On 5 July 2016, the Registrar of Securities Services posted draft amendments to the JSE Debt Listings Requirements (the “DLRs”) on the Financial Services Board’s website. The proposed amendments are open for public comment until 15 July 2016.
The draft amendments include a number of changes to various sections of the DLRs that, if adopted, will have an impact on the obligations of:
- issuers (specifically special purpose vehicle issuers of asset-backed debt securities (“ABSs”) and issuers of credit-linked notes)
- guarantors (including guarantors of the obligations underlying ABSs)
- issuers and guarantors’ auditors
- debt sponsors
Included in the proposed amendments are provisions that:
- make it clear that issuers will require the approval of “holders of debt securities holding not less than 66.67% … of the value of a specific class of notes or all outstanding notes for changes to the terms and conditions of the debt securities” (our emphasis). This may mean (depending on the quorum requirements for noteholder meetings) that the standard provisions in most issuers’ programmes that permit amendments to the terms and conditions with the approval of an “extraordinary resolution adopted at a properly-quorated noteholder meeting” may no longer comply with the DLRs.
- impose more onerous disclosure requirements on issuers of ABSs. Issuers of ABSs will now be required to –
- ensure that the financial information of any underlying obligor whose obligations make up 10% or more of the value of the underlying obligations is made publicly available (on a website), unless the underlying obligations are guaranteed under an irrevocable, unconditional on-demand guarantee, in which case the guarantor’s financial information may be made publicly available instead. The above disclosure requirements will also be imposed in respect of the obligors of reference obligations (or if no reference obligations are specified, the reference entities) in respect of credit- linked notes;
- make periodic reports on the underlying pool of assets within set time frames (previously this was open-ended); and
- make use of a new reporting template with certain minimum disclosures.
- require (i) issuers to prepare and publish both annual financial statements and interim financial statements; and (ii) guarantors, if required by the JSE, to also prepare and publish annual financial statements and interim financial statements.
- require issuers to submit their audited financial statements to the JSE within four, rather than six, months of the issuers’ financial year-end.
- Given the potential impact on various role players in the debt capital markets, the amendments will need to be carefully reviewed to determine their full impact.