• The ZSE has slashed the minimum market capitalisation from USD 10 million to USD 1 million, reducing the free-float requirement from 30% to 10%, cutting listing fees and waiving selected compliance costs
• The reforms are a direct response to the ZSE’s structural decline
• Practice Note 18 does not solve the core ZWG valuation problem, the 4.15% vs 2.32% trading-cost gap, the capital-gains-tax differential, or the USD settlement/repatriation advantages

Harare- The Zimbabwe Stock Exchange has relaxed listing requirements effective 1 June 2026 and valid for a window of 36 months, slashing the minimum market capitalisation requirement for listing from USD 10 million to USD 1 million, reducing the minimum free-float threshold from 30% to 10%, and waiving certain compliance costs to lower the cost of accessing domestic capital markets.

Under Rule 76(1), the exchange stated it may accept an application for listing from an issuer with a minimum market capitalisation of not less than USD 1,000,000, and that it shall not, by reason only of an issuer's failure to meet the USD 10,000,000 threshold, refuse an application for listing where the issuer satisfies the USD 1,000,000 threshold.

The reforms were accompanied by a reduction in listing fees and the waiver of selected compliance costs in a package that ZSE Group CEO Justin Bgoni described as designed to attract new issuers, improve market liquidity, and lower the cost of accessing domestic capital markets.

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. Following Econet's delisting on 31 March 2026, the ZSE's market capitalisation fell by about 42% to USD 2.58 billion at the end of April, while VFEX stood at USD 3.53 billion. By the end of May, ZSE's market capitalisation had marginally improved to USD 2.73 billion, but it remained well below VFEX's USD 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.

An exchange founded in 1894 has been overtaken in market value by an exchange founded in 2020 within six years of the latter's establishment. The 90% reduction in the listing threshold is the ZSE's response to that reality.

The USD 10 million minimum market capitalisation threshold was calibrated for an exchange whose primary function was to provide a public market for Zimbabwe's established industrial, commercial, and financial companies, none of which needed a relaxed threshold to qualify. It was not calibrated for an exchange that has lost Econet, TSL, First Mutual Properties, Proplastics, and a queue of USD-revenue businesses either through VFEX migration or private buyout, and whose surviving main board companies are increasingly concentrated in ZWG-denominated businesses whose investable universe for foreign capital is structurally limited.

Applied to a shrinking pool of main board candidates, a USD 10 million minimum market capitalisation threshold does not attract new issuers. It filters out the only category of new issuer still likely to list on the ZSE main board in the current market: the emerging domestic business whose commercial activity is genuinely ZWG-denominated and for whom the ZSE's ZWG pricing framework represents the correct market structure rather than a structural disadvantage.

Under the new measures, ZSE has also reduced the minimum free-float threshold from 30% to 10%, allowing companies to retain greater control while still accessing public capital markets. The free-float reduction from 30% to 10% addresses a specific and genuine concern among potential ZSE issuers: founder dilution anxiety.

Many privately held Zimbabwean businesses that have reached a scale and operational maturity consistent with public market listing have declined to pursue that option because a 30% free-float requirement means surrendering 30% of ownership in a market whose ZWG pricing mechanism, as the departure of established companies has repeatedly confirmed, does not reflect the USD commercial value of the business being listed.

Reducing the free-float requirement to 10% means a founder retaining 90% of their company can access public capital market financing while still listing, substantially reducing the dilution cost of a ZSE listing without requiring the company to fully commit to a public ownership structure whose long-term implications for control and governance they may be unwilling to accept.

The Problem Practice Note 18 Does Not Solve

Nine issuers have already migrated from ZSE to VFEX. Not one of those nine migrated because the listing threshold was USD 10 million rather than USD 1 million. Every one of them migrated because the ZSE's ZWG pricing mechanism produces a market valuation of their business that their boards and majority shareholders have assessed as materially below the USD commercial value that a dollar-denominated exchange would reflect.

TSL Limited, with 97% USD revenues, does not have a USD 10 million minimum capitalisation problem, it actually  has a ZWG valuation problem. First Mutual Properties, with a property portfolio of USD-asset-backed commercial real estate in Harare's central business district, does not have a USD 10 million minimum capitalisation problem, it has a ZWG valuation problem, the same with  Econet Wireless, whose delisting alone removed 42% of ZSE market capitalisation in a single transaction, does not have a USD 10 million minimum capitalisation problem, but a ZWG valuation problem compounded by the undervaluation that a ZWG-denominated market applies to a company whose revenues, infrastructure investment, and competitive positioning are all USD-calibrated.

Practice Note 18 does not address the ZWG valuation problem. It does not introduce a multi-currency trading framework. It does not reduce the ZSE's trading cost of 4.15% to the VFEX's 2.32%. It does not equalise the capital gains tax treatment between ZSE and VFEX disposals. It does not introduce the USD settlement and foreign currency repatriation framework that makes VFEX listings accessible to international investors in a way that ZSE listings are not.

Every one of those structural competitive advantages that VFEX holds over the ZSE remains unchanged after Practice Note 18's implementation. The companies that have departed and the companies currently evaluating departure have made their decisions based on those structural advantages, not on the USD 10 million listing threshold that the ZSE has now reduced.

The Micro-Cap Risk

ZSE is attempting to stimulate listings and capital formation by lowering entry barriers, easing compliance requirements, and reducing transaction costs. 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.

The ZSE's current liquidity challenge is not merely a function of having too few listed companies, but also a function of having too few listed companies whose market capitalisation, free-float, and trading volume are sufficient to attract institutional investor participation. Institutional investors, including pension funds, insurance companies, and asset managers who collectively account for the majority of meaningful secondary market trading volume on any exchange, apply minimum size and liquidity screens to their investable universe.

A company with a market capitalisation of USD 1 million, a free-float of 10%, and therefore a publicly traded value of USD 100,000, does not pass those screens regardless of its fundamental business quality. The institutional investor who cannot build or exit a position of meaningful size without moving the market cannot include that security in a portfolio that must be managed with reasonable transaction cost efficiency.

Practice Note 18 is 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. The listing numbers metric and the market quality metric are genuinely different outcomes. An exchange with 150 listed securities of which 80 are micro-cap, thinly-traded ZWG companies whose combined market capitalisation is USD 200 million is a worse market than an exchange with 60 listed securities of which 40 are liquid, institutionally tradeable, and USD-equivalent businesses with a combined market capitalisation of USD 3 billion.

The ZSE's trajectory has been moving from the second description toward the first, and Practice Note 18, if it attracts primarily micro-cap issuers, accelerates rather than reverses that trajectory.

The ZEEX Parallel

Practice Note 18 and the ZEEX approval, announced within days of each other in the first week of June 2026, represent the ZSE's simultaneous pursuit of two complementary but distinct strategies. ZEEX targets SMEs at the pre-formal or early formal stage of development for whom a USD 1 million minimum capitalisation is still potentially a barrier. The main board relaxation under Practice Note 18 targets established businesses whose USD 10 million market capitalisation is no barrier in itself but for whom the combination of compliance cost, free-float dilution, and listing fee structure has made the cost-benefit calculation of a ZSE listing unfavourable.

The strategic logic of pursuing both simultaneously is coherent: ZEEX creates a new entry point for early-stage capital formation that feeds a pipeline toward eventual main board listing, while Practice Note 18 lowers the main board's cost of access for established businesses that would otherwise remain private or pursue the VFEX route.

The execution risk is also coherent: both reforms address the supply side of the listing equation, reducing the cost and barrier of listing, without addressing the demand side, whether the investor base available on the ZSE has sufficient capital, risk appetite, and USD purchasing power to provide the liquidity that new issuers require to make listing commercially worthwhile.

The 36-Month Window

Practice Note 18 applies for 36 months from 1 June 2026, expiring in June 2029. The outlook for the ZSE over the next three to six months follows the 36-month window of relaxed listing requirements under Practice Note 18, and the ZSE's All-Share Index could continue its upward trajectory, although at a more moderate pace than the 40% year-to-date advance, with the key watchpoint being the central bank's ability to maintain forex reserves and support the stability of the ZiG to protect the value of ZiG-denominated assets.

The temporary nature of Practice Note 18 is the most analytically uncomfortable feature of the reform package. A company that lists on the ZSE under the relaxed USD 1 million threshold and 10% free-float requirement in 2027 will be governed by a listing regime that reverts to USD 10 million and 30% in June 2029.

The regulatory uncertainty that creates for a small issuer whose market capitalisation may still be below USD 10 million when the temporary relaxation expires is real and should be disclosed explicitly to prospective issuers evaluating the reform's attractiveness. Inviting companies to list under temporary rules whose expiry may require those companies to meet thresholds they cannot satisfy is an exchange whose disclosure obligations to prospective issuers must be explicit about the post-2029 regulatory landscape.

The structural reform that would make Practice Note 18 permanent and its underlying logic durable is the one the ZSE has not yet announced: a multi-currency trading framework that allows ZSE-listed companies to be priced and traded in USD where their commercial reality is USD-denominated, eliminating the valuation discount that has driven nine issuers to the VFEX and made the ZSE structurally uncompetitive for the category of company that generates its revenues, pays its debt, and competes for capital in US dollars. That reform would address the cause of the ZSE's structural decline. Practice Note 18, competently designed and pragmatically implemented within the constraints of the current ZWG pricing framework, addresses its symptom.

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