JSE aims to lure new listings

CHANGES: NEW CLASSIFICATION WILL MINIMISE RED TAPE AND BURDENSOME REQUIREMENTS

- Adriaan Kruger

'It will help only if economic growth presents investment opportunities.'

The announcement by the Johannesburg Stock Exchange (JSE) and the Financial Sector Conduct Authority (FSCA) that the latter has approved changes to the stock exchange's listing requirements has attracted little fanfare.

Although the changes reduce red tape and some cumbersome processes for certain listed companies, the move is a small step to try to lure new companies to the JSE and stem the delistings.

The number of listings on the JSE dropped from an already uninspiring 460 companies in 2004 to only 274 in 2024 as a lot of companies decided to end their listings, with most blaming the high costs to maintain a listing and adhere to the listing requirements relative to the benefits of being listed.

The prime reason for listing on the stock exchange is to access capital and to give shareholders the opportunity to value and sell their shares.

However, it is not attractive for many smaller companies to raise capital for expansion and growth as these local companies usually trade at such low ratings that the majority shareholders are unwilling to sell a lot of shares to raise a little capital.

Also, when companies trade at attractive ratings, they quickly fall prey to offers from private equity funds or larger companies - and are then delisted.

The JSE initiated several projects to make it easier for companies to list and maintain listings.