South African corporate governance faces key reckoning

Subject

South African corporate governance.

Significance

Johannesburg Stock Exchange (JSE)-listed IT company EOH, which has seen its share price decline by over half in 2019, announced on October 11 it would press criminal charges against employees implicated in corruption. As South Africa’s institutions begin to grapple with the spectre of ‘state capture’, public pressure is growing to tackle more sophisticated ‘white-collar’ crime.

Impacts

• Large institutional investors will increasingly refine their approach to evaluating firms, including how they determine governance quality.
• A major UK-based report on auditing due later this year will likely result in similar regulatory changes elsewhere, including South Africa.
• The Financial Sector Conduct Authority enforcement head has vowed firmer action against transgressors of financial market regulations.