JSE’s new rules for all its listed entities
Governance code mandatory, B-BBEE status, race and gender diversity
THE JSE this week made the King IV Governance Code mandatory for listed entities, as they had now been included in the exchange’s listings requirements. Companies would also be required to publish a compliance report on their broad-based black economic empowerment (B-BBEE) status, unless an exemption could be provided to the JSE.
Melanie de Nysschen, corporate finance principal at Bravura – an independent investment banking and advisory firm – said although some of these changes were expected, the timeous and appropriate implementation would require careful planning and consideration. She advised listed companies to take note of these requirements.
De Nysschen explained that while the application of the corporate governance practices in the King Code was generally voluntary, listed companies could not choose to ignore King IV, which had amended the disclosure regime to “apply and explain”.
This change would be effective to annual reports submitted to the JSE on or after October 1. The revised listings requirements required full disclosure of the remuneration policy and implementation report in the annual report.
In terms of the B-BBEE regulations, the company’s compliance report on its B-BBEE status would be required to include the relevant scores received by the listed entity in the BEE elements of ownership, management control, skills development, enterprise and supplier development, socio-economic development and other sector-specific elements.
The report must state if the company was an empowering supplier and whether it had achieved the priority element thresholds of ownership, skills development and enterprise and supplier development.
Aligned with a practical approach adopted in King IV, setting out principles for the establishment of a unitary board reflective of an appropriate balance of power, the JSE would require a determination of a director’s independence to be made holistically and on a substance over form basis in accordance with the indicators provided in the Companies Act and the King Code.
In addition to a policy on the promotion of gender diversity at board level, the JSE now required listed entities to include a policy on the promotion of race diversity at