Greater B-BBEE disclosure requirements for JSE-listed companies

In an effort for the South African government to assess the state of transformation of publicly listed companies, the Broad-Based Black Economic Empowerment Act, 2003 (the “B-BBEE Act”), read together with the B-BBEE Regulations, requires that all companies listed on the Johannesburg Stock Exchange (“JSE”) report to the B-BBEE Commission annually on their compliance with broad-based black economic empowerment (“B-BBEE”). As a consequence, the JSE also amended the JSE Listings Requirements by placing a continuing obligation on JSE-listed companies to publish such B-BBEE compliance reports on their company website and, furthermore, to make an announcement on the SENS that this has been done.

JSE-listed companies are required to submit their annual B-BBEE compliance reports to the B-BBEE Commission by completing the prescribed form B-BBEE 1. Annual B-BBEE compliance reports must be submitted within 30 days of the approval of their audited financial statements and their annual report or within 90 days of the end of the financial year.

The prescribed form B-BBEE 1 requires very limited B-BBEE-related information to be submitted to the B-BBEE Commission (effectively, only the company’s verified B-BBEE scorecard). However, on 20 December 2017, the B-BBEE Commission issued an explanatory notice giving further guidance on the information required to be reported on. Notably, this explanatory notice includes a “compliance reporting matrix”, which sets out the additional detailed information required to be included in B-BBEE annual compliance reports (in addition to the information prescribed in form B-BBEE 1). It appears that the purpose of these additional disclosure requirements is to enable the B-BBEE Commission to assess a listed company’s state of compliance with each B-BBEE element of the B-BBEE scorecard and how each such element has contributed to the outcome of its overall B-BBEE rating.

The explanatory notice also clarifies that the annual B-BBEE compliance reporting obligation applies to both primary and secondary listed companies on the JSE.

The additional reporting obligations will be effective on 1 April 2018.

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This article was first published by ENSafrica (www.ENSafrica.com) on 24 January 2018.

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