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Change on the horizon for JSE listings

The Johannesburg Stock Exchange (JSE) published a consultation paper in May 2022 that requested stakeholders to comment on a series of proposals to make the exchange more fair, efficient, transparent, and competitive. The comments were released in August 2022 and outlined an overwhelmingly positive response.

What do the changes entail?

Following the consultation process, it was determined that several essential listing and debt listing requirements would be prioritized. The implementation of these amendments is said to happen in phases.

Amendments to listing requirements

DUAL CLASS SHARES: The JSE has proposed amendments to introduce dual class shares for applicants seeking a listing on the Main Board. The proposed amendments, which come with essential investor protections, will keep the JSE competitive and assist in attracting new listings.

NEW FREE FLOAT LISTING: After re-evaluating the amount of free float required for a listing, the UK and EU have decided to lower the 20% threshold to 10%. Following these changes, the JSE is proposing amendments accordingly.
FREE FLOAT ASSESSMENT: Any holdings of 10% or more in the securities of an issuer by a shareholder, regardless of such shareholder’s relationship with the company, are ineligible for free float status. Proposed amendments seek to remove this exclusion and introduce a minimum number of shareholders with a more appropriate exclusion for controlling shareholders.
SPECIAL PURPOSE ACQUISITION COMPANIES (SPAC): The pandemic increased volatility levels, making traditional listings riskier. This resulted in a boom in special purpose acquisition companies (SPACs). The JSE’s current Special Purpose Acquisition Company (SPAC) offering is accessible and flexible. However, the JSE still plans to make amendments to match with international markets. This will ensure that SPACs remain attractive and competitive for issuers and investors.
FINANCIAL REPORTING DISCLOSURES: The JSE has put forward the suggestion to do away with the obligation of providing an abridged report for companies that have already published audited annual financial statements online. They have also proposed a way to simplify financial reporting requirements and remove superfluous provisions that do not provide regulatory value.
Amendments to debt listing requirements

This improvement project strives to propose amendments to these debt listing requirements where the JSE has determined that:

  • Provisions require more clarity rather than context; and
  • Where there is ambiguity in interpretation.

The Directory of Issuer Regulation at the JSE, Andre Visser, has stated that the entity has an ongoing goal to create an enabling environment for those listed on the JSE by incorporating international practices. The proposed amendment strives to provide a conducive and internationally competitive environment for increasing capital on the JSE.