What the JSE Listings Requirements say about Integrated Reporting

This article forms part of an ongoing series that unpacks the context and requirements for Integrated Reporting in South Africa. Integrated Reporting has rapidly evolved into a complex field. There are various legal requirements that apply to Integrated Reporting, several guidelines and multiple aspirational frameworks that have input into defining report content and report quality. As such, this article should be read in the context of the rest of the series, rather than as a standalone piece.

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The JSE Listing Requirements

What are they?

The JSE Listing Requirements set out the rules and procedures that govern companies listed on the Johannesburg Stock Exchange (JSE). The JSE is the frontline regulator for listed companies, setting listings requirements and enforcing trading rules. It is supervised by the Financial Services Board (FSB). Since the JSE has no criminal or civil jurisdiction, the FSB processes any cases where legislation has been contravened.

The JSE Listing Requirements apply to new listings and regulate the corporate actions and continuing obligations of all currently listed companies, including issuers of specialist securities. They have an additional goal of ensuring that the business of the JSE is carried on with due regard to the public interest.

South Africa is moving towards a twin peaks model of oversight that will see prudential supervision transferred to the South African Reserve Bank (SARB) and market conduct regulation led by the FSB. However, the JSE will continue to act as frontline regulator, reporting to the FSB as the lead regulator under the new regulatory regime, so the JSE Listing Requirements should not be affected by the changes.

The JSE periodically issues updates and guidance letters on the Listing Requirements to clarify certain areas.

Who they apply to

  • New listings
  • Currently listed companies
  • Listed debt securities and any other listed securities
  • Directors of listed companies
  • Sponsors

What they say about Integrated Reporting

The short answer:

The body of the JSE Listing Requirements does not mention or require the production of an Integrated Report.

This is further clarified in the JSE’s Guidance Letter: Integrated Reporting (27 June 2013):
“the production of an Integrated Report is not a mandatory principle from a Requirements perspective and neither is the application and compliance with the IIRC IR Draft Framework.”

But since the JSE Listings Requirements require application of the King Code (currently King III) and Integrated Reporting is recommended in the Code (Chapter 9), companies choosing not to issue an Integrated Report need to explain why they have chosen not to apply this principle.

The long answer:

While the JSE Listing Requirements are silent on Integrated Reporting, there is a ‘But’. The JSE Listing Requirements stipulate the minimum contents of a listed company’s annual report to include a narrative statement explaining how it has applied the principles of the King Code (s8.63a) and explaining where it doesn’t apply the King Code.

At the time of writing, King III is still in force, with King IV applying to all companies with financial years starting on or after 1 April 2017. Note that, as further discussed below, the Amendment Letter issued by the JSE on May 22 2017 obliges the application and disclosure of King IV on any document submitted to the JSE on or after 1 October 2017. These amendments became effective from 19 June 2017.

Chapter 9 of the King III Code addresses Integrated Reporting and disclosure, and both Code and Report talk to Integrated Reporting (the ongoing process of gathering and reporting non-financial sustainability information alongside financial information) as well as the Integrated Report (the annual output of the year’s relevant information, financial and non-financial).

Additional information

Guidance Letter: Guidance on corporate governance

30 September 2014
The JSE makes certain principles mandatory for companies to apply (around corporate governance), with the balance being adopted on an ‘apply or explain’ basis.

In September 2014, the JSE issued a Guidance Letter that reiterates their expectation that issuers listed on the main board address all 75 principles of the current King Code (King III, until 1 October 2017), disclosing how each has been applied or explaining why or to what extent they were not applied. This document is to be made available on the website of the issuer and regularly reviewed to ensure that the disclosures are current and relevant. The guidance letter does not require the King III Register to be published in the annual report if it is available on the company’s website.

Amendment Letter

22 May 2017
The JSE announced amendments to the Listing Requirements in May 2017 that effectively bring forward the application of King IV. While King IV itself requires application in financial years starting on or after 1 April 2017, the amendments require any documents (circulars and annual reports) submitted to the JSE on or after 1 October 2017 to demonstrate application and disclosure of King IV. The effect of this is to require application of King IV to all Integrated Reports produced on or after 1 October 2017. This means that even companies with year ends of June 2017 will need to make sure that they implement King IV or tighten their reporting timelines to ensure that their reports are finalised by 30 September 2017.

Guidance Letter: Integrated reporting

27 June 2013
This guidance letter clarifies the obligations of listed companies under the JSE Listings Requirements regarding Integrated Reporting. It reiterates that Chapter 9 of the King Code (Integrated reporting and disclosure) is not a mandatory principle and can be applied on an ‘apply or explain’ basis. The same guidance letter also refers positively to the International Integrated Reporting Council (IIRC) and the publication of the IR Framework (at that stage, still in draft form), while emphasising that use of the Framework is not a mandatory principle.