The Botswana Stock Exchange (BSE) will next January initiate a new set of equity listing requirements, including a sterner disciplinary regime which will penalise errant companies by moving them to a default board where daily fines of P500 will be levied.
The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) finally approved the new listing rules last month, following a four-year consultative process that involved an extended feedback period with affected market players.
The new disciplinary structure comes as the local bourse battles to keep counters compliant, particularly in terms of publicising their financial statements on time, ensuring these are not qualified by auditors and paying regulatory fees.
The BSE has generally exercised patience with defaulters in the past, even allowing one company to stay suspended for four years and bounce back to trade this year. However, the exchange has also forcibly delisted some defaulters, including Galane Gold last August, which failed to pay its listing fees.
Last year, several counters, including several blue chips flouted the listing rules, but escaped serious censure by the exchange. The final rules approved by NBFIRA state that companies will be moved to the default board in the event of failing to publish financial statements or upon receipt of a qualified audit opinion. The rule covers all BSE equity platforms, which include the flagship Domestic Companies Board, Venture Capital Board and the Foreign Companies Board. “A penalty of P500 per day shall accrue against a listed company for every calendar day that its securities are on the default board commencing on the third (3rd) calendar day the company is on the default board. “If any listed company’s securities are on the default board, the maximum penalty which can accrue shall be BWP150, 000.
“The securities shall be transferred out of the default board upon the listed company complying with the
On Tuesday, the BSE’s listings and trading manager, Tsametse Mmolai told journalists that the maximum fines for other offences under the equity listing results had also been increased from P25,000 to P150,000.
Companies and their associated directors who fall afoul of the BSE and find themselves delisted will not be able to return seeking a listing for at least 10 years, the new rules state.
Mmolai explained that other changes in the new rules included an increase in the free float from 20% to 30%, which will be required of all companies by December 31, 2019. The free float refers to the percentage of shares available for trading by the public.
“Most of the listed companies already have more than 30% free float, but there are some that don’t and the deadline for them to increase that is December 31, 2019,” he said.
Other changes include locking in 75% of the shares owned by promoters of listings for two years after the initial listing. “This is to ensure that promoters don’t list and fly away. They must be there with the investors,” he said.
Companies seeking dual listings in Botswana will have to appoint market makers in order to ensure tradeability of their shares locally. The BSE is also introducing fast tracked secondary listings for companies already listed on recognised exchanges.