1. Purpose and Scope
1.1 Purpose
These Sponsor Rules establish requirements for a person or entity approved by IDSX (the Exchange) to act as a Sponsor for an Issuer seeking admission of securities to IDSX. A Sponsor performs an important gatekeeping and continuing oversight function. These Rules seek to ensure Sponsors conduct appropriate due diligence; assess Issuer suitability; help Issuers understand and comply with IDSX Rules; ensure information submitted is complete and not materially misleading; identify material legal, financial, governance and disclosure risks; maintain independence and professional judgement; support sponsored Issuers’ continuing compliance; and cooperate with IDSX to protect market integrity and investors.
2. Requirement for a Sponsor
2.1 Sponsor Appointment
Unless IDSX determines otherwise, an Issuer applying for initial admission must appoint an approved Sponsor. The Sponsor must remain appointed throughout the admission process.
2.2 Continuing Sponsor
IDSX may require an Issuer to maintain an approved Sponsor following admission. Where required, the Sponsor acts as the primary professional intermediary between the Issuer and IDSX for matters specified in these Rules.
2.3 Exemptions
IDSX may waive or modify the Sponsor requirement if it considers that the Issuer is subject to comparable supervision by another recognised market; has sufficient experience, governance and professional support; another approved professional adviser performs substantially equivalent functions; or a Sponsor is unnecessary having regard to the security or proposed admission. A waiver may be conditional.
3. Role of a Sponsor
A Sponsor is expected to act as an independent professional gatekeeper between an Issuer and IDSX. It may advise on admission requirements; coordinate the application; conduct and supervise due diligence; review corporate, financial and ownership information and Issuer disclosures; identify material issues requiring disclosure or remediation; liaise with IDSX; provide Sponsor confirmations; assist with continuing disclosure procedures; advise on ongoing obligations; review material announcements where required; and perform additional functions specified by IDSX. A Sponsor is not IDSX’s agent and cannot bind IDSX.
4. Sponsor Is a Separate Role
Sponsor approval does not automatically authorise an entity to act as a Broker, Trading Participant, Underwriter, Market Maker, Custodian, financial adviser or other regulated intermediary. A Sponsor performing another role must separately satisfy the rules for that role. Sponsor status alone does not require underwriting an offering or providing secondary market liquidity.
5. Eligibility Requirements
5.1 General Eligibility
An applicant must satisfy IDSX that it:
- is duly incorporated or otherwise legally established;
- has an appropriate professional reputation;
- maintains adequate financial resources and governance arrangements;
- maintains adequate systems and internal controls;
- has sufficient knowledge of securities, corporate finance and capital markets;
- employs or engages suitably experienced personnel;
- maintains appropriate compliance procedures;
- has appropriate professional indemnity insurance where required by IDSX;
- can conduct effective due diligence and maintain complete records; and
- is fit and proper to perform Sponsor functions.
6. Regulatory and Professional Status
A Sponsor must hold all licences, registrations, permissions or exemptions required by Applicable Law for its services. IDSX Sponsor approval is not a regulatory licence. An overseas Sponsor may be approved where IDSX is satisfied that it is appropriately established, meets acceptable professional standards, can provide information necessary for supervision, can comply with IDSX Rules, and its jurisdiction creates no unacceptable regulatory or enforcement risk. IDSX may impose additional requirements.
7. Sponsor Personnel
7.1 Responsible Individuals
A Sponsor must nominate one or more individuals responsible for Sponsor activities. They must have appropriate experience in corporate finance, securities offerings, financial analysis, corporate governance, due diligence, regulatory compliance or related professional disciplines.
7.2 Competence
Each transaction must be supervised by personnel with experience sufficient for the Issuer’s size and complexity, business, incorporation jurisdiction, proposed security, ownership and transaction structure.
8. Independence and Conflicts of Interest
8.1 General Requirement
A Sponsor must exercise independent professional judgement and identify, manage and, where appropriate, disclose conflicts.
8.2 Relevant Conflicts
Potential conflicts include ownership interests in the Issuer; loans to or from it; common directors or controllers; material commercial dependence; underwriting, Market Maker or Broker arrangements; consulting or transaction-based success fees; and relationships with major shareholders or related parties.
8.3 Financial Interests
A Sponsor may receive professional fees, but fee arrangements must not impair independent judgement. IDSX may restrict arrangements creating an unacceptable conflict.
9. Initial Assessment of an Issuer
Before agreeing to sponsor an application, the Sponsor must preliminarily assess legal existence; ownership and control; management; operations; financial condition and reporting; litigation and regulatory history; capital structure; related-party transactions; use of proceeds; security structure and investor rights; transfer restrictions; tokenisation structure where applicable; governance; and suitability for admission. It must not submit an application where it has reasonable grounds to believe the Issuer is unsuitable.
10. Due Diligence
10.1 General Standard
Due diligence must be reasonable and proportionate to the Issuer and proposed admission, and sufficiently thorough for the Sponsor to form a reasonable professional opinion on the accuracy and completeness of application and disclosure materials.
10.2 Corporate Due Diligence
Review, where applicable, constitutional documents, registrations, shareholder registers, beneficial ownership, subsidiaries and material affiliates, directors and officers, authorised share capital, issued securities and shareholder rights, material corporate actions, historical capital changes, and material related-party relationships.
10.3 Business Due Diligence
Obtain a reasonable understanding of principal business, business model, material products and services, major customers and suppliers, key assets and intellectual property, regulatory environment, key dependencies, principal risks and material contracts.
10.4 Financial Due Diligence
Review appropriate audited financial statements, management accounts, cash flow, indebtedness, material liabilities, working capital, revenue concentration, related-party transactions, contingent liabilities, tax matters and financial reporting controls.
10.5 Legal and Regulatory Due Diligence
Make reasonable enquiries regarding material litigation, regulatory investigations, material licences, sanctions, insolvency history, relevant criminal proceedings involving key persons, material contractual restrictions, securities issuance restrictions and other legal matters material to investors.
11. Directors, Controllers and Beneficial Owners
A Sponsor must make reasonable checks on persons exercising material control over an Issuer. Enquiries should include, where appropriate, identity, corporate and professional history, ownership interests, regulatory and insolvency history, disqualifications, material litigation, sanctions screening and potential conflicts. The Sponsor must notify IDSX of matters that may reasonably affect an individual’s suitability to be associated with a IDSX Issuer.
12. Disclosure Document Review
A Sponsor must review admission and disclosure materials and take reasonable steps to satisfy itself that material statements are evidenced; risks are appropriately disclosed; financial information is fairly presented; ownership and security rights are clearly explained; use of proceeds is adequately described; related-party matters, conflicts, litigation and regulatory matters are disclosed; and the overall presentation is not misleading by statement, omission or presentation.
13. Verification Process
Material factual statements in an admission document should be appropriately verified. The Sponsor must retain supporting records. Verification may use corporate records, contracts, bank evidence, financial statements, legal opinions, third-party confirmations, licences, regulatory records, intellectual property or property records, and management representations. Management representations alone should not be relied upon where independent verification is reasonably available and appropriate.
14. Admission Recommendation
Before recommending admission, the Sponsor must form a reasonable opinion that the Issuer satisfies admission requirements; has an appropriate corporate structure and suitable directors and controllers; has properly disclosed material information and risks; has sufficiently reliable financial information; has procedures for ongoing disclosure; understands its continuing obligations; and has no unresolved matter making admission materially inconsistent with market integrity.
15. Sponsor Declaration
IDSX may require a formal declaration before admission. It may confirm that the Sponsor conducted appropriate due diligence, reviewed the application and admission document, made reasonable enquiries about directors and controllers, identified no undisclosed matter materially affecting admission, considers the Issuer suitable, and believes it has adequate systems for continuing obligations. A Sponsor must not give confirmation without a reasonable basis.
16. Tokenised Securities
A Sponsor must understand blockchain, distributed ledger or tokenisation structures sufficiently to assess investor implications. Relevant matters include the token’s legal relationship to the underlying security; security-holder register and legal and beneficial ownership; voting and distribution rights; transfer restrictions; wallet whitelisting and eligibility; corporate actions; token issuance and cancellation; lost-key and recovery procedures; smart-contract controls and administrative keys; blockchain selection; custody and settlement; and reconciliation with the legally recognised register. Blockchain ownership alone must not be assumed to determine legal ownership of the underlying security.
17. Capital Structure and Token Supply
For a tokenised security, the Sponsor must take reasonable steps to verify that token supply corresponds to securities legally authorised for tokenisation; excess issuance requires appropriate approval; minting and burning are controlled; corporate actions are accurately reflected; blockchain records can be reconciled with the official securities register; and discrepancies can be corrected.
18. Transfer Restrictions
Restrictions must be clearly described in admission materials. They may include jurisdiction, investor qualification, lock-up, maximum ownership, sanctions, shareholder approval, foreign ownership, KYC or wallet-whitelisting requirements.
19. Continuing Obligations
Where continuing sponsorship is required, the Sponsor must maintain reasonable oversight and help the Issuer understand obligations relating to continuous disclosure, periodic reporting, material and related-party transactions, director or control changes, capital changes, corporate actions, material litigation, insolvency risk, suspension events and changes to security-holder rights.
20. Continuous Disclosure
A Sponsor should maintain reasonable communication with the Issuer about information that may require disclosure and promptly raise relevant matters. If the Issuer refuses or fails to disclose information the Sponsor reasonably considers necessary under IDSX Rules, the Sponsor must notify IDSX.
21. Material Transactions
Where IDSX Rules require, an Issuer must consult its Sponsor before a material acquisition, disposal, merger, restructuring, substantial borrowing, additional issuance, related-party transaction, change of control, business combination, significant change to principal business, or other IDSX-designated transaction. The Sponsor must consider whether IDSX notification, investor disclosure, shareholder approval, additional due diligence, an updated disclosure document or trading suspension is required.
22. Additional Issuances
For a proposed additional issuance, the Sponsor must assess whether it is validly authorised; investors are appropriately informed; dilution is disclosed; pricing is fair and explained; related-party issues exist; token-supply controls remain appropriate; and IDSX Rules are satisfied.
23. Corporate Actions
A Sponsor must reasonably assist with dividends and distributions, splits and consolidations, bonus and rights issues, redemptions and conversions, mergers, tender offers and changes to investor rights. For tokenised securities, it must consider whether the action is properly reflected in token and registry infrastructure.
24. Changes of Control
A sponsored Issuer must promptly notify its Sponsor of proposed or actual material control changes. The Sponsor must assess implications for continuing suitability; directors and controllers; disclosure; ownership restrictions; related parties; operations; and IDSX compliance, and promptly notify IDSX of material concerns.
25. Financial Reporting
A Sponsor must take reasonable steps to ensure the Issuer understands periodic reporting obligations. On learning of material financial irregularities, it must investigate to an appropriate extent, discuss the matter with the Issuer, consider disclosure, and notify IDSX where appropriate.
26. Sponsor Contact with IDSX
The Sponsor is expected to be the principal professional contact for Sponsor matters. It must respond promptly to enquiries, provide requested information, facilitate Issuer communications, escalate material concerns, cooperate with investigations, and ensure information given to IDSX is not knowingly false or misleading.
27. Duty to Notify IDSX
A Sponsor must promptly notify IDSX of material suspected fraud or misrepresentation; serious governance failure or financial deterioration; undisclosed liabilities; IDSX Rule breaches; regulatory investigations or sanctions concerns; insolvency risk; cybersecurity incidents affecting security records; unauthorised token issuance; material securities-record discrepancies; or other matters that may materially affect investors or market integrity.
28. Withdrawal as Sponsor
A Sponsor may resign subject to IDSX requirements and reasonable notice to the Issuer and IDSX. It must not resign to prevent IDSX learning of a material compliance concern. IDSX may require an explanation where resignation follows a material disagreement or compliance concern.
29. Replacement Sponsor
Where sponsorship is required and the Sponsor resigns or becomes ineligible, the Issuer must appoint a replacement within the period specified by IDSX. Pending replacement, IDSX may restrict new issuances or corporate actions, impose additional reporting, suspend trading or impose another necessary condition.
30. Sponsor Records
A Sponsor must maintain adequate records, including due diligence files and verification materials; Client and Issuer identification; correspondence and meeting notes; internal approvals and financial analysis; legal advice where appropriate; conflict assessments and declarations; disclosure and continuing-compliance reviews; and material communications with IDSX. Records must be retained for the period required by law or any longer period IDSX prescribes.
31. Reliance on Experts
A Sponsor may reasonably rely on qualified auditors, lawyers, accountants, valuers, engineers, cybersecurity or blockchain specialists, technical consultants and tax advisers. Reliance does not remove its responsibility to consider whether an expert’s conclusions are reasonable in the context of the admission.
32. Professional Indemnity Insurance
IDSX may require insurance appropriate to the Sponsor’s activities, sponsored transaction size, number of sponsored Issuers, operating jurisdictions and business risks, and may specify minimum coverage.
33. Financial Resources
A Sponsor must maintain resources sufficient to conduct its business in an orderly manner. IDSX may prescribe minimum net assets, working capital, liquid assets or other prudential measures, with requirements varying by scale and nature of activity.
34. Sponsor Fees
A Sponsor may negotiate due diligence, admission advisory, ongoing Sponsor, corporate action and other professional fees directly with an Issuer. IDSX is not responsible for commercial fee disputes. Material conflicts arising from fee structures must be disclosed.
35. Allocation of Responsibilities
Sponsor appointment does not relieve the Issuer, its directors or management, auditors, legal advisers or other professional advisers of their own responsibilities under law or IDSX Rules. A Sponsor must perform its own obligations but does not guarantee the Issuer’s future performance, profitability or solvency.
36. No Guarantee of Investment
Sponsor appointment must not be described as a guarantee of investment quality, Issuer solvency, future profitability, liquidity, market price, dividends or investment returns. A Sponsor’s existence is not a IDSX endorsement or investment recommendation.
37. Sponsor Misconduct
Misconduct may include inadequate due diligence; knowingly submitting false information or recklessly disregarding material inaccuracies; concealing material information; unmanaged conflicts; misuse of confidential information; failure to cooperate or repeatedly supervise sponsored Issuers; improper pressure on independent advisers; or other conduct inconsistent with Sponsor integrity.
38. Supervisory Action
Where concerned, IDSX may request information, require remediation, impose conditions or enhanced supervision, restrict new mandates, require replacement personnel or enhanced insurance, suspend Sponsor status or terminate it.
39. Suspension of Sponsor Status
IDSX may suspend a Sponsor that no longer meets eligibility requirements; has a suspended required permission; is suspected of serious misconduct; has material financial concerns; fails to cooperate; presents material investor or market-integrity risk; or where suspension is otherwise reasonably necessary. During suspension it must not accept new appointments unless IDSX permits.
40. Termination of Sponsor Status
IDSX may terminate status if a Sponsor no longer meets eligibility; commits serious or repeated breaches; acts dishonestly or without professional integrity; provides materially false or misleading information; becomes insolvent; fails to maintain required professional or regulatory status; fails to remedy deficiencies; or otherwise ceases to be suitable.
41. Responsibility Following Suspension or Termination
Suspension or termination does not remove obligations relating to prior work. The Sponsor must cooperate with IDSX, affected Issuers, replacement Sponsors and relevant authorities to facilitate an orderly transition.
42. Confidentiality
A Sponsor must protect confidential information obtained through its role. It may disclose it where authorised by the Issuer, required by IDSX Rules, law, a competent regulator or court, or necessary to protect market integrity. It must not misuse confidential or inside information.
43. Market Abuse
A Sponsor must not use information obtained through its role to engage in or facilitate insider trading, front-running, market manipulation, improper dealing, unauthorised disclosure of inside information or other market abuse. It must maintain appropriate information barriers where required.
44. Sponsor and Market Maker Relationship
A Sponsor may act as Market Maker for a sponsored Issuer only if separately approved, compliant with Market Maker Rules, managing and disclosing material conflicts, and not restricted by IDSX. Sponsor appointment alone does not require secondary market liquidity provision.
45. Sponsor and Underwriter Relationship
A Sponsor may act as Underwriter where separately permitted. It must identify and manage conflicts from underwriting exposure, pricing, allocation, offering-completion incentives and transaction-based compensation. Underwriting does not reduce independent-judgement obligations.
46. Sponsor and Broker Relationship
A Sponsor may act as Broker where separately approved. If it or an affiliate distributes a sponsored Issuer’s securities, it must maintain appropriate conflict controls.
47. Sponsor Responsibility for Introduced Issuers
A Sponsor must not treat its role as merely administrative and must form its own professional view on suitability and disclosure. It must not submit an Issuer solely because the Issuer requests admission, another adviser approves the transaction, an auditor reviewed accounts, a lawyer reviewed documents, or another exchange previously admitted it.
48. Proportionality
Due diligence should be proportionate to Issuer size and business complexity, capital raised, investor number and type, Issuer risks, security structure and nature of admission. Proportionality does not permit omission of material due diligence: it means a proportionate process, not a reduced integrity standard.
49. IDSX Directions
IDSX may issue Sponsor or due diligence guidance, checklists, standard declarations, disclosure templates, technical standards, practice notes and procedures. A Sponsor must comply with binding IDSX directions.
50. Amendments
IDSX may amend these Rules and will give reasonable notice of material amendments unless immediate implementation is required for legal, regulatory or market-integrity reasons.
51. Interpretation
Terms defined in IDSX General Rules have the same meaning unless stated otherwise. References to securities include token, blockchain or other digital representations where appropriate. Technology does not replace or override legal rights and obligations associated with the underlying security.
52. Effective Date
These Sponsor Rules take effect on the date determined and published by IDSX.
IDSX · Sponsor Rules — Version 1.0