The 2023 Companies Amendment Bills (the "Bills") were recently tabled before Parliament, and they are set to make a few welcome changes to the way companies operate in South Africa.
The overarching objectives of the Bills are:
- To ease the manner in which companies operate and limit unnecessary red tape;
- To achieve a greater measure of equity between directors and senior management and address public concerns regarding high levels of inequalities in society; and
- To provide greater disclosure of the ultimate owners of shares in a business.
Further amendments were passed as part of the General Laws Amendment Act, Act 22 of 2022 (the "GLAA") in order to address South Africa's greylisting. The amendments per the GLAA related to "beneficial interests" in shares and which largely addressed the objective of "greater disclosure of the ultimate owners of shares" per the Bills.
The Bills further aim provide for simplified reporting requirements for small businesses and increased powers for the Companies Tribunal to mediate, conciliate, and arbitrate disputes. The bill is still in its early stages, but it is expected to be passed into law in the near future.
For example, to achieve a greater measure of equity, a proposed amendment per the Bills is the duty imposed on public and state-owned companies to prepare and present remuneration policies of directors and prescribed officers, which is to be approved by ordinary resolution at an annual general meeting. This is intended to address South Africa's high levels of inequality, and it will be the first time that such data is required to be made public.
The Bills propose that a public or state-owned company's remuneration policy contain the following:
- An implementation report containing details of remuneration and benefits received by each director or prescribed officer
- The total remuneration of an employee with the highest total remuneration
- The total remuneration of an employee with the lowest total remuneration
- The average remuneration of all employees, median remuneration of all employees and the remuneration gap reflecting the ratio between the total remuneration of the top 5% highest paid employees and the total remuneration of the bottom 5% lowest paid employees of the company
The Bills further simplifies the reporting requirements for small businesses. Small businesses will be exempt from some of the requirements that apply to larger companies, such as the requirement to have a remuneration report.
These are just some of the key changes that are proposed in the new Bills. Businesses should carefully review the Bills, and its implementation in final format and start preparing for the changes that it will bring about.
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