Longhorn Associates, a licensed Investment Broker has disclosed that the conditions that companies need to meet before listing their stock on the Lusaka Securities Exchange (LuSE) may be one of the reasons discouraging companies from listing on LuSE.
Investment Advisor and Analyst Joy Nanyinza said there are so many conditions that companies need to meet before they can list on LuSE and Brokers among other stakeholders have tried to engage the regulators in an effort to have the listing requirements revised as they are deterring companies from listing.
Speaking in an interview with the Zambian Business Times-ZBT, Nanyinza explained that a company is required to have a minimum of 10 million shares in issues and Directors and Senior Management of a company should have a certain level of expertise if they have to be part of the board.
“The Directors or Senior Management should have a certain level of expertise; LuSE will want to know what qualifications the board has. LuSE will look at who’s in your board, what’s their qualification, what does the Chairperson have, are they all in one sector or is it diverse, the requirements obviously are one of the reasons very few companies are listing”, she said.
Nanyinza mentioned that the whole listing process is tedious and starting the process does not guarantee that a company will automatically be allowed to list on LuSE once the process is complete as a company may be told at the end of the process that it does not qualify to list.
She added that in some instances, companies may be told that they will not be listed just yet but quoted which means a company’s securities are registered with the Securities and Exchange Commission (SEC) but the company has not been listed on the market and may be listed after due investigations and the company meets certain requirements.
Other listing conditions are that the applicant must be a duly incorporated company, must have its shares registered with the SEC, must have a minimum prescribed share capital and three years profit history (must have a satisfactory audited profit history for the preceding 3 financial years). The LuSE may in its absolute discretion list a company which is in its development stage, (other than a mineral company) and which does not have the required profit history.
Applicants must be carrying on as its main activity, either by itself or through one or more of its subsidiaries, an independent business, which is supported by its historic revenue earning history, and which gives it control over the majority of its assets and must have 25% of each class of equity securities held by the public.
The Directors and Senior Management of an applicant must collectively have appropriate expertise and experience for the management of the applicant and shares must be fully paid up and transferable and applicant’s number of the public shareholders in respect of listed securities shall be atleast 300 for equity shares and 50 for preference shares or equity instruments.
Alternative market conditions for listing are that the company must be a public company, must have a minimum trading turnover of K250, 000 and a maximum of K20 million, the public must hold a minimum of 10% free float and the issuer must appoint a designated adviser.
In addition, the company must show that it has been in operations for a period of 5 years or show increased revenues and market share for three years, the company must have a minimum of five Directors, the majority of whom should be non-family and the Directors must undertake a Directors training induction with the IOD.
