Would you invest your money in a micro business on the stock exchange or is it simply too risky?
So Jamaica’s government has officially launched the Micro Stock Exchange for small businesses that want to raise between 50 and 100 million Jamaican dollars. That’s about 300 to 600 thousand US dollars. Not a lot of money in the business world, but it could make a world of difference to start ups and small businesses that need funding.
But the question is: are businesses that small even investible? Do they have the discipline and track record to take investors’ money and deliver a return?
Well speaking in Parliament recently, Finance Minister Fayval Williams said companies won’t be allowed to list in the new Micro Market right away.
They’ll first have to go through a Stock Market Sandbox – a sort of testing ground – before being allowed to raise money from investors.
“This is a simulated market environment designed to prepare businesses for the realities of operating as a publicly listed entity. The sandbox will expose prospective issuers to the reporting obligations, corporate governance standards and regulatory expectations they will face once they are listed. The sandbox will provide a low risk setting that allows potential listed companies to learn, to adapt, and to build capacity before entering the live market.”
-Hon. Fayval Williams
Minister of Finance
Minister Williams also announced another important safeguard.
Unlike companies on the Junior and Main Markets, businesses on the Micro Market won’t have to produce audited financial statements every three months.
Instead, they’ll file audited financial statements twice a year, along with annual audited accounts and annual reports.
This is a compromise aimed at reducing compliance costs while still giving investors independent financial oversight.
Ultimately, the success of the Micro Market may come down to one thing.
Can Jamaica strike the right balance between making it easier for small businesses to raise capital while giving investors enough confidence to put their money behind them?
And that’s the Bottom Line.
So what do you think? Will these measures be enough to give you confidence to invest in a micro or small business?
