Listing rules

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Listing rules

Taking your virtual company through a public offering, even on a simulated stock market, is a major undertaking. Going public provides a source of pride and an opportunity for growth of your virtual business. At the same time, it carries significant responsibilities.

We do accept only business models based on a metaverse or virtual world, dealing with virtual goods and commodities. Other types of business models even partially dealing with real goods, commodities and services may be refused or fall under specific VSTEX rules.

As of now our exchange supports only the Linden Dollar (L$).

From Linden Labs TOS Section 1.4:

Second Life "currency" is a limited license right available for purchase or free distribution at Linden Lab's discretion, and is not redeemable for monetary value from Linden Lab. (copied from Linden Lab website on November 7, 2007)

If your company is listed on another stock exchange and you want to migrate your shares on Vstex, please contact us. We don't accept IPO from companies already listed with other stock exchanges.

Rules for listing a new company at Vstex and for keeping the listing requirements (see also delisting rules at the bottom of the page):

Section A - General rules
1. The person in charge (CEO) for the company fills in the List your company form. The form must be filled in every part and in the most detailed way.
2. Every company will be assigned a "Group" and a "Class" (see Section F), according to its market capitalization. Depending on the Group and Class companies will be subject to different rules/requirements/fees etc.
  Groups and Classes are assigned by the VSTEX and revised at the end of every quarter.
3. Every company shall have a board of directors (BOD), consisting of the CEO and at least as many directors as the company classification requires (see Section F "Companies classification system); directors must be indicated in the listing module/company prospectus. Companies will be allowed to lower the number of directors requirement by one, with explicit, written permission from the VSTEX (additional reports and financial statements will be asked in order to grant the requirement reduction). CEO and directors must be SL accounts registered, controlled and operated by unique individuals.
  The board of directors has the responsibility to manage the business of a corporation for the benefit of its shareholder owners.
  
  The directors of Vstex listed corporations stand in a fiduciary relationship not only to the stockholders but also to the corporations upon whose boards they serve.
  
  The director’s fiduciary duty to both the corporation and its shareholders is characterized as a triad: due care, good faith, and loyalty. That triparte fiduciary duty does not operate intermittently but is the constant compass by which all director actions for the corporation and interactions with its shareholders must be guided.
  
  Although the fiduciary duty of a Vstex listed company director is unremitting, the exact course of conduct that must be charted to properly discharge that responsibility will change in the specific context of the action the director is taking with regard to either the corporation or its shareholders.
  
  A director should, constantly put management to the test of explaining or demonstrating the soundness, reasonableness and integrity of positions taken or recommended to the board that could have a significant impact on the company (and thus its stockholders). Second, a director’s duty is personal to the individual who has chosen to serve in that capacity. He or she must act affirmatively to apprise himself or herself about the matters on which he or she acts specifically, and with respect to his or her general supervision of the management of the company’s business and affairs, including the activities of the company’s senior officers.
  
  The VSTEX has endeavored to provide the directors with clear signal beacons and brightly lined-channel markers as they navigate with due care, good faith, and loyalty on behalf of a Vstex listed corporation and its shareholders.
4. Vstex’s staff will evaluate the submitted module within 96 hours from posting and, after a first meeting with the company staff, ask for additions and/or modifications (if any).
5. At the end of the examination from the Vstex staff, the company is voted for on the website. Every Vstex user with the right to vote expresses his preference about the company IPO within its starting date as expressed in the listing module (for the modalities of assignation of the right of vote, please check the general rules section).
6. Every company will hold at least two public meetings every year, no later than 30 calendar days past Q2 and Q4 end. Meetings will have to be open to the company shareholders, the general public and the press. Company quarterly/yearly reports should be commented and discussed. Shareholders and press questions should be answered. The purpose of this rule is to set minimum levels of communication with shareholders, the press and the general public.
7. Every company shall adopt and enforce a "code of ethics" for the CEO, directors, owner/s and officials. Purpose of the code of ethics will be to promote the honest and ethical conduct, including the proper handling of actual or apparent conflicts of interest; to promote full, fair, accurate, timely and understandable disclosure in public reports and communications; and to promote compliance with all applicable laws, rules and regulations.

Section B - IPO and SPO specific rules
1. The minimum value of the IPO shall be 100,000L$.
2. No less than 51% and no more than 60% of the issued shares will be locked and unavailable for transfers and buys/sells.
3. The maximum number of IPOs active at any given time is two. Exceeding IPOs approved by our Community will be placed in a waiting list, with priority given to who sent the listing module first.
4. The company shall answer all enquiries from prospective investors and shall answer all questions about (with inclusion of, but no limitation to) the current and planned business model; failure to satisfy enquiries may result in the interruption of the IPO process.
5. The voting for the approval of the IPO will run for 14 days; every VSTEX registered account will be eligible for voting. Using alternate accounts in order to manipulate the results is strictly forbidden.
6. At the voting end date votes will be counted; the company is accepted in the IPO if the majority of those who have the right to vote has been reached.
7. The company, accepted through the community vote, is listed in the IPO section of our website and can start selling shares to the general public.
8. It is strictly forbidden to sell "pre-IPO" shares.
9. It is strictly forbidden to offer IPO shares for free or at reduced prices, with specific inclusion of (but no limitation to) contests, sweepstakes, random draws and any direct offer to specific investors.
10. It is strictly forbidden for owners of locked shares and/or any issuer insider to buy into the company IPO a collective amount of shares greater than 5% of the issued shares. Using alternate accounts to bypass this rule will result in the IPO termination; in such an evenience, the initial listing fees won't be refunded.
11. All IPO shares shall be purchased through the web based system. No exceptions will be made.
12. The company enters the trading room if after 21 days after the IPO start date at least 51% of placed shares will have been subscribed. Unsubscribed shares shall be turned into "stock options", with no voting rights attached to them.
13. At the end of its IPO, the company shall enter the trading room; a 2.5% IPO Vstex commission and a further 2.5% commission for a risk fund is deducted from the total amount.
14. Funds from the IPO shall be transferred to the issuer as soon as possible (48 hours on an average).
15. Secondary Public Offerings shall be divided into two types:
  1. SPO with issuance of new shares
  2. SPO with no issuance of new shares
16. SPOs with issuance of new shares do dilute current stakes in the company and as such should be presented to shareholders and backed up by an industrial/development plan. The plan shall be available to shareholders and prospective investors for at least a week on a generally available and accessible location. Additionally, an open meeting is recommended.
17. General rules for all SPOs:
  1. approval from VSTEX must be obtained as a first, necessary step
  2. the duration of the SPO shall not exceed 21 days
  3. a temporary trading halt shall be issued on the stock for the duration of the SPO
  4. commissions on SPOs shall be applied as follows: 2.5% commission + 0.5% risk fund quota, on shares sold (SPOs with no issuance of new shares) or on the final amount of the SPO (SPOs with issuance of new shares)
18. Funds from the SPO shall be transferred to the issuer as soon as possible (48 hours on an average).

Section C - Issuer Listing Fees
1. The VSTEX Virtual Stock Exchange
  1. Entry Fee
    1. An issuer that submits an application to list any class of its securities (not otherwise identified) on the VSTEX Virtual Stock Exchange, shall pay to VSTEX a fee calculated on total shares outstanding, according to the following schedule. This fee will be assessed on the date of listing on the VSTEX Virtual Stock Exchange, except for L$1,000 which represents a non-refundable, application fee, and which must be submitted with the issuer's application.
      - Up to 1 million shares: L$1,000
      - 1+ to 5 million shares: L$5,000
      - 5+ to 10 million shares: L$7,500
      - Over 10 million shares: L$10,000
    2. Total shares outstanding means the aggregate of all classes of equity securities to be listed on the VSTEX Virtual Stock Exchange as shown in the issuer's most recent periodic report or in more recent information held by VSTEX or, in the case of new issues, as shown in the offering circular.
    3. An issuer that submits an application to list any class of rights on the VSTEX Virtual Stock Exchange, shall pay, at the time of its application, a non-refundable application fee of $1,000 to VSTEX.
    4. The VSTEX Board of Directors or its designee may, in its discretion, defer or waive all or any part of the entry fee prescribed herein.
    5. If the application is withdrawn or is not approved, the entry fee (less the non-refundable application fee) shall be refunded.
  2. Continued Listing Fee (waived until December 31, 2010)
    1. ~~At the beginning of every year (January, 1) every issuer shall pay a 12,000 L$ non-refundable continued listing yearly fee~~
    2. ~~the continued listing fee shall be automatically deducted from the CEO VSTEX account~~
    3. ~~shall the automatic debit process fail, the payment will be arranged manually~~
    4. the continued listing fee shall be paid before January 15; expired this deadline, the company will be temporarily halted; before trading can be resumed, the issuer shall pay an additional 3,000L$ non-refundable fee
2. Written Interpretation of VSTEX Listing Rules
  (a) An issuer listed on the VSTEX Virtual Stock Exchange may request from VSTEX a written interpretation of the Rules contained in the Listing Rules page. In connection with such a request, the issuer must submit to VSTEX a non-refundable fee of L$1,000. A response to such a request generally will be provided within three weeks from the date VSTEX receives all information necessary to respond to the request.
  
  (b) Notwithstanding paragraph (a), an issuer may request a written interpretation of the Rules contained in the Listing Rules page by a specific date that is less than three weeks, but at least one week, after the date VSTEX receives all information necessary to respond to the request. In connection with such a request for an expedited response, the issuer must submit to VSTEX a non-refundable fee of L$3,000.
  
  (c) An applicant to VSTEX that has submitted the applicable entry fee under Rule 1 Section C will not also be required to submit a fee in connection with a request for a written interpretation involving the applicant's initial listing on VSTEX.
  
  (d) The VSTEX Board of Directors or its designee may, in its discretion, defer or waive all or any part of the written interpretation fee prescribed herein.
  
  (e) VSTEX shall publish on its website a summary of each interpretation within 60 days from the date such interpretation is issued.
  
  (f) An issuer is eligible to request a written interpretation from VSTEX pursuant to paragraphs (a) or (b), subject to payment of the appropriate fee, if it has a class of securities that has been suspended or delisted from the VSTEX Virtual Stock Exchange, but the suspension or delisting decision is under review pursuant to the delisting rules.
Section D - Company prospectus and reporting
1. The prospectus shall contain all information which, according to the particular nature of the issuer and of the virtual securities offered to the public or admitted to trading on the VSTEX, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor, and of the rights attaching to such securities. This information shall be presented in an easily analysable and comprehensible form.
2. The prospectus shall contain information concerning the issuer and the virtual securities to be offered to the public or to be admitted to trading on the VSTEX. It shall also include a summary. The summary shall, in a brief manner and in nontechnical language, convey the essential characteristics and risks associated with the issuer, any guarantor and the virtual securities, in the language in which the prospectus was originally drawn up. The summary shall also contain a warning that:
  1. it should be read as an introduction to the prospectus
  2. any decision to invest in the virtual securities should be based on consideration of the prospectus as a whole by the investor
  3. virtual securities are offered only for Linden Dollars (L$); Second Life "currency" is a limited license right available for purchase or free distribution at Linden Lab's discretion, and is not redeemable for monetary value from Linden Lab.
  4. where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might have to bear the costs of translating the prospectus before the legal proceedings are initiated; and
  5. civil liability attaches to those persons who have tabled the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus.
3. Responsibility for the information given in a prospectus attaches to the issuer CEO; the prospectus shall be accompanied by a declaration that, to the best of his knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.
4. Information may be incorporated in the prospectus by reference to one or more previously or simultaneously published documents. This information shall be the latest available to the issuer. The summary shall not incorporate information by reference.
5. When information is incorporated by reference, a crossreference list must be provided in order to enable investors to identify easily specific items of information.
6. After a successful IPO, the company prospectus has to be kept updated, with the exception of the "Financial Data" section, which has to be updated at the end of every month (within 15 calendar days); the purpose of this rule is to provide investors with a document reflecting the current status of the company. VSTEX issuers are strongly encouraged to keep and provide on request the original prospectus, for researching purposes
7. The "Cash on hand" value must be the exact value at month end
8. It is forbidden to pay (or promise to pay) out dividends from the IPO/SPO funds. Dividends must be paid out of company profits.
9. In compliance with the Linden Lab "banking policy" it is forbidden to pay (or promise to pay) out a guaranteed or fixed return on investments. Paying (or promising to pay) out a fixed or guaranteed percentage over company profits (which by their nature are not guaranteed and variable in their amount) is fine.
10. Each quarter (Q1 January/March, Q2 April/June, Q3 July/September, Q4 October/December) companies shall publish (within 15 calendar days past the quarter end) a financial report, following the template provided by VSTEX.
  This is a mandatory requirement and failure to comply is considered a serious infringement. Unless the income statement is posted, the VSTEX will:
  1. 25 calendar days past the quarter end, put the company on temporary trading halt (management accounts will be locked and put on hold)
  2. 40 calendar days past the quarter end, initiate the company permanent delisting process
11. Each quarterly report shall feature the following items:
  1. A single-step income statement
  2. A list of assets and liabilities at the end of the reported period; assets and liabilities short descriptions and their value in L$ (for non cash equivalent items, estimates from the company are accepted)
  3. A detail of stock options assignments for the reported period; name of the receiver, amount assigned, short description of why the assignment was made
12. The report issued in accordance with the template provided by VSTEX shall be sent at the address enforcement@vstex.net. It is recommended to make the report generally available by using the company website, newsletters, news items, press releases and any viable mean.

Section E - Shareholders meetings and exercise of certain rights of shareholders in listed companies
Holders of shares carrying voting rights should be able to exercise those rights given that they are reflected in the price that has to be paid at the acquisition of the shares. Furthermore, effective shareholder control is a pre-requisite to sound corporate governance and should, therefore, be facilitated and encouraged. It is therefore necessary to adopt measures to approximate the listing rules to this end; certain minimum standards are introduced with a view to protecting investors and promoting the smooth and effective exercise of shareholder rights attaching to voting shares.

This Section establishes requirements in relation to the exercise of certain shareholder rights attaching to voting shares in relation to general meetings of companies whose shares are admitted to trading on the VSTEX market.

For the purposes of this Section the following definitions shall apply:
- "shareholder" means the natural or legal person that is recognised as a shareholder
- "proxy" means the empowerment of a natural or legal person by a shareholder to exercise some or all rights of that shareholder in the general meeting in his name
1. The company shall ensure equal treatment for all shareholders who are in the same position with regard to participation and the exercise of voting rights in the general meeting.
2. The company shall issue the convocation of a general meeting not later than on the 14th day before the day of the meeting.
3. The company shall issue the convocation referred to in paragraph 2 of this Section in a manner ensuring fast access to it on a non-discriminatory basis. The company shall use such media as may reasonably be relied upon for the effective dissemination of information to the general public.
4. The convocation referred to in paragraph 2 shall at least:
  (a) indicate precisely when and where the general meeting is to take place, and the proposed agenda for the general meeting
  
  (b) contain a clear and precise description of the procedures that shareholders must comply with in order to be able to participate and to cast their vote in the general meeting. This includes information concerning:
  
  (i) the rights available to shareholders under Article 6, to the extent that those rights can be exercised after the issuing of the convocation, and under Article 8, and the deadlines by which those rights may be exercised; the convocation may confine itself to stating only the deadlines by which those rights may be exercised, provided it contains a reference to more detailed information concerning those rights being made available on the Internet site of the company
  
  (ii) the procedure for voting by proxy, notably the forms to be used to vote by proxy and the means by which the company is prepared to accept electronic notifications of the appointment of proxy holders; and
  
  (iii) where applicable, the procedures for casting votes by correspondence or by electronic means;
  
  (c) where applicable, state the record date as defined in Article 7 and explain that only those who are shareholders on that date shall have the right to participate and vote in the general meeting;
  
  (d) indicate where and how the full, unabridged text of the documents and draft resolutions referred to in points (c) and (d) of paragraph 5 may be obtained;
  
  (e) indicate the address of the Internet site on which the information referred to in paragraph 5 will be made available.
5. The company shall provide, for a continuous period beginning not later than on the 14th day before the day of the general meeting and including the day of the meeting, and make available to its shareholders on its Internet site at least the following information:
  (a) the convocation referred to in paragraph 2;
  
  (b) the total number of shares and voting rights at the date of the convocation (including separate totals for each class of shares where the company’s capital is divided into two or more classes of shares);
  
  (c) the documents to be submitted to the general meeting;
  
  (d) a draft resolution or, where no resolution is proposed to be adopted, a comment from a competent body within the company, to be designated, for each item on the proposed agenda of the general meeting; moreover, draft resolutions tabled by shareholders shall be added to the Internet site as soon as practicable after the company has received them;
  
  (e) where applicable, the forms to be used to vote by proxy, unless those forms are sent directly to each shareholder.
6. Companies shall ensure that shareholders, acting individually or collectively:
  (a) have the right to put items on the agenda of a general meeting, provided that each such item is accompanied by a justification or a draft resolution to be adopted in the general meeting
  
  (b) have the right to table draft resolutions for items included or to be included on the agenda of a general meeting.
  
  The company may provide that the right referred to in point (a) may be exercised only in relation to the 2 annual meetings (see Section A, Rule 6), provided that shareholders, acting individually or collectively, have the right to call, or to require the company to call, a general meeting which is not a general meeting held as per Rule 6, Section A with an agenda including at least all the items requested by those shareholders.
  
  Any of the rights specified in this paragraph can be subject to the condition that the relevant shareholder or shareholders hold a minimum stake in the company; such minimum stake shall not exceed 5 % of the share capital.
  
  The company shall ensure that, where the exercise of the right referred to in this paragraph, point (a) entails a modification of the agenda for the general meeting already communicated to shareholders, the company shall make available a revised agenda in the same manner as the previous agenda in advance of the applicable record date as defined in Article 7 or, if no record date applies, sufficiently in advance of the date of the general meeting so as to enable other shareholders to appoint a proxy.
7. Conditions and limitations applicable to shareholders initiated meetings:
  (a) no more than one of such meetings can be held per month
  (b) no such meetings can be held in the month where a general meeting has been called by the pertaining issuer
  (c) whenever shareholders require a listed company to call for a meeting, the company shall answer (positively or negatively) in no more than 10 calendar days from the request receipt
  (d) any such meeting shall require at least a 14 days advanced notice; the notice shall be sent by VSTEX to each shareholder via inworld notecard and shareholders calling the meeting will make the notice publicly and widely available on the web.
  (e) further conditions, limitations and applicable procedures shall be set forth by VSTEX, through the means of a specific policy to be published separately from the Listing Rules.
8. Companies shall provide that the rights of a shareholder to participate in a general meeting and to vote in respect of his shares shall be determined with respect to the shares held by that shareholder on a specified date prior to the general meeting (the record date).
  Companies shall ensure that the record date shall not lie more than 2 days before the date of the general meeting to which it applies.
9. Every shareholder shall have the right to appoint any other natural or legal person as a proxy holder to attend and vote at a general meeting in his name. The proxy holder shall enjoy the same rights to speak and ask questions in the general meeting as those to which the shareholder thus represented would be entitled.
  
  Apart from the requirement that the proxy holder possess legal capacity, companies shall abolish any rule which restricts the eligibility of persons to be appointed as proxy holders.
  
  Companies may limit the appointment of a proxy holder to a single meeting, or to such meetings as may be held during a specified period.
  
  Companies may limit the number of persons whom a shareholder may appoint as proxy holders in relation to any one general meeting. However, if a shareholder has shares of a company held in more than one securities account, such limitation shall not prevent the shareholder from appointing a separate proxy holder as regards shares held in each securities account in relation to any one general meeting. This does not affect rules prescribed by the applicable law that prohibit the casting of votes differently in respect of shares held by one and the same shareholder.
  
  Apart from the limitations expressly permitted in this paragraph, companies shall not restrict the exercise of shareholder rights through proxy holders for any purpose other than to address potential conflicts of interest between the proxy holder and the shareholder, in whose interest the proxy holder is bound to act, and in doing so companies shall not impose any requirements other than the following:
  
  (a) Companies may prescribe that the proxy holder disclose certain specified facts which may be relevant for the shareholders in assessing any risk that the proxy holder might pursue any interest other than the interest of the shareholder;
  
  (b) Companies may restrict or exclude the exercise of shareholder rights through proxy holders without specific voting instructions for each resolution in respect of which the proxy holder is to vote on behalf of the shareholder;
  
  (c) Companies may restrict or exclude the transfer of the proxy to another person, but this shall not prevent a proxy holder who is a legal person from exercising the powers conferred upon it through any member of its administrative or management body or any of its employees.
  
  A conflict of interest within the meaning of this paragraph may in particular arise where the proxy holder:
  
  (i) is a controlling shareholder of the company, or is another entity controlled by such shareholder;
  
  (ii) is a member of the administrative, management or supervisory body of the company, or of a controlling shareholder or controlled entity referred to in point (i);
  
  (iii) is an employee or an auditor of the company, or of a controlling shareholder or controlled entity referred to in (i);
  
  (iv) has a family relationship with a natural person referred to in points (i) to (iii).
  
  The proxy holder shall cast votes in accordance with the instructions issued by the appointing shareholder.
  
  Companies may require proxy holders to keep a record of the voting instructions for a defined minimum period and to confirm on request that the voting instructions have been carried out.
  
  A person acting as a proxy holder may hold a proxy from more than one shareholder without limitation as to the number of shareholders so represented. Where a proxy holder holds proxies from several shareholders, the company shall enable him to cast votes for a certain shareholder differently from votes cast for another shareholder.
10. The company shall establish for each resolution at least the number of shares for which votes have been validly cast, the proportion of the share capital represented by those votes, the total number of votes validly cast as well as the number of votes cast in favour of and against each resolution and, where applicable, the number of abstentions.
  If no shareholder requests a full account of the voting, it shall be sufficient to establish the voting results only to the extent needed to ensure that the required majority is reached for each resolution.
  
  Within a period of time which shall not exceed 15 days after the general meeting, the company shall publish on the Internet the voting results.
Section F - Public shells, reverse mergers, mergers, acquisitions
1. VSTEX believes that the securities of companies operating as "public shells" may be subject to market abuses or other violative conduct detrimental to the interests of the investing public. Therefore, in accordance with the spirit of its listing rules, VSTEX may determine to apply additional and more stringent criteria or move to delist such companies in order to preserve and strengthen the quality and integrity of the VSTEX Virtual Stock Exchange and to protect prospective investors and the public interest.
2. A reverse merger occurs when a public company that has no business and usually limited assets acquires a private company with a viable business. The private company "reverse merges" into the already public company, which now becomes an entirely new operating entity and generally changes name to reflect the newly merged company's business. Reverse mergers are also commonly referred to as reverse takeovers, or RTO's.
  1. An issuer must apply for initial inclusion prior to consumating the transaction whereby the issuer combines with a non-VSTEX entity, resulting in a change of control of the listed company and potentially allowing the non-VSTEX entity to obtain a VSTEX listing. The issuer must also have been listed for at least 6 months before the date set for the merger operation to be effective, to keep continued listing eligibility.
  2. In order to determine that a change of control has occurred, VSTEX will consider a variety of factors including, but not limited to: changes in the voting power and/or share ownership, management, board of directors, and financial structure of the listed entity. VSTEX will also consider the nature of the businesses as well as the relative size of the entities involved in the transaction.
  3. VSTEX will provide written notice to the company if it determines that the transaction, as then proposed, will result in a reverse merger, thereby advising the company that the combined entity will be required to submit an initial listing application and listing agreement prior to consummating the transaction, satisfy all initial inclusion criteria immediately upon consummation of the transaction and pay all required fees (if applicable). Please note that the initial Listing Application should be submitted approximately 6 weeks prior to the expected consummation of the transaction to allow sufficient time for VSTEX’s review. Failure to submit the Initial Listing Application, Listing Agreement and related fees (if applicable) prior to consummation may result in VSTEX issuing a determination of delisting to the company upon consummation of the transaction.
  4. Upon receipt of the notification, the company will be entitled to appeal VSTEX's determination, notwithstanding the fact that the transaction has not yet been completed, and the company is not then subject to immediate delisting. If the company is successful on appeal, it may proceed with the transaction with the understanding that the combined entity will continue to be subject only to the maintenance criteria. If the company is unsuccessful on appeal, it may abandon the transaction. If the company chooses to proceed with the transaction after an unsuccessful appeal and does not satisfy the initial inclusion requirements upon consummation of the reverse merger, it will be subject to immediate delisting without the right to a new oral hearing. Prior to delisting, the company will, however, be provided written notice of the particular initial listing standard(s) that it does not satisfy and will be afforded an opportunity to make a written submission to the VSTEX. The company's submission may, among other things, dispute the finding that it failed to satisfy the initial listing requirements or it may proffer a plan to achieve compliance with the applicable initial listing standard(s).
  5. Reverse mergers must be approved by at least two thirds of the voting shares ("stock options" won't be eligible for voting), during a shareholder meeting or with a vote to be held after a shareholder meeting.
3. A merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals."
  For the purposes of this rule, it will be considered a merger an acquisition where the new management/board of directors will be the sum of the existing managements and boards, or where both the companies will give a significant contribution to the new management/board of directors.
  
  There is no quantitative threshold to define a merger versus an acquisition, as doing so would present a serious potential problem, as a quantitative threshold would be easily circumvented.
  
  In making its determination, VSTEX will look to a number of factors, including, but not limited to:
  - what percentage of each company's assets are active vs. passive;
  - does each company generate revenues;
  - what is the nature of any revenues generated (passive vs. active);
  - are each company's expenses reasonably related to the revenues being generated;
  - how many employees in each company support the business operations;
  - what is management's role in the company's investments;
  - how long has the company been without material business operations;
  1. An issuer must apply for initial inclusion prior to consumating the transaction whereby the issuer combines with a non-VSTEX entity, resulting in a new company or in a change of the listed company. The issuer must also have been listed for at least 6 months before the date set for the merger operation to be effective, to keep continued listing eligibility
  2. An issuer must apply for initial inclusion prior to consumating the transaction whereby the issuer combines with a VSTEX entity, resulting in a new company or in a change of the listed companies. The issuers must also have been listed for at least 6 months before the date set for the merger operation to be effective, to keep continued listing eligibility.
  3. The terms of the merger between two VSTEX issuers will be reviewed by a third, independent auditing entity. All auditing entities will have to be approved by the VSTEX. THE VSTEX will upkeep a list of auditing services known to be adherent to the same, comparable or greater, VSTEX ethic and moral standards. The incurring costs associated with the review will be billed to both companies directly from the auditor and the audit results will be forwarded to the VSTEX, for publication in a generally accessible area.
  4. In order to determine that a change of the listed company has occurred, VSTEX will consider a variety of factors including, but not limited to: changes in the voting power and/or share ownership, management, board of directors, and financial structure of the listed entity. VSTEX will also consider the nature of the businesses as well as the relative size of the entities involved in the transaction.
  5. VSTEX will provide written notice to the companies if it determines that the transaction, as then proposed, will result in a significant change of the listed companies, thereby advising the companies that the combined entity will be required to submit an initial listing application and listing agreement prior to consummating the transaction, satisfy all initial inclusion criteria immediately upon consummation of the transaction and pay all required fees (if applicable). Please note that the initial Listing Application should be submitted approximately 6 weeks prior to the expected consummation of the transaction to allow sufficient time for VSTEX’s review. Failure to submit the Initial Listing Application, Listing Agreement and related fees (if applicable) prior to consummation may result in VSTEX issuing a determination of delisting to the companies upon consummation of the transaction.
  6. Upon receipt of the notification, the companies will be entitled to appeal VSTEX's determination, notwithstanding the fact that the transaction has not yet been completed, and the companies are not then subject to immediate delisting. If the companies are successful on appeal, both may proceed with the transaction with the understanding that the combined entity will continue to be subject only to the maintenance criteria. If the companies are unsuccessful on appeal, both may abandon the transaction. If the companies choose to proceed with the transaction after an unsuccessful appeal and do not satisfy the initial inclusion requirements upon consummation of the merger, both will be subject to immediate delisting without the right to a new oral hearing. Prior to delisting, the companies will, however, be provided written notice of the particular initial listing standard(s) that are not satisfied and will be afforded an opportunity to make a written submission to the VSTEX. The companies submission may, among other things, dispute the finding that it failed to satisfy the initial listing requirements or it may proffer a plan to achieve compliance with the applicable initial listing standard(s).
  7. Mergers must be approved for both companies by at least two thirds of the voting shares ("stock options" won't be eligible for voting), during a shareholder meeting or with a vote to be held after a shareholder meeting.
4. RESERVED

Section G - Companies classification system

Group Class Market Capitalization (Millions L$) Directors Transfer fee (L$)* Companies

A
Large-Cap 1 200+ 4 150,000

2 100+/200 135,000

3 75+/100 125,000

4 50+/75 115,000

B
Mid-Cap 5 35+50 3 105,000

6 20+/35 95,000

7 15+/20 85,000 MDN VST

8 10+/15 75,000

C
Small-Cap 9 8+/10 2 65,000

10 4+/8 55,000 ITA ITL VHI

11 2+/4 45,000 DMI TDJ

12 1+/2 35,000 DWF GRP PBA SLT

D
Micro-Cap 13 0,75+/1 1 25,000 IBF

14 0,5+/0,75 20,000 AFP

15 0,3+/0,5 15,000 MMC VHE

16 0,1+/0,3 10,000

17 0/0,1 7,500

Trading halt and delisting rules

Authority to Initiate Trading Halts
In circumstances in which VSTEX deems it necessary to protect investors and the public interest, VSTEX may halt trading of a security listed on VSTEX to permit the dissemination of material news or:
1. Halt trading in a security listed on VSTEX when VSTEX requests from the issuer information relating to:
  1. material news;
  2. the issuer's ability to meet VSTEX listing qualification requirements; or
  3. any other information which is necessary to protect investors and the public interest.
2. Halt trading in a security listed on VSTEX when:
3. extraordinary market activity in the security is occurring, such as the execution of a series of transactions for a significant Linden dollar value at prices substantially unrelated to the current market for the security;
4. VSTEX determines that such extraordinary market activity is likely to have a material effect on the market for the security; and
5. VSTEX believes that such extraordinary market activity is caused by the misuse or malfunction of an electronic quotation, communication, reporting, or execution system operated by, or linked to, VSTEX.
6. Halt trading when requested by the issuer.
Disclosure of Material Information
It's required that, except in unusual circumstances VSTEX issuers disclose promptly to the public any material information which would reasonably be expected to affect the value of their securities or influence investors' decisions. VSTEX issuers shall notify VSTEX of the release of such material information that involves any of the events set forth below prior to its release to the public. VSTEX recommends that VSTEX issuers provide such notification at least two hours before such release.** Under unusual circumstances issuers may not be required to make public disclosure of material events; for example, where it is possible to maintain confidentiality of those events and immediate public disclosure would prejudice the ability of the company to pursue its corporate objectives. However, VSTEX issuers remain obligated to disclose this information to VSTEX upon request.
Whenever unusual market activity takes place in a VSTEX issuer's securities, the issuer normally should determine whether there is material information or news which should be disclosed. If rumors or unusual market activity indicate that information on impending developments has become known to the investing public, or if information from a source other than the issuer becomes known to the investing public, a clear public announcement may be required as to the state of negotiations or development of issuer plans. Such an announcement may be required, even though the issuer may not have previously been advised of such information or the matter has not yet been presented to the issuer's Board of Directors for consideration. It may also be appropriate, in certain circumstances, to publicly deny false or inaccurate rumors which are likely to have, or have had, an effect on the trading in its securities or would likely have an influence on investment decisions.

** Notification may be provided to the VSTEX Communication and Public Relations Department by email at the address communication@vstex.net
Trading halts
A trading halt benefits current and potential shareholders by halting all trading in any VSTEX securities until there has been an opportunity for the information to be disseminated to the public. This decreases the possibility of some investors acting on information known to them but which is not known to others. A trading halt provides the public with an opportunity to evaluate the information and consider it in making investment decisions. It also alerts the marketplace to the fact that news has been released.
VSTEX's Communication and Public Relations Department monitors trading in VSTEX securities during the trading day for price and volume activity. In the event of certain price and volume movements, the VSTEX Communication and Public Relations Department may contact an issuer and its market makers in order to ascertain the cause of the unusual market activity. The VSTEX Communication and Public Relations Department treats the information provided by the issuer and other sources in a highly confidential manner, and uses it to assess market activity and assist in maintaining fair and orderly markets. A VSTEX listing includes an obligation to disclose to the VSTEX Communication and Public Relations Department information that the issuer is not otherwise disclosing to the investing public or the financial community. On occasion, changes in market activity prior to the issuer's release of material information may indicate that the information has become known to the investing public. Changes in market activity also may occur when there is a release of material information by a source other than the issuer, such as when a VSTEX issuer is subject to an unsolicited take-over bid by another company. Depending on the nature of the event and the issuer's views regarding the business advisability of disclosing the information, the VSTEX Communication and Public Relations Department may work with the issuer to accomplish a timely release of the information. Furthermore, depending on the materiality of the information and the anticipated affect of the information on the price of the issuer's securities, the VSTEX Communication and Public Relations Department may advise the issuer that a temporary trading halt is appropriate to allow for full dissemination of the information and to maintain an orderly market. The institution of a temporary trading halt pending the release of information is not a reflection on the value of the securities halted. Such trading halts are instituted, among other reasons, to insure that material information is fairly and adequately disseminated to the investing public and the marketplace, and to provide investors with the opportunity to evaluate the information in making investment decisions. A trading halt normally lasts one half hour but may last longer if a determination is made that news has not been adequately disseminated or that the original or an additional basis exists for continuing the trading halt.

The VSTEX Communication and Public Relations Department is required to keep non-public information confidential and to use such information only for regulatory purposes.

Issuers are required to notify the VSTEX Communication and Public Relations Department of the release of material information included in the following list of events prior to the release of such information to the public. It should also be noted that every development that might be reported to VSTEX in these areas would not necessarily be deemed to warrant a trading halt. In addition to the following list of events, VSTEX encourages issuers to avail themselves of the opportunity for advance notification to the VSTEX Communication and Public Relations Department in situations where they believe, based upon their knowledge of the significance of the information, that a temporary trading halt may be necessary or appropriate.
1. Financial-related disclosures, including quarterly or yearly earnings, earnings restatements, pre-announcements or "guidance."
2. Corporate reorganizations and acquisitions, including mergers, tender offers, asset transactions and bankruptcies or receiverships.
3. New products or discoveries, or developments regarding customers or suppliers (e.g., significant developments in clinical or customer trials, and receipt or cancellation of a material contract or order).
4. Senior management changes of a material nature or a change in control.
5. Resignation or termination of independent auditors, or withdrawal of a previously issued audit report.
6. Events regarding the issuer's securities - e.g., defaults on senior securities, calls of securities for redemption, repurchase plans, stock splits or changes in dividends, changes to the rights of security holders, or public or private sales of additional securities.
7. Significant legal or regulatory developments.
Trading halts initiated upon request from the issuer shall last no more than 3 days or, under exceptional circumstances and after proper authorization from the VSTEX, 7 days.
Management Accounts suspension
1. When a trading halt or a delisting occurs, accounts of the company CEO, directors, owner/s will be put on hold (frozen); at its sole discretion the VSTEX may lock additional accounts belonging to any known CEO/director, their known or identified alts and any account suspected of any wrongdoing. This is a measure intended to prevent company assets from being illegally taken away or transferred to third parties in order to hide the aforementioned assets.
  For temporary halts, accounts will be reinstated (should no charge against the account be made) after (if needed) proper investigation from the VSTEX.
2. Exculpation from personal liability for monetary damages to the company/shareholders is not available for liability arising out of any of the following:
  - a breach of the duty of loyalty (such as the misappropriation of corporate opportunities or failing to disclose a conflict of interests)
  - acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law and/or Linden Lab Policies and Terms Of Service
  - improper payment of dividends or improper stock repurchases and redemptions
  - transactions from which the CEO/director derived an improper personal benefit
Delistings
A delisting can occur when a company is no longer in compliance with the listing rules and/or the management fails to meet VSTEX requirements and/or indications to reach compliance. A delisted company does still exist and the CEO/directors/managers keep their obligations and liabilities towards shareholders and third parties.
A delistment means that the company is no longer allowed to be traded publicly on the exchange.