Listed on the Exchange, What Now?
The first quarter of this year has already seen the listing of 3 companies on the Junior Market of the Jamaica Stock Exchange (JSE). While many appreciate the work and time it takes to get listing ready, some forget that with listing, comes additional obligations. In addition to the statutory obligations of a company under the Companies Act, listed companies must also comply with the JSE Rules. A listed company who fails to comply with these obligations, may be suspended or delisted.
The first obligation which comes with listing is the payment of listing fees. Whether a company is listed on the Junior Market or Main Market, it will be required to pay an initial listing fee, an annual listing fee and/or a supplementary listing fee for additional issues of securities.
As it relates to its financials, a listed company is required to submit to the JSE (a) on a quarterly basis, a report with its financial statements within 45 days of the end of the period to which the statement relates; and (b) within 90 days of the company’s financial year end, a report with its audited financial statements. This report should also include the (i) disclosure of the shareholdings of directors and senior management and their connected persons and (ii) shareholdings of those persons holding the 10 largest blocks of shares. Failure to submit either of these reports within the stated time frame is to result in the trading of the company’s shares being suspended until the reports are submitted to the JSE. If a company anticipates a delay in submission, it should notify the JSE as soon as possible and indicate the cause and the probable extent of the delay. In addition to notifying the JSE, the rules require that the company should simultaneously place an advertisement in print media advising shareholders of the delay. These financial reporting requirements, as well as the publication of an Annual Report, are mandatory for both Main Market and Junior Market companies. The Annual Report is to be sent to the JSE within 120 days of the company’s financial year end.
Listed companies are also required to adopt corporate governance guidelines and disclose these guidelines to the JSE and its shareholders. A private company would not be mandated to have this document, however, it is highly recommended that a transparent corporate governance policy be documented, even if you do not plan to list. The JSE Rules also require that the corporate governance guidelines be posted on the company’s website. In terms of the content of the guidelines, companies may refer to the Private Sector Organisation of Jamaica Corporate Governance Code 2021. The guidelines adopted by the listed company must at minimum address director qualification standards, director duties and responsibilities, board balance and independence, director access to management and independent advisors, director compensation, director orientation and continuing education, annual performance evaluation of the board, management succession, accountability and audit. The guidelines are to be reviewed every 2 years.
The JSE Rules also require listed companies to make timely disclosures. A listed company must disclose material information concerning its business and affairs once such information becomes known to management or once it becomes apparent that information already in its possession, is now material. The JSE Rules provide a definition of material information, states that it is the responsibility of each listed company to determine what information is material in the context of the company's own affairs and also provides examples of items which require prompt disclosure as material information. These include changes in share ownership that may affect control of the company, major corporate acquisitions or dispositions and any developments relating to the business and affairs of the company that would reasonably be expected to significantly affect the market price or value of any of the company's securities or that would reasonably be expected to have significant influence on a reasonable investor's investment.
The Listing Agreement signed by all listed companies also imposes ongoing obligations on the company. These include (a) providing the JSE with a copy of all circulars, notices and reports issued by the company as they are issued, (b) filing with the JSE a certified copy of any amendment to the Articles of Incorporation, (c) notifying the JSE promptly of any dealings in securities by directors, senior management and their connected persons, or the issue of any bonds, debenture, additional shares or other securities, (d) notifying the JSE promptly of any proposed increase of the company’s authorised share capital, (e) notifying the JSE immediately as it relates to any dividend decisions, and (f) notifying the JSE, in addition to the shareholders as already required under the Companies Act, of the date of the company’s next annual general meeting. The agreement also has a general catch all disclosure requirement which states the company will provide the JSE with such information concerning the company as may reasonably be called for.
The benefits of listing include the ability to raise capital form the public, increased publicity and name recognition and for Junior Market companies, a tax incentive. To enjoy these benefits listed companies must be able to comply with all obligations under the JSE Rules. A company preparing to list and those already listed, should ensure that they have the human resources both at the board level and management level to ensure they are able to meet all the obligations to stay listed. After all, “Making the List” (published by Shaniel May Brown on January 29, 2020) is just step 1, but staying on the list, requires an ongoing compliance commitment.
Simone Bowie Jones is a Partner and Shaniel May Brown is an Associate at Myers, Fletcher & Gordon and they are members of the firm's Commercial Department. They may be contacted via firstname.lastname@example.org , email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.