Strate offers 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, such as dividend and interest payments, rights and capitalisation issues.
South Africa's many thousand unlisted companies 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 in stark contrast to the inherent risks, share register inaccuracy and settlement delays associated with a paper-intensive register. 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 delisting from the JSE in due course.
Unlisted companies can reap a great many Strate features and benefits, including:
- The elimination of paper certificates and the secure electronic clearing, settlement and custody of shares
- The security of the Strate system ensures extensive controls thanks to a sophisticated encryption and authentication device in the coding of the software. The security of the electronic records has never been compromised.
- Strate uses the renowned SWIFT network for the relay of electronic messages. SWIFT is a network owned by all the banks in the world and therefore the provider of choice for all major financial institutions, globally. SWIFT is the world's most secure network, with consistent 99% up-time since its inception.
- At the point of settlement, the electronic records are updated real-time via book-entry. Settlement via book entry is therefore both secure and efficient.
- Simultaneous final irrevocable delivery versus payment (SFIDvP) refers to the principle whereby the delivery of shares by the seller and payment for those shares by the buyer occur simultaneously. SFIDvP is enabled by reserving the shares and cash before the point of settlement in order that they are ready for simultaneous, electronic transfer on settlement day. This transfer is irrevocable and the finality of the transfer is upheld by the amendments to the Companies Act (2008), the Financial Markets Act (2012) and the CSD Rules.
- The unlisted company enjoys the benefit of an electronic shareholders' register. The electronic register is updated real-time when the simultaneous transfer of shares and funds takes place. Hence all trades will be reflected on the register of shareholders for dematerialised shares in the Strate environment, as there will be no outstanding share transactions except for trades affected during the last few days that have not settled. In the paper-based environment, up to six months can elapse before the register of shareholders is updated. Unlisted companies wishing to obtain an accurate idea of their shareholders find themselves in a far more efficient position in the Strate environment.
- Strate executes all corporate actions electronically. For example, interest, dividends and proceeds will be credited to clients' accounts. The electronic execution of corporate actions is quick and secure.
- Strate is the regulator of the CSD Participants and has a responsibility to ensure the certainty of market transactions. The regulation of the market players is significant, as investors thereby gain the peace of mind that all business processes associated with electronic settlement are regulated by Strate under the authority of the Financial Services Board.
To view the Strate Issuer Services Brochure, click here