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Saturday, November 18, 2017 
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Frequently Asked Questions

There are 4 criteria that your company needs to fulfill in order to list on the Bucharest Stock Exchange’s Main Market:

  • be a joint stock company (SA)
  • have the value of anticipated capitalization / shareholders’ equity of at least EUR 1 mn
  • have a free-float of at least 25%
  • be in function for the last 3 years and have audited financial reports for the last 3 years

Do you think you fulfill these requirements? Contact us today at marketing@bvb.ro for more details or get in touch with one of the authorized intermediaries!

When it comes to issuing bonds, the list of requirements is shorter than in case of issuing shares. Firstly the company has to be a joint-stock company (SA) and the value of the bonds to be issued has to be at least EUR 200,000. However, if the value of the offering is lower you can still list them as long as the Financial Supervisory Authority (ASF) issues a special approval. Alternatively, you can consider listing bonds on AeRO, where there is no minimum value of the offering imposed. For more information about issuing bonds on AeRO, click here.

There is no correct answer to this question, since these instruments have different characteristics and offer different benefits. By issuing new shares and listing them on the stock exchange, an entrepreneur sells part of his company to the public, the stake depending on the amount of money the company needs as well as the percentage of the company he is comfortable selling. As opposed to bonds, when issuing shares, there is no debt that has to be repaid to the investors. Once listed on the stock exchange, the company can also benefit from other financial gains, such as using own shares as a collateral when accessing bank loans or as a currency to acquire competition. For more information about the benefits of listing, click here.

Bonds on, the other hand, involve borrowing capital from investors, in exchange for periodical interest rate payments. Bonds are an attractive instrument to entrepreneurs as issuing them does not affect the ownership of the company or how the company is operated, while, at the same time, offering the company exposure and publicity granted by accessing financing through the stock exchange. The money borrowed from investors has to be repaid at maturity, or in tranches. The funds can also be rolled over through an issuance of new bonds, replacing the previous issuance. Alternatively, the bonds can be converted into shares at maturity, or even at certain given moments before it, thus reducing the amount of money to be paid to bonds holders at maturity (they are referred to as convertible bonds).

Valuation is one of the most important steps in a company’s journey to the stock market. Before listing shares, your company will receive a market valuation carried out by a professional – a bank or a broker, using tools which are widely acknowledged, like assets and multiples. Also, a comparison with similar companies in Romania as well as in the region should be provided.

The evaluation report will contain a descriptive part, a commercial and an operational analysis – one legal and one financial. For applications based on income approach, the report will also contain a description of the strategy linked to the future business development and assumptions in explaining and justifying parameters considered in the financial model of evaluation based on income.

Based on this valuation, intermediary together with the company’s shareholders will decide the price at which the company will be sold to the investors (in case of shares), or the interest rate offered to investors in the case of bonds issuance. In case of listing of shares, the price should ideally be set-up as the best price, not too low (so the company is not undervalued) but also, not too high (so that the company is not overvalued).

Before the launch of an IPO, intermediaries managing the public offer will run a roadshow. During such roadshow, they will present the company to potential investors who will provide feedback regarding the price that they would be willing to pay to acquire shares in the respective company.

Based on the investors’ feedback, the intermediaries together with the company owners will establish a final price or a minimum and/or maximum prices for the shares at which the offering will be launched. If the offering will be launched with an interval of a minimum and/or a maximum prices, the final price will be established at the end, based on the orders placed by the investors.

Yes, after the listing, the price can rise or drop. The stock price can be influenced by many factors. After the listing, the valuation of a company is made by investors, based on the demand and offer of the shares of that company. Investors decide to buy or sell a stock based on the information they receive from the company as well as the information they read in the media, the economic environment etc.

The evolution of a stock can be influenced by events such as, inter alia,:

  • Earnings and sales growth
  • New product releases
  • Management and transparency
  • Evolution of the sector
  • Changes in the legal framework (independent of the company)
  • Macroeconomic developments (independent of the company)

Investor Relations activities of a company are designed to assure the good relation between the issuer and the shareholders/potential investors by providing complete and accurate information to the investor’s community. The better these activities, the higher the interest of analysts and investors will be, which can ultimately lead to an increase of both trading activity and the share price.

After the listing, a company should stay in regular contact with its shareholders by fulfilling mandatory reporting obligations – quarterly reports as well as current reports in cases of occurrences of any significant events. It is also crucial to maintain good investor relations as well as comply with the Bucharest Stock Exchange’s Code of Corporate Governance. For more information about what happens after listing, click here.

Yes, you can do this through the technical listing, in case your company has several shareholders. In case of technical listing, no offering takes place, which means that the shareholder structure of the company is not impacted in any way and the company simply decides to be take advantage of the benefits of being a listed company (additional visibility, credibility, transparency). For technical listing on the Main Market, prospectus will be required for a company to be admitted to trading. Also, you will still need to fulfill the listing criterion, including the 25% free float.

The costs of issuing shares on the Bucharest Stock Exchange’s Main Market are not fixed and involve the following fees:

  • Broker fees, for the preparation of the due diligence report, company valuation, prospectus and investor presentation, investment teaser etc.
  • Auditors’ fees, for carrying out the audit of the financial statements
  • Lawyers’ fees (in case of an IPO)
  • ASF fee, which equals a percentage of the offering (in case of an IPO)
  • Prospectus fee to be paid to ASF (in case of a technical listing)
  • ASF fee for registering securities
  • Central Depository fees
  • Bucharest Stock Exchange fees, which are specified below

Fees charged by the BVB include the fee for processing of the listing application and admission to trading (both paid at once) and the fee for maintenance to trading (paid on an annual basis). To see more details, please consult the dedicated section of our website.

The costs of issuing bonds on the Bucharest Stock Exchange’s Main Market are not fixed and involve the following fees:

  • Broker fees, for the preparation of the prospectus
  • ASF fee, which equals percentage of the offering
  • ASF fee for registering securities
  • Central Depository fees
  • Bucharest Stock Exchange fees

Fees charged by the BVB include the fee for processing of the listing application and admission to trading (both paid at once) and the fee for maintenance to trading (paid on an annual basis). To see more details, please consult the dedicated section of our website.

The process of preparing a company to list may take between 3 to 12 months. The length of the process will depend on the company’s preparedness. The size of the company, public offering structure and its value are also relevant in determining how long the listing process will take. For more information regarding the length of your company’s listing process, you should contact an intermediary.

You can contact the Bucharest Stock Exchange at: marketing@bvb.ro. The authorized intermediaries can also provide you additional details, you can find their full list here.