The Johannesburg Stock Exchange (JSE) has approved various amendments and proposed further amendments to the JSE Listings Requirements (JSE Listings Requirements) and the JSE Debt Listings Requirements (JSE Debt Listings Requirements).

Click on the following links for the  announcement regarding approved JSELR amendments, schedule regarding JSE Consultation Paper items, Schedule regarding Financial Reporting Disclosures, Financial Disclosures Transitional Arrangements letter, announcement regarding JSE Debt Listings Requirements amendments, Schedule regarding Debt Annual Improvement Project, announcement regarding proposed amendments, Section 18 Dual Listings proposed amendments, Section 19 Specialist Securities proposed amendments, Section 23 BEE Segment proposed amendments, and the Explanatory Memorandum regarding proposed amendments.

Approved changes regarding Weighted Voting Share Structures 

With effect from 17 July 2023, the JSE will allow companies with weighted voting structures (dual class shares) to list on the Main Board of the JSE.

The approved provisions remain largely unchanged from the amendments previously proposed with the following adjustments:

• Re-election of directors: Enhanced voting processes apply now also to re-election of independent non-executive directors (in addition to appointment or removal as was the case in previous drafts).
• Changes in capital to be offered in the same ratios in conjunction with ordinary voting shares: As per previous proposals, no further weighted voting shares can be issued, save in the event of a rights issue, bonus issue, capitalisation issue, scrip dividend, consolidation or sub-division of securities, now also in each case offered in the same ratios in conjunction with ordinary voting shares.
• Immediate announcement requirements: The following must be immediately announced on SENS: (i) in the event that the weighted voting share is sold or transferred to any person; (ii) on the expiry of a period of 10 years from the listing date of the applicant issuer (either of which will trigger an automatic conversion into an ordinary voting share); or (iii) if holders of ordinary voting shares agree at a general meeting to allow an extension to the 10 year sunset provision for conversion.
• Consequential changes: In order to give effect to the proposals (new and from previous drafts), the following additional consequential changes have been made to existing requirements:
  • Demand to call a shareholders meeting: The proposed amendments already contemplated holders of ordinary voting shares of 10% having the ability to convene a general meeting. The amendment schedule now makes reference to this right in existing requirements of 3.93, triggering an obligation to inform the JSE in writing and release an announcement.
  • Low and high voting securities: Existing restrictions on listed companies issuing low or high voting securities in 4.18 have been amended such that they are now subject to paragraph 4.47 (changes in capital offered in the same ratios in respect of weighted voting share structures). It also makes clear that where a company currently has listed low or high voting securities prior to the incorporation of weighted voting shares in the Listing Requirements (i.e. prior to 17 July 2023), the JSE will grant a listing of additional securities of that class.
  • Conditions for listing: Existing conditions for listing for the applicant issuer seeking a secondary listing on the JSE have been amended confirming that in addition to referencing the jurisdiction in which the issuer is incorporated, regard must also be had to the listing conditions of the primary exchange.
  • Other: A few of the nits have been cleaned up (i.e. replacing instances of referencing “dual class” with “weighted voting”).

Free Float:

Effective 17 July 2023, the proposed changes to reduce free float requirements from 20% to 10% and finesse which securities are regarded as being held by the public will come into force and effect, unchanged from previous drafts.

Special Purpose Acquisition Companies (SPACs):

Effective 17 July 2023, proposed amendments to the SPAC admission criteria to ensure attractiveness will come into force and effect, the only change from previous drafts pertain to demonstrating that the board has the collective requisite experience – reference is now made to an “established” track record and corporate governance history (in place of a “positive” track record and history).

Financial reporting disclosure:

Following the JSE “cutting red tape” initiatives, revised financial reporting disclosure changes will come into force and effect for all results (both interim and year end) for periods ending on or after 30 June 2023. These changes result in simplification of applicable wording; removal of previous obligations to always prepare an abridged report (which report follows the IFRS format applied to interims being IAS 34); and removal of the current obligation to obtain an auditor’s opinion on interim results published where the previous set of annual results are accompanied by a modified opinion.

Provisions remain largely unchanged from previous drafts with the following adjustments:

• Procedure for non-compliance: The period after non-compliance before (i) the listing will be annotated with a “RE” to indicate non-compliance; and (ii) the JSE will release an announcement to SENS advising that the issuer has not submitted its results and cautioning holders – remains 14 days after failure to comply with 3.15 and 3.17 (i.e. requirements for annual results and interim results) and is reduced for failure to comply with 3.16 (i.e. the period to release the annual report and notice of annual general meeting) from one month after failure to comply to the first day after failure to comply. As previously proposed, the listing of the issuer will be suspended at the end of the fourth month after non-compliance with annual and interim result requirements and the fifth month after non-compliance with annual report and general meeting requirements.
• Annual results: Clarity has been provided that every issuer must, within three months after the end of each financial year end, release a results announcement dealing with either (i) condensed financial statements; or (ii) annual financial statements / summary financial statements (not annual reports as per previous drafts).
• Condensed financial statements: In addition to these financial statements complying with 8.57(a) and 8.58 (minimum contents) as before, they must now also be reviewed for an issuer’s annual reporting period prepared on the basis that the annual financial statements are not available. For Mining companies, summary information for the prior year previously required in condensed financial statements and summary financial statements have been moved to interim results.
• Annual reports: It has been made clear that annual reports now reference annual financial statements and the disclosures complying with 8.64 (i.e. disclosures re application of King Code; trading statements; corporate governance information; compliance with MOI; material risks; profit forecast; and specifics for mineral and property companies), which do not need to be presented in a single document. Among these disclosures is a new disclosure requirement of separate financial statements of the listed South African company. A “South African Company” is a new defined term referencing a company incorporated in terms of the Companies Act.
• Short form announcement: This is now also a defined term meaning a press announcement containing the information in 3.46A (i.e. headlines if dealing with results: increases and decreases in revenue, earnings, dividends, net asset value, name of audit firm; and a new requirement for a link to the full announcement on SENS and the issuer’s website etc).
• Auditors report: The issuer’s audit report requirements now also make reference to International Standards on Auditing (or in the case of overseas companies, in accordance with national auditing standards acceptable to the JSE).
• Summary financial statements: Clarity is provided that the accompanying documentation for summary financial statements (i.e. the type of audit opinion and details of material uncertainty; emphasis of matter etc), is all in respect of the annual financial statements.
• Results announcement: This section has been tidied up and also confirms that annual financial statements are available through the JSE cloudlink, the additional information will only be available on the issuer’s weblink. The obligation to expressly reference a “prior period error” per IAS 8.5 in instances of changes since condensed financials has been deleted.
• Issuer’s weblink: This is a newly defined term meaning the exact URL where the information is available on the issuer’s website (which URL must be included in the results announcement).
• Guidelines on the publication of information have been cleaned up: See Appendix I to section 11 for more (i.e. (i) removing many requirements to electronically submit to the JSE; distribute to shareholders; and publish in the press; and (ii) introducing requirements to publish through SENS and make available through cloudlink). All of these guidelines are subject to a new note to consider statutory obligation to distribute annual financial statements under the Companies Act.
• Other: A few other nits have been cleaned (cross referencing and nuances in drafting); Form M has been updated; and reference to announcement of director changes in interim reports and financial statements have been deleted.

The JSE will no longer send reminder letters in terms of paragraphs 3.17(a) and 3.23(a) of the current service issue of the JSE Listings Requirements (such letters previously sent on the day following the due date of issue of the interim/provisional report or three months after the financial year end of the issuer in the case of annual financial statements, in each case reminding the issuer to comply within a month or risk a listing suspension).

The JSE is in the process of updating the SENS announcement event types to be used for the release of results. Should an issuer “early implement” before the new SENS announcement event types are live, provision has been made for designated processes to be followed.

Approved changes regarding JSE Debt Listings Requirements

There are only minor amendments to the Debt Listings Requirements since previous drafts, predominantly introducing a security requirement for any platform through which information will be shared electronically.

Proposed changes regarding the BEE Segment

The first set of proposed amendments to the JSE Listings Requirements (i) introduce new BEE SPV provisions; and (ii) add adherence to section 12 (Mineral Companies) and section 13 (Property Entities) to the conditions to listing on the BEE Segment.

A ‘BEE SPV’ is defined as a special purpose entity created with the specific objective of facilitating a black economic empowerment transaction. If adopted, the proposed amendments to the requirements for a BEE SPV would read as follows:

• Existing provisions in section 23: Existing provisions of section 23 are to remain unchanged (i.e. conditions to listing, BEE contract provisions and verification agent provisions).
• BEE SPV listing requirements: The BEE SPV must appoint a sponsor; it must have committed or subscribed capital of at least ZAR 10 million prior to listing and have assets held by a trust or equivalent ringfenced entity; the issuer must be listed; 10% of each class of equity securities must be held by the public; and where underlying assets are equity (i) they must be listed or financial information must be published; and (ii) they must constitute a minority interest without management control of the listed companies.
• PLS and circular requirements: The PLS must describe the rights of security holders; details of the underlying assets; risks; and details regarding the day-to-day management of the BEE SPV. Financial disclosures must be in the PLS or incorporated by reference. The BEE SPV should include its latest audited balance sheet if newly incorporated or financial history if not. For the underlying asset, if unlisted, certain financial and interim financial information will be required. Ancillary documents should include the annual financial report; exchange control approval (if applicable); any other regulatory approval; a draft abridged PLS; Part I and II documents; and agreements that relate to the terms and conditions or relationship between the BEE SPV and the issuer of the underlying asset. All circulars must comply with content and approval requirements; embargos on announcements; and sponsor disclosure requirements.
• Continuing obligations: The BEE SPV must obtain approval from the majority of the holders of securities in a general meeting for any material changes to the agreements (engaging with the JSE); announce any new issue or amendments; publish annual financials and interims; and inform the JSE of any changes in the BEE verification agent. The issuer must comply with the continuing obligations in section 3 with a few exceptions (i.e. there is no need to comply with requirements around provisional reports; cash companies; pre-emptives; profit warranties; issues by subsidiaries other than on listing; press announcements since all announcements are made on SENS; and certain corporate governance requirements regarding the balance of power at board level and certain audit committee and company secretarial requirements).
• Underlying issuer obligations: The issuer must publish certain announcements regarding the BEE SPV, including, immediately after the JSE has approved the application for listing, any declaration of dividends; any changes in the constituents of the asset pool; and any corporate action or restructuring in the underlying assets. All corporate actions of the issuer must be undertaken according to requirements, including timetables.

Any additional listings would then be in accordance with Listing Requirements and supported by relevant authorisations and announced.

Proposed changes regarding Depository Receipts and Secondary Listings

The JSE is also proposing a separate set of amendments to the JSE Listings Requirements and JSE Debt Listings Requirements as part of it’s Rejuvenation Project of Section 19 (Specialist Securities) aimed at making the provisions easier to apply (to these and other types of instruments in the future); removing ambiguities and administrative provisions; and simplification of admission criteria, listing particulars, financial information, continuing obligations and corporate governance.

As part of the review process, the JSE proposes to remove Section 19 from the JSE Listings Requirements and to combine the provisions dealing with Specialist Securities, with the JSE Debt Listings Requirements, incorporating the following changes, if approved:

• The JSE Debt Listings Requirements to include Specialist Securities, and this combined set of listings requirements will then be known as the Debt and Specialist Securities Listings Requirements (DSS Requirements).
• Depository receipts to be moved from the current Section 19 to a more appropriate section, being Section 18 (Dual Listings and Listings by External Companies). The main heading of Section 18 will then be amended from ‘Dual Listings and Listings by External Companies’ to ‘Secondary Listings and Depository Receipts’.
• The insertion of definitions for Depository, Depository receipts or DR; Fully covered; Issuer; Sponsor DR; and Unsponsored DR.
• The inclusion of new paragraphs 18.50 – 18.51 providing for the ‘Criteria for an Issuer’ such that an issuer of sponsored DRs must demonstrate to the JSE that it meets paragraphs 18.1 to 18.11, applicable to a secondary listing and an issuer of unsponsored DRs must (i) be regulated under the Banks Act of 1990 or the equivalent foreign legislation in the case of foreign issuers; (ii) have relevant expertise to issue securities; (iii) 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; and (iv) be in conformity with the applicable laws of its jurisdiction of incorporation, having obtained all necessary statutory, or other, consents required to apply for and maintain a listing of securities.
• The inclusion of paragraphs 19.86 – 19.103 providing for Depository Receipts. This has been copied verbatim from the current Section 19.
• The amendment of Section 2 in order to make provision for sponsors, registered in terms of the JSE Listings Requirements to act as sponsors for issuers of specialist securities.
• The amendment of Section 2 to make provision for a designated person to be appointed, not only by a secondary registered debt issuer but also by issuers of specialist securities.
• The replacement of schedule 24 with Form H1.
• Providing for the listing documents in respect of unsponsored DRs in respect of the depository to include details of its full name; place and date of incorporation; and full name and addresses of its directors; or in the case that the depository is not a company, the persons with corresponding duties and powers in relation to the depository.
• Requiring responsibilities of the depository for unsponsored DRs to be announced on SENS, and all financial information of the underlying entity be made available within 10 business days of publication of the financial information available on the website.

Key Dates

The effective date for approved changes apart from the financial reporting disclosures is 17 July 2023, granting issuers and sponsors a month to adopt the new requirements. A transitional period has been granted for financial reporting disclosures such that provisions only apply to results (both interim and year end) for periods ending on or after 30 June 2023. Early implementation will be permitted.

The JSE invites comments to the proposed amendments by close of business on 17 July 2023.