Logo of Phnom Penh Post newspaper Phnom Penh Post - Talking Finance: The benefits of listing

Talking Finance: The benefits of listing

Talking Finance: The benefits of listing

In the second of his columns explaning financial terms,  Anthony Galliano, chief executive officer of Cambodian Investment Management, tackles initial public offerings.

Transforming from a privately held business to a publicly listed company offers substantial benefits. Rather than borrowing, which has to be repaid with interest, a company can gain access to cash and long-term capital.

The initial public offering of shares generates significant interest and greatly elevates the reputation and profile of the listing company.  With a heightened public profile, business opportunities may increase and brand awareness improves.

The value of the company may increase as investors usually place a premium over the book value of the company.

The listing company can attract high-quality personnel, especially if it offers employee share-ownership schemes and options.

Employee productivity and pride in the company generally improves with share ownership.

A listed company may acquire another company by exchanging its stock rather than using or borrowing cash, reducing the debt burden on the company’s balance sheet.

For the business owner of a privately held company, listing offers the capacity to monetise a portion or all of their shares, which is usually the highest potential payout in realising the value of their company ownership.

However, in order to list a company there are stringent rules and regulations which is probably the reason only three firms have initially been designated to float by the Cambodian government. The Securities and Exchanges Commission of Cambodia, which is the government authority that oversees the sale of securities, has issued a prakas on corporate governance for listed companies.  

In order to make a public offering, a company must submit an issuer application and disclosure document.  

The disclosure document will include general information, risk factors, use of proceeds, operational plans, asset valuations, related party transactions, compensation, financial statements, and determination of offering price.

In order to ensure an independent validation, a due diligence report is required by both a professional accounting firm and a law firm, registered with the SECC. This may present issues for listing candidates as business owners have rarely disclosed such sensitive information in the past and are accustomed to privacy in these matters.

The company must have a board of directors of at least five of which one fifth is independent.

The capital of the company must be at least 5 billion riels, the company must have earned a profit of 500 million riels in the latest financial year and 1 billion for the latest three financial years.

A licensed securities market operator must approve securities pricing, a challenge in itself given the lack of depth in this area in the market presently.  

The transformation to list involves great preparation, embracing corporate governance, much greater disclosure, and acting in the best interest of all shareholders. This will be progressive and will eventually significantly change how companies are owned and managed.

In the second of his columns explaning financial terms,  Anthony Galliano, chief executive officer of Cambodian Investment Management, tackles initial public offerings.
TRANSFORMING from a privately held business to a publicly listed company offers substantial benefits. Rather than borrowing, which has to be repaid with interest, a company can gain access to cash and long-term capital.
The initial public offering of shares generates significant interest and greatly elevates the reputation and profile of the listing company.  With a heightened public profile, business opportunities may increase and brand awareness improves.
The value of the company may increase as investors usually place a premium over the book value of the company.
The listing company can attract high-quality personnel, especially if it offers employee share-ownership schemes and options.
Employee productivity and pride in the company generally improves with share ownership.
A listed company may acquire another company by exchanging its stock rather than using or borrowing cash, reducing the debt burden on the company’s balance sheet.
For the business owner of a privately held company, listing offers the capacity to monetise a portion or all of their shares, which is usually the highest potential payout in realising the value of their company ownership.
However, in order to list a company there are stringent rules and regulations which is probably the reason only three firms have initially been designated to float by the Cambodian government. The Securities and Exchanges Commission of Cambodia, which is the government authority that oversees the sale of securities, has issued a prakas on corporate governance for listed companies.  
In order to make a public offering, a company must submit an issuer application and disclosure document.  
The disclosure document will include general information, risk factors, use of proceeds, operational plans, asset valuations, related party transactions, compensation, financial statements, and determination of offering price.
In order to ensure an independent validation, a due diligence report is required by both a professional accounting firm and a law firm, registered with the SECC. This may present issues for listing candidates as business owners have rarely disclosed such sensitive information in the past and are accustomed to privacy in these matters.
The company must have a board of directors of at least five of which one fifth is independent.
The capital of the company must be at least 5 billion riels, the company must have earned a profit of 500 million riels in the latest financial year and 1 billion for the latest three financial years.
A licensed securities market operator must approve securities pricing, a challenge in itself given the lack of depth in this area in the market presently.  
The transformation to list involves great preparation, embracing corporate governance, much greater disclosure, and acting in the best interest of all shareholders. This will be progressive and will eventually significantly change how companies are owned and managed.

MOST VIEWED

  • Negotiations on EBA being held

    In an effort to defuse tensions, a senior government official said Cambodia is negotiating with the European Union (EU) on the Everything But Arms (EBA) trade deal, which allows the Kingdom to export goods to the 28-member bloc tariff-free. The EU notified Cambodia on October 5

  • Ministers to tackle sea pollutants

    Preah Sihanouk provincial authorities and members of local communities have collected 77 tonnes of water hyacinth at a Sihanoukville beach, Preah Sihanouk Provincial Hall spokesperson Or Saroeun said. He told The Post yesterday that the aquatic weeds had been floating along some of the province’s

  • Chinese police escort deported scam suspects

    Ninety-one Chinese nationals accused of extorting money from victims in a Voice over Internet Protocol (VoIP) scam were deported from Phnom Penh International Airport on Monday under the escort of 182 Chinese police personnel. General Department of Immigration head of investigations Ouk Hay Seila told reporters

  • Sam Rainsy, government group set to clash at IPU Geneva meet?

    Opposition figure Sam Rainsy has been invited to speak at the General Assembly of the Inter-Parliamentary Union (IPU) in Geneva, according to a former Cambodia National Rescue Party (CNRP) lawmaker. A government delegation is also set to attend the meeting, a National Assembly press release