ZSE slashes listing costs to attract new issuer

CLOUDINE MATOLA

The Zimbabwe Stock Exchange (ZSE), once a go-to destination for companies seeking cheap funding, has unveiled sweeping reforms aimed at revitalising the country’s primary equities market, dramatically cutting listing requirements, waiving key fees and easing compliance obligations in a bold attempt to attract new issuers and restore investor confidence, Business Times can report.

The measures come as the ZSE grapples with shrinking market capitalisation, subdued trading activity and a growing number of delistings, including the high-profile exit of telecoms giant Econet Wireless Zimbabwe. The challenges have allowed the Victoria Falls Stock Exchange (VFEX) to overtake the ZSE in market value, intensifying pressure on the local bourse to reposition itself as a competitive capital-raising platform.

The exchange has reduced the minimum market capitalisation required for a company seeking a listing from US$10m to just US$1m, opening the door to a broader pool of small and medium-sized enterprises previously excluded from the market.

At the same time, the minimum free float requirement, the proportion of shares that must be available for public trading, has been slashed from 30% to 10%, while the minimum shareholder spread has been lowered to 50 public shareholders.

The reforms are contained in Practice Note 18, which provides for a temporary relaxation of listing requirements over the next three years.

ZSE Group chief executive officer Justin Bgoni said the measures are intended to lower financial and structural barriers to entry while creating a more accessible and cost-effective listing environment.

“The Zimbabwe Stock Exchange, in exercise of the powers conferred upon it by the Listing Rules contained in Section 3(1)(h) of Statutory Instrument 134 of 2019, hereby issues a temporary relaxation of listing requirements through Practice Note 18,” Bgoni said.

Under the revised framework, companies with a market value of at least US$1m will now qualify for listing consideration, representing a ten-fold reduction from the previous threshold.

“In exercise of its discretion under Rule 76(1), the Exchange may accept an application for listing from an issuer with a minimum market capitalisation of not less than US$1 million, notwithstanding that Part V of the Listing Requirements prescribes a minimum market capitalisation of US$10m,” Bgoni said.

The exchange further indicated that it will no longer reject applications solely on the basis that an issuer fails to meet the previous US$10m threshold, provided it satisfies the new US$1m benchmark.

In another significant concession, companies will only be required to make available 10% of their issued shares to the investing public, down from the previous 30% threshold.

“The Exchange may accept a minimum free float of ten percent for equity listings, notwithstanding any provision in the Listing Requirements prescribing a minimum free float of thirty percent,” Bgoni said.

The reforms also seek to reduce the direct costs associated with going public.

The ZSE has waived all initial listing fees for new applicants over the next three years, a move expected to lower the cost of accessing public capital markets and encourage more companies to consider listings.

The fee waiver, however, applies only to first-time admission charges and does not extend to ongoing annual listing obligations.

In a further effort to reduce compliance costs, the exchange has suspended the requirement for interim financial statements to undergo external auditor reviews for financial periods ending on or after December 31, 2025.

Listed companies will also be permitted to publish corporate announcements and notices directly on their own websites and the ZSE platform, reducing publication expenses and accelerating information dissemination to investors.

Market participants say the reforms represent one of the most significant attempts in recent years to broaden participation on the local bourse and stimulate new listings.

FBC Securities described Practice Note 18 as a strategic market-development initiative designed to improve accessibility and reduce the regulatory burden faced by prospective issuers.

“Practice Note 18 is a market-development measure that should improve listing accessibility and reduce issuance friction over the next three years. The near-term effect is likely to be strongest for smaller issuers and prospective applicants that previously faced binding eligibility and cost constraints,” FBC Securities said.