Stock markets uncovered: Why the JSE has its main board and the AltX

Fsp Invest, 07 Feb. 2014

Tags: jse, johannesburg stock exchange, altx, main board, differences between main board and altx, what is the altx, listing requirement, stock market, why list, why list on the altx, listing requirements,

When a company decides to list on the Johannesburg Stock Exchange there are two places available to list: The main board and the AltX. But what’s the difference? It all boils down to the company looking to list. Let’s take a closer look at the differences between the main board and the AltX…

The JSE introduced the AltX (an alternative exchange) back in April 2003, Gareth Stokes in Fear, Greed and the Stock Market explains…

But why would the JSE introduce another exchange?

Well the whole purpose behind launching the AltX was to give smaller and medium-sized companies an opportunity to raise capital without having to tick all the boxes required to list on the main board.

The JSE isn’t the only stock exchange with a board aimed at smaller companies. For example, the London Stock Exchange has its AltX equivalent, AIM.

At the moment there are about 50 companies listed on the AltX.

The AltX has less stringent listing requirements

Listing on a stock exchange is an expensive process. By smaller companies opting to list on the AltX, they don’t have to pay for and meet certain specifications that the main board requires.

For example, to list on the main board, a company needs a minimum of R25 million in share capital. The AltX only requires R2 million.

To list on the AltX, the listing fee is less and so is the number of shareholders needed.

Looking at a company’s financials, for listing on the main board a company needs a minimum of three years profit history. The AltX requires none. The main board requires a company to generate a minimum of R8 million in pre -tax profit. The AltX has no requirement for this.

So if you have a smaller company that you think could benefit from being a listed entity, the AltX provides you a way to do just that.

Companies list for a number of reasons. The most popular include:
  • Raising capital from sale of your shares.
  • Bringing your company profile into the public realm and the publicity that can attract.
  • Attracting foreign investors.
So there you have it, why the JSE has its main board and the AltX.

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