Local companies traded on the Bermuda Stock Exchange have been told to continue to provide six-month financial reports to the exchange.

The reporting requirements -- opposed by some of the 34 locally listed companies on the grounds of cost -- will be continued because they constitute "an essential part of an open and well informed market'', the BSX said yesterday.

The unaudited six month report requires BSX-listed companies to disclose not only financial details, like profits and dividends, but also total shareholdings of the companies' directors and officers as well as their immediate families.

"The BSX believes that regular financial reporting is an essential part of an open and well informed market,'' the exchange said. "The BSX believes that all public companies should be able to prepare management accounts for the first six months of each year.'' The half-year reporting issue was raised during consultation on the new domestic and international listing rules.

The exchange will continue to take comments on the new rules through April 15.

Initially some companies expressed concern over the cost and additional resources for half-year reports, said BSX chief operating officer Greg Wojciechowski.

"Some of the six-month reports have been up to international standards,'' he said.

The BSX, which also opened the floor for discussion prior to adopting the new listing regulations, said it wanted to give companies a chance to comment after a period of practical application.

The new rules bring the exchange up to international standard and are part of a larger plan to make the BSX a complete offshore capital market.

Also on the domestic rules, the BSX is proposing share repurchasing requirements.

"In light of recent share buyback programmes, it has been suggested that there should be guidelines in the domestic listing regulations,'' the BSX said.

In a repurchase, a company buys back its own shares, usually when they are undervalued. By reducing shares outstanding, per share earnings rise and tend to elevate remaining shares' market value.

The BSX is looking at limiting share buybacks, on or off the exchange, to a maximum of ten percent.

A one month gap before a new issue, suspending the buyback if a price sensitive event occurs, and prohibiting buybacks from insiders, are other recommendations.

It was also suggested that repurchases should be funded from a company's capital or other money available for distribution to shareholders and that shareholders should approve such plans.

Buyback rules ensure all shareholders approve the plan, are aware of it, and no shareholders have an unfair advantage, Mr. Wojciechowski said.

The BSX also said that some comments during the consultation suggested that a part of disclosure rules needed clarification.

Under the rules, when a shareholder of a public company acquires five percent ownership, or a five percent owner changes holdings significantly, directors of the company must make a public announcement.

The BSX deems a change of at least one percent as significant.

On the international listing rules, the BSX has made three recommendations including: Redefining a "qualified investor'' as a single investor whose investment is morw than $50,000 instead of $100,000. The international rules offer faster listing if securities are to be marketed only to qualified investors. The change also will mean the minimum tradable lot will be $50,000.

Replacing the term "substantial shareholder'' in the application for listing form from ten percent to five percent. This move aligns the international rule with domestic.

And, restricted marketings -- issues which restrict investment to qualified investors -- must, under their prospectus, have various documents available for public inspection.

The BSX has also made a general recommendation on transferring securities.

Under the rules, all listed securities must be "freely transferable'' ensuring that there have been no restrictions placed on transferring shares.

A company bylaw requiring transfers be subject to directors' discretion is unacceptable, the BSX said.

The BSX recommends securities may not be subject to any transfer restrictions or compulsory repurchase or redemption unless the holding of the securities results in regulatory, pecuniary, legal, or tax disadvantages for the issuer, or, the issuer wants to restrict maximum holding per holder to a pre-defined percentage specified in the issuer's prospectus and constitution.