

    1. Ongoing Compliance Oversight:

      1. Develop processes for monitoring the issuer’s adherence to continuing obligations under the Listing Rules.

      2. Provide guidance on disclosure requirements, corporate actions, and reporting obligations.

    2. Material Breach Notifications: Notify MERJ Exchange immediately of any breaches of the Listing Rules or other material concerns identified during or after the listing process.

  7. Scope and Limitations

    1. Sponsor Advisors are not responsible for performing tasks requiring specialized legal, audit, or forensic expertise. These must be conducted by securities counsel, auditors, or other professionals engaged by the issuer.

    2. The Sponsor Advisor’s role is to coordinate with such professionals and ensure their conclusions are incorporated into the due diligence process.

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