The Zimbabwe Stock Exchange has proposed to set $250,000 as the minimum share capital for companies intending to list on the country’s planned secondary bourse, but analysts predict that most companies listed on the main bourse will be reluctant to downgrade to the alternative market.
The ZSE on Friday released draft listing rules for the alternative market to be known as the Zimbabwe Emerging Enterprising Market (ZEEM).
“The applicant must have share capital of at least $250 000 (including reserves but excluding minority interests, and revaluations of assets and intangible assets that are not supported by a valuation by an independent professional expert acceptable to the ZSE prepared within the last six months),” read the ZEEM listing requirements in part.
“The public shall hold a minimum of 26 percent of each class of equity securities and the number of public shareholders shall be at least 50.”
ZEEM, according to the listing rules, is a market for small to medium companies with growth potential and applicants that meet the criteria for listing on the Main Board will not ordinarily be granted a listing on ZEEM.
Lynton-Edwards research analyst Kudzi Sharara said companies listed on the main bourse will only be enticed to downgrade to ZEEM if they make huge compliance savings.
“I think it would have been good to see some companies on the main bourse migrating to the ZEEM but I think the capital requirements of $250,000 is too little (the gap between that and the market caps for most counters is too big),” Sharara said.
Other analysts said while the setting up of ZEEM would improve the depth of the capital markets and provide a capital-raising platform for SMEs, companies listed on the new exchange still face an uphill task to raise funds in a tight market.
About 15 firms have been deregistered from the ZSE since 2012.
Three of the firms delisted through schemes of arrangement while the other three voluntarily left the ZSE.-The Source