The Johannesburg Stock Exchange (JSE) has fined Eskom, the state-owned utility, R3-million for failing to comply with the debt listing requirements (DLRs). This penalty includes a public censure. Eskom’s non-compliance involves the timely publication of policies and registers regarding dealings with board members, prescribed officers, and related parties.
Eskom is a significant issuer of debt securities listed on the JSE. Consequently, it must adhere to the JSE’s DLRs. These rules, especially those implemented in 2020, mandate that state-owned entities disclose their policies on dealings with domestic prominent influential persons (DPIPs) and related parties. This includes details about loans and procurement.
However, Eskom did not comply with these provisions. The entity failed to publish the required policies and registers by the stipulated deadlines. Despite numerous extensions and delays, Eskom still had not met these requirements by July 31, 2023. This breach covers several key paragraphs of the DLRs, specifically 7.9, 7.10, 7.15, and 7.16.
The JSE emphasized the importance of these disclosures. DPIPs, due to their influential positions, can significantly impact an issuer’s operations and financial decisions. Without transparent disclosure, there is a risk of conflicts of interest, which could undermine investor confidence. Similarly, disclosing loans and procurement involving related parties is crucial for ensuring the integrity and fairness of these transactions. Failure to disclose this information deprives noteholders of essential insights into potential risks and the issuer’s financial health.
In response, Eskom acknowledged its failure to fully comply with the publication requirements. The utility stated that the JSE’s sanction addresses the delay in publishing the policies and registers, not any breach of the policies themselves. Eskom has since taken significant steps to rectify the situation and ensure compliance moving forward. The outstanding policies and registers were published on the Eskom website on April 12 (policies) and June 28 (registers). Additionally, Eskom committed to publishing the requisite register of suppliers by October 31.
Despite these efforts, Eskom expressed disappointment over receiving a public censure and suspended fine from the JSE. The utility reaffirmed its commitment to adhering to the DLRs and upholding the principles of good corporate governance. Eskom recognizes the importance of effective governance and transparent disclosure for maintaining noteholder confidence..
The JSE’s enforcement of the DLRs highlights the importance of timely and accurate disclosure in maintaining market integrity. By imposing sanctions on non-compliant issuers, the JSE reinforces the need for transparency and accountability in the financial sector. This approach helps protect investor interests and promotes a fair and efficient market.
