How to list

Should your company be listed?

If you are interested in a listing, please call JSE Business Development.

When deciding to list your company, you need to consider the following questions:

• Where is our current business plan taking us?
• What are our likely capital requirements?
• How strong is our competitive position and how can it be maintained or strengthened?
• What is the quality of the management team, both at board level and throughout the company and does it need strengthening?
• Are all members of management working to the same agenda?
• What outside advice and perspective - such as non-executive directors - does the board have access to?
• What will attract investors to the company and are we ready to commit time to communicating with investors?

In addition, you need to keep the following factors in mind:

• Possible loss of control - the sale of equity in the company would involve ceding a degree of management control to the outside shareholders, especially with regard to significant acquisitions;
• Disclosure requirements and ongoing reporting - a much higher degree of disclosure and reporting is required, which may require an additional investment in management information systems and more rigorous application of compliance controls;
• Loss of privacy - greater accountability to outside shareholders means that the directors lose much of the privacy and autonomy they may have enjoyed whilst running an unlisted company. The company’s heightened profile also means that any underperformance receives a greater degree of media coverage which may have a direct effect on the share price;
• Costs and fees - the overall costs of listing and maintaining the listing must be considered and understood before embarking on the process;
• Management time - the listing process, continuing obligations and other listing related duties may require additional management time; and
• Directors’ responsibilities and restrictions - the responsibilities and restrictions placed on directors are complex and include disclosure of total remuneration packages, restrictions on share dealing and the communication of price-sensitive information.

How to list on AltX

Once you have decided that a listing is the appropriate mechanism for your company to achieve its objectives, the process is as follows:

• Obtain the services of a registered Designated Advisor
• The DA performs a due diligence to determine the appropriateness and suitability of your company for a listing.
• The DA advises you on the different methods of listing and provides guidance as to the best method for your company.
• The DA assists you in compiling an application letter and a business plan for submission to the JSE Issuer Services.
• Based on the presentation by your Board of Directors together with your DA to the AltX Advisory Committee, a recommendation will be made to the JSE Issuer Services.
• Once the JSE Issuer Services accepts your application, your DA will assist you in compiling all the documentation as stipulated by the AltX Listing Requirements and other relevant legislation.
• On successful verification of the content of the documentation, the JSE will provide you with a formal approval letter.

Depending on a number of factors, including the complexity of the method chosen for your listing, this process may take between 8 and 12 weeks.

If you are interested in a listing, please call JSE Business Development.

Methods of listing

1. A “Front Door” listing, either by means of an introduction, a public offer or a private placing, in conjunction with the issue of a prospectus or a pre-listing statement.

   Introduction

   An introduction is suitable where a company does not need to raise capital and has an existing wide spread of shareholders. This is the cheapest and quickest means of entry, since there is no offer to the public and minimum formalities are required. A pre-listing statement is required that contains salient information about the company.

   Public Offer

   An offer to the public may be an offer for subscription or an offer for sale. In an offer for subscription, members of the public are invited to subscribe for un-issued shares and the proceeds accrue to the company. In an offer for sale, existing shareholders invite subscribers to purchase their shares and therefore the proceeds accrue to the sellers. This method requires the publication of a prospectus, which must be approved by and registered with the Registrar of Companies. The advantages of this method include the following:

   • allows for a wide spread of shareholders;
   • marketing advantage of public attention and interest; and
   • may obtain the best price through larger market.
   
   

   Private Placing

   A private placing is an offer of shares to selected parties where shares are “placed” or offered to subscribers by the company as the result of private negotiations. A private placing with an institution may help to ensure a stable, long term shareholding in the company and may also facilitate the raising of funds in the event that the company wishes to raise additional capital in the future by way of a rights offer. The advantages of a private placing include:

   • allowing for major preferred shareholders;
   • generation of goodwill through placing with customers, suppliers and staff;
   • relatively low cost;
   • suits a specialised business with limited investor appeal; and
   • the issue price may be privately negotiate
      

2. A “Back Door” listing, either by means of a cash shell or a reverse listing.

   Cash Shell

   A listed cash shell company acquires a viable business, either for cash, or for the issue of additional shares in the cash shell company. A cash shell is a listed company whose assets consist wholly or mostly of cash or shares because it has disposed of all, or a substantial part of its business.

   Reverse Takeover

   A listed company acquires a larger but unlisted company or business. This results in a change of control of the shareholding of the listed company, and also requires the publication of a transmuted listing statement.

   In a reverse takeover a compatible listed company will acquire the unlisted company with the purchase consideration being paid by the issue of new shares in the listed company. These new shares must be sufficient in number and value to ensure that the shareholders in question have a controlling interest in the listed company after the issue of new shares.

Cost of listing on AltX

The cost of listing your company depends on a number of factors and will be influenced by your objectives. Typical costs to consider include:

• Designated Advisor
• Attorneys
• Auditors
• Transfer Secretary
• Printing of Prospectus and/or other documentation
• Marketing and advertising
• JSE Listing Fee (once off)
• Annual JSE Listings Fee; and
• Sundries

Responsibilties of being listed

In deciding if listing is appropriate for your company, it is important for you and your executive team to understand and accept the following responsibilities of being a listed company:

• Sharing corporate control

  By becoming a listed company, you will be relinquishing exclusive control of your company’s future, as the number of company “owners” (shareholders) will increase. You will require shareholder approval to do certain corporate actions as well as having to share the financial benefits and losses with shareholders.

• Managing to maximise shareholder value

  As a listed company, you will be accountable to shareholders and responsible for the enhancement of shareholder value. Directors will be required to diligently perform their fiduciary responsibilities as well as maintain a high quality of investor relations.

• Sharing strategic information

  As a listed company you will be required to disclose all relevant information to both shareholders and regulators. In order to build and maintain shareholder loyalty, it is advisable that you share strategic information with your current and potential shareholders on a regular basis.

• Ongoing costs

  As a listed company, you will be responsible for the following ongoing costs:

  1. Continuing fees to corporate advisors, including auditors, attorneys and Designated Advisors.
  2. AltX annual fee.
  3. Production of information for shareholders and regulator

• Relinquishing control over personal assets invested in the company

Listing requirements

Please refer to the table below for a comparison between the JSE Main Board and AltX.

For a more detailed explanation of the AltX requirements, a PDF version of section of the JSE Listing Requirements may be downloaded.

Please visit this link for the full JSE Listings Requirements.

* Transaction Categories

>>Category 1

>>Transaction > 50% of market capitalisation

• Circular to shareholders
• Shareholder meeting
• Shareholder approval
• Kicks in at 25% for Main Board

>>Category 2

>>Transaction < 50% of market capitalisation

• Announcement on SENS
• Company website (if applicable)
• AltX website
• Voluntary publication in press
• Kicks in at 5 to 25% for Main Board