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JSE moots separate board for BEE stock
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Edward West
Business Day
Tuesday, March 16, 2010
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The JSE is planning a separate board for black economic empowerment (BEE) schemes, possibly as early as September.
JSE chief operating officer Leanne Parsons said yesterday that planning for the board was “quite far down the line”.
There was a need for such a board as listed shares were issued for empowerment transactions, but needed to stay listed, and some to be held in black hands, even after lock-in periods.
The BEE shares would be subject to the same regulatory procedures as other listed stocks.
Clients would be able to trade shares anonymously, but on a more transparent price basis.
Without a formal market, holders of BEE shares were commonly traded over the counter once lock-in periods had expired, and one “doesn’t know if you are getting a fair deal”, Parsons said.
“It’s not a costly exercise for us and we have the right technology, the trading platform for it.”
She said the prices of the BEE stocks would find their own levels, which may or may not be equal to the price of the listed shares of their corresponding companies. Factors, including the terms of the BEE deal, would affect price.
Some BEE schemes required that the shares be sold to other blacks only, and the board would accommodate this.
Reg Rumney, an empowerment commentator and director of the Centre of Economic Journalism at Rhodes University, said the plan was encouraging and would help further empowerment. There was a relatively small pool of black people with sufficient funds to buy large BEE shareholdings, but the board would help make BEE shares more liquid, as long as the contract terms were flexible enough.
He said the board could also solve the problem of where BEE shareholders went to seek other black shareholders to sell stock to after lock-in periods had expired.
Rumney said that in theory every company would have a BEE component under current empowerment law. This should create demand for the schemes to be listed.
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