JSE cuts red tape

The Johannesburg Stock Exchange (JSE) recently finalised new requirements and amendments for listed companies as part of its efforts to cut red tape and simplify compliance.

As part of its Cutting Red Tape Project, the JSE announced on 19 June that the Financial Sector Conduct Authority has approved amendments to the JSE Listings Requirements in respect of, amongst other things, financial reporting disclosures.

According to law firm Cliffe Dekker Hofmeyr (CDH), this project aims to reduce red tape and facilitate a more enabling regulatory environment. 

One stringent requirement the JSE seeks to remove is the obligation on issuers to produce an abridged report regarding their annual financial statements and publish the report on SENS simultaneously with the publication of their annual financial statements.

This obligation can be found in Paragraph 3.21(b) of the JSE Listings Requirements. 

According to the JSE, this requirement adds no regulatory benefit. Instead, it adds management time for issuers to prepare their full suite of financial results and increases costs.

According to CDH, these costs can come in the form of internal resources and external costs in terms of typesetting and auditors, should an issuer decide to get its auditors to review those results. 

The amendments to this regulation aim to achieve the following.

• The simplification of the provisions in general.
• The removal of the previous obligation to always prepare an abridged report.
• Limiting the need to prepare an IAS 34 format set of results only if the detailed audited annual financial statements are not available for public consumption electronically.
• Removal of the previous obligation to obtain an auditor’s opinion on interim results published where the previous annual results were published, accompanied by a modified opinion.

The JSE’s new requirements for this obligation come into effect on 17 July 2023.

“At a time when more issuers are opting to delist from the JSE, it will be interesting to see whether these ‘cutting red tape’ initiatives will entice new listings and persuade current issuers to remain listed on the JSE,” CDH said.