Amended listing requirements of the JSE

The FSCA recently approved amendments to the JSE listing requirements (see Board Notice 298 of 2022). The amended listing requirements will come into effect from 11 July 2022. 

These amendments consist of a thorough consultation process with relevant market participants and the FSCA and the main reason for the newly approved amendments is to remove some of the red tape and make it easier for companies to be listed on the JSE. Furthermore, the amendments aim to regulate companies listed on the JSE effectively and appropriately. 

The five most important amendments are;

1. The exemption threshold for ordinary course of business transactions has been increased from a percentage ratio of 10% to 30% in transactions that do not need to be categorized in order to comply with the Listings Requirements (and that would otherwise require shareholder approval and the publication of a circular to shareholders);

2. Any  transactions with directors and/or their associates are excluded from the ordinary course of business exemption referred to above;

3. Additional circumstances are provided for where intra-group repurchase transactions do not require shareholder approval, namely intra-group repurchases by the issuer of its securities from wholly-owned subsidiaries or in the context of share incentive schemes and/or non-dilutive share incentive schemes controlled by the issuer, in each case, on a non pro-rata basis;

4. Related parties are allowed to participate in a general issue of shares for cash through a process if certain conditions including, inter alia, maximum pricing requirements and that all allocations in the process take place on an equitable basis;

5. When a circular to shareholders include management accounts used for the purposes of the pro forma financial effects, a reporting accountant’s review or audit opinion (whichever is applicable) must be obtained on those management accounts for acquisitions only and not for disposals.

The amendments were made with the recognition that the global landscape is continuously developing and the significance of engaging market participants to guarantee that a balance is struck between obligations placed on companies listed by the JSE to comply with continuous regulatory requirements and the regulatory responsibilities of the JSE. It is also important to note that the amendments come at a time when there is a substantial increase in companies delisting from the JSE with very little new listings to bridge the gap. Therefore, the amendments which were mainly approved to make it more attractive for companies to be listed on the JSE, are approved at a very crucial time.