BSCI 371 /

BSST 371
Public Listings
SU E6 - Part 2
 Today’s lecture

Content

Definition and Criteria for Stock Exchanges

Public Listing Requirements
Understanding Listing Requirements
Listing Requirements in Practice
Can a Company be De-listed?
 Learning outcomes
E6 Part 2 - Public Listings
On completion of this study unit, you should be able to:

 Discuss the motivation for an organisation to list on an

exchange.

 Discuss and apply requirements relating to Public Listing.

 Discuss and apply the criteria and processes relating to

Public Listing.

 Discuss conditions under which the company can be

de-listed.
What Are Listing Requirements?

• Listing requirements comprise the various criteria and minimum

standards established by stock exchanges, such as the
Johannesburg Stock Exchange (JSE), that companies must meet to
list their shares for trading.

• A company will be allowed to list shares for trading only if it meets

initial as well as ongoing requirements.

• Companies that do not meet listing requirements on major exchanges

may be able to offer their shares for trading over-the-counter (OTC).

https://www.jse.co.za/
Understanding Listing Requirements

• Listing requirements are a set of conditions which a firm must meet before
listing a security on one of the organised stock exchanges.

• The requirements typically include a certain size and market share of the
security to be listed. The underlying financial viability of the issuing company
is also a criterion. Exchanges establish these standards as a means of
maintaining their own integrity, reputation, and visibility.

• When companies request listings, they have to prove to an exchange that

they meet the listing requirements. The high visibility and liquidity that a
listing support is strong incentive for a company to meet listing requirements.

https://www.jse.co.za/
Understanding Listing Requirements
• Once a security is listed, the issuing company usually have to
maintain a set of related but less stringent trading requirements.
• Otherwise, the company faces delisting. While no legal penalty
is involved, being delisted can mean huge consequences for a
company because its stock won't be traded on the exchange.
• Companies can cross-list a security on more than one
exchange, and often do.
• Listing requirements are not barriers to trading altogether, as
firms are always free to trade securities over-the-counter.

https://www.jse.co.za/
Listing Requirements in Practice
Basic Requirements:
• Listing requirements vary from different exchanges
• There are however certain metrics which are almost always included.
• The two most important categories of requirements deal with the size of the
company (as defined by annual income or market capitalisation) and the
liquidity of the shares (a certain number of shares must already have been
issued).
• For example, the JSE requires for distribution:
A company must have at least 25 million equity securities in issue and at
all times at least 20% of each class of such securities must be held by the
public to ensure reasonable liquidity.

• Other markets. The JSE also offers listings on the Alternative Exchange
Board (Alt X) (which has less stringent listing requirements).
https://www.jse.co.za/
JSE Main board vs Alt X
• The Main Board is where you will find the JSE's Top 40 (shares)
stocks, as well as securities like exchange-traded funds (ETFs),
exchange-traded notes (ETNs) and warrants.

• The Alt X (Alternative Exchange) is the JSE's board for smaller

and medium-sized companies in South Africa. Established in
2003, Alt X provides smaller companies not yet able to list on
the JSE Main Board with a clear growth path and access to
capital.

https://www.jse.co.za/
Dual Listing Companies
• Dual listing is when a particular security is listed on more than one exchange.
• DLC is a commonly used abbreviation for dual-listed companies.
• A dual-listed company is made up of more than one legally registered
corporation that operates as a single business.
• Any company that is listed on more than one exchange must fully comply with
the legal and listing requirements of all the countries and their respective
exchanges that it is listed in.

• Examples of Companies with Dual Listings:

• Unilever – Listed in the UK and the Netherlands
• Rio Tinto – Listed in Australia and the UK
• BHP Billiton – Listed in Australia and the UK
• Brambles – Listed in Australia and the UK
• Investec – Listed in South Africa and the UK
https://corporatefinanceinstitute.com/resources/equities/dual-listing/
 Newly listed companies on JSE
• Southern Palladium Ltd, a palladium explorer and developer, and
• CA Sales Holdings Ltd, which operates within the fast-moving
consumer goods industry and deliver services to blue-chip
manufacturers, both locally and internationally.

Source: https://www.iol.co.za/business-report/companies/two-new-listings-on-jse-southern-palladium-and-ca-sales-9187c774-f899-4c61-a52f-ecdf8a66c6e
5
Can a Company Be De-listed?
• Yes. If companies fail to pay annual fees or they can no longer meet the
financial and liquidity requirements of an exchange, they can be delisted.
• Also, if share prices drop below a certain minimum, a company can be
delisted.
• Once delisted from a particular exchange, investors won't be able to trade a
company's stock on that exchange.

• Reasons for de-listing:

Causes for de-listing may include failure to file timely financial reports,
lower than-required stock price, or insufficient market capitalization.

https://www.jse.co.za/
Companies recently de-listed on JSE
Info just for informational purposes
• 18 companies have recently de-listed for example Spanjaard who has been listed on the
Johannesburg Stock Exchange (JSE) since 1987. With a market value of just R30 million,
Spanjaard says it “is of the view that it is unsustainable for Spanjaard to maintain its
listing on the JSE and the de-listing will result in substantial cost and management time
savings
• This while 14 companies are in the formal process of de-listing or are subject to corporate
action that is likely to result in their delisting.
• These include digital technology investment company Etion, diversified mining and
exploration company Bauba Resources, platinum miner Royal Bafokeng Platinum,
wholesale and distribution company ARB Holdings and downstream petroleum products
supplier Vivo Energy.

Source: https://www.engineeringnews.co.za/article/firm-says-at-least-32-companies-likely-to-delist-from-south-africas-exchanges-this-year-2022-07-05
Any questions?