Capital markets regulation and development Capital markets regulation and development Make in India – International Perspective The 43rd National Convention of Company Secretaries Kempinski Ambience Hotel: Delhi 17 December 2015 Carina Wessels (South Africa)

OVERVIEW Introduction to the Johannesburg Stock Exchange (JSE) Introduction to the Johannesburg Stock Exchange (JSE) Regulatory overview Regulatory overview Some key recent developments Some key recent developments Some challenges Some challenges

INTRODUCTION TO THE JSE Johannesburg: Trading between the chains Johannesburg Stock Exchange: Formed on 8 November 1887 during the South African gold rush Johannesburg Chambers and Company – the first company to list

Following the first legislation covering financial markets (1947) – the JSE joined the World Federation of Exchanges in 1963 Electronic trading system introduced in early 1990’s JSE Limited listed on its own exchange in 2005 JSE today: 19 th largest stock exchange in the world by capitalisation Largest exchange on the African continent Circa 400 listed companies Ranked first in the world ito regulation of securities exchanges (World Economic Forum’s Global Competitiveness Survey: ) INTRODUCTION TO THE JSE

Companies Act 71 of 2008, as amended Financial Markets Act 19 of 2012, inter alia: Financial markets regulation Licence and regulate exchanges, CSD’s, clearing and settlement, custody and administration of securities Prohibit insider trading and other market abuse JSE Listings Requirements King Code of Governance for South Africa (King III) Not regulation: apply or explain, but certain aspects incorporated into Listings Requirements Code for Responsible Investing in South Africa (CRISA) Not regulation: guidance on how institutional investors and their service providers should execute investment analysis and investment activities and exercise rights so as to promote sound governance REGULATORY OVERVIEW

Listings Requirements review: some significant changes and, in instances, relaxation/simplification over the past few years Company secretary: The board must annually consider and satisfy itself of the competence, qualifications and experience of the company secretary (only other position a similar process is required for: Audit Committee assessment of Finance Director) Board must include a statement in the integrated report on the process followed to determine, as well as information that demonstrates actual competence, qualifications and experience Must disclose the application of the principle of having an arm’s length relationship between the company secretary and that the company secretary should not be a director in the integrated report For official Johannesburg stock exchange (JSE) documents, where the company secretary is also a director, JSE will prohibit that person from signing off in both capacities and instead ask for another director to also sign off SOME KEY RECENT DEVELOPMENTS

Listings Requirements review: some significant changes and, in instances, relaxation/simplification over the past few years Board composition (gender diversity specifically): Corporate governance requirements now include the need for the Board or the Nomination Committee to have a policy on gender diversity at the board level which needs to be reported in the integrated report If applicable, the Board or Nomination Committee must also report progress on agreed voluntary targets Effective date of this change, still to be determined SOME KEY RECENT DEVELOPMENTS

Trading settlement: Moving from T+5 to T+3 (has taken longer than initially anticipated – probably to be fully implemented during 2016 Regulation of OTC trading: Financial Services Board directive: Public companies providing trading infrastructure in instances (mostly black economic empowerment schemes) = the definition of an “exchange” ito the Act If trading falls within the definition of an exchange: required to licence as an exchange or cease OTC trading At the time, circa 15 companies that would likely require an exchange licence This and drivers for competition: first application for a second exchange – ZAR X submitted and feedback awaited SOME KEY RECENT DEVELOPMENTS

King IV: Why? Aspirations: A = accessibility B = better not more C = co-creation What will set King IV apart: integration, outcomes, scalability, sector supplements Process: Research: interviews, benchmarking / international developments Working group sessions Public consultation Target date: 2H 2016, with a likely effective date mid 2017 SOME KEY RECENT DEVELOPMENTS

Global impact on listed companies: significant shift in Top40 companies over the past year (mainly large mining companies dropping out due to global commodity downturn) Regulatory and political uncertainty in South Africa: recent change in Finance Minister and resultant uproar / investor confidence Extent and cost of compliance SOME CHALLENGES

Carina holds LLB and LLM degrees, a certificate in advanced labour law, programme for management development and FCIS. She is an admitted advocate of the High Court of South Africa and a fellow of Chartered Secretaries Southern Africa (CSSA). Her formal employment stretches across a breadth of various disciplines, including human resources, business improvement, corporate secretariat and legal and within large international organisations namely De Beers, Investec and Exxaro (of which she has been the Group Company Secretary and member of the executive committee since June 2011). She has over many years supplemented her formal work experience with various part-time activities and public service. She is past president of CSSA and also the immediate past president of the Corporate Secretaries International Association: a global federation of trade bodies representing in excess of corporate secretaries and governance professionals worldwide. She is co-author of the CSSA board exam level Corporate Administration text book and a contributor to the Corporate Secretaryship textbook. A number of her articles on governance and legal matters have been published and she is a regular speaker at Corporate Governance and Company Secretariat seminars both locally and internationally. She has over 37 years of accumulated non-executive director and audit committee experience in a variety of different types of organisations. CARINA WESSELS