by Raeesa Cassim
On March 26, 2024, the Companies Amendment Bill, 2023 (CAB 2023) and the Companies Second Amendment Bill, 2023 (CSAB 2023) (collectively the “Bills”), which introduces changes to the Companies Act, 2008 were passed by the National Council of Provinces and are now awaiting presidential assent.
The proposed changes in the Bills will significantly impact corporate governance structures for many companies in South Africa. Companies should prepare for key duties that will be imposed once the Bills are in force. Given uncertainty about a transitional period, it’s advisable to prepare as if the amendments will take effect immediately upon being gazetted by the President.
But what do you need to know moving forward:
- Expanded AGM Agenda Items:
The Bills broaden the scope of business to be transacted at Annual General Meetings (AGMs). Companies will now need to address the presentation of their remuneration report, social and ethics committee (SEC) report, and the appointment of the SEC during AGMs.
- Transparency Requirements on Executive Pay:
Companies will be required to prepare and present their remuneration policies and reports for shareholder approval at AGMs. The remuneration report must be presented and approved by shareholders through an ordinary resolution.
- Social and Ethics Committee Reporting:
Public and state-owned companies will be obligated to present an SEC report at their AGMs once the proposed changes take effect.
The appointment of the SEC will also be a key agenda item at AGMs of public companies.
- SEC Exemption:
The Bill introduces an amendment allowing companies with existing formal mechanisms substantially performing SEC functions to apply for an exemption from the SEC requirement.
What could you do with all this information?
Familiarize yourself with the relevant amendments that may affect your corporate and strategic operations and prepare accordingly as well as seek expert guidance to help you navigate the new amendments and the impact on your business.
This note is not intended to, and does not, constitute legal advice, and may not be relied upon. For further information as well as tailored advice, our team is ready to let you know how you can navigate these changes.
