The Johannesburg Stock Exchange (the “JSE”) has recently made global amendments to its Listing Requirements which took effect from 30 September 2014. As part of the changes and in an attempt to increase accessibility to South Africa’s capital reserves and attract new listings, the JSE has introduced a fast track listing process for certain companies.
Eligibility for fast track listing
A company already admitted to an accredited exchange for a period of at least 18 months is eligible to place a secondary listing either on the JSE’s Main Board or AltX (the JSE’s secondary exchange market). The following exchanges are accredited for the purposes of the JSE’s fast track listing process:
- the Australia Stock Exchange;
- the London Stock Exchange;
- the New York Stock Exchange and NYSE Euronext; and
- the Toronto Stock Exchange.
How does the fast track listing process work?
A company making use of the JSE fast track listing process is no longer required to produce a pre-listing statement. Instead, it will only be required to produce a pre-listing announcement which is read in conjunction with the company’s latest published information (including its annual report) prepared in accordance with the rules of the exchange where the company has its primary listing. The scope of the disclosure required by a pre-listing announcement is far narrower than that required by a full pre-listing statement. Therefore, the costs and time incurred in obtaining a secondary listing on the JSE are significantly reduced.
How does the JSE’s fast track listing process compare to the fast track admission on AIM?
The process is very similar to that for obtaining fast track admission on AIM, the London Stock Exchange’s secondary market. A company already admitted to an AIM designated market for a period of at least 18 months prior to the date of admission may apply for fast track admission. Instead of producing a full admission document, a company seeking fast track admission is required to make a pre-admission announcement. The scope of the disclosure required by a pre-admission announcement is far narrower than that required by a full admission document. Accordingly, the time and costs incurred in obtaining a secondary listing on AIM are significant reduced.
The current AIM designated markets are the main markets of the Australian Stock Exchange, Euronext, Deutsche Bourse, Johannesburg Stock Exchange, Nasdaq, NYSE, Stockholmborsden, Swiss Exchange, Toronto Stock Exchange and the UKLA Official List.
What is the likely impact of the JSE’s fast track listing process?
In recent years, South Africa has experienced both economic and political discomfort. Against this background, the JSE has implemented a variety of measures designed to increase the attractiveness of South Africa as a trading environment. The introduction of fast track listing is just the latest attempt by the JSE aimed at enticing new listings. For example, in 2011 South Africa’s inward listing rules were amended to allowed foreign domiciled companies to be treated as domestic listings.
The nascent nature of the JSE’s fast track listing process means that it is really too early to assess its impact and, as yet, it is unclear how many companies will take advantage of the procedure. However, it is worth noting that, generally speaking, the JSE’s attempts to increase the appeal of South Africa as a trading environment seem to be working. Since the 2008 financial crisis, the JSE has shown a long term upward trend and 2014 has seen a spike in listings on the JSE – long may this continue.
This blog post has been co-authored by David Gewer and Bafana Ntuli of Werksmans Attorneys http://www.werksmans.com/