The Simplification Project was proposed in May 2022 through a JSE Consultation Paper. The project aims to simplify the Listings Requirements and record the JSE’s regulatory objectives in a plain and concise manner that is easier for issuers and sponsors to understand and apply. Coinciding with this project were the proposed amendments to the Companies Act 71 of 2008 (Companies Act), as contained in the Companies Amendment Act 16 of 2024 (Amendment Act) and Companies Second Amendment Act 17 of 2024. These amendments were assented to by the President in July 2024 and certain provisions thereof became effective from 27 December 2024.

The introduction of sections 30A and 30B (which provisions are not yet in force) by the Amendment Act has precipitated amendments to the Listings Requirements. This includes the deletion of section 3.84(j) of the Listings Requirements and the removal of Schedule 14 to the Listings Requirements. These amendments were proposed in an effort to remove duplication in the regulation of executive remuneration and with the ancillary benefit of reducing the volume of the Listings Requirements.

Remuneration policy and report

Under the proposed section 30A of the Companies Act, public companies and state-owned companies are required to prepare and present a remuneration policy for shareholder approval by way of an ordinary resolution at the company’s annual general meeting. Under the proposed section 30B of the Companies Act, public companies and state-owned companies are also required to prepare and present a remuneration report for approval at the company’s annual general meeting. For an in-depth discussion on these sections and their effects, see our article here.

In terms of Paragraph 3.84(j) of the Listings Requirements, the remuneration policy and the implementation report must be tabled every year for separate non-binding advisory votes by shareholders of the issuer at the annual general meeting. This provision is in support of the recommended practice in the King IV Report on Corporate Governance, 2016, which essentially mirrors the provision.

With the introduction of sections 30A and 30B to the Companies Act dealing with matters regarding remuneration, the JSE has proposed removing Paragraph 3.84(j) of the Listings Requirements to avoid confusion, duplication and regulatory effort. The recently published draft King V Report on Corporate Governance also proposes streamlining its governance provisions in light of the introduction of sections 30A and 30B to the Companies Act, to avoid redundancy. You can find a brief discussion of the draft King Report here.

Foreign companies with a primary listing on the JSE

A gap was identified, however, with foreign companies with a primary listing on the JSE that would not be subject to the provisions of the Companies Act. The removal of Paragraph 3.84(j) of the Listings Requirements, without ensuring reasonable regulation on the remuneration for foreign primary issuers, meant that the consequences of not receiving shareholder approval on the remuneration policy and implementation report (as contemplated in proposed sections 30A and 30B to the Companies Act) would not have any bearing on such foreign primary issuer.

To address this gap, the JSE proposes substantially maintaining the non-binding advisory vote on the remuneration policy and implementation report for foreign primary issuers. The proviso, however, is that the announcement inviting dissenting shareholders to engage with the company is only triggered if the remuneration policy or report, or both, are voted against by 50% or more of the votes exercised. The trigger threshold is currently 25% but is proposed to be adjusted to mirror the majority vote requirement contained in section 30A.

Share incentive schemes

Furthermore, in light of the introduction of section 30A to the Companies Act, together with the existing section 30(6) of the Companies Act which requires that all executive remuneration be disclosed in the annual financial statements, including performance-related payments and all other incentives, the JSE is of the view that the disclosure of all executive remuneration, including incentives, will be adequately addressed by the aforementioned Companies Act provisions.

As a result, the JSE proposes removing Schedule 14 to the Listings Requirements entirely. Schedule 14 currently sets out the requirements for share incentive schemes. Upon its removal, the Listing Requirements will seek to only regulate three aspects of dilutive share schemes: (i) the approval of shareholder dilution, (ii) the basic minimum content of dilutive share schemes, and (iii) general governance arrangements. To achieve this, the JSE proposes introducing new provisions dealing with dilutive share schemes in section 5 of the Listing Requirements.

These Listings Requirements amendments have not come into force yet, but are contemplated in the consolidated simplified Listings Requirements, pending the effective operation of the corporate governance amendments in the Amendment Act. The effective date is yet to be known, but issuers should familiarise themselves with both the Listings Requirements and Companies Act amendments in anticipation of their enforcement.