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Index Change Advice - FTSEJSE Ground Rules Free Float and Suspensions
FTSE/JSE Africa Index Series
Ground Rule Change
19 January 2015
Following the meeting of the FTSE/JSE Advisory Committee on 3 December 2014, and in
order to align with other FTSE Partnership indices, FTSE/JSE announces a change to the
“Free Float” and “Suspension of Dealing” rules as set out in the notice below. The
associated rule changes will take immediate effect.
The changes include an additional point in the free float rules regarding shares not
accounted for on the Strate Register and clarification on the treatment of free float
changes following the expiry of Lock-ins.
The changes also include the treatment of long term suspensions and of suspended
constituents that are restored to listing after they have been removed from the index.
6.3.1 Free float restrictions include:
Existing Rule:
• Shares directly owned by State, Regional, Municipal and Local governments
(excluding shares held by independently managed pension schemes for governments).
• Shares held by Sovereign Wealth Funds where each holding is 10% or greater. If
the holding subsequently decreases below 10%, the shares will remain restricted until
the holding falls below 7%.
• Shares held by directors, senior executives and managers of the company, and
by their family and direct relations, and by companies with which they are affiliated.
• Shares held within employee share plans.
• Shares held by public companies or by non-listed subsidiaries of public
companies.
• Shares held by founders, promoters, former directors, founding venture capital
and private equity firms, private companies and individuals (including employees) where
the holding is 10% or greater. If the holding subsequently decreases below 10%, the
shares will remain restricted until the holding falls below 7%.
• All shares where the holder is subject to a lock-in clause (for the duration of that
clause)*.
• Shares held for publicly announced strategic reasons, including shares held by
several holders acting in concert.
• Shares that are subject to on-going contractual agreements (such as swaps)
where they would ordinarily be treated as restricted.
* Free Float changes resulting from the expiry of a lock-in will be implemented at the
next quarterly review subsequent to there being a minimum of 20 business days
between the lock-in expiry date and the Tuesday before the first Friday of the review
month.
New Rule:
• Shares directly owned by State, Regional, Municipal and Local governments
(excluding shares held by independently managed pension schemes for governments).
• Shares held by Sovereign Wealth Funds where each holding is 10% or greater. If
the holding subsequently decreases below 10%, the shares will remain restricted until
the holding falls below 7%.
• Shares held by directors, senior executives and managers of the company, and
by their family and direct relations, and by companies with which they are affiliated.
• Shares held within employee share plans.
• Shares held by public companies or by non-listed subsidiaries of public
companies.
• Shares held by founders, promoters, former directors, founding venture capital
and private equity firms, private companies and individuals (including employees) where
the holding is 10% or greater. If the holding subsequently decreases below 10%, the
shares will remain restricted until the holding falls below 7%.
• All shares where the holder is subject to a lock-in clause (for the duration of that
clause)*.
• Shares held for publicly announced strategic reasons, including shares held by
several holders acting in concert.
• Shares that are subject to on-going contractual agreements (such as swaps)
where they would ordinarily be treated as restricted.
• Shares that are not accounted for on the Strate Register, only for instruments
classified as foreign for index purposes by the South African Reserve Bank.
* Free Float changes resulting from the expiry of a lock-in will be implemented at the
next quarterly review subsequent to there being a minimum of 20 business days
between the lock-in expiry date and the Tuesday before the first Friday of the review
month. If the previously locked-in shares are sold by way of a corporate event (such as
a secondary offering), any change to the free float will be applied T+5 following
completion and therefore will not be subject to the minimum 20 business day rule.
8.4 Suspension of Dealing
Existing Rule:
8.4.1 In the event that a constituent of a FTSE/JSE Africa Index, other than the
FTSE/JSE Top 40 Index, is suspended, the constituent may remain in the FTSE/JSE
Africa Index, at the price at which it is suspended, for up to 20 business days, whilst a
suspended constituent of the FTSE/JSE Top 40 Index may remain in the Index for up to
five business days. During this time FTSE/JSE may delete the constituent immediately at
zero value in cases it is expected that the constituent will not recommence trading.
? If the constituent is declared bankrupt, placed under curatorship, business rescue
or placed in provisional liquidation, the last traded price will be adjusted down to
zero value and the constituent will be removed from the index.
? If the constituent is temporarily suspended, but expected to recommence trading
pending a restructure or corporate event, it may remain in the index at its last
traded price until trading recommences post event.
? If there is no accompanying news when a constituent is suspended, FTSE/JSE will
normally allow it to remain in the index for up to 20 business days (5 business
days in the Top 40) at its last price before determining whether to delete it or
allow it to remain in the index.
8.5 Relisting of Suspended Constituents
8.5.1 If a constituent recommences trading within 3 months of being suspended, it will
be re-added to the index at the same value (normally zero) at which it was deleted. It
will then be determined whether it may remain in the index at its new value.
8.5.2 If a company relists after a continuous period of suspension lasting more than 3
months, the company will be treated as a new issue for the purposes of index eligibility.
New Rule:
8.4.1 In the event that a constituent of a FTSE/JSE Africa Index, other than the
FTSE/JSE Top 40 Index, is suspended, the constituent may remain in the FTSE/JSE
Africa Index, at the price at which it is suspended, for up to 20 business days, whilst a
suspended constituent of the FTSE/JSE Top 40 Index may remain in the Index for up to
five business days. During this time FTSE/JSE may delete the constituent immediately at
zero value in cases it is expected that the constituent will not recommence trading.
• If a constituent is declared bankrupt, placed under curatorship, business rescue
or placed in provisional liquidation, the last traded price will be adjusted down to zero
value and it will subsequently be removed from the index.
• If there is no accompanying news when a constituent is suspended, FTSE/JSE will
normally allow it to remain in the index for up to 20 business days (5 business days in
the Top 40) at its last traded price before determining whether to delete it at zero value
or allow it to remain in the index.
• If a constituent is temporarily suspended but expected to recommence trading
pending a restructuring or a corporate event, for example a merger or acquisition, it may
remain in the index at its last traded price for up to 20 business days.
• If it continues to be suspended at the end of that period, it will be subject to
review and a decision will be taken to either allow the constituent to remain in the index
for a further period of up to 20 business days or to remove it at zero value. This
procedure will be repeated at successive 20 business day intervals thereafter until either
trading recommences or a decision is taken to remove it from the index.
• If a constituent has been removed from the index and trading is subsequently
restored, it will be treated as a new issue for the purposes of index eligibility.
An updated version of the Ground Rules document is now available on the FTSE/JSE
website.
For further information or general enquiries please contact us at info@ftse.com or indices@jse.co.za or call:
Client Services in UK: Tel: +44 (0) 20 7866 1810
Client Services in Europe, Middle East & Africa: Tel: +44 (0) 20 7866 1810
Client Services in US: Tel: +1 888 747 FTSE (3873) or +1 212 314 1139
Client Services in Asia Pacific: Tel: +852 2164 3333 or +81 3 3581 2811
JSE Limited: Tel: +27 11 520 7137
Alternatively please visit our website at www.ftse.com or www.ftsejse.co.za
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Date: 19/01/2015 05:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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