Treasury, JSE debt requirements seek more transparency at SOEs

National Treasury and the Johannesburg Stock Exchange last week released proposals for new debt listing requirements, aimed at strengthening governance and transparency at state-owned entities.

The proposed new debt listing requirements include stipulations to compel SOEs looking to apply for debt securities to be more transparent when looking to access these financial tools.

SOEs have been able to issue debt on markets, but a key issue has been years of poor governance plaguing many of these entities.

Boosting transparency

A statement from National Treasury said the requirements would not only boost transparency, but would also go a long way in stopping corruption at SOEs that have, over the years, dealt with compromised directors accused of pursuing private interests in their positions.

“The issuer, if a quasi-governmental entity - most commonly provincial and local authorities or municipalities and state-owned entities - must disclose its policy on the procurement of services and/or products on the applicant issuer’s website,” said the statement.

The statement recommended that records of procurement partners representing 10% or more of the annual procurement spend should be maintained and made available on the website of applicant issuers when they publish their annual financial statements.

“The applicant issuer must have a policy dealing with the disclosure and treatment of domestic prominent influential persons at board level of directors of the applicant issuer and in respect of any transactions or dealings by the applicant issuer with domestic prominent influential persons,” the statement said.

National Treasury and the JSE also recommend that applicant issuers have a policy dealing with the nomination of their directors, including details of assessment on the suitability of candidates, and the process involved in considering nomination of domestic prominent influential persons as directors.

“A summary of the policy dealing with the nomination of directors of the applicant issuer must be disclosed in the placing document and may be incorporated by reference,” the statement said.

Treasury and the JSE also recommended the policy dealing with the nomination of directors of the applicant issuer should be a document “open for inspection”.

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