The JSE moved to secure the integrity of the country’s financial markets after a torrid few months. Photo: Nhlanhla Phillips/African News Agency (ANA)

JOHANNESBURG – The JSE yesterday moved to secure the integrity of the country’s financial markets after a torrid few months which have seen corporate scandals become the norm. 

The local bourse released a discussion paper that is suggesting a raft of changes to strengthen regulations around primary and secondary listings. 

“While the JSE is reviewing areas within its mandate, we do not suggest that we have solutions for the ecosystem as a whole," said JSE chief executive Nicky Newton-King. 

“Depending on the nature of the comments received in response to this paper, it may be appropriate to convene a colloquium to discuss the improvement of governance.”

The near-collapse of Steinhoff following an “accounting irregularity” and the short selling activities of Viceroy Research have put the spotlight on loopholes in the country’s markets. The JSE wants issuers to have the minimum subscribed capital amount in place prior to any capital raising through a listing, while it aims to raise the current subscribed capital amount required to list. The JSE in 2007 pegged the subscribed capital at R500 million. 

It also wants shares that are held by any person or people closely affiliated to the directors and management of applicant issuers not to be regarded as publicly held. 

It further wants to exclude shares issued to employees and shares held subject to any lock-up provisions to achieve public spread. Another key change mooted by the JSE is that notice of a listing be published on SENS 10 business days before the listing. The current rules stipulate that the issuer publish its pre-listing statement five business days before the actual listing. 

The JSE also plans to introduce a requirement that boards have and publish a mandatory policy regarding diversity at board level and that they publish performance against that policy on an annual basis. 

The SA Reserve Bank, National Treasury and the Financial Sector Conduct Authority earlier this month in their draft 2018 Financial Markets Review made a plethora of recommendations to stymie corporate greed. 

One proposal is that people who expose malfeasance be financially rewarded for their efforts. In another, the review calls for regulators to investigate the characteristics and structure of the South African corporate primary and secondary bond markets.