Four recently de-listed companies have chosen to continue to settle their shares electronically via Strate.
Strate provides both JSE-listed and any unlisted companies a facility whereby they are able to dematerialise, clear and settle shares in the Strate environment. This includes the processing of corporate action events for the company, such as dividend and interest payments, rights and capitalisation issues.
Where Issuers unbundle/distribute into unlisted entities with the intention to list on the JSE at a later stage, it would benefit Issuers to use our facility to settle electronically. This ensures a smooth transition to the listed ISIN as weʼll convert the unlisted to the listed entity without shareholders having to dematerialise their physical share certificates into the new listed entity.
The benefits of a secure infrastructure
Unlisted companies in South Africa are obliged to carry the burden and cost of maintaining paper-based share registers. Through the conversion of paper share certificates into electronic records of ownership (dematerialisation), along with electronic clearing and settlement in Strate of shares bought and sold, the unlisted company enjoys the benefits of a secure infrastructure; one that currently provides just such a service to all JSE-listed equities, warrants and bonds, as well as the money market industry.
More importantly, the unlisted company is guaranteed that its shareholder register is efficiently and professionally maintained to provide a register record of all reported share transactions.
This is in stark contrast to the inherent risks, share register inaccuracy, and settlement delays associated with a paper-intensive register.
Listing or de-listing on the JSE
The heightened level of confidence engendered by Strate’s involvement in the registers of unlisted entities will enhance the marketability of unlisted shares.
This mechanism is ideal for larger corporations with a large shareholder base and/or companies that contemplate listing on the JSE or de-listing from the JSE in due course.
