As the economic threats from the coronavirus outbreak continue, businesses – particularly microenterprises – that are dealing with disrupted supply chains and lost revenue, are becoming increasingly concerned about their survival. The JSE has responded in support, announcing relief measures that include a non-interest-bearing payment holiday of up to six months granted to public companies in need, and assistance for smaller-cap and AltX companies.

Patrycja Kula, Business Development Manager at the JSE, highlights that small businesses have been prioritised. ‘We have focused predominantly on small- and mid-cap size listed entities. The small-cap counters are among the most vulnerable in strained markets and a vital growth node of the economy. The JSE will be giving those companies explicit relief in capital raising and those investors who might be trading on their share.’

In determining how to distribute relief, the JSE had much to consider, but trade was key. ‘Our relief measures are aimed at incentivising trade as well as lowering the cost of secondary capital raisings,’ according to Kula. ‘We offer, for example, a 50% discount for all trade, clearing settlement and BDA fees, as well as a further 25% discount on secondary capital raises for all companies listed on the ZA03 trading segment, AltX and BEE Board for the remainder of the year. As we unlock the economy, and businesses return to higher levels of operation, we hope that issuers will make use of these relief measures, as they are in place until December 2020. We also hope that the 50% trading discount will stimulate continued trading and liquidity in our AltX and BEE-listed companies.’

Further, the JSE has increased the amount of quarterly cash disbursements to small and medium-size stockbrokers in its enterprise development programme, with connectivity fees increasing from 33% to 50% of the traded value. This benefits largely the brokers with a 51% black-owned operation, specifically to insulate them from the negative effects of COVID-19 and to ensure that black representation within the financial markets is sustained during the pandemic.

The JSE’s helping hand is applied on a case-by-case basis, recognising that each distressed business has unique characteristics. ‘We engage and review requests individually, with respective billing updates remaining in place for the remainder of the year for brokers who are eligible for the trading discounts, and listed companies for the secondary capital raisings-fee reductions,’ says Kula.

She adds that the depth and liquidity of capital markets is crucial in enabling financial markets to support the country’s economy, particularly in a time of crisis. ‘The JSE plays an essential role in enabling price transparency, trading out of positions and, more importantly, providing access to capital in this much-needed time. We really value our relationships with our market partners and work together to play as big a part as we can in making sure they remain operational.’

Through various engagements with the market regarding the impact of the COVID-19 pandemic on the business and operations of issuers, the JSE made a number of regulatory changes, one of which was the expansion on the written resolutions offering for Main Board issuers. Section 60 of the Companies Act No 71 of 2008 also provides that a resolution may be implemented by voting on a written resolution instead of voting at a meeting of shareholders. This is additional regulatory relief for expedited capital raising options for issuers.

‘We welcome any and all direct engagement with our clients and suppliers to further discuss the measures we’ve taken and relief we can offer to counter the impact of the COVID-19 pandemic on their operations to ensure business continuity,’ says Kula. ‘Where uncertainty prevails, we have a wealth of experts available to guide, hand-hold and advise appropriately.’

By Kerry Dimmer
Image: Gallo/Getty Images