Andre Visser | Director | Issuer Regulation | Johannesburg Stock Exchange (JSE) | mail me |

We are pleased to announce that the Financial Sector Conduct Authority (FSCA) has approved our amendments to the listings requirements dealing with market segmentation which come into effective on 23 September 2024.

The market segmentation project repositions our main board into two segments, the prime and the general segment. This 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.

Maintaining transparency and disclosure

The general segment affords issuers on the main board listing with different application of certain provisions of the listings requirements. Issuers seeking to apply for the general segment can submit an application to us from 23 September 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 whilst 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 our 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.

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 any one 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 only 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 (increase by 20%, currently 30%), 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% (increase from 0,25% and 5%); and
• 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.

Staying relevant to the evolving needs of the market

We remain committed to creating an enabling environment for listed companies and continually assess our listing requirements to ensure they are relevant and applicable to the ever-evolving needs of the market.

Further to the approval of the market segmentation reforms, we announced the expansion of our secondary listings framework and have 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. This initiative is part of our continuous commitment to improving accessibility and efficiency for international companies.

Together, these projects demonstrate our proactive approach to regulatory innovation and its dedication to enhancing the attractiveness and effectiveness of the South African capital markets.

Related FAQs: JSE market segmentation project – listing requirements amendments

Q: What are the recent amendments to the JSE listing requirements?

A: The recent amendments to the JSE listing requirements include changes aimed at simplifying the listing process and creating a two-tiered equities market, dividing the JSE’s main board into a general segment and a specialised segment for smaller companies.

Q: How do the amendments to the JSE affect smaller companies listed on the JSE?

A: The amendments to the JSE are designed to better accommodate smaller companies by reducing the listing requirements and allowing for more flexibility in their financial disclosures, enabling these companies to raise capital more efficiently.

Q: What is the purpose of the proposed segmentation of the JSE main board?

A: The purpose of the proposed segmentation of the JSE main board is to create a more tailored listing environment that recognises the differing needs of larger and smaller companies, enhancing access to financial markets for smaller entities.

Q: How do the new listing requirements impact financial information disclosure?

A: The new listing requirements allow for a more streamlined approach to financial information disclosure, permitting condensed financial statements for smaller companies, which can reduce the compliance burden.

Q: What are the key features of the two-tiered equities market proposed by the JSE?

A: The key features of the two-tiered equities market include a main board general segment for larger companies and a specialised segment for smaller companies, each with distinct listing requirements tailored to their specific needs and market capitalisation.

Q: How will the amendments to the JSE listings benefit investors?

A: The amendments to the JSE listings are expected to benefit investors by providing a wider range of investment opportunities in smaller companies, which may offer higher growth potential, while still ensuring transparency and regulatory compliance.

Q: What role does the Companies Act play in the JSE listing requirements?

A: The Companies Act plays a critical role in the JSE listing requirements by setting the legal framework that governs company disclosures, corporate governance and compliance, which the JSE must adhere to in its amendments and listing processes.