The Public Investment Corporation (PIC), which is the largest single shareholder on the Johannesburg Stock Exchange, holding 12.5% of the market capitalisation of the JSE Top 40 listed companies, has for some time voted against the reappointment of company directors with long tenure beyond nine years. This has been regularly reported in its quarterly reports.
Since the announcement of Mandatory Audit Firm Rotation it has highlighted that it has voted against the reappointment of auditors where the audit firm had been auditing an entity for more than nine years, as it believes that after nine years there is a familiarity threat, which may impair auditor independence.
Consequently, the IRBA began to track the change in shareholder voting at annual general meetings with respect to the reappointment of auditors. There has been a significant increase in opposition in some cases to reappointing auditors where there is excessive tenure. The IRBA refers to this as the shareholder effect.