In the midst of the AGM season

Between April and the end of June, the majority of companies whose equity is listed on the Malta Stock Exchange (MSE) publish their audited financial statements and convene their Annual General Meetings (AGM). A number of equity issuers also publish their financial forecasts via a Financial Analysis Summary.

A number of AGMs this year are asking shareholders to vote on resolutions that go beyond the customary approval of financial statements and the re-appointment of auditors. Various shareholder circulars were published in recent weeks ahead of the AGMs of APS Bank plc, AX Real Estate plc, Bank of Valletta plc, International Hotel Investments plc, Malta International Airport plc and MedservRegis plc. Most circulars reveal a shift in the manner in which companies are managing their capital allocation, rewarding shareholders and also senior management.

An increasingly common theme across the equity market is the use of share buybacks. Moreover, two companies have indicated a renewed appetite for raising fresh capital to continue their expansion plans. Both themes warrant close attention from investors and market participants despite the continued lacklustre trading activity in most of the equities listed on the MSE.

Increasing use of share buybacks

The MSE has been in operation for 34 years and for most of the time, share buybacks were non-existent. Instead, the dominant tool to reward shareholders and for capital allocation purposes was, and remains, a cash dividend which was at times supplemented by occasional bonus share issues and scrip dividends.

This is now changing slightly. During the AGM’s held in 2025, three companies were authorised to conduct share buybacks, namely BOV, MIA and M&Z plc. Both BOV and MIA have proposed to continue their share buybacks in the months ahead while M&Z has not included this on their AGM agenda. Moreover, buybacks will also be conducted by other companies namely AX Real Estate, APS, MedservRegis and Plaza Centres following the approval at the second EGM that took place recently.

The mechanism of share buybacks is especially important given the size of the market and the very infrequent trading activity across most shares on the MSE. Moreover, a meaningful proportion of shares in most companies is held by strategic or financial investors as well as long-term retail investors who rarely trade their shares.

As such, given the structure of the Maltese equity market, the rationale for buybacks is two-fold. The conventional reason is that of returning surplus capital efficiently to shareholders and signalling that directors and management consider their shares to be undervalued. Moreover, an additional and very important justification in Malta is to have a buyer of shares regularly in place to offer liquidity to small shareholders who wish to exit without being at the mercy of opportunistic low offers that appear regularly in the market. Shares repurchased can either be cancelled, thus reducing the number of shares in issue (such as the procedure of MIA and that generally used by most companies overseas), or to source shares for employee incentive schemes without diluting existing shareholders.

This is precisely the justification articulated by APS and MedservRegis. APS shareholders have approved the resolution to buy back up to 5 million shares at a price range between €0.45 and €0.75 per share, with the aggregate cost capped at €4 million. Meanwhile, MedservRegis is asking shareholders to authorise the repurchase of up to 1 million shares at a price range between €0.65 and €1.10 per share over an 18-month period.

BOV has been carrying out its buyback programme since August 2025 and through the regular company announcements, it transpires that the bank acquired a total of 937,770 shares until 29th May 2026 at an average price of €1.97. At the forthcoming AGM, BOV is asking shareholders to renew the programme for a maximum amount of up to 2.33 million shares at a price between €1.75 and €2.75 per share (previous range was between €1.55 and €2.55 per share).

AX Real Estate plc offers a further variation on the buyback theme and a very clear illustration of the liquidity rationale. At its AGM held on 24th April 2026, shareholders approved a buyback of a maximum aggregate consideration of €1 million over a 12-month period. The company explicitly stated that the buyback is intended to enhance liquidity in its shares and more interestingly, the maximum price of the buyback is equivalent to the company’s net asset value per share (currently at €0.553 per share) and a daily cap of 25,000 shares per shareholder to prevent disproportionate participation by any one seller.

The need to raise capital

While share buybacks represent the return of capital to shareholders or the recycling of capital, the circulars of IHI and APS show a very different requirement by the two companies, namely the potential additional capital injections to support further expansion plans.

IHI is asking shareholders to approve three resolutions designed to enable a substantial equity injection from one or more institutional investors. One of the resolutions provides a renewal to the authorisation for the directors to issue shares, that lapsed in July 2025, for a further five years. Another resolution is related to the waiver of pre-emption rights so that the directors may allot up to a maximum of 384,315,080 new ordinary shares directly to an incoming investor, without first offering them to existing shareholders. The other resolution grants consent to the company to share unpublished price-sensitive information with bona fide prospective investors conducting due diligence.

APS shareholders have approved resolutions for an increase in equity and also debt. The bank may issue up to €150 million in new debt securities to “support its capital and financial requirements, including where these arise from a regulatory determination”. Moreover, beyond the scrip dividend under which a total of 3.15 million new shares were issued which increased the share count very minimally, the directors of APS have the authority to issue new shares in the case of a transaction related to a new business opportunity or acquisition. The consideration for partly funding such a transaction via the issuance of shares mitigates the impact on the bank’s capital base and likewise ensures that the counterparty retains a vested interest in the long-term success of the wider APS Group, since the seller becomes a shareholder rather than simply being paid out. Nonetheless, the board noted that it currently has no business proposition in hand.

Raising the ceiling at BOV

Another important and very interesting resolution is the one of BOV asking shareholders to replace its Memorandum and Articles of Association in its entirety with the main amendments relating to Articles 5.3, 5.4, 5.5 and 5.6 of the Memorandum of Association. These provisions currently restrict any person from acquiring or holding, whether directly or indirectly, shares in the company in excess of 5 per cent of the issued share capital, subject to certain pre-determined exceptions. The proposed amendment would raise that threshold from 5 per cent to 9.99 per cent of the issued share capital. This is a meaningful change to a restriction that has been part of BOV’s ownership structure for years. The 9.99 per cent figure is just short of the 10 per cent level at which a holding becomes a qualifying holding under EU and MFSA banking supervision rules, triggering regulatory notification and prior approval. In effect, the amendment provides added room to accommodate larger individual stakes without surpassing the supervisory threshold.

The current AGM season confirms that an increasing number of equity issuers are becoming more proactive in their approach to maintain an attractive investment proposition. The increased use of buybacks is a healthy development; the possible additional capital plans by IHI and APS are being structured with strategic or institutional investors in mind and the update of the Memorandum of Association of BOV takes into account the important changes to the shareholding structure following the various large trades that that took place last year.

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