Series 1 : Article 1

Aiming at Cutting the Red Tape

JSE Targets Effective and Appropriate Levels of Regulation

The Times They Are A-Changing

While decades have passed since Bob Dylan penned these lyrics, it seems that the times are still a-changing, and with them, over the last few years, the significant evolution of capital markets regulation and legislation. The JSE, as a front-line regulator advocating for the enhancement of corporate governance and the quality of general and financial reporting disclosures, has recently recognised that certain provisions of the Listings Requirements appear to be redundant and/or not fit for purpose.

Whilst striving to keep the Listings Requirements current, and to remove the provisions that no longer meet the intended regulatory objectives, the JSE is aware of the continued market noise that “the Listings Requirements are too onerous”.

So what to do?

Come writers and critics…

The JSE’s Issuer Regulation Division compiled a Consultation Paper in March this year to obtain proposals for cutting red tape. The aim – to achieve a level of effective and appropriate regulation for existing Main Board and AltX listings.

Recognising that it would be beneficial to obtain wider input from market participants and stakeholders, the JSE invited comments and suggestions on the Consultation Paper. The JSE welcomed proposals to make application of the Listings Requirements easier, and to do away with the “red tape” to allow for a more flexible and fit for purpose application whilst supporting the environment to allow JSE listed companies to focus on their business and operations.

This sounds good, but is this a done deal?

Don’t speak too soon, for the wheel’s still in spin

The market has been cautioned that when considering any proposals, the JSE will not compromise on its regulation standards aimed at investor protection. However, it clearly recognises that it must strike a balance between its regulatory objective on the one hand and the obligations/responsibilities placed on JSE listed companies on the other. After all, it is important for the stability and integrity of the South African financial markets that the Listings Requirements provide for an effective and appropriate level of regulation to ensure a fair, efficient and transparent financial market and that listings regulation is carried out with due regard to the public interest.

So, what can we expect?

As the present now, will [perhaps] later be past

With the key focus of the Consultation Paper being “effective and appropriate levels of regulation“, the JSE is proposing amendments around the following Listings Requirements:

  1. Transactions – Ordinary Course of Business Exemption
  2. Revised Listing Particulars & Reverse Take-Overs
  3. Abridged Report
  4. Rights Offers, Directors and Closed Periods
  5. Intragroup Repurchases of Securities
  6. General Authority to Issue Shares for Cash/Bookbuilds

So, what exactly do these proposed amendments entail?

Keep your eyes wide open…

The Merchantec Capital Team is going to unpack each of the proposals contained in the Consultation Paper over the course of the next few weeks.

We hope that you will enjoy this series, and we look forward to receiving your feedback.