The Johannesburg Stock Exchange (JSE) published a consultation paper in May 2022 as part of its ongoing efforts to ensure that the bourse is fair, efficient, transparent, and competitive – requesting stakeholders to comment on a raft of proposals.
The stock exchange then released a response paper in August 2022 outlining the feedback received from market participants, which showed favourable support from an overwhelming majority of commentators, the JSE said.
Following the consultations, the group said it will now move to prioritise some of the recommendations.
It said that implementing the amendments would take a phased approach. As a result, the JSE prioritises the following amendments to its listing and debt listing requirements.
Listings Requirements
- Dual class shares – Considering developments in other leading international markets, the JSE proposes amendments to introduce dual-class shares for applicants seeking a listing on the Main Board. The proposed amendments are accompanied by appropriate safeguards to afford the necessary investor protection and will allow the JSE to remain competitive and attract new listings.
- Free float: new listings – The UK and EU have reconsidered the level of free float required on the listing, which has been identified as a deterrent to the listing. In line with these developments, the JSE proposes amendments to reduce the 20% free float threshold to 10%.
- Free float assessment – Currently, holdings of securities that do not qualify as free float on listing are any holdings of 10% or more in the securities of an issuer, irrespective of such shareholder’s relationship with the company. The proposed amendments will remove the 10% holdings free float exclusion and introduce a minimum number of shareholders and a more appropriate exclusion for controlling shareholders to align with certain peer exchanges.
- Review of special purpose acquisition companies (SPAC) – During 2020 and 2021, the pandemic raised volatility levels, making traditional listings riskier. This resulted in a SPAC boom, especially in the US, although interest may have tapered recently. The JSE’s current SPAC offering is accessible and flexible. Still, the JSE is proposing amendments to align with leading international markets to ensure the attractiveness and competitiveness of SPACs to issuers and investors.
- Financial reporting disclosures – Following its “cutting red tape” initiatives, the JSE is proposing to remove the obligation to produce an abridged report when the issuer has published its audited annual financial statements on the issuer’s website. The JSE also proposes simplifying the financial reporting requirements and removing provisions that do not provide regulatory value. These changes will save time and costs for companies.
Debt Listings Requirements
The Annual Improvement Project 2022 mainly aims to propose amendments to the Debt Requirements, where the JSE has determined that:
- Specific provisions in the Debt Requirements require more clarity and context; and
- There is ambiguity in the interpretation, which needs to be remedied.
“It is our ongoing objective to create an enabling environment for listing on the JSE as we take into account international best practices as we evolve our listing requirements,” said Andre Visser, Director of Issuer Regulation at the JSE.
“We believe the above-proposed amendments will go a long way in providing a conducive and internationally competitive environment for capital raising on the JSE with appropriate safeguards to ensure investor protection and to attract new listings,” added Visser.
The JSE has any interested parties to comment on the consultation paper on or before 30 November 2022.-bustech
