The JSE wishes to add a disclosure item under corporate governance as it relates to race diversity at board level.
As with the gender diversity policy introduced by the JSE in November 2015 pursuant to paragraph 3.84(k) (now 3.84(i) of the Requirements, the JSE wishes to add a disclosure item under corporate governance as it relates to race diversity at board level. The disclosure should clearly identify the race diversity policy at board level and require annual reporting on how the policy has been applied.
More than 20 years into our democracy, our economy has still not completed its transformation. In November 2015, the JSE introduced disclosure around gender transformation at board level. The amendments are proposing a similar policy of disclosure around racial transformation at board level. The proposal regarding disclosure around gender transformation was well received by listed companies. We hope that this new requirement regarding disclosure around racial transformation will also be well received.
The JSE’s requirements on transformation are twofold:
- Racial diversity disclosure at board level; and
- Publication of their BBBEE scorecard on their website. Please refer to Items 2 below. Transitional Provisions Should the amendments be accepted, the JSE will ensure that there is sufficient lead time of at least 12 months from the effective date of the amendments to allow issuers to prepare for the implementation of these provisions.
2 Section 16: Periodical Returns Appendix 1 to Section 11
The JSE wishes to include disclosure on the websites of issuers regarding their compliance with broad-based black economic empowerment pursuant to:
- the Broad-Based Black Economic Empowerment Amendment Act No. 46 of 2013 (the “BBBEE Amendment Act”) and
- the Broad-Based Black Economic Empowerment Regulations 2016 (which came into force on 6 June 2016) (the “Regulations”). The JSE must be notified once the annual compliance report is placed on the issuer’s website.
Section 13G(2) of the BBBEE Amendment Act stipulates that all public listed companies on the Johannesburg Stock Exchange must provide the Commission, in such manner as may be prescribed, a report on their compliance with broad-based black economic empowerment. Section 12(3) of the Regulation requires the submission of a compliance report in the prescribed form to the Commission. The form is attached for ease of reference. The information required to be disclosed in the form must reflect the state of compliance with the following elements: 5 “Regulations”).
The JSE must be notified once the annual compliance report is placed on the issuer’s website.
- management control;
- skills development;
- enterprise and supplier development;
- socio-economic development;
- any other sector specific element;
and reflect how each element contributes to the outcome of the scorecard in terms of the Codes of Good Practice.
Section 12(5) of the Regulations stipulates that where the public company listed on the JSE has included the annual compliance report in its audited financial statements and annual report, such company may file the audited annual financial statements and annual report with the Commission within 30 days of the approval of the audited annual financial statements and annual report.
On the basis that the Regulations allow for the incorporation and disclosure of the annual compliance report in the annual report of issuers, the JSE wishes to amend the Requirements to make the disclosure of the annual compliance report on the website of the issuer mandatory. The aim with the approach will be to ensure equal and consistent dissemination by all listed companies of compliance with broad-based black economic empowerment.
It should be noted that the preparation of the annual compliance report is a statutory obligation on all companies listed on the JSE pursuant to the provisions of the BBBEE Amendment Act and the JSE will merely be requiring the disclosure of such compliance report on the website of issuers. The JSE will require issuers to notify the JSE once the report has been published on the website of the issuer. The issuer will further be required to make an announcement of availability on SENS once the report has been published on the website of the issuer.