Publications
Partners
Pretoria – South African Reserve Bank (SARB) governor Lesetja Kganyago has announced that 149 200 of the bank’s shares are available for the public to purchase.
This follows a high court order last year that existing shareholders with more than the statutory limit of 10 000 shares had to dispose of the excess shares.
Since its establishment in 1921, the Reserve Bank has always had private shareholders.Today it has over 660 shareholders and its shares are traded on an over-the-counter share transfer facility (OTCSTF) market that is coordinated within the Reserve Bank, according to a note on the SARB website.
SARB previously de-listed from the JSE Securities Exchange South Africa in 2002 and introduced a live trading facility, operating in terms of OTCSTF rules, in 2005. The facility, though, is not a screen trading facility but operates by means of postal, fax, hand delivery or email communication only.
Kganyago spoke about the fresh sale of shares at a press briefing at SARB's Tshwane headquarters on Thursday .
He explained that the high court order regarding the statutory limit of 10 000 shares was issued on November 4 2016. The bank sought the assistance of the courts following the amendment of the SARB Act in September 2010.
The Reserve Bank was concerned that shareholders were buying more shares on behalf of their family members and companies. In an effort to curb this, the SARB Act was amended to apply to the limit of shares held by shareholders and their families and associates.
“No shareholder and immediate family and associates can collectively own more than 10 000 SARB shares,” he said.
Independent broker Investec will facilitate the disposal of shares over two years following the date of the order, he explained. The public can submit bids to Investec securities.
Any person may apply to own shares (unless they already own 10 000 shares) which will be sold at no less than a predetermined market price. The SARB will do all things necessary to enable the sale of shares, he added.
He explained that the SARB does not have a profit maximising objective.
“The SARB does not bow to any pressure, be it political or the private sector. The SARB accounts to the people of South Africa,” he said.
Kganyago added that the SARB had 2 million ordinary shares available, with a dividend of 10 cents paid as stipulated by law.
The shareholders however have no say on policy decisions taken by SARB in implementing its mandate.
“However, SARB shareholders can elect a maximum of seven non-executive directors of the board, from a list of candidates from a panel chaired by the governor,” he explained.
These powers are exercised at the annual general meeting and each shareholder is limited to one vote for every 200 shares held. SARB recently put out an advertisement for non-executive board member nominations.
SARB shareholders can also discuss the annual report and audit reports of the SARB. They can appoint auditors and determine their remuneration package, he said.
Risks SARB intends to prevent
Kganyago explained why the statutory limit was put in place. In 1920, a central bank was created in which banks were given shareholding.
“The Reserve Bank was created in response to some financial banking crisis occurring prior to 1920,” said Kganyago. The central bank was created to act on behalf of the financial system to ensure the continued flow of financial services.
The limitation was enacted to ensure no particular institution or individual would have undue influence over the Reserve Bank, he said.
The SARB had listed on the Johannesburg Stock Exchange to trade freely beyond banks and included individuals, none of whom could own more than 10 000 shares. Having shares in excess of 10 000 was found to give shareholders, their families and associates, power to “exert” undue influence.
The SARB Act was amended to ensure the diversity of shareholders, explained Kganyago. He urged individuals with expertise in mining, labour, commerce and finance to apply to own shares.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
