Strate settles first transactions for de-listed companies
30 May 2012
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 Strate's facility to settle electronically. This will ensure a smooth transition to the listed ISIN as we will convert the unlisted to the listed entity without shareholders having to dematerialise their physical share certificates into the new listed entity.
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 - 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 de-listing from the JSE in due course.
Strate Ltd is proud to be the licensed Central Securities Depository (CSD) for the electronic settlement of financial instruments in South Africa. As the trusted independent provider of innovative post trade products and services in Africa, Strate offers state of the art technology, international expertise and global best practice to the financial markets.
Strate provides electronic settlement for securities including equities, bonds and derivative products such as warrants, Exchange Traded Funds (ETFs), retail notes and tracker funds for Africa’s largest stock exchange, the Johannesburg Stock Exchange (JSE), and equities for the Namibian Stock Exchange. It has now added the settlement of money market securities to its portfolio of services. It provides services to Issuers for their Investors in terms of the Companies Act (2008) and Securities Services Act (SSA) (2004).