South Africa: the JSE fixes the conversion price on the day of issue

South Africa permits the instrument but not the pricing mechanic. Paragraph 7.49 of the JSE Listings Requirements says the strike price of options or convertible securities issued for cash may not exceed a 10% discount to the weighted average traded price over the 30 business days at the date of issue. The pricing window closes when the convertible is signed, not when it converts.

Key takeaways

• 7.49 is the rule, and "at the date of issue" is the whole of it. The authorising resolution must expressly allow the issue of options or convertible securities, and the strike price is measured against the 30-business-day traded average as at that date.
• The paragraph numbers moved. The Simplification Project renumbered the rulebook: issues for cash now run from 7.26, specific issues at 7.33, general issues at 7.38, options and convertibles at 7.49. Advice citing 5.51 or 5.52 predates the rewrite.
• An ordinary resolution, not a special one. Both 7.33 and 7.38 are approved by ordinary resolution, with parties participating in a specific issue and their associates excluded from voting.
• The statute counts the convertible as converted. Companies Act s 41(4)(a) measures the s 41(3) test on the greater of the shares to be issued or those issuable after conversion, so a convertible can trigger a 30% special resolution on day one.

Paragraph 7.49, and the window that shuts at signing

Where options or convertible securities, other than executive and staff share schemes, are granted or issued for cash, paragraph 7.49 requires the issuer to obtain either a specific authority under 7.33 or a general authority under 7.38. Whichever is used, the resolution "must expressly allow for the issue of options/convertible securities, and the strike price may not exceed a 10% discount to the weighted average traded price of such equity securities measured over the 30 business days at the date of issue of the options/convertible securities".

That last clause makes South Africa a fixed-price market. A market-referenced convertible works because the reference period ends at conversion; here it ends at issue. Everything the investor would price — a refix, a reset, a look-back — falls outside a rule that has already told the parties which 30 days count. The structure is not prohibited; it is priced out of existence.

Pre-emption comes from the exchange, not the statute

An adviser reasoning from the Companies Act will get this backwards. Section 39(1)(a) says the statutory subscription right does not apply to a public company except to the extent its Memorandum of Incorporation provides otherwise, and s 35(2) confirms a share has no nominal or par value at all — so unlike Kuwait there is no floor beneath the issue price.

What binds instead is paragraph 7.26: an issuer proposing to issue equity securities for cash must first offer them to existing holders pro rata unless a specific or general authority is obtained. Paragraph 7.27 adds that the securities must be of a class already in issue, or convertible into one. Both are listing rules, both are lifted by ordinary resolution, and the result is a market where the vote is easy and the price is not.

The 30% test counts your convertible as converted

Above the exchange sits s 41(3): an issue of shares, securities convertible into shares, or rights exercisable for shares, in a transaction or series of integrated transactions, requires a special resolution where the voting power of the class issued or issuable equals or exceeds 30% of the voting power of all shares of that class held by shareholders immediately before the transaction. Section 41(4)(a) measures that as the greater of the shares to be issued or the shares issuable after giving effect to conversion.

Read with 7.49, the two rules point the same way. A convertible whose conversion number cannot be computed at signing cannot be tested against s 41(3) at signing either — and s 41(4)(b) aggregates transactions entered into within a 12-month period between the same or related parties, so a facility drawn in tranches risks being read as one integrated transaction.

Exchange control decides the exit, not the listing

The investor's shares are in a class already listed, so once the JSE approves the listing of the additional securities they trade without a further offer document. The Requirements make the point obliquely: several submission checklists ask for exchange control approval "if applicable", and Section 12 lists the corporate events on which the South African Reserve Bank must approve. The Financial Surveillance Department administers the regime through Authorised Dealers, and a non-resident's holding must be correctly endorsed before capital and income can be transferred abroad.

For the instrument as it works elsewhere see convertible notes for listed issuers and private placements by public companies; for what a US register adds, see free-trading shares. Check whether the listing fits first.

• All markets
• United Kingdom
• Australia
• New Zealand
• Kenya

Primary sources

• JSE — simplified Listings Requirements, 12 December 2025
• Companies Act 71 of 2008 — sections 35, 39, 40 and 41

Financing a JSE issuer: frequently asked questions

Can a JSE issuer grant a convertible with a floating conversion price?

Not as a floating price. Paragraph 7.49 of the JSE Listings Requirements says that where options or convertible securities are granted or issued for cash, the strike price may not exceed a 10% discount to the weighted average traded price of the equity securities measured over the 30 business days at the date of issue of those instruments. The measurement ends when the convertible is issued, so a South African convertible is a fixed-price convertible.

What majority does a non-pro-rata issue for cash need?

An ordinary resolution in general meeting. Paragraph 7.28 routes every issue for cash through either a specific authority under 7.33 or a general authority under 7.38, and both are approved by ordinary resolution. On a specific issue the parties participating and their associates are excluded from voting. A special resolution can still be needed under the Companies Act where the 30% voting-power test is met.

Do South African shareholders have a statutory pre-emption right?

Not in a listed company. Section 39(1)(a) of the Companies Act 71 of 2008 disapplies the statutory subscription right for a public company except to the extent its Memorandum of Incorporation provides otherwise. The pre-emption that binds a JSE issuer comes from paragraph 7.26 of the Listings Requirements, which requires shares issued for cash to be offered to existing holders pro rata unless a specific or general authority is obtained.

Can an offshore investor get its money out?

The shares themselves trade freely once the JSE has approved the listing of the additional securities, because they are in a class already listed. The gating item is exchange control. The Financial Surveillance Department of the South African Reserve Bank administers the regime through Authorised Dealers, and a non-resident holding must be correctly endorsed for capital and income to be transferred abroad. Confirm the current position in the Currency and Exchanges Manual before signing.