GUIDE TO LISTING

CONTENTS
04 The Guide

05 Ethiopian Securities Exchange (ESX)

06 ESX Market Segments

07 Understanding the Listing Process

10 Benefits of Listing

11 Regulatory Framework

12 Pre-Listing Considerations

2 ESX | Ethiopian Securities Exchange

14 Listing by IPO: Key Steps

19 Listing by Introduction: Key Steps

20 Listing and Trading on ESX

23 Post Listing

24 Myths About Going Public

25 For More Informations

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 The Guide
Going public is a pivotal step for any business, its shareholders, and management. Listing on the Ethiopian
Securities Exchange (ESX) signals a strong commitment to transparency, enhancing the company’s
credibility and trustworthiness. This milestone can significantly raise the company’s profile among key
stakeholders such as customers, suppliers, employees, financial institutions, investors, and the media,
positioning it for growth and broader market visibility.

This guide serves as a comprehensive resource for This guide covers the entire life cycle of an IPO,
companies considering going public, as well as for from the initial decision-making process to post-IPO
investors, financial advisors, and other key players involved considerations. It offers insights into the practical steps
in the Initial Public Offering (IPO) process. It explains the required to successfully navigate an IPO, including
essential concepts, steps, and factors to consider at understanding what an IPO entails, preparing for an IPO,
each stage of the IPO journey. Whether you’re thinking meeting listing requirements, and managing post-IPO
about listing your company on the Ethiopian Securities responsibilities.
Exchange or investing in a newly listed company, this
guide is designed to help you understand the process
and make well-informed decisions.

4 ESX | Ethiopian Securities Exchange

Ethiopian Securities Exchange (ESX)
The Ethiopian Securities Exchange (ESX) is Ethiopia’s first, and only organized securities exchange
established as a public private partnership in line with Article 31 of the Capital Market Proclamation
(No.1248/2021).
As a securities exchange, ESX fulfills the roles of a Self-Regulatory Organization (SRO) and central market
organizer, offering an integrated suite of products through its equity, fixed income and alternative market
segments.
ESX supports mobilization of finance for both public and private sector institutions while providing investors
a platform to invest in a reliable and efficient environment. The core objective of the ESX is to facilitate access
to capital and support effective capital allocation in a manner that promotes the country’s economic growth.

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 ESX Market Segments
ESX offers a diverse range of markets and financial products across three key
areas: the Equity Market, Fixed Income Market and the Alternative Market.
These offerings cater to the varied needs of investors, companies, as well as
public sector financing needs, promoting a dynamic capital market ecosystem in
Ethiopia.

Equity Market
Comprises the Main Market for well-established companies and the Growth Market for smaller or
emerging businesses.
The Equity Market includes additional financial instruments such as Exchange-Traded Funds
(ETFs), Real Estate Investment Trusts (REITs), Sharia-Compliant Equity products, and Structured
Products designed to provide tailored risk and return profiles.

Fixed Income Market

Serves as marketplace for Treasury Bonds, T-Bills, Corporate Bonds, Sharia compliant fixed
income instruments – Sukuks, Municipal Bonds and other thematic instruments.
The market also provides platform for Interbank Money Market and Repurchase Agreements
(Repo) (Secured Interbank) transactions.

Alternative Market
Focuses on innovative and niche financial products, including Crowd-investment platforms and the
Over the Counter/ Unlisted Market for trading securities that are not publicly listed.

Fuel Your Business Growth:

ESX Opens Doors to Equity and
Debt Capital for SMEs

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Understanding the
Listing Process
Listing refers to the process by which a company’s shares are included and quoted on
the ESX, allowing them to be traded by investors.

A company that undergoes the listing process must meet all the regulatory requirements of the Ethiopian
Capital Markets Authority (ECMA) and ESX, including financial disclosures, corporate governance practices.
Once listed, the company’s shares become publicly traded, increasing their liquidity and providing the
company with access to a broader pool of capital. Listing also typically enhances the company’s visibility,
credibility, and ability to raise funds in the future.
Companies have several options when it comes to accessing the capital market. The most popular and
common transaction structures are presented below.

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 A. Listing by IPO
An Initial Public Offering (IPO) is the process by which of the shares to investors. Once the IPO is completed,
a privately held company offers shares to the public the company’s shares are listed on ESX, making them
for the first time. This transition allows the company to available for trading by the general public.
raise capital from public investors by selling ownership The company works with a licensed transaction
stakes in the form of shares. By selling new or existing advisor such as an investment bank to determine the
shares to the public, the company can obtain funding investor demand, initial offer price and the number of
to finance its operations and growth, or allow its shares to be sold. The investment bank may use a
founders and shareholders to exit. book building, fixed price offer or auction to determine
IPOs in Ethiopia are required to be supported by the offering price.
licensed transaction advisors and other advisors,
who assist the company in registering and pricing the
shares, marketing the offering, and managing the sale

> Book building: Book building is a price determination mechanism where the issuing company,
with the help of investment bank (s) gathers indications of interest from institutional investors,
high-net-worth individuals and to some extent retail investors for shares being offered. Through
this process, a “book” is created, reflecting the demand for the shares at various price levels.
The final price, or strike price, is set based on the level of demand at the end of the book-building
period, ensuring the minimum capital required is raised.

> Fixed price offering: A fixed price offering is a method of issuing shares or other securities
where the price at which the securities are offered to the public is predetermined and fixed by
the company. Unlike the book-building process, where the price is determined based on investor
demand, in a fixed price offering, the issuer sets the price upfront, and investors can buy the
securities at that specified price.

> Auction: A share offering through auction is a method of selling shares or securities in which
potential investors submit bids for the number of shares they wish to purchase and the price they
are willing to pay. This auction process determines both the price and allocation of shares based
on demand from investors.

Types of Offers in an IPO

An offer for sale is a listing method where existing shareholders invite the public to purchase shares
that are already in their possession. This process does not involve issuing new shares but instead
allows current shareholders to sell a portion of their holdings. It is often used as an opportunity for
founding shareholders to realize returns on their investment by reducing their stake in the company.

An offer for subscription is when a company invites the public to purchase newly issued shares.
Unlike existing shareholders, the new investors acquire these shares directly from the company. This
approach modifies the company’s shareholding structure while channeling the proceeds from the
sale to the company as equity capital. Companies typically use this method when listing to raise
funds for expanding their operations.

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B. Listing by Introduction
In a listing by introduction “Registration of shares without concurrently raising capital” or often called
“Direct Listing”, a company lists on ESX without issuing new shares or raising additional capital.
Instead, existing shares held by current shareholders, employees, or investors are listed on an
exchange for the public to easily buy and sell. This is the best way of becoming public for existing share
companies with a wider shareholding base.
Key Features of Listing by Introduction:

1. No New Shares Issued: The company does not issue additional shares to raise capital.
Instead, it lists the existing shares held by current shareholders.
2. Pre-existing Shareholders: The company already has a broad base of shareholders,
and the shares are freely transferable.
3. Market for Shares: The listing provides a regulated and organized market for trading the
company’s shares, enhancing liquidity and visibility.
4. No Public Offer: Since no shares are being sold to the public, there is no need for
underwriting or an Initial Public Offering (IPO).

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 Benefits of Listing
Listing on the Ethiopian Securities Exchange (ESX) offers more than just opportunity
to raise capital. It enables companies at various stages of growth to strategically
position themselves for the future.
Whether it’s expanding operations, enhancing market visibility, or solidifying their financial foundation, listing
allows businesses to advance and pursue long-term development goals while benefiting from increased
credibility and access to public markets.

Access to Capital Liquidity for Shareholders

Listing provides companies with access to the An IPO offers liquidity for the company’s founders,
public capital markets and alternative sources of early investors, and employees by providing an
capital helping the company achieve its strategic opportunity to sell shares on the open market.
objectives and its long-term growth and success. Listing on ESX allows institutional investors to exit
Listing helps reduce a company’s reliance on debt through a market-based avenue, enabling them to
financing by increasing its equity base. sell their holdings at market-determined prices.
Once listed, a company can more easily raise
additional capital through secondary share Employee Performance
offerings or by accessing debt markets, providing
future funding opportunities. Offering share options to employees can boost
performance, while also helping to attract and
This increased access to capital markets enhances retain top talent by aligning their interests with the
the company’s financial flexibility, supporting company’s success.
its growth and expansion plans while reducing
the need to depend solely on traditional forms of Executives in particular can be compensated with
borrowing. a combination of salary and share options, aligning
with global best practices, and providing incentives
for long-term value creation.
Enhancing Visibility and Prestige
Listing elevates a company’s profile, boosting Valuation and Reputation
visibility among potential customers, partners,
and investors. This can lead to increased brand Being listed on ESX gives the company a
recognition and attract favorable media attention, transparent, market-driven valuation, which can
analysts, and business opportunities. be used to assess its performance and improve its
reputation among customers, suppliers, and the
Achieving listed status on ESX enhances the business community.
company’s credibility with key stakeholders,
including business partners, customers, and The public market’s valuation provides a strong
employees. signal to stakeholders, enhancing the company’s
credibility and helping it build a solid standing in the
Being a listed company can provide competitive industry. This can be instrumental in gaining trust
advantages, opening doors to new business and recognition from partners and investors.
opportunities and strengthening the company’s
market position.

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Regulatory Framework
A company intending to list on ESX must satisfy the requirements of both the ECMA and
the listing and trading requirements of ESX.

Listing on ESX requires two successful applications:

A To ECMA for the registration of securities and approval of Prospectus

> In line with Article 75 (1) of the Capital Market Proclamation “A publicly traded security shall be
registered, prior to the offer or placement, by the Authority.” Certain exemptions apply.

> In line with Article 76 (1) of the Capital Market Proclamation “ An issuer of securities shall obtain
approval from the Authority for its prospectus prior to issuing or advertising any securities for a
public offering”
B To ESX for the Listing and Trading of Securities
> In line with the Rulebook of the ESX an issuer shall submit its listing application after which ESX
shall make an independent determination of the viability of the company for listing.

> Part of the listing evaluation includes; confirmation against minimum listing requirements of the
exchange for both main, and growth markets (for equity securities)

> Such requirements include but are not limited to;

● Minimum capital (market capitalization)

● Minimum operational track record

● Minimum free float requirements

● Ensuring these securities are fully paid and transferable

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 Pre-Listing Considerations
Before pursuing listing, a company should evaluate its readiness to transition
to a publicly listed and traded entity through assessment of the below critical
factors. These elements influence how compelling the company’s equity story
will be for potential investors. The strength of these factors will ultimately
determine investor confidence and the success of the IPO.

Financial Health
Ensure strong financial performance and transparency through accurate, audited statements. Focus on
demonstrating stability with clear revenue growth, profitability, cash flow, and manageable debt levels.
This builds investor confidence and sets a solid foundation for going public.

Operational Readiness
Ensure processes, systems, and infrastructure are robust and capable of supporting growth; includes
having a well-structured management team, effective supply chain management, strong internal controls,
compliance with regulations and up-to-date technology systems.

Business Model
Develop a clear value proposition that outlines the revenue model, customer base, and operational
structure. A solid business model is key to generating steady income and maintaining profitability, which
will be crucial in attracting investors and securing long-term growth after going public.

Market Position
Assess the company’s position versus competitors as a strong market position shows a competitive edge.
The company should have clear growth plans, such as market expansion or product development, and
communicate how IPO funds will support these goals to investors.

Strategic Readiness
Have a clear business strategy that sets long-term goals, identifies growth opportunities, and aligns
resources. This helps the company navigate the challenges of going public and ensures sustained growth
in the competitive market.

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Corporate Governance
A company must strengthen its corporate governance to meet standards expected by regulators,
investors, and ESX. This includes separating management from the board, having independent board
members, and setting up key committees like audit, risk, and compensation. Strong governance,
accountability, and ethical practices are crucial for building investor confidence and enhancing the
company’s reputation in the public market. These factors directly impact the success of the company’s
transition to being publicly traded.

Financial Audit and Reporting Requirements

A company must ensure its financial audit and reporting practices comply with applicable laws and
regulations. This includes preparing audited financial statements for the required number of years, e.g.,
three years if the company is to be listed on ESX main market or at least 2 years if the company is to
be listed on ESX Growth Market, in accordance with International Financial Reporting Standards (IFRS)
or any other acceptable standard by the relevant regulatory body. The company should also establish
robust.

Legal and Regulatory Considerations

A company must thoroughly review and ensure compliance with all legal and regulatory requirements
governing public offer and trading of securities. This includes addressing any outstanding legal issues,
such as lawsuits or contractual disputes, which could pose risks to potential investors. A strong legal
foundation is critical to mitigating risks and ensuring a smooth and compliant transition to public markets.

The Equity Story

The success of an IPO largely hinges on a compelling equity story and its effective communication. A
company’s share profile is multifaceted, shaped by a range of internal and external factors as well as
market expectations. Evaluating the quality or sustainability of a company’s performance cannot rely
solely on financial metrics. This is where the equity story becomes crucial. Designed to capture the
attention of the financial community, the equity story presents the company within its context, outlining
its background, ambitions, and prospects. It highlights potential growth, profitability, and competitive
advantages for investors, linking the company’s business case with its investment proposition.

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 Listing by IPO: Key Steps
Decision to go Public DD and Regulatory Filing Pricing and Allocation
Board Approval Develop Equity Story Set Final Price
Assess Readiness Prepare Prospectus Allocation
Remediate Gaps File with Regulator

POST
IPO

Select Advisor/ Underwriter Marketing & roadshow Listing & trading

Investment bank/ advisor Roadshow pricing Stock exchange Listing
Underwriting agreement Investor relations First day of trading
Identify IPO Team

Overview of the IPO Timeline

PHASE KEY ACTIVITIES
> Assess IPO readiness (financial, legal,
governance)
Pre-IPO Preparation > Assemble IPO team
> Improve internal controls & financial reporting
> Prepare prospectus and financial statements
Drafting and Due > Conduct due diligence
Diligence (DD)
> Prepare regulatory filings
> Submit filings & respond to regulatory feedback
Regulatory Review & > Begin marketing IPO via roadshow
Roadshow
> Gather investor feedback on pricing
> Finalize IPO pricing
Pricing and Listing > Execute listing on the stock exchange
> Begin public trading
> Transition to public company standards
Post-IPO > Maintain investor relations
> Meet ongoing reporting obligations

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Step 1:
Decision to go Public

The decision to go public is a critical phase of the IPO process, where a company evaluates the
strategic benefits and challenges of becoming a publicly traded entity.

Under this step,

> The company’s board of directors must formally approve the decision to go
public, signaling alignment with the organization’s growth strategy.
> A thorough evaluation of the company’s financial, operational, and governance
structures should be performed to ensure it meets regulatory and market
requirements for a public offering.
> Gaps should be identified and areas of deficiencies that require improvement
must be addressed to meet the standards expected by regulators and investors
in the public market.

This decision is influenced by factors such as the need for capital to fund expansion, increase visibility,
enhance credibility, and provide liquidity for existing shareholders.

Select Advisors
Transaction Advisors Legal Advisors
Transaction advisors typically include investment Legal advisors with expertise in capital markets
banks, underwriters, transaction advisors, legal provide guidance throughout the IPO Process and
advisors, auditors, and public relations firms. take part in the interaction between the company and
regulatory agencies, ECMA and ESX. Legal advisors
These advisors play a vital role in structuring the
play a key part in the IPO process as they lead the
IPO, ensuring regulatory compliance, preparing
company’s legal due diligence, contribute to the
financial disclosures, and managing market
drafting of the legal sections of the prospects and
communications. The selection process focuses on
advise management team on their legal and regulatory
finding advisors with a strong track record, relevant
duties before and after the IPO.
industry experience, and a deep understanding of
the regulatory environment. Companies put together
internal IPO team that works together with selected Auditors
advisors under this key step. Auditors are responsible for confirming the accuracy
A well-chosen team of advisors is essential for and fairness of the historical financial information
navigating the complexities of the IPO, optimizing and financial position presented in the prospectus.
valuation, and ensuring a successful listing. Auditors sign on the audit reports, giving assurance
on fair presentation of statements.

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 Step 2:
Due Diligence and Regulatory Filing
This phase focuses on ensuring that the company meets all legal, financial, and regulatory requirements for
going public and prepare its prospectus document to file with the regulator. During this phase, the company,
with the help of its transaction advisors, undergoes a thorough review of its financial statements, corporate
governance practices, legal contracts, and operational performance. Auditors, legal advisors, and investment
banks collaborate to verify the accuracy and completeness of information, identifying and addressing any
potential risks or compliance issues. A key part of this process is the preparation of the prospectus.

A. Registration Statement
In line with Article 8 of ECMA Directive on Public Offering and Trading of Securities (Directive Number 1030/2024),
an issuer is expected to ECMA a submit a registration statement that includes

> A letter signed by a duly authorized officer or the > A Certified copy containing the details of the Board of
transaction advisor Directors, as applicable;
> A prospectus or any other offer document, as > A copy of the annual Report for the preceding 3 (three)
applicable, and
> A valuation report issued by the transaction advisor
> The accompanying information and documents, that
> An external independent legal opinion
include, among others
> Summary and copies of agreement with transaction
> Copy of the Certificate of Commercial Registration and
advisors
business license
> Evidence of escrow bank account opened for the
> An authenticated copy of the Memorandum of
subscription monies
Association of the Issuer and other applicable
incorporation documents > Where the issuer intends to list on a securities exchange
a letter of provisional approval of listing
> A certified copy of the resolution(s) of the shareholders
or Board of Directors authorizing the Offer of the
Securities, as applicable;

B. Prospectus
The Prospectus is a detailed document that provides potential investors with essential information about the
company, including its financial health, business strategy, risk factors, and growth prospects.

“Prospectus” refers to a document or a publication by, or on behalf of, a share company

containing information on the character, nature, and purpose of an issue of shares, debentures,
or other corporate securities that extends an invitation to the public to purchase the securities;”
Capital Market Proc; Article 2(52).
The prospectus is then submitted to the ECMA, for review and approval. This phase is essential for building investor
confidence as well as ensuring that the company complies with all the regulations necessary for a successful IPO.
This phase usually includes professional equity valuation work. This valuation helps set the initial price range for the
shares being offered to the public. The valuation process is crucial, as it impacts how much capital the company
will raise and how attractive the offering will be to potential investors. It will also be refined during the capital raise
roadshow when the feedback from investors is gathered.

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Summary of prospectus contents
Major areas of information that are required to be provided within the
prospectus issued by the issuing company in line with the Capital Market
Proclamation and ECMA Directive on Public Offering and Trading of Securities
include:

• Business overview: A comprehensive description • Reasons for the offer and use of proceeds
of the business, its strategy and objectives • Distribution and underwriting
• A clear and coherent description of the business • Expenses of the offer
plan
• A description of the issuer’s operations and • Property, land and fixed assets
principal activities
• A summary of material contracts to which the
• Principal markets and competition issuer or any member of the group is a party

• The regulatory environment in which the issuer

operates its business • Audited historical financial information
• Profit forecast or a profit estimate
• Information on employees (number, type of • Significant change in the issuer’s financial position
employment, etc.)
• Proforma financial information
• Description of compensation benefit plans, share-
based payment, etc. • Special valuation report: A special valuation report
may be required where the specific nature of
the operations or planned activities of the issuer
• Issuer’s debt position
warrants
• Credit ratings assigned to an issuer
• Issuer’s investment activity • Corporate governance arrangements
• Governance and management; A profile of board of
• Interests and related party transactions directors, senior management, and founders and
• Major shareholders and interested persons promoters (where the business is in existence for
less than 5 years)
• Related party transactions
• Board committees and practices
• Management discussion and analysis operations • Remuneration paid to Board of Directors and
and financial results, capital resources and estimate of the amounts payable to named
liquidity, working capital statement executive officers

• Information concerning the securities being offered • Extract of the issuer’s memorandum of association

• Dividend rights, voting rights, pre-emption rights, • The total of issuer’s share capital
redemption provisions, etc. • Dividend policy
• Terms and conditions of the offer of securities
• Risk factors: Description of the material risks
• Pricing — the price at which the securities are
that are specific and relevant to the issuer and its
being offered and the basis for the issue price
business
• Other related matters: Trading arrangements

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 Step 3:
Marketing and Roadshow
The marketing and roadshow phase of an IPO is a pivotal stage where the company and its transaction
advisors actively promote the upcoming public offering to potential investors. This phase typically involves
a series of presentations, known as the “roadshow,” where the company’s management team, along with
investment bankers, meets with institutional investors, analysts, and fund managers to showcase the
company’s business model, financial performance, and future growth potential.

The roadshow serves as an opportunity to generate investor interest and assess demand for the shares. It
also provides investors with the chance to ask questions and gain deeper insights into the company.

Step 4:
Listing and Trading
The listing and trading phase of an IPO marks the market, enhance visibility, and provide liquidity for
moment when the company’s shares are officially shareholders. For many issuers, the listing is an
listed on ESX and made available for public trading. unforgettable highlight in the company’s history. The
On the day of the listing, also known as the “IPO listing ceremony will be celebrated by the company’s
debut,” the company’s share begins trading under management and staff on ESX trading floor. This
a designated ticker symbol. This phase is the designed event and the live broadcast from the trading
culmination of the IPO process, where the company floor allow all employees to experience this special
transitions from private to public ownership. moment in the company’s history in real time. The
presence of national and international media on the
Successful listing and strong trading activity helps
trading floor further increases the company’s visibility
establish the company’s presence in the public
and reach, garnering broad international attention.

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Listing by Introduction: Key Steps
Similar to steps to be followed by a company that is going through the IPO
process, listing a company by introduction (listing an existing share company
without raising new capital) requires fulfillment of certain steps, alibet that are
lighter than listing by IPO.

Step 1 - Prepare the Company for Listing

> Ensure that the company complies with the eligibility criteria for listing, such as the minimum
capital requirements, free float, financial reporting, and shareholder requirements, as specified
under ESX rules

> Conduct a readiness assessment to identify gaps in compliance, operational processes, or

disclosures required for public companies.

Step 2: Regulatory Filing

> Hire advisors, including transaction and legal advisors to assist with preparing the required
documents, ensuring adherence to ECMA and ESX requirements.

> Submit an application to ECMA, including the required documentation for registration:

• Information Memorandum: A detailed document outlining the company’s financial health,

governance, risks, and other material disclosures.
• Audited financial statements, prepared in compliance with IFRS and other documents

• An application to register shares is limited to the shares that an Issuer has previously issued,
and no new securities shall be offered or registered as part of the Registration Statement

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 Listing and Trading on ESX
Listing and trading of securities on ESX is governed by the Rulebook of the exchange
which provides for listing and trading rules including membership rules and
disciplinary procedures and dispute resolution rules.
The Rulebook prescribes requirements of listing both equity and debt securities. ESX’s equity listing
requirements to its main board and growth board are further discussed on the following pages.

The trading rules of ESX are designed to ensure fair, transparent, and orderly trading of securities on the
exchange. These rules govern the behavior of trading members, issuers, and investors, establishing a
framework that promotes market integrity and protects investor interests.
Understanding and complying with these key trading requirements is critical for issuers to ensure their
securities remain actively and favorably traded on ESX.
Below are the key trading requirements that impact issuers directly.

Prohibition of Insider Trading Issuers must ensure that they and their representatives do not engage in
and Market Manipulation insider trading, where they use non-public information to their advantage.

Issuers are required to provide timely, accurate, and complete information to

Disclosure Requirements the market. This includes financial reports, material developments, and any
other information that could affect the price of their securities.
The Exchange may impose trading halts on an issuer’s securities in the event
Trading Halts and
of emergencies, significant market disruptions, or if the issuer fails to comply
Suspensions
with disclosure obligations.
Issuers need to be aware that engaging in or allowing activities like front-
running (trading ahead of large client orders), short selling without proper
Prohibited Trading Practices authorization, or colluding to manipulate prices can result in disciplinary
actions, including fines and possible suspension of their securities from the
Exchange.
Issuers must ensure that all transactions involving their securities are accurately
Audit Trails and Transaction
recorded and auditable. Any discrepancies or unauthorized transactions could
Records
trigger regulatory scrutiny and damage the issuer’s reputation.
Issuers should ensure that transactions involving their securities are settled
Clearing and Settlement
promptly and correctly, as delays or failures in the settlement process can lead
Requirements
to market instability and affect the issuer’s credibility
Issuers need to maintain the required percentage of shares available to the
Maintenance of Public Float
public (public float) to avoid public float falling below the minimum threshold

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Criteria for Listing on ESX

The ESX listing rule outlines the key listing requirements for companies seeking to go
public. These criteria ensure that companies meet essential regulatory, financial, and
governance standards before listing their shares on the exchange.

Paid-up and Transferable Capital

The company’s capital should meet the requirements of ESX and be fully paid and freely transferable,
ensuring that there are no restrictions on the transfer of shares among investors.

Equal Rights for Shares in the Same Class

Shares within the same class must carry identical rights, maintaining fairness and transparency for
all shareholders

Minimum Public Float

The company must meet the minimum public float requirement, ensuring that a certain percentage
(10%-15%) of shares are available for trading by the public. Hence owners can keep control of the
company

Going Concern
The company must be a viable and operational entity with a sustainable business model,
demonstrating that it is a going concern

Operational track record

The company must be a viable and operational entity with a sustainable business model,
demonstrating that it is a going concern.

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 Comply with ECMA’s proclamation & directives, commercial
code, ESX’s rulebook and other relevant laws

Be registered with the ECMA

L
Be a going concern I
S
Ensure capital is fully paid & freely transferable
T
E
Ensure that shares in a same class carry same rights D
Meet the minimum public float requirement

Listing eligibility conditions for companies seeking to list on either the Main Market
or the Growth Market segments are different.
Below are the specific listing requirements for both the Main and Growth Market
segments.
ELIGIBILITY MAIN MARKET
GROWTH MARKET
CONDITION (MAIN BOARD)
≥ Three (3) years
≥ Two (2) years
Or
Operating Track Or
Record ≥ Three (3) years by a core investor/
≥ Two (2) years by a core investor/
technical partner in the same
technical partner in the same business
business
Revenue growth rate of at least 20%
annually in the last two (2) years.
Profits after tax in at least one of the
Profitability last three (3) financial years.
Or
Demonstrated growth potential through
core investor/technical partner.
Three (3) years of not materially
Two (2) years of not materially qualified
Financial qualified FS prepared in accordance
FS prepared in accordance with IFRS or
Statements (FS) with IFRS or applicable Ethiopian
applicable Ethiopian standards
standards

Market ≥ ETB 500M market capitalization or ≥ ETB 100M market capitalization or

Capitalization shareholder equity shareholder equity

≥ 15% shares in the hands of 300

10% shares in the hands of 50 or more
Public Float or more security holders (≥10% if
security holders
Market Capitalization ≥ ETB 2B)
Application Submission of all required documents as per ESX
Documents

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Post Listing
Life as a Listed Company Once listed, the company is expected to maintain compliance with the
relevant rules, managing investor relations, and sustaining growth.

Regulatory Compliance The company must adhere to ongoing regulatory requirements, including
timely and accurate financial reporting, disclosure of material events, and compliance with corporate
governance standards.

Corporate Governance Strengthening corporate governance becomes essential post-IPO. The

company must ensure that its board of directors continues to provide effective oversight, with independent
directors playing key roles in audit, risk, and remuneration committees.
Transparency and accountability in decision-making are vital to maintaining trust with investors.

Regulatory compliance takes prominence from ESX and

ECMA perspectives for continued listing

Market Sustainability
Regulatory Monitoring Financial Stakeholder and Corporate
Compliance Financial Management Engagement Responsibility

Corporate Risk Operational &

Investor Relations Technological
Governance Management
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ESX | Ethiopian Securities Exchange 23

 Myths About Going Public
Certain myths around going public, commonly held by founders and other
stakeholders of companies, need to be dispelled. These include:

Owners will lose control of the company

The minimum free float requirement on ESX of 15% of shares for main market (500m – 2bn ETB) and
10% for main market > 2bn ETB as well as 10% for growth market, allows founders/owners/existing
shareholders to retain control of the company after listing

IPO process is unduly complicated

The IPO process is well within the capacity of the owners and managers of any successful business.
With adequate preparation, and access to high quality external advisors, the route to a listing is far from
a daunting one. It can be viewed as a series of steps, each of which is readily achievable.

Going public is unduly expensive

An IPO can bring down the cost of capital in the long-term, compared to other ways of raising finance.
This can make going public highly cost effective, even after fees are taken into account.

Listing is suitable only for large companies

A small company can carry out an IPO on ESX as long as its market valuation or market capitalization
post IPO reaches at least 100 million ETB (ESX Growth Market).
This opens the door to many family and other businesses of small to medium size. The key
consideration is the quality of the company, rather than how large it is.

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For More Informations
Our team of experts at the ESX are ready to support you in your listing and IPO
journey

For inquiries on how to unlock new growth opportunities and elevate your
company by listing on the ESX, please contact our dedicated team at the
exchange

Yodit Kassa
Chief Business Development Officer (CBDO)
Email: yodit.kassa@esx.et

Dawit Abebayehu
Listing and Reporting, Senior Manager
Email: dawit.abebayehu@esx.et

Solomon Kitata
Listing and Reporting, Senior Advisor
Email: solomon.kitata@esx.et

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ESX | Ethiopian Securities Exchange 27
 Contact us
Tel: +2519 5212 0031
Email: info@esx.et
www.esxethiopia.com
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