JSE requires debt officer as new listing requirement

The JSE now necessitates that companies have a debt officer as part of its listing requirements.

The Johannesburg Stock Exchange (JSE) has announced that, as part of its listing requirements, companies that issue bonds have to appoint a debt officer.

The debt officer has to work with bondholders, and companies such as Absa, Santam, Growthpoint, Telkom and Woolworths, as well as state-owned groups like Eskom and the South African National Roads Agency, all announced that they now had a debt officer.

According to the new rule, which has been approved by the Financial Sector Conduct Authority (FSCA) the debt officer has to act as the central contact person for bondholders if they need assistance. For instance, if they need more information about the issuer’s compliance with the terms and conditions of their contracts, the debt officer must also provide the details of others who also hold debt securities.

Debt securities are contracts over an amount of money that was borrowed, which must be repaid at a specific date and usually at a specific rate of interest. Typically, these include bonds. In the past, debt security holders had no point of contact at companies, and no access to information about other investors and could not organise themselves as a group.

Currently, debt managers can be employees of the company and Eskom, Absa and other companies have made their financial executives their debt officers as well.

What is potentially a breakthrough is that directors of state-owned enterprises and companies that issue debt on the JSE must from now on publicly disclose any conflicts of interest, and must pass “fit-and-proper checks” – where a person’s past actions are scrutinised to see whether they are fit and proper for the role they are undertaking.