FSCA approves JSE listing requirements dealing with market segmentation

The Financial Sector Conduct Authority (FSCA) has approved the Johannesburg Stock Exchange (JSE) amendments to the listing requirements dealing with market segmentation which come into effect on September 23, 2024.

The Market Segmentation Project repositions the JSE’s Main Board into two segments: Prime and General.

The JSE says the new structure aims to offer a suitable and efficient level of regulation tailored to the size and liquidity of issuers on the Main Board, while continuing to uphold investor confidence in the market.

The General Segment affords issuers on the Main Board listing with different application of certain provisions of the listing requirements.

Issuers seeking to apply for the General Segment can submit an application to the JSE from September 23, 2024, with the effective launch date of the General Segment to be communicated.

Once approved, the issuer will be classified under the General Segment.

The General Segment affords meaningful regulatory relief to issuers while maintaining transparency and disclosure.

Some of the benefits include more enabling capital-raising measures; significant cost savings; efficient and cost-effective financial reporting; and greater flexibility for the boards to manage the business.

“We welcome the FSCA’s approval of the amendments to the JSE’s Listing Requirements in relation to the Market Segmentation Project as we believe it will create a flexible and enabling environment for certain companies listed on the Main Board to raise capital and undertake corporate actions within an appropriate and relevant regulatory framework,” said Andre Visser, the director for Issuer Regulation at the JSE.

The General Segment offers the following, to name a few:

• An automatic annual rolling general authority to issue shares for cash without shareholders’ approval representing up to 10% of the issuer’s issued share capital.
• A general repurchase authority not requiring shareholders’ approval, not exceeding 20% in any one financial year.
• A specific repurchase authority not requiring shareholders’ approval, subject to it not involving related parties and does not exceed 20% in a financial year.
• Removal of fairness opinions for related party corporate actions and transactions, with more focus being placed on governance arrangements and transparency (agreements open for inspection), and exclusion from voting for related parties and associates.
• Removal of the requirement to release results announcements within three months. Issuers will be required to prepare an annual report within four months.
• Removal of the preparation of pro forma financial information but rather inclusion of a detailed narrative on the impact of the transaction/corporate action on the financial statements.
• Increasing the category 1 percentage ratio to 50% or more (an increase of 20%) which increases the category 2 threshold accordingly.
• Requiring only two year audited historical financial information for the subject of a category 1 transaction (currently, three years of audited historical information).
• Increasing the small-related party transaction percentage ratio to 3% and less than or equal to 10% (an increase from 0.25% and 5%).
• Increasing the classification of a material shareholder, from 10% to 20%.

Classification into the General Segment is only available to Main Board issuers who are not included in the FTSE/JSE All Share Index.

The JSE said it remained committed to creating an enabling environment for listed companies and would continually assess its listing requirements to ensure they were relevant and applicable to the ever-evolving needs of the market.

Further to the approval of the Market Segmentation reforms, the JSE announced the expansion of its secondary listings framework and has added Tadawul as well as all the Euronext exchanges (Amsterdam, Brussels, Dublin, Paris, Milan, Lisbon and Oslo) to its list of approved and accredited exchanges.

Tadawul and Euronext exchanges are now included in the group of global exchanges recognised for the fast-track process, including the London Stock Exchange, Australian Securities Exchange, New York Stock Exchange, Toronto Stock Exchange, Singapore Stock Exchange and Hong Kong Exchanges and Clearing Ltd.

The initiative is part of the JSE’s continuous commitment to improving accessibility and efficiency for international companies.

The JSE said that together, the projects demonstrated its proactive approach to regulatory innovation and its dedication to enhancing the attractiveness and effectiveness of the South African capital markets.

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