Track Record

Directive Track Record

I. GENERAL PROVISIONS

Art. 1 Scope

1. This Directive governs exemptions to the duration requirement ("Track Record Requirement") set forth in LR10.

2. It applies to issuers seeking a primary listing on MERJ Exchange who do not meet the three-year financial history requirement, unless exempted elsewhere in the Listing Rules, including the Additional Rules for Bonds, Exchange Traded Products, and Derivatives.

Art. 2 Principles for Granting Exemptions

1. The Listing Committee may grant an exemption to the Track Record Requirement if:

   1. The exemption is in the interest of the issuer or investors; and

   2. The issuer provides guarantees ensuring that investors have access to sufficient and reliable information for informed decision-making.

2. Exemptions may be granted in cases such as:

   1. Mergers, spin-offs, or reorganizations where pre-existing entities are continued;

   2. Securities guaranteed by collateral rendering issuer duration irrelevant (e.g., asset-backed securities);

   3. Young companies with at least one year of financial statements that seek to raise capital for growth ("Young Companies").

Art. 3 Obligations During Listing

1. The Listing Committee may require:

   1. Additional disclosures in Listing Particulars to address informational gaps;

   2. Presentation adjustments for financial statements to ensure clarity.

2. The issuer must comply with all continuing obligations under LR Section III, including reporting and disclosure.

II. SPECIAL PROVISIONS FOR YOUNG COMPANIES

Art. 4 Principle

Young companies may qualify for a listing if:

1. At least 50% of the securities offered result from a capital increase paid for in cash; and

2. Listing Particulars satisfy the supplementary requirements outlined below.

Art. 5 Content of Listing Particulars for Young Companies

1. In addition to the requirements under LR28, the Listing Particulars must include –

   1. Financial statements for at least one full financial year prepared under applicable accounting standards;

   2. Semi-annual financial statements if the most recent annual report is over eight months old;

   3. Disclosures on lock-up agreements, including:

      1. Names and holdings of locked-up parties;

      2. Lock-up periods and applicable conditions;

   4. Detailed risk disclosures addressing:

      1. Competitive conditions;

      2. Market dependencies;

      3. Industry cycles, regulatory risks, or dependencies on key personnel.

III. LOCK-UP AGREEMENT PROVISIONS

Art. 6 Applicability of Lock-Up Obligations

Lock-up agreements apply to:

1. The Issuer: Restricted from selling or issuing new shares (except for pre-approved capital increases) for six months from the first trading day.

2. Pre-Existing Shareholders:

   1. Shareholders holding over 3% of voting rights or capital immediately before the public offering are restricted for 12 months;

   2. Calculations include shares listed in the issuer’s official records or Listing Particulars;

   3. Exemptions apply to proprietary holdings of financial institutions.

3. Governance Bodies: Directors and executives are subject to a 12-month lock-up.

Art. 7 Permissible Transactions During Lock-Up

1. Transactions allowed during the lock-up period include:

   1. Transfers due to inheritance, matrimonial settlements, or donations to immediate family;

   2. Transfers within holding structures such as trusts or private companies;

   3. Sales under compulsory execution or as part of employee stock ownership plans disclosed in Listing Particulars.

2. Exceptions require prior notification to the Listing Committee and adherence to disclosure rules.

Art. 8 Disclosure of Lock-Up Agreements

Listing Particulars must include:

1. A list of locked-up shareholders and their holdings;

2. Total locked-up shares as a percentage of the offering;

3. Summary tables specifying lock-up durations and conditions.

Art. 9 Violations of Lock-Up Agreements

1. Suspected breaches must be reported immediately to the Listing Committee.

2. Upon verification, MERJ Exchange may:

   1. Announce the breach publicly via an Official Notice;

   2. Impose sanctions or penalties under the Listing Rules.

IV. LISTING AND REPORTING OBLIGATIONS

Art. 10 Listing Application Requirements

1. Applications must include drafts of all lock-up agreements.

2. Final signed agreements must be submitted no later than three trading days after the first trading day.

Art. 11 Separate Security Number for Locked Securities

1. Equity securities subject to lock-up agreements must carry a separate security number in the depository system.

2. These securities are deemed part of the same class but cannot be traded until the lock-up period expires.

Art. 12 Reporting Obligations During Lock-Up Period

1. Issuers must immediately report:

   1. Any rebooking or transfer of locked securities;

   2. Changes in ownership or structure affecting lock-up compliance.

2. Reports must include:

   1. Security numbers and quantities affected;

   2. Details of the transaction or event.

V. ONGOING OBLIGATIONS FOR MAINTAINING LISTING

Art. 13 Quarterly Reporting Requirements

1. Issuers exempted under this Directive must publish quarterly financial statements within two months of each reporting period’s end.

2. Quarterly statements must include:

a. First quarter: Financial performance for three months;

b. Second quarter: Six months;

c. Third quarter: Nine months.

1. Annual financial statements may substitute for fourth-quarter reports.

Art. 14 Conditions for Maintaining Listing

Issuers remain subject to additional obligations until they present three consecutive years of audited financial statements, at which point standard Listing Rules apply.

VI. FINAL PROVISION

Art. 15 Entry into Force

This Directive shall take effect on 1 March 2025.

Art. 16 Transitional Provisions

1. Applications submitted on or after the effective date are subject to this Directive.

2. Issuers listed before this date must ensure compliance within six (6) months of the date specified in Art. 15.