THE Zimbabwe Stock Exchange (ZSE) has slashed its minimum listing threshold from US$10 million to US$1 million as the 132-year-old bourse moves to reverse a decline in market value following increasing competition from the Victoria Falls Stock Exchange (VFEX).
The measure is part of a broader package of reforms that also includes relaxed minimum free-float and shareholder spread requirements. The changes will remain in place for three years.
The reforms come at a time when the ZSE is under mounting pressure from declining market capitalisation and a wave of delistings, most notably telecoms giant Econet Wireless Zimbabwe.
The exchange has now moved to significantly lower entry barriers and ease compliance requirements in a bid to attract new listings, restore liquidity, and regain competitiveness against VFEX, which has overtaken it in market value.
Following Econet’s delisting on March 31, the ZSE’s market capitalisation fell by about 42% to US$2,58 billion at the end of April, while VFEX stood at US$3,53 billion. By the end of May, ZSE’s market capitalisation had marginally improved to US$2,73 billion, but it remained well below VFEX’s US$3,78 billion.
VFEX has rapidly emerged as Zimbabwe’s primary stock exchange just six years after its launch, compared to the ZSE’s 132-year dominance.
“In exercise of its discretion under Rule 76(1), the exchange may accept an application for listing from an issuer with a minimum market capitalisation of not less than US$1 000 000, notwithstanding that Part V of the Listing Requirements prescribes a minimum market capitalisation of US$10 000 000,” ZSE said in the new Zimbabwe Stock Exchange (Temporary Relaxation of Listing Requirements) Practice Note 18.
“The exchange shall not, by reason only of an issuer’s failure to meet the US$10 000 000 threshold, refuse an application for listing where the issuer satisfies the US$1 000 000 threshold set out in subclause (1).”
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In another major change, the ZSE has reduced its minimum free-float requirement to 10% from 30%, allowing companies to list while retaining a larger proportion of shares in the hands of founders and controlling shareholders.
The bourse will also, at its discretion, accept a reduced shareholder spread.
“An applicant issuer shall be required to have no fewer than 50 public shareholders, and the exchange shall not require compliance with any higher threshold prescribed in the Listing Requirements,” ZSE said.
Further, the bourse may allow issuers to raise capital without issuing a prospectus, subject to conditions.
This will apply provided that the total value of the capital raised does not exceed 75% of the issuer’s market capitalisation at the time of the raise, and that the transaction is accompanied by abridged disclosure or an announcement as prescribed by the Exchange.
However, the ZSE stressed that the concession does not override requirements under the Companies Act and only applies within the exchange’s discretion.
The bourse has also waived initial listing fees for new issuers.
However, the waiver applies only to initial listing fees and does not extend to quarterly, annual, or other regulatory and administrative charges payable after listing.
Listed companies will also no longer be required to have their half-year (interim) financial statements reviewed by external auditors under the listing rules.
These temporary concessions represent the ZSE’s most significant attempt yet to rebuild its listing pipeline as competition from VFEX intensifies.
Investment analyst Kuda Taimo said the ZSE is attempting to stimulate listings and capital formation by lowering entry barriers, easing compliance requirements, and reducing transaction costs.
He said that while reducing these hurdles is a positive step, there is concern that some of the relaxed thresholds “could create a market populated by micro-cap, tightly held, and thinly traded counters that institutional investors may still avoid”.
“So overall, I view Practice Note 18 as a pragmatic and probably necessary response under current conditions, but its success will ultimately depend on regulatory discipline and whether the reforms improve genuine capital formation and investor participation rather than simply increasing listing numbers,” Taimo said.
