What is the "Rejuvenation Project"?
The JSE Limited ("JSE") undertook the 'Rejuvenation Project' that included, among other things, a review of the composition and appropriateness of Section 19 (Specialist Securities) of the JSE Listings Requirements ("Section 19").
This project resulted in changes to both the JSE Listings Requirements, as well as the JSE Debt Listings Requirements (the "DLRs"), replacing the latter in its entirety with the new Debt and Specialist Securities Listings Requirements (the "DSSRs").
These amendments came into effect on 11 November 2024.
What is the practical impact of the "Rejuvenation Project"?
Existing issuers may be required to amend their programmes and/or products listed with the JSE, and new issuers (together with their sponsors and advisors) should ensure that new programmes and/or products are drafted, to align with these changes, which are discussed briefly below.
What are the main changes to the JSE Listings Requirements?
The amended JSE Listings Requirements have, among other things, included a new Section 23 (BEE Segment) which required the deletion of certain BEE provisions from Section 4 (Conditions for Listing) and removed Section 19 in its entirety dealing with Specialist Securities (which are now addressed under the new DSSRs, as discussed below).
Depositary receipts ("DRs") are now governed by an amended Section 18 (Secondary Listings and Depositary Receipts). Issuers of unsponsored DRs must now, among other things, be regulated under the Banks Act of 1990 (or the equivalent foreign legislation), have the relevant expertise to issue securities (or access to such expertise) and be generally acceptable to the JSE (having regard primarily, but not only, to the interests of investors and the objects of the Financial Markets Act of 2012).
Depositories responsible for unsponsored DRs are also now required to disclose their duties on the SENS platform and all financial data pertaining to the underlying entity should be accessible within 10 business days of its publication on the entity's website.
What does this mean for the DLRs?
With effect from 11 November 2024, the DLRs have been replaced entirely by the new DSSRs, subject to certain transitional arrangements discussed below.
The DSSRs now incorporate provisions dealing with Specialist Securities (which were previously dealt with in Section 19). These provisions were redrafted in their totality and repackaged based on the type of issuer.
Structured Products were removed from the definition of "debt securities", effectively limiting debt securities to only instruments with debt characteristics, namely those that are "distinctive debt securities" or "ordinary debt securities". Credit-linked notes, redeemable preference shares, asset-backed debt securities, securitisations, convertible notes and project bonds now all fall under the category of a "distinctive debt security" and are accordingly Debt Securities and are not considered to be Specialist Securities.
A new definition, "structured products", was introduced being investment products "whereby a derivative, or combination of various derivative or other strategies have been used" to achieve a specific investment outcome, and would now include products such as an AMC or an ETN, which structured products now form part of and are treated as Specialist Securities along with warrants and products with a participatory interest in an ETF or AMETF.
Transitional arrangements
The JSE has set out certain transitional arrangements in relation to the new DSSRs to allow sufficient time for sponsors and issuers to adopt them.
Issuers of relevant structured products have until 31 January 2025 to implement a system for publishing daily unwind levels and making them available on their websites and to include a link to the unwind levels in their pricing supplements.
In respect of year-ends commencing from 30 November 2024: (i) issuers with both ordinary shares and debt securities listed on the JSE would not be required to comply with certain financial reporting disclosures set out in the DSSRs; and (ii) the annual compliance certificate of an issuer must (in addition to a declaration regarding the issuer's compliance with all applicable listings requirements during the previous financial year), declare whether or not there are any changes to the issuer's placing document in terms of the DSSRs resulting from any information contained in the placing document, in relation to the issuer, being outdated in a material respect.
Conclusion
These changes require issuers, sponsors and advisors to navigate the new regulatory landscape in order to ensure compliance with the JSE's updated rules and regulations, as discussed briefly above.
*Reviewed by Stephen von Schirnding, Executive in ENS' Banking and Finance Department.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
