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Background and Introduction

One aspect of Corporate Finance is raising funds/capital for a business. In that regard, several options are open to the business including debt; private equity; or public equity through an Initial Public Offer [ IPO]. This guide will focus on an IPO, specifically, listing on the Malawi Stock Exchange [MSE] mainboard.

What is an IPO

An Initial Public Offer refers to the first time that a company makes an offer of securities to the public. An offer to a section of the public, individual members of the public, or an offer to a person who knew the offeror through a publicly available advertisement all amount to an offer being deemed as public. Such securities include shares, debentures, stock, notes, bonds, warrants, and funds.

Generally, companies raise capital through an IPO in two ways. They can either issue new shares to the public or sell shares of the existing shareholders to the public without raising any fresh capital. In both ways, IPOs take place in a primary market. In this market, investors buy shares, notes, or bonds from the company issuing the securities through a bank or broker. The company is then listed on the stock exchange upon satisfying the requirements of the Malawi Stock Exchange [MSE].

Legal Framework

The following pieces of legislation are key in an IPO: Financial Services Act, Securities Act, and Companies Act as well as other regulations, rules, and policies made pursuant to or under them.

Listing Admission Requirements

The MSE has set the following requirements:

  • The company must be duly incorporated and must be a public company. If the company is an existed private company, it has to re-registered as a public company.
  • The Company which can undergo the process must have a subscribed capital (including reserves but excluding minority interests, revaluations of assets that are not supported by an independent professional expert, acceptable to the committee prepared within the last six months and intangible assets) of at least MK 500 million;
  • Not less than 30, 000, 000 equity shares in issue;
  • A satisfactory audited profit history for the preceding three financial years must be presented by the company;
  • 25% of each class of equity shares shall be held by the public, unless otherwise agreed with the MSE committee;
  • The number of public shareholders of listed securities shall be at least;
    • 300 for equity shares;
    • 25 for preference shares; and
    • 10 for debentures;
  • The minimum initial issue price of securities shall not be less than 100 tambala per security, unless otherwise agreed with the MSE committee
  • For a public offer:
  • Any offer of securities to the public by an applicant will comprise of a minimum of 5, 000, 000 such securities of an offer value of not less than MK50 million; or
  • If at least 25% of each class of the shares of the company inclusive of any past offers and/or placements is offered to the public, subject to whichever of the two options is higher.

Procedure for Conducting an IPO

It is important to state at the outset that the law requires that only brokers and dealers who are members of the Malawi Stock Exchange to trade in securities. Further, all processes done in the offer for the sale of securities are required to be underwritten. Underwriting in the securities market simply refers to a process where an investment bank first buys the securities purported to be offered to the public.

The steps for listing and initial public offer are as follows:

  • Apply for registration of securities to the Registrar of Financial Institution

This step is necessary because the law provides that only registered securities may be traded publicly or offered for sale.

The application should be accompanied by a prospectus, which is essentially a document that contains information that would enable an investor and professional adviser to make an informed assessment of the assets, liabilities, financial position, profits and losses, prospects of the issuing company, and rights attached to the securities.

Publication of press announcement and/or pre-listing statement of the intention of the company to offer securities to the public

  • Offer opens

At this point, documents must be submitted to the Stock Exchange Committee for approval prior to listing

  • Offer closes

Results of the offer submitted to the Stock Exchange Committee

  • Results announcement published by the issuing company giving the date of commencement of dealing in the securities subject to listing being granted
  • Refund cheques to be returned and documents of title posted
  • Securities listed where listing has been granted by the Committee
  • File required documents to the Committee

The documents required include a certificate certifying that the capital has not yet been held, an audited list of shares and/or debenture holders, and an analysis of securities held by shareholders.

Listing Fees

There are fees attached to the listing application which are currently in the sum of MK 1, 650, 000.00.  For more information on fees see www……..


A company, in seeking to raise capital to finance its operations and growth, may conduct an IPO. The process results in the company becoming a public company listed on the MSE. In order to conduct the IPO, a company must meet the admission requirements by the MSE. Generally, an IPO can be an exciting process due to the advantages it offers but before a company jumps in, it must make sure it understands the risks and benefits that the process imposes.

This content appears as a courtesy of Ritz Attorneys at Law, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit