Reserve Bank sells stock
• Court ruling thwarted quest for power by building up share stakes
The Reserve Bank has moved to diversify its shareholder base by inviting people to buy into 149,200 shares in the Bank that have become available due to a high court decision in late 2016.
Shareholdings in the Bank, which has had private shareholders since it was founded in 1921, are capped at 10,000 per shareholder. The court decision enforced a 2010 change to legislation that capped the cumulative number of shares a shareholder could hold with his or her associates at 10,000, thwarting some shareholders who had been trying to gain power by building up stakes.
Shareholders lack power to influence the monetary policy or other policy decisions by the Bank, whose independence is protected by the Constitution.
Shareholders who decided to buy shares as families and associates “were trying to exert undue influence, or influence disproportionate to the statutory limit”, Reserve Bank governor Lesetja Kganyago said at a media briefing on Thursday.
Although some associated shareholders complied with the 2010 legislative change, the Bank had to get a decision from the High Court in Pretoria to ensure all the excess holdings were put up for sale.
It now wanted to distribute those shares to a broader group of shareholders.
The Bank’s 2-million shares are traded on a transfer facility market over the counter and, most recently traded at about R3 a share, but it is unclear what process will be followed to sell the new parcel of shares.
The Reserve Bank is one of few central banks in the world that have private shareholders — it has about 660 of them — and its structure has been controversial on occasion, with calls to “nationalise” the Bank. It said on Thursday “the concept of private shareholding in the [Bank] is based on the principles of shared community representation and participation in governance for the purposes of increased independence, transparency and accountability”.
It emphasised that shareholders had no say in any policy decisions the governor and deputy governors took — and that the Bank was not driven by a profit motive. Shareholders may be paid a fixed dividend of 10c per share each year, but only as long as the Bank has the resources to finance this.
Shareholders elect a maximum of seven of the board’s 15 directors, in terms of strict criteria from a list approved by a panel chaired by the governor, while the state appoints the rest, who include the Bank’s governor and three deputy governors. The 2010 change in legislation added one more governmentappointed director to ensure the private shareholders do not have a majority vote.
As each shareholder is limited to one vote for every 200 shares held, someone who holds 10,000 shares has 50 votes.