CIS Corporate Governance Conference

1. CIS Corporate Governance Conference The Impact of the New Companies Act on Shareholder Disclosure and the Role of Strate in the Financial Markets   PRESENTED BY: Monica Singer and Dr. Maria Vermaas DATE: Thursday 10 September 2009

2. What is Strate? South Africa’s authorised Central Securities Depository for the electronic settlement of financial instruments in South Africa Provides electronic settlement for equities, bonds, warrants and money market securities to the South African market and the Namibian Stock Exchange Owned by the JSE Ltd (44.5%), four local banks (55.4%) and Citibank (0.1%) Core purpose is to mitigate risk and bring efficiencies to the South African market Aligned to international best practice and standards 2

3. Strate Ltd Vision and Purpose • Vision • We are the leading independent South African provider of innovative post trade products and services • We are globally recognised for the confidence we inspire in our financial markets infrastructure • Purpose • Strate’s purpose is to provide clearing, settlement and depository services for securities, enabling end-to-end pragmatic, reliable, innovative solutions that facilitate the management of risk and the realisation of value for all stakeholders 3

4. The Markets we Serve Equities – Shares, Exchange Traded Funds and Warrants (T+5) Alt-X (T+5) Yield-X (T+3) Bonds (T+3) Money Market Securities (T+0) Namibian Stock Exchange (NSX) (T+5) 4

5. Board Composition • Chairman (Independent Non Executive) • Two executive directors • Two representatives from the JSE Ltd • Two representatives from the Banks / Participants (rotation basis) • One representative from the listed companies • One representative from the fund managers • Four independent non executive directors 5

6. Benefits of Strate Simultaneous final irrevocable delivery versus payment in Central Bank Funds World class settlement system with compliance to international standards Rolling, contractual, guaranteed settlement Risk Management – given top ranking by Thomas Murray rating agency Robustness of support for business continuity capability and Disaster Recovery G30 and IOSCO compliance except T+ 3 for equities S.W.I.F.T Connectivity (ISO 15022 standards) and Virtual Private Network Electronic securities lending and borrowing 6

7. Value Added Services to Issuers Corporate Actions processing with the elimination of market claims and no failed trades; Accuracy of the share register (BND) for Issuers; Electronic custody of shares which are reconciled daily; Elimination of paper share certificates; Electronic processing of corporate events - elimination of costs, significant risks and administration previously associated with corporate actions processing; Interest, dividends and proceeds are credited to the clients' accounts directly occurring in a quick and secure manner; The elimination of the costs and risks of cheques payments and the improved efficiency of dividend payments; Certainty of settlement (T+5) for investors; The marketability of South Africa financial services infrastructure. 7

8. Products available to Issuers Strate currently provides the following value added reporting services to Issuers on request:- The delivery of a PDF or Excel beneficiary download report via e-mail direct to the Issuer and / or their Sponsor. Ad hoc beneficiary downloads for the purpose of mailing in respect of special events by prior arrangement. A list of the top 100 beneficial owners (or number determined by the Issuer). A list of beneficial owners/shareholders holding in excess of (X) % of the issued share capital or dematerialised balance. A list of non-resident beneficial owners/shareholders. The number of beneficial owners/shareholders and the % held by band. e.g. 1-1000 No. of beneficial owners/shareholders % of shareholders, % of issued share capital. Ad hoc data sorts by beneficial owners/shareholders. A list of movements by beneficial owners/shareholders since the previous reporting period. Accurate buyer seller details for trades executed on a specific day or over an extended period. 8

9. Other products and services Clearing and Settlement Corporate Actions Strate Reporting Services Strate Training and Exams SWIFT Services / Virtual Private Network 9

10. Future Projects • Securities Ownership Register (SOR) • Centralised register of beneficial ownership holdings • Investor specific accounts are kept in the name of the beneficial account holder • Legal, risk mitigation, operational and cost imperative for the South African market • Link UP Markets • Global trend for CSD to CSD links • Strate invited to join Link UP Markets as the African link connecting to eight European CSDs • Address complexities and inefficiencies of cross-border settlement • Position South Africa globally • Move to the daily Beneficiary Download (BND) • Market initiative – move from monthly, to weekly and daily to better service issuers • Equities and bonds • Corporate Actions enhancement project • More efficient processing of corporate actions aligned to international standards • Ability to deal with the growing complexity of corporate action events and the management of risk 10

11. Relationship: Strate and Issuer • Securities Services Act (SSA), CSD Rules, CSD Directives • Companies Act (Co. Act), regulations • JSE Listing requirements 11

12. Three important things for Issuers • The decision making process • Flow of capital inside and outside the company • Mechanism for transferring shares 12

13. Electronic transfer by book entries • Paper crunch • Various holding and settlement models • Indirect vs Direct • Fragmentation vsCentralised • Non-transparent vs Transparent 13

14. Model under Section 91A of Co. Act Transfer Secretary Issuer STRATE (CSD) CSD Participant A CSD Participant B Subregister Subregister 1. Broker Nominee 2. Own Name Client Mr A 3. Investor BC (Pty) Ltd 4. Other Nominee 5. CSD Participant A Nominee 1. CSD Participant B Nominee Sub -subregister 1. Investor D 2. Other Nominee 3. Global Investor E Sub-Sub-Subregister 1. Investor F 2. Investor G 14

15. Model under Co. Act, 2008 • Alignment with SSA • Chapter 2 Part E in the Co. Act 15

16. Securities Ownership Register (SOR) ISSUER CSD Top-tier INT AC1 AC2 AC3 16

17. South African legislation • SSA does not prescribe a specific settlement model, but enables a Transparent SOR system: • Deposit of securities with a CSD or a Participant for deposit in the CSD (s 41(1);35(a)) • Doesn’t prescribe manner in which records of clients or beneficial owners must be kept, but provides that CSD rules must provide for the manner • Enables transfer of securities held by CSD or Participant by entry in the central securities account of the CSD or securities account of the parties kept by the CSD or Participant (s 42) • CA prescribes subregister model for equities (s 91A) • Companies Act, 2008: In alignment with SSA approach, the Act moves away from the restrictive approach to subscribe a specific settlement model for the market. The Act contains the basic underpinnings for an effective settlement model, but the CSD rules will spell out the detail of the specific model. This allows for flexibility to ensure the law adapts to reality and keeps up with global and domestic business developments in SA financial markets. 17

18. Subregister Model “omnibus account”: CSD does not know A, B or C or even X’s own intermediaries CSD's Book Intermediary X’s Account 1,600 Intermediary X's Book Customer A’s Account Customer B’s Account Customer C’s Account 300 200 100 18

19. SOR Model intermediaries CSD's Book Intermediary X’s Account own cust.A cust B cust C 1,000 300 200 100 Intermediary X's Book Customer A’s Account Customer B’s Account Customer C’s Account 300 200 100 19

20. Examples of benefits of SOR • Segregation • Ownership • Attachments • Increased transparency • The issuer’s legal register of uncertificated securities would be centralised • Shareholders would be able to directly exercise their rights as shareholders of the issuer 20

21. Relationships: Strate and Issuer and Client • Issuer can control who holds the securities (who casts the vote?) • Issuer can communicate with relevant shareholders • Strate keeps electronic records centralised • Strate facilitates the exercise of shareholder rights (address execution problems in voting) • Transparency and identification • Network relationships 21

22. Contacts: • Bryan Rudd, Business Development Manager, Strate (bryanr@strate.co.za or 011 579 5376) • Monica Singer, CEO Strate Ltd • (monicas@strate.co.za or 011 759 5311) • Dr. Maria Vermaas, Head of Legal, Strate Ltd • (mariav@strate.co.za or 011 759 5315) Questions? 22