In August 2014, the Johannesburg Stock Exchange (JSE) announced amendments to the JSE Listings Requirements that include a fast track secondary listing process for companies that are already listed on accredited foreign exchanges.
Fast track secondary listings are still a relatively novel concept in the South African market, and in December 2014 NRF LLP and NRFSA assisted AIM listed Sirius Real Estate Limited to become the first company to obtain a secondary listing on the JSE through the fast track process. To date, no further companies have obtained a fast track secondary listing on the JSE but this bespoke process has the potential to greatly increase the attractiveness of listing on the JSE to multinationals with interests in South Africa or the rest of Africa.
International companies that have been listed on ‘one of the accredited exchanges’ for at least 18 months can undertake a fast track secondary listing on the JSE’s Main Board or AltX. Four ‘accredited exchanges’ are set out in the new Listings Requirements, the Australian Stock Exchange, the London Stock Exchange, the New York Stock Exchange (NYSE) – including the NYSE Euronext – and the Toronto Stock Exchange (TSX). Although not expressly included in the Listings Requirements, the JSE has confirmed that the TSX Venture Exchange (TSXV) may also be regarded as an accredited exchange. It remains to be seen whether the JSE will add further exchanges to this list, particularly exchanges in Asia.
The rationale behind the fast track process is that the JSE has satisfied itself as to the disclosure and regulatory requirements of the accredited exchanges, and as such is willing to allow companies listed on these exchanges to avoid the more onerous requirements of the ordinary JSE secondary listing process. The fast track secondary listing process significantly reduces the time and costs associated with obtaining a secondary listing on the JSE, as well as making it easier for multinationals that are already operating in South Africa or the rest of Africa to obtain a secondary listing on the JSE. Multinationals can use the fast track secondary listing process to obtain a relatively administration-free secondary listing on the JSE, which can be used as a springboard into other African countries.
Companies that qualify and apply for a fast track secondary listing on the JSE need not produce a pre-listing statement and, instead, are required only to release a far less administratively cumbersome pre-listing announcement. The pre-listing announcement must contain disclosures, which are set out in the Listings Requirements. These disclosure items may be made by simply cross-referring to the company’s latest published financial information including its annual report prepared in accordance with the requirements of the exchange on which it has its primary listing.
A company that is listed on the junior board of a foreign exchange – whether accredited or not – may not apply for a secondary listing on the JSE’s Main Board. Such a company will only be eligible for a secondary listing on the JSE’s AltX. This rule applies to all secondary listings – both fast track and ordinary. The rationale behind this rule relates to the regulatory requirements that the company is subject to in respect of its primary listing, and applies regardless of whether the company meets the criteria for a Main Board listing on the JSE. If a company that has its primary listing on the junior board of a foreign exchange wishes to list on the Main Board of the JSE, it would have to apply for a primary listing on the Main Board of the JSE, and comply with all of the relevant Listings Requirements. This company would then have a primary listing on the foreign exchange as well as the JSE.
Alastair Dixon is a director at Norton Rose Fulbright. He can be contacted on +27 11 685 8672 or by email: firstname.lastname@example.org.
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