The requirements in summary for a Main Board listing are as follows:
• A subscribed capital (including reserves but excluding minority interests, and revaluations of assets and intangible assets that are not supported by a valuation by an independent professional expert acceptable to the Committee prepared within the last six months) of at least R25 million.
• The company must have a satisfactory profit record for at least the preceding three years, the last of which must be an audited profit before taxation of at least R8 million.
• The public must hold a minimum of 20% of each class of share. Obviously this means that in the offer at least 20% of shares must be offered to the public.
• The number of the public shareholders (excluding employees and their associates) of listed securities must be at least: 500 for equity shares, 50 for preference shares and 25 for debentures.
• The minimum initial issue price of shares is required to be not less than 100 cents per share. This of course means that there will not be less than 25 million shares in issue.
• Companies are obliged to disclose much detail in their prospectus and financial statements.
• The listed company must appoint a sponsor on a permanent basis. The sponsor must be independent of the company, and ensure that the listing requirements are adhered to at all times. Any information on the company of relevance to the public and the JSE (trading statements, financial information, press announcements) must be disseminated through the sponsor.
• All annual, interim provisional reports must be audited, and comply with GAAP (Generally Accepted Accounting Practice) or IFRS (International Financial Reporting Standards).
• Abridged annual financial statements are released on SENS (see below) on the day the statements are released.
• Disclosure of directors' emoluments in all forms (share options, fees, basic salaries, bonuses, material benefits, performance-based payments, etc.).
• Compliance with some of the principles of the King Code of Corporate Governance, including the splitting of the functions of chairman and chief executive, the appointment of an audit and remuneration committees (majority to be non-executive and independent), appointment of a risk committee (depending on the nature of business), appropriate board structure, non-share trading periods, etc.
The JSE has the right to list companies that do not strictly comply with the above requirements, but this will only occur in exceptional circumstances.
Investment entities and property and mineral companies that are listed on the Main Board have certain modified criteria for listing. These will not be elucidated here.
Development capital market
The Development Capital Market (DCM), according to the JSE, was created in 1984 in recognition of "...the need to encourage the growth of small to medium sized businesses and companies which are not able to list on the Main Board.. ."20 The criteria to be met by companies applying for a listing on the DCM are less onerous than those of the Main Board.
The main requirements of a listing on the DCM include:
• A subscribed capital, excluding revaluations of assets, of at least R1 million, in the form of not less than one million shares in issue.
• A satisfactory profit record for the preceding two years (or in exceptional circumstances, a lesser period), the last for which the company reported an audited profit level of at least R500 000 before taxation (mineral companies are exempt from this requirement).
• A minimum of 10% of each class of equity shares in issue is to be held by the public.
• The company must have a minimum of 75 public shareholders.
• The minimum initial issue price must be not less than 50 cents per share.