Fast-track listing on JSE for Canadian mining companies

The Johannesburg Stock Exchange (JSE) implemented a fast-track listing process in September 2014 to assist certain companies in obtaining a secondary listing on the Exchange. The JSE is currently the largest stock exchange on the African continent and one of the top 20 in the world in terms of market capitalization.

The JSE promotes the new fast track process as:

• An opportunity to access South Africa’s readily available institutional capital at a lower cost by eliminating a second round of administrative preparation for listing
• Making it easier for multinational companies already operating in South Africa and the rest of the continent to list on the JSE, using the exchange as a springboard into other countries in Africa
• A way for companies to gain a greater profile with international investors trading on the JSE

Canadian mining companies have long been at the forefront of operations and investment in Africa. In March 2015, Canada and South Africa signed a Memorandum of Understanding on co-operation in mining and mineral development that aims to encourage increased reciprocal investment in exploration and prospecting activities, with a particular focus on the junior to mid-tier mining sector.

In addition, across Africa, Canada has Foreign Investment Protection & Promotion Agreements (FIPAs) currently or soon to be in force with several countries in Africa. FIPAs are bilateral agreements aimed at protecting and promoting foreign investment through legally binding rights and obligations. The objective of each FIPA is to encourage reciprocal investment in each country that is a party to the FIPA.

Fast-track listing process

Companies which have had shares admitted to listing for a period of at least 18 months on certain stock exchanges, including the Toronto Stock Exchange or the TSX Venture Exchange, may use the JSE fast-track listing process.

Applicants who qualify for the JSE fast-track listing process do not need to produce a pre-listing statement and, instead, need only release a pre-listing announcement. The announcement must contain certain disclosure items that are read in conjunction with the applicant’s latest audited financial statements. Such financial statements may be prepared in accordance with the requirements of the applicant’s primary stock exchange listing. Other information, such as competent person’s reports and valuation reports, will also be required.

Fast-track applicants will need to comply with the JSE Listings Requirements for secondary listings, including the need to comply with the normal Main Board or Alternative Exchange (known as AltX) listings criteria (unless otherwise agreed to by the JSE). The applicant must have the required spread on its South African share register or make arrangements, to the satisfaction of the JSE, to ensure that sufficient scrip is available on the South African share register. The applicant must also appoint and maintain a sponsor.

It is a general requirement for secondary listing on the JSE that a company that is listed on the junior board of a foreign exchange may not apply for a secondary listing on the Main Board of the JSE. Such a company will only be eligible for a secondary listing on the JSE’s Alternative Exchange (AltX) being the JSE’s junior board. 

Capital raising, or not

Canadian mining companies can obtain a fast-track secondary listing on the JSE with or without a capital raising.

For a secondary listing without a capital raising, applicants need to:

• Submit a memorandum in support of the applicant’s compliance with the JSE Listings Requirements for a Main Board or AltX listing
• Make a pre-listing announcement
• Have a suitable sponsor

For a secondary listing with a capital raising, companies need to comply with all of the above and consult with the JSE in connection with the raising and, if it is not already registered, register as an external company in South Africa. 

Africa continues to be a key international market for Canadian miners. Obtaining a fast-track secondary listing on the JSE may assist in making the most of opportunities in Africa. 

Dawn Whittaker is a Senior Partner, Norton Rose Fulbright, Toronto, and Alastair Dixon is a Director, Norton Rose Fulbright, Johannesburg.