Only 17% of the companies that qualify to be listed on the general segment of the JSE’s main board have done so, with the current market cap of the segment — designed to ease the stringent listing requirement for smaller firms — at just under R20bn.
The JSE on Wednesday told Business Day the market cap of the segment, based on the 19 companies listed on the segment, was R18.6bn.
“The general segment was officially launched by the JSE on October 18 2024 in response to the need in the market to create a fit-for-purpose regulatory framework for smaller companies listed on the main board,” the bourse said.
“All companies with a primary listing on the main board that are not included in the FTSE/JSE All share index qualify for listing in the general segment. However, companies must apply to move to the general segment.
“Since the launch, 19 companies have applied and have been granted approval to be classified in the general segment. One further company has applied. There are approximately 115 companies that are eligible for classification in the general segment and approximately 17% of those companies are now classified in the segment.”
The Financial Sector Conduct Authority in September endorsed amendments to JSE’s listing requirements for the market segmentation project.
The initiative, announced in April, splits the JSE’s main board into two segments, tailored to meet the needs of large corporations and smaller firms. The main board has been divided into “prime” and “general”, with smaller companies trading in the general segment.
The action is designed to minimise regulatory burdens and the costs associated with listing on the JSE for smaller companies.
The JSE hopes segmentation will curb the trend of delistings by making it more appealing for small- and mid-cap companies to remain listed.
Delistings on the JSE have seen Africa’s largest stock exchange halve in size in two decades, and have also curtailed trading volumes and reduced investment options.
Benefits accruing to smaller issuers listed on the general segment will include flexibility to raise capital through the introduction of a general authority to issue shares for cash without shareholder approval, subject to a prescribed limit and pricing limitations.
Another reform will see companies listed on the general segment being permitted to prepare an annual report within four months instead of the current three-month deadline.
The JSE has removed fairness opinions for related-party transactions/corporate actions, with more emphasis placed on shareholder approval.
The reforms are among the most consequential in 20 years. The JSE launched an alternative exchange, AltX, for small and mid-sized listings in 2003 but it failed to retain and attract new listings.
Applications for issuers that seek to apply for the general segment opened on September 23.
The JSE was criticised for onerous regulations, costs and requirements for small firms, which lack the financial muscle of their bigger counterparts.
It is not only small firms that have been delisting, though. Some of the exchange’s erstwhile darlings have also exited, largely as a result of corporate action. They include Pioneer Foods, Mediclinic, Distell, Massmart, PSG Group, Clover, Royal Bafokeng Platinum and Liberty.
The JSE’s plan is to rewrite its listing requirements and remove red tape that has deterred local and offshore companies from trading on the exchange.
Companies including Finbond, Santova and PBT are already listed on the general segment.
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