The JSE has introduced significant changes to its listing requirements. The aim of the revision was to:
- provide greater transparency in a listed company's activities;
- reduce ambiguity in the requirements for listed companies;
- provide easier access to the market for emerging entrepreneurs and companies assisting in the reconstruction and development of the country;
- improve market liquidity; and
- improve investor protection.
The proposals were contained in a consultation draft which was sent to all listed companies and other interested parties for discussion. The consultation process was designed to give the interested parties the opportunity to contribute to the new requirements to ensure the successful and secure development of South Africa's equity market. All comments received were considered by the JSE and the new listings requirements were introduced on 1 July 1995.
The JSE also supports the Code of Corporate Practices and Conduct ("the Code") contained in the King Report on Corporate Governance, and a disclosure requirement is included in the new listings requirements. The requirement states that companies listed on the main board must disclose in their annual reports, in respect of financial years commencing on or after 1 July 1995, the extent of their compliance or non-compliance with the Code. The Code also requires companies to state whether they have an affirmative action programme and whether there exists any worker participation in the management activities of the company.
A financial redevelopment sector was created on the main board in 1994. The JSE believes that this sector will assist in the raising of new capital for Reconstruction and Development Programme ("RDP") projects and for investment in emerging businesses. The listings requirements for this sector were previously somewhat restrictive and have, accordingly, been revised to allow the JSE greater latitude in granting such listings.
The listings requirements for the Venture Capital Market were also revised. The capital required for a listing to be granted on this board is now R500,000, whereas previously R2 million was required. The revisions were also introduced on 1 July 1995.
The revision of the section relating to mineral companies (section 12) required further consultation and became effective on 1 October 1995. This revised section is, to a large extent, a codification of current market practice, but there are a number of important new requirements which are aimed at raising the level of disclosure to international standards, with a view to enhancing investor protection.
The JSE Committee has also agreed to the establishment of a new sector on the JSE main board, the "Industrial - Development Stage" sector. Companies with permanent capital of at least R20 million that do not have the three year profit history normally required for a main board listing, may apply for a listing in the new sector if they meet the other requirements. They must also provide an appropriate forecast of future profits/losses during and at least one year after completion of the development stage.
Whilst every care has been taken in the preparation of this article, the JSE is not responsible for any errors or omissions contained therein. Readers should therefore study the original Act, rules and other documents referred to or consult with the JSE before acting on any information supplied.
For further information kindly contact: JSE Public Relations Department, PO Box 1174, Johannesburg 2000. Tel: 377 2200; Fax: 834 7402; or do a text search "Johannesburg Stock Exchange" and "Business Monitor".