The Financial Services Board amendments to the JSE Listings Requirements (board notice 52 of 2017) which are now in effect, are primarily focused on two aspects:
- They include certain of the obligations set out in the King Report on Corporate Governance for South Africa, 2016 (King IV) as mandatory obligations in the Listings Requirements (the King IV Amendments); and
- They incorporate a listed company’s obligation in terms of section 13(G) of the Broad-Based Black Economic Empowerment Amendment Act 2013 (read together with regulation 12(3)) into the Listings Requirements. A listed company must submit a compliance report within 90 days of the end of the company’s financial year. The compliance report must be in the prescribed form and reflect the company’s initiatives and outcomes for each of the elements of its scorecard.
Importantly, the King IV Amendments now make it mandatory to comply with the recommendations set out in King IV for listed entities. Failure to comply will require listed entities to explain their reasons. The amendments affect listed entities with either a primary listing or a dual listing on the JSE, but they do not affect entities with a secondary listing.
Notable amendments include the amendments to section 3 – continuing obligations:
- The appointment of a social and ethics committee. The composition of various committees should be considered in accordance with the recommended practices of King IV, on an ‘apply and explain’ basis;
- A consolidation of the sub-sections relating to company secretary appointment;
- The requirement that the board of directors, or nomination committee, must have a policy on the promotion of race diversity at board level. The consideration and application of this must be reported to the shareholders in the annual report; and
- The remuneration policy and implementation report must be tabled every year for a separate non-binding advisory vote by the shareholders at the annual general meeting.
Additional amendments include the implementation of the King IV disclosure and application regime in the listing particulars (section 7), the financial information (section 8) and in relation to corporate governance (section 21 – alternate exchanges) of listed entities.