JSE relaxes listing requirements

‘The changes you will see are aimed at cutting down the cost of compliance … perceived by some parties as excessive red tape’: Andre Visser – director of issuer regulation.

FIFI PETERS: The JSE hasn’t been the best friend for some companies listed on it. Often some companies have complained about the excessive red tape on the stock exchange that has made it quite costly, and exhaustive to remain listed. However, in its defence the JSE has tried to operate in a manner in which it is best able to ensure that investors are protected. With this said, it has made some concessions on red tape, with the Financial Sector Conduct Authority [FSCA] now approving some amendments to the JSE listing requirements.

We have Andre Visser, who is the director for issuer regulation at the JSE on the Market Update for more. Andre, thanks so much for your time. Exactly what changes under these new listing requirements?

ANDRE VISSER: Thank you, Fifi. The changes that we published on Sens yesterday were the conclusion of a process that we started last year. They were basically in response to some of the concerns that have been raised in the market about the level of regulation and the red tape. I think it must be said that some of those issues became a bit more prominent at the end of 2020 and the beginning of 2021, where companies were facing the challenges of Covid while still having to comply with the normal listing requirements.

That became more prominent but, as a responsible listings authority we engaged with those parties, and that resulted in our publishing the consultation paper last year to actually obtain input and views from various stakeholders on the changes that we can make to create a more enabling environment for companies, and to cut red tape.

So the changes that we published yesterday were very well received by the market and the detail of the changes that you will see is aimed at cutting down the cost of compliance, and a big focus on getting boards of companies more flexibility to get on with running the business, as opposed to complying with issues that may be perceived by some parties as excessive red tape.

FIFI PETERS: So for existing players on the JSE that has essentially made it a lot easier for them to stay, is what you’re saying. I’m interested also in what you think this will mean for companies who had previously wanted to come to market, but perhaps reconsidered because of the red tape. Are you expecting these changes to be impactful in drawing in new listings?

ANDRE VISSER: Fifi, we certainly believe it will be impactful. If we look at the level of support that we received from companies and other stakeholder groups, we certainly believe it will be. What is important to just mention is that the cutting-red-tape project and the changes that we published yesterday were simply the start of a longer-term process. What we will be doing in the coming weeks is we will be publishing a further consultation document to the market in which we will be proposing a number of additional reforms to our listings framework that we believe will go a long way in making the JSE even more competitive with our international peers. I think it will go a long way in attracting those companies that may have in the past said, look, we can’t consider the JSE because of the following reasons. We believe those changes that we are proposing will go a long way in eliminating some of those issues.

FIFI PETERS: Some of the changes that we’re speaking about right now pertain to measures regarding companies looking to raise capital or money on the JSE through the issuance of new shares. It looks at the preparation of some documents regarding listing particulars in which you’ve made that process easier. But the ones that could be forthcoming – can you give us some highlights of the kind of amendments there that you’re talking about that are in the pipeline?

ANDRE VISSER: Fifi, perhaps I don’t want to go into too much detail with that, but I think Leila [Leila Fourie, JSE Group CEO] at our AGM yesterday mentioned some of those things. If you go and look at issues where international markets have moved on significantly, it would be in areas like the dual-class shares, something that’s not permissible in South Africa at the moment and on the JSE.

Many international markets – in fact most international markets – have moved on and started aligning those dual-class share structures. Those structures become very important in many cases, specifically in the technology space where companies with very innovative ideas may want to come to market, but they want to retain control for a limited period of time to try and stave off hostile takeovers, and so on. Most of our international peers – London moved on it recently, we know Singapore has moved on it, Hong Kong has moved on it, Euromex has moved on it. We believe issues like that would be appropriate for us to now reconsider, to ensure that we remain competitive and we can show companies that the JSE is open to those types of listing. That’s just one of the examples, but there’s a whole host of issues that we will be proposing in this document.

FIFI PETERS: Sure. But of course, as the JSE you serve a very important role in the investment community, in financial markets, in ensuring that investors’ assets and their investments are safe. So just talk to me about that, about how these amendments that are going to create a more enabling environment do so in a manner in which they balance the safety of investments as well.

ANDRE VISSER: Fifi, obviously the protection of investors remains of paramount importance for the JSE. Whenever we consider a possible amendment, that is something that’s always front of mind. If you go and look at the way that we balanced these proposals or the amendments that we published yesterday, you’ll see every single change that we did make. We did compensate that with additional disclosure or additional protection mechanisms to take into account the interest of investors.

I think a very important point to make as well is, given the very robust consultation process that we went through, and also through the FSCA’s final public-consultation process, investor groups also had an opportunity to comment on these proposals. As I mentioned earlier, there is very broad support on the changes that we’ve made.

FIFI PETERS: All right Andre, we’ll leave it there for now. As you say, the changes have been welcomed by the market. It will be interesting to see what that translates to in terms of the activity that may be forthcoming from here on.

Thanks so much for your time so far. That was Andre Visser, the JSE’s director for issuer regulation.




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