In market milestone, credit union lists deferred shares
In the first of a new class of listings, Jamaica’s largest credit union has introduces shares on the main market of the Jamaica Stock Exchange.
Community & Workers of Jamaica Co-operative Credit Union, C&WJCCU, listed 450 million units of its 7.35% Variable Deferred Shares, on Friday signifying a milestone in a two-year process of rules changes and accommodations that have broken new ground, according to JSE Group Managing Director Marlene Street Forrest.
“This is the first time in the history of the Jamaica Stock Exchange that we are listing a security of an organisation that is not issued by a company, and which is not incorporated under the Companies Act of Jamaica or another approved jurisdiction, Street Forrest said at the ceremony.
She added that the stock market rules had to be adjusted to accommodate the new listing as an ‘approved entity’.
“Approved entity means an industrial and provident society, a cooperative society, a building society, a statutory corporation, collective investments schemes, or any other entity and/or corporate structure enabled by governing legislation and approved by the exchange,” she reported.
Credit Unions were designated ‘defined financial institutions’ under a Finance Ministry regulatory amendment in 1999. This triggered a raft of organisational and structural changes among the more than 60 credit unions at the time. Now there are only 25.
Also in the mix was preparation for credit unions to be regulated by the Bank of Jamaica, replacing the self-regulatory ethos, which obtained since the first credit union emerged in 1940-41.
Along with mergers, credit unions have had to restructure their balance sheets and reclassify the types of shares that their membership can hold.
“The new requirements allow for a portion of members’ shares to become fixed or permanent and, as such, treated as equity, as well as a voluntary pool of shares which would be treated as deposits,” Registrar of Cooperative Errol Gallimore told the Financial Gleaner ahead of the C&WJCCU listing.
The deferred shares being listed, although part of the credit union’s capital adequacy requirements, do not affect the ownership structure of C&WJCCU, union where each member regardless of the number of shares, has one vote, Gallimore explained.
Describing the two-year journey in getting the shares listed, Chief Executive Officer of C&WJCCU, Carlton Barclay, in an apparent dig at naysayers, said that with the help of several partners the credit union made the ‘impossible’ possible.
“It can’t be done, is what we have heard or it is impossible under these rules. Well, it has been done,” Barclay said.
“Being listed on the JSE is a giant step forward in bringing C&WJ – and indeed the credit union movement – into the 21st century financial world,” he added.
Street Forrest in marking this milestone reflected on others before, including the listing of the first stock on the junior market – Access Financial in 2009; the scope of the offer for Wigton Windfarm, which drew thousands of new investors to the market last year, and now C&WJCCU as the first ‘approved’ institution.
Street Forrest says the JSE sees this as a new era for the capital market where entities other than companies can be players in the market.
“The Jamaica Stock Exchange sees this listing by introduction today as a green shoot and a signal that commerce is resuming and moving in the right direction,” she said.
The listing increases the total securities on the JSE to 128, by 92 companies. The main market comprises 63 securities, including 50 company listings, Street Forrest said.