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State Owned Enterprises: Transparency and financing.

12 February 2013, 07:03

We are once again being shafted by the Government when it comes to funding and bailing out State Owned Enterprises (SOEs). Eskom’s current application for a 16% per year increase for the next 5 years and the recent bailout of SAA spring to mind.

Is it not time to find a revolutionary business model to achieve honest transparency and market related funding? My suggestion would be something in the line of the following:

1)      Create a separate Board on the Johannesburg Stock Exchange (JSE) just for SOE’s

2)      Set the maximum percentage that the Government may own, directly or indirectly, to 35% of any SOE

3)      Limit any other shareholder to a maximum of 5% of the issued shares

4)      Allow no “Golden share(s)” or veto rights to any shareholder

5)      Split the company board 50/50 between the Government shareholder and the rest of the shareholders

6)      Appoint an independent Chairperson that is mutually agreed to by the board and or shareholders

The JSE is a reputable entity that is well run and attracts investments from all over the world so it is the ideal platform for an initiative like this. Their rules and regulations have been well tested over time and are internationally accepted by investors. The technology of the JSE is on par with some of the best stock exchanges operating today.

What would this achieve? The initial listing of the various SOE’s would be a huge cash injection into the Government’s coffers but more importantly the SOE’s would now be a public owned and traded entity which would then have to abide by the JSE’s regulations. Funding would be attracted at market related pricing. The SOE’s would have to be well run and deliver not only on their mandate but also to their shareholders. The playing field would be levelled and no longer would the Government be able to screw us taxpayers over to fund their useless management of SOE’s. Cadre employment would also be a thing of the past and only capable persons would be appointed to sit on the boards.

So how about a SA Inc board on the JSE?

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