Launch Base Africa

The Johannesburg Stock Exchange has introduced sweeping changes to its listing requirements that could make it significantly easier for technology startups and other high-growth companies to go public in South Africa.

The updated regulations, which came into effect in December 2025, include provisions for special purpose acquisition companies (SPACs), weighted voting structures, and streamlined requirements for development-stage companies — tools that have become standard on major exchanges globally but were previously unavailable on the JSE.

What’s changed

The most significant changes centre on three key areas that have traditionally made IPOs challenging for emerging tech companies.

First, the JSE now permits weighted voting share structures for main board listings, allowing founders to maintain control even as they raise capital from public markets. Each weighted voting share can carry up to 20 votes, though these enhanced rights automatically convert to ordinary shares after 10 years or upon transfer. This addresses one of the fundamental tensions in tech companies going public. Founders can now access public capital without immediately ceding control to institutional investors.”

Second, the exchange has formalised a SPAC framework, allowing these vehicles to raise capital and list before identifying acquisition targets. SPACs must complete an acquisition within 36 months and hold all raised capital in escrow, with shareholders receiving redemption rights if they vote against a proposed deal.

Third, development-stage companies — those not yet profitable but with substantial net asset value — can now list on the main board with just 12 months of audited financial statements, down from the standard three years, provided they meet a R500m ($27m+) net asset value threshold.

The compliance burden

Despite these reforms, the JSE’s requirements remain notably more prescriptive than comparable exchanges. The listing rules document runs to more than 170 pages, with detailed provisions covering everything from corporate governance to financial reporting.

All new listings must appoint a sponsor — typically an investment bank or corporate finance firm — who bears ongoing responsibility for ensuring compliance. Sponsors face fines of up to R1m and potential removal from the JSE’s approved register for breaches. The sponsor regime creates a professional intermediary layer that doesn’t exist in quite the same way in other markets. It adds cost and complexity, but also provides investors with additional assurance.

The requirements for ongoing disclosure are similarly comprehensive. Companies must announce any “price sensitive information” immediately, with detailed guidance on what constitutes material information. Trading statements are required when results are expected to differ by more than 20% from previous periods.

The SPAC question

The introduction of SPACs has generated particular interest, given their popularity in the US during 2020–2021, though the vehicle has since fallen out of favour amid regulatory scrutiny and poor post-merger performance.

The JSE’s SPAC rules include several investor protections. Directors must collectively hold at least 5% of shares at listing, with these holdings restricted from sale for six months post-acquisition. All capital must be held in escrow and invested only in investment-grade bonds or bank deposits. Shareholders who vote against an acquisition receive redemption rights at the initial listing price, adjusted for expenses and interest.

The framework is conservative compared to the US model. That’s possibly appropriate given how SPACs have performed globally, but it remains to be seen whether there’s actually demand for this structure in the South African market.

No SPACs have listed under the new rules yet, and several market participants questioned whether the vehicle would gain traction given South Africa’s relatively limited pool of institutional capital and the alternative of simply listing the target company directly.

The weighted voting debate

The weighted voting provisions have sparked debate about corporate governance standards. Critics argue that dual-class structures entrench management and reduce accountability to minority shareholders.

The JSE has attempted to address these concerns through several mechanisms. Certain matters — including variation of share rights, appointment of auditors and independent directors, and removal of listing — must be voted on through an “enhanced voting process” where weighted shares carry only one vote each.

Additionally, holders of at least 10% of ordinary shares can convene general meetings, and the weighted voting rights automatically sunset after 10 years unless ordinary shareholders vote to extend them (with weighted share holders excluded from this vote).

The governance safeguards are more robust than some other markets. But it still represents a fundamental shift in how we think about shareholder democracy in South Africa.

Development stage companies

The relaxed requirements for development-stage companies could prove particularly relevant for biotechnology, renewable energy, and other capital-intensive sectors where companies may have substantial assets but limited revenue.

These companies can list with just one year of audited accounts, provided they have a net asset value of at least R500m ($27m+). However, they must still meet the standard free float requirements — 10% of shares held by at least 100 public shareholders.

“The R500m threshold is substantial,” a Cape Town based founder, tells Launch Base Africa, in an email. “It’s not going to help early-stage startups, but it could be relevant for scale-ups that have raised significant capital and want to access public markets earlier than would previously have been possible.”

The broader context

The reforms come as African stock exchanges face increasing competition for listings from international venues. Several prominent South African technology companies have chosen to list in the US or Europe rather than domestically, attracted by deeper pools of capital and higher valuations.

The JSE has also introduced market segmentation, creating a “general segment” for main board companies not included in the FTSE/JSE All Share Index. These companies face reduced disclosure requirements, including exemption from quarterly reporting and a higher threshold for category 1 transactions (50% versus 30%).

For alternative exchange (AltX) listings targeting smaller companies, the requirements remain more flexible, with just one year of audited accounts required and category 1 transaction thresholds set at 50%.

Practical implications

For startups considering a JSE listing, several practical points emerge from the new requirements.

Pre-listing costs remain substantial. Companies must prepare comprehensive listing particulars — effectively a prospectus — engage auditors for multi-year financial statements, appoint sponsors, and ensure corporate governance structures meet JSE standards, including board composition requirements and committee structures.

The ongoing compliance burden is also significant. Companies must publish annual and interim results within specified timeframes, announce all price-sensitive information immediately, and comply with detailed rules around corporate actions, related party transactions, and changes to share capital.

“The all-in cost of going public on the JSE probably starts around R5m-R10m for a straightforward listing,” the founder adds. “And that’s before you factor in the ongoing costs of maintaining a listing, which can easily run to several million rand annually.”

What hasn’t changed

Notably, the reforms don’t address several barriers that have historically made JSE listings challenging for technology companies.

The exchange still requires relatively high levels of free float (10% held by at least 100 shareholders for main board) and minimum market capitalisations that may be prohibitive for earlier-stage companies. The main board requires either R15m in pre-tax profit and R50m net asset value, or R500m net asset value for companies without a profit history.

The working capital requirements are also demanding. Directors must confirm that working capital is sufficient for at least 12 months, and the JSE requires detailed working capital forecasts, sensitivity analyses, and, in some cases, verification by auditors.

Financial reporting standards remain rigorous, with quarterly trading statements required when results are expected to differ materially from forecasts, and immediate announcement of any price-sensitive information.

The international comparison

Compared to European exchanges, the JSE’s requirements remain more prescriptive in some areas while being more flexible in others.

The sponsor regime has no direct equivalent in most European markets, where companies typically work with nominated advisers or corporate brokers but without the same ongoing compliance responsibilities. However, the JSE’s market segmentation now offers flexibility closer to the distinction between main and growth markets in Europe.

The weighted voting provisions are more restrictive than US exchanges, where companies like Facebook and Google have listed with founders holding super-voting shares with no sunset provisions. But they’re more permissive than many European markets, where dual-class structures face significant regulatory and institutional resistance.

Looking ahead

Whether these reforms will materially increase technology IPOs on the JSE remains uncertain. Much will depend on factors beyond the exchange’s control, including macroeconomic conditions, investor appetite for growth companies, and the relative attractiveness of international listing venues.

The changes are welcome and remove some genuine barriers. But the fundamental question is whether there’s sufficient domestic institutional capital to support technology valuations at levels that make public markets attractive compared to private funding or international listings.

The proof will come in the next 12–24 months, as the first companies test the new framework and investors signal their appetite for development-stage companies, SPACs, and weighted voting structures in the South African market.

For now, the JSE has brought its listing regime closer to international standards. Whether that’s enough to stem the flow of companies choosing to list elsewhere remains to be seen.

South African agritech startup Livestock Wealth, once held up as a model for democratising access to agricultural assets, has reached a regulatory reckoning after years of scrutiny, investor complaints and mounting questions about its business model.

The Financial Sector Conduct Authority (FSCA) has concluded its investigation into Livestock Wealth (Pty) Ltd, its founder and CEO Ntuthuko Shezi, and an associated entity, Livestock Wealth Financial Services (Pty) Ltd. While the regulator stopped short of finding that the company operated an illegal investment scheme, it imposed administrative penalties and confirmed that the firm’s financial services licence has lapsed.

The outcome closes a long-running probe, but leaves unresolved concerns around delayed investor withdrawals and the operational sustainability of crowd-farming platforms operating at the edges of financial regulation.

FSCA: no illegal financial services, but misleading conduct

In its final enforcement notice, the FSCA said it found no evidence that Livestock Wealth conducted unregistered financial services business. The company’s offerings — including cattle, macadamia trees and other agricultural assets — do not qualify as “financial products” under South African law. As such, the platform did not require a financial services provider (FSP) licence to market them.

However, the regulator imposed administrative penalties of ZAR50,000 (€2,400) each on Livestock Wealth and Shezi for misleading representations. Livestock Wealth had displayed the FSP licence of Livestock Wealth Financial Services on its website, creating the impression that Livestock Wealth itself was a licensed financial services provider.

The FSCA said this contravened provisions of the Financial Sector Regulation Act and the Financial Advisory and Intermediary Services Act.

The regulator also confirmed that the FSP licence of Livestock Wealth Financial Services has lapsed, after the entity remained dormant for an extended period.

While noting that the company cooperated fully with the investigation, the FSCA’s decision did not address complaints relating to delayed investor withdrawals or asset verification.

From agritech poster child to regulatory scrutiny

Founded in Johannesburg in 2015, Livestock Wealth built a following by pitching “crowd-farming” as an alternative asset class. Retail investors could fund cattle breeding, crop tunnels or tree farming through a digital platform, with the promise of returns once assets matured.

The model attracted institutional interest. In 2022, the Mineworkers Investment Company (MIC), through its Khulisani Ventures vehicle, invested ZAR10m (€480k) in the startup, describing it as an example of scalable, innovative, black-owned agribusiness. At the time, Livestock Wealth said it had enabled thousands of users to invest and managed assets exceeding ZAR100m.

The funding was intended to support growth and potential international expansion.

Two years later, the tone had shifted sharply.

Investor withdrawals stall

By early 2024, investors began publicly reporting missed and delayed withdrawals, some stretching back several months. Complaints surfaced across media outlets, online reviews and investor forums, with users alleging repeated postponements and inconsistent communication.

Several investors said withdrawal requests submitted in the first half of 2024 had still not been processed by November. Others claimed they were told delays were caused by unrelated investors failing to meet obligations — explanations that raised concerns about cash flow and fund segregation.

The situation appeared particularly acute for stokvels — collective savings groups common in South Africa. One such group said it was owed nearly ZAR140,000, despite receiving written repayment commitments from the company.

Livestock Wealth has not published up-to-date financial statements, making it difficult for investors to assess the company’s liquidity position.

Legal structure under pressure

Livestock Wealth’s terms and conditions state that all investments are agreements between investors and independent farmers, with the platform acting only as a limited intermediary. Multiple clauses disclaim liability for farmer performance, investment outcomes or losses, and explicitly distance the company from responsibility for disputes.

Investors, however, dispute that characterisation. Several say they dealt exclusively with Livestock Wealth, received no direct farmer details, and relied on the platform’s wallet system and asset IDs to track ownership and returns.

Some investors have raised concerns that funds may not have been managed on a strictly product-by-product basis, though no regulatory finding has been made on this point.

Quiet end to a public defence

During earlier stages of the FSCA probe, Shezi publicly released correspondence suggesting the regulator had previously indicated that the platform did not require licensing. As scrutiny intensified, communication became more limited.

In mid-2024, Shezi said the company was awaiting final regulatory clarity. That clarity has now arrived — without findings of unlawful financial activity, but with penalties for misleading conduct and confirmation that the group no longer holds an active FSP licence.

The FSCA decision does not mandate restitution or address investor liquidity, leaving affected users to pursue complaints through other channels.

Livestock Wealth’s rise and decline highlights the fragile boundary between agritech innovation and financial intermediation. While crowd-farming platforms may fall outside traditional licensing regimes, they remain exposed to operational risks once retail investors expect liquidity, transparency and timely payouts.

For regulators, the case underscores the limits of existing frameworks. For investors, it serves as a reminder that assets framed as “not financial products” can still carry financial risk.

And for Africa’s startup ecosystem, Livestock Wealth stands as a cautionary example: regulatory compliance may be necessary — but it is not sufficient to sustain trust once growth gives way to exits.

At the World Economic Forum in Davos, European Commission president Ursula von der Leyen announced EU Inc: a proposed pan-European corporate structure designed to make it easier for startups to scale across the bloc.

The idea is simple, almost suspiciously so. Instead of re-incorporating every time a startup expands into a new EU country, founders could register once and operate across all 27 member states under a single legal framework — the so-called “28th regime”.

“Too many companies have to look abroad to grow and scale up,” von der Leyen said. “While on paper the market of 450 million Europeans is open, in reality it’s far more complicated. And that acts as a handbrake on growth.”

EU Inc promises a central EU registry, harmonised investment terms and a unified approach to employee stock options. It will sit alongside national corporate regimes, not replace them, but the subtext is clear: Europe would quite like its startups to stop fleeing to Delaware.

For African founders watching from afar, the announcement landed uncomfortably close to home. Europe is trying to solve, with a single legal instrument, a problem African startups have been living with — and exporting themselves to avoid — for over a decade.

The African Startup That Isn’t, Legally Speaking

The offshore incorporation of African startups is no longer controversial; it is procedural. Ask where a fast-growing African fintech is legally based and the answer is rarely Lagos, Nairobi or Cape Town.

Jumia, long marketed as Africa’s first tech unicorn, was incorporated in Germany, headquartered in Dubai, listed in New York, and ran its central tech team from Portugal — while doing business primarily in Nigeria, Kenya, Morocco and Egypt. This global shuffle raised eyebrows during its IPO roadshow, but few were surprised.

The founders, Jeremy Hodara and Sacha Poignonnec, were European. Forgiveness was granted.

Less indulgence has been extended to companies founded wholly by Africans. Flutterwave, one of the continent’s most prominent fintechs, is headquartered in San Francisco. Paystack sold to Stripe via a US corporate structure. Andela long ago ceased to pretend it was legally Kenyan or Nigerian.

This is not anecdotal. According to data from the African Venture Capital and Private Equity Association (AVCA), 21% of all VC deals between 2014 and 2019 went to African startups headquartered outside the continent. More than half of those companies were incorporated in the United States.

That 21% figure matches the share of total VC funding that went to South Africa during the same period. In other words, registering abroad was statistically as effective as being South African — and more effective than being Nigerian (14%), Kenyan (18%), Egyptian (9%) or Ghanaian (3%).

Africa’s funding geography has quietly become a legal one.

Why Founders Flip

The reasons African founders flip into offshore jurisdictions are well-rehearsed, if rarely admitted without defensiveness.

Tax, Treaties and Investor Comfort

Mauritius has become Africa’s preferred offshore compromise: close enough to feel continental, distant enough to reassure investors.

Its appeal is straightforward. A 15% corporate tax rate — the lowest in Africa — generous R&D deductions, five-year tax holidays for selected sectors, no capital gains tax, no withholding tax on dividends, and a dense web of double taxation treaties. Venture funds can be taxed at an effective rate of 3%.

Seychelles and South Africa offer variations on the theme. Outside the continent, the menu widens: Delaware, Nevada, Singapore, the UK, Estonia.

Each offers a different blend of tax efficiency, legal certainty and investor familiarity. None offers symbolism.

Delaware, the Default

Delaware’s appeal to African founders has less to do with taxes — despite persistent myths — and more to do with predictability. Its courts specialise in corporate disputes. Its shareholder protections are well-understood. Its legal documents are investor muscle memory.

But Delaware is optimised for scale, not sympathy. Franchise taxes, compliance costs and the gravitational pull of US legal norms often arrive later, after the champagne from the Series A has gone flat.

As one African founder put it privately: “You don’t move to Delaware because it’s cheap. You move because arguing with US VCs about Nigerian company law is more expensive.”

Europe’s Fragmentation Problem

Europe, for all its capital depth, remains legally fragmented. The UK, Germany, Estonia and Sweden all compete as startup hubs, each with their own tax thresholds, VAT rules and compliance quirks.

EU Inc is an admission that the continent’s single market has been more aspirational than operational — especially for startups. African founders, unsurprisingly, have preferred jurisdictions that don’t require a map, a translator and three law firms to expand.

IP, Valuation and the Paper Company Problem

For startups, intellectual property is the business. Where the IP lives largely determines valuation, investor appetite and legal recourse.

African founders are often advised — sometimes gently, sometimes forcefully — to move IP into a foreign holding company. ARIPO, OAPI and the Madrid System provide continental IP coverage, but enforcement, predictability and investor confidence remain uneven.

The result is a familiar structure: IP in Delaware, operating company in Africa, revenue somewhere in between.

This structure works — until it doesn’t.

The LittleFish Lesson: When the Flip Bites Back

In April 2025, South Africa’s High Court delivered a judgment that should be required reading for any African founder contemplating a Delaware flip.

Davith Kahwa, cofounder of South African fintech LittleFish, sued his cofounder, his company, and its investors — TLcom Capital and Flourish Ventures — alleging oppressive conduct designed to squeeze him out.

He lost.

The judgment details how LittleFish’s IP was transferred to a newly incorporated Delaware entity as part of a $2.5m VC deal. Kahwa’s equity was diluted. His role was reduced to “support”. His remaining shares were placed under a vesting agreement controlled by a board now dominated by investors.

When relations deteriorated, Kahwa sought a compulsory buyout based on the company’s pre-investment valuation. The court refused.

Its reasoning was devastatingly simple:

• South African law could not reach the Delaware holding company.
• Kahwa had signed every agreement.
• A term sheet is not a promise.
• Acquiescence is not oppression.

The court’s message was blunt: legal structure is strategy, not paperwork.

EU Inc, Meet Africa Inc

Europe’s proposed EU Inc is, in effect, an attempt to domesticate its own version of the Delaware flip — to keep companies legally European while allowing them to scale.

Africa has no equivalent.

Instead, it has a patchwork of national regimes, regional treaties, tax incentives and informal workarounds. The result is a steady export of incorporation, IP and governance — often without founders fully understanding what they are trading away.

The irony is hard to miss. Europe is trying to build what African founders have been forced to outsource.

The Bottom Line

Offshore incorporation is not a moral failing. It is a rational response to fragmented markets, investor bias and legal uncertainty.

But it is not neutral.

Where a startup is incorporated determines:

• Which courts hear disputes
• Which laws protect founders
• Where IP value accrues
• Who has leverage when things go wrong

As the LittleFish case shows, these choices echo long after the funding announcement.

EU Inc suggests that even Europe now recognises that legal fragmentation quietly kills ambition. Africa, meanwhile, continues to treat incorporation as an administrative afterthought — until it becomes an existential one.

The question is no longer whether African startups should flip to Delaware.

It is whether Africa can ever offer a credible reason not to.

Udoh Charles

Charles has carved a niche at the forefront of Africa’s booming tech scene. With years of experience, Udoh has become a go-to expert for multi-million dollar deals in venture capital, private equity, and intellectual property across a vast landscape — from Delaware and New York to Singapore and South Africa. But his expertise extends beyond just the legalese. Udoh is also a corporate governance, data privacy, and tax whiz. An award-winning writer and researcher, he’s passionate about chronicling Africa’s startup story, cementing his position as a true pioneer in the field.