Many companies have taken advantage of the Johannesburg Stock Exchange's dispensation on N shares. The exchange allowed the continued use of N shares when it re-wrote listing requirements in 1995 to facilitate black empowerment. There are currently 32 companies on the JSE which have N shares, some of which are black-controlled as a consequence. But the institutional market still dominates ownership structures despite the control vested in black shareholders via N shares. And operational performance in some cases has been dismal.
N shares have other drawbacks.
They generally trade at a discount to the ordinaries, so they dilute the market capitalisation of a company. They also encourage messy capital structures, which make rating the companies difficult for investors. Pay has announced plans to convert its N shares. Now institutions are pushing for conversion of N shares. Empowerment should be about developing senior black managers and control about a broad spread of shareholders.