Botswana Stock Exchange’s (BSE) Head of Listings and Trading, Tsametse Mmolai has this week announced new equity listings requirements. These are rules that govern the listing process on the bourse.
Mmolai said on Tuesday that the new equity listings requirements have been approved by the capital market regulator – the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) and are effective beginning of January next year.
The requirements currently in use were introduced in 1999. The new ones will see the BSE transforming from a blanket approach which covers all asset classes to those specific to each type of security.
For the main board, the new requirements will see 75 percent of shares owned by the promoter locked in for two years. Mmolai said this is in order to avoid a situation where a promoter comes and then the following days claim their shares and leave.
Thereafter, trading in 33.3 percent of the locked holding will be permitted after 12 months and for this class, a minimum of 300 shareholders is required while minimum subscribed capital has been raised to P5 million.
Another change for the main board is that three-year profit forecast is required if profit track record is inadequate. The new listing requirements also compel companies to have 30 percent of listed equity to be held by the public.
For the venture capital, the same rules that have been introduced on the main board applies, except that here the minimum number of shareholders required is 100 while 10 percent of shares have to be in the hands of the public.
There should be evidence showing that directors and senior managers have successful track records. Minimum subscribed capital for the venture capital board has been raised to P2.5 million from half a million Pula.
Tshipidi SME board – a new board on the BSE catering for small and medium enterprises and serving as a platform for them to raise capital – has a number of requirements.
This board, according to the new requirements which will come in use next year, should have a panel of industry experts established by the BSE to make independent recommendation to the BSE, on whether or not applicants to the Tshipidi board can be listed.
The rules dictate that directors of the company applying to list on the Tshipidi board attend an induction workshop and the company must have a Nominated Advisor which is a key part of listing and must be retained for the observation period.
For a company to list on this board it should have a minimum of five shareholders and a three year profit forecast and a business plan. Minimum subscribed capital for this board is P500, 000 and 75 percent shares owned by the promoter will be locked in for five years with 5 percent shares of the company held by the public.
BSE, which is allows dual listing, has made new changes for this type of listing and key among them being the appointment of a market maker.
Mmolai said the reason for the appointment of a market maker was motivated by an observation which showed that liquidity is very low in this board as investors tend to buy and hold those shares for too long, leaving potential investors frustrated when they attempt to purchase shares.
Other changes that made to the requirements include the obligations which among them will see cautionary statements relating to profit warning contain more information such as a range of expected results. In addition, the King III Code of corporate governance is now a listing requirement.
Asked to share his views on the new requirements, Research Manager at Motswedi Securities Garry Juma said they are still studying them as it is a comprehensive document and therefore not in a position to share his fair opinion on them.
Another notable change that will be adopted affects the mining and minerals companies. The BSE has accepted mining codes of the South African, Australian and Canadian National Mineral Codes as well as the Petroleum Resources Management System for oil and gas exploration and mining companies. Mining companies will also be compelled to give a quarterly update on their cash flow position.
Andre Boje, who is the chief executive officer of Minergy, one of the listed coal mining companies said even though he is yet to see the whole document, he does not see any problem with the quarterly update requirement.