THE Junior Market of the Jamaica Stock Exchange (JSE) is poised to become an even more attractive funding option for companies, after lawmakers passed legislation lifting the capital-raising cap to $750 million from $500 million.

The amendment is designed to provide greater opportunities for small and medium-sized enterprises (SMEs) to access equity funding, enabling them to expand operations and contribute more significantly to the economy.

“We will be increasing the current cap for new companies wishing to participate in the Junior stock exchange. Currently, that is set at $500 million, and that will be moved to $750 million,” Finance Minister Fayval Williams announced at a post-Cabinet press briefing on Wednesday.

The Government’s decision to raise the capital-raising cap for smaller entities from $500 million to $750 million reflects efforts to boost business growth and economic activity, particularly for SMEs. SMEs, which are key drivers of employment and innovation, are currently restricted under existing laws to raising between $50 million and $500 million through equity financing.

Micro, small, and medium-sized enterprises (MSMEs) listed on the Junior Market of the JSE already benefit from a range of tax incentives. These include conditional relief from income tax as well as exemptions from transfer tax and stamp duty on share transfers through the exchange.

“This will positively impact the MSME sector as it will broaden the scope for more MSMEs to benefit from the suite of incentives afforded,” said Williams.

As of December 2024, 48 companies are listed on the Junior Market, with a combined market capitalisation of $148.5 billion. The finance minister, however, made it clear that companies already listed on the Main Market cannot downgrade to the Junior Market due to this increase in capitalisation.

“The policy is applicable only for new entrants to the stock exchange,” she added.

Marlene Street Forrest, managing director of the JSE, speaking on Money Media’s Taking Stock programme, said she expects the Senate to pass the legislation soon. Street Forrest also indicated that 2025 may see a rise in initial public offerings (IPOs) on both the Junior and Main Markets, adding that several applications are currently pending with the exchange.

“We have been in a season of reviews, in terms of mergers and acquisitions, but a series of reviews in terms of new companies coming onto the market,” Street Forrest said.

Only two new companies were listed on the equities market in 2024: Omni Industries and RA Williams Distributors.

This aligns with findings from the Jamaica Chamber of Commerce’s Business and Consumer Confidence Indices for the third quarter of 2024. The report revealed that while 58 per cent of businesses expressed a need for financing, only 4 per cent preferred to seek equity investors, indicating a limited inclination toward using the stock market for funding. Instead, half of these businesses favoured bank loans as their primary source of capital.