Unpacking the newly gazetted Companies Amendment Acts

The long-awaited amendments in the Companies Amendment Bills, 2023 have been signed into law and published in the Government Gazette as Acts of Parliament. The Companies Amendment Act, 2024 includes provisions to enhance transparency and provide for more disclosure by companies. The Companies Second Amendment Act, 2024 extends the time bars applicable to applications for director delinquency and proceedings to recover loss due to director liability.

On 30 July 2024, the Companies Amendment Act, 2024 and Companies Second Amendment Act, 2024 (collectively, the Companies Amendment Acts, 2024) were published in the Government Gazette, following the President's signature of the final bills.

The commencement date/s of the amendments have not yet been proclaimed.

The Companies Amendment Act, 2024 aims to enhance transparency and provide for more disclosure by companies. It also aims to reduce red tape to enhance the ease of doing business in South Africa and clarify certain technical provisions in the Companies Act.

The Companies Second Amendment Act, 2024 follows from the recommendations made by the Zondo Commission of Enquiry into State Capture and aims to extend the time bars applicable to applications for director delinquency and proceedings to recover loss due to director liability.

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The key provisions in the Companies Amendment Acts, 2024 are briefly set out below.

Companies Amendment Act, 2024

New remuneration provisions applicable to public and state-owned companies:

• Public and state-owned companies will have a duty to prepare and present a remuneration policy (once every three years or whenever there are material changes to the policy) and a remuneration report (each year at the annual general meeting [AGM]) for approval by ordinary shareholder resolution. Remuneration disclosures, including pay gap disclosures, must be made in the implementation report forming part of the remuneration report.
• If the remuneration report is not approved at the annual AGM, at the next year's AGM, the remuneration committee must explain how shareholder concerns have been addressed, and non-executive directors on the remuneration committee (serving 12 months or more) must stand for re-election as remuneration committee members.
• Thereafter, there are further consequences if the remuneration report is again not approved, including that in-scope non-executive directors must stand down from the committee for a period of two years. They can however remain as directors on the board, provided they successfully stand for re-election.

• refined exemption criteria allowing a company that has a formal mechanism within its structures which substantially performs the functions of an SEC, to apply for an exemption from the requirement to have an SEC, irrespective of whether there is legislation requiring it to have the formal mechanism;
  
• for public and state-owned companies, the majority of the SEC members must be non-executive directors who have not been involved in the day-to-day management within the previous three financial years;
  
• public and state-owned companies must elect the SEC every year at the AGM and the SEC must present its social and ethics committee report to shareholders at each AGM;
  
• for other companies, the board must annually appoint the SEC and the SEC must present its social and ethics committee report annually at a shareholders' meeting or by written resolution; and
  
• the social and ethics committee report must be prepared in the "prescribed" manner and form (not yet prescribed).

Company ownership: Unpacking new record-keeping, reporting requirements

Janine Will 28 Mar 2023

Companies Second Amendment Act, 2024

For a detailed snapshot of the final amendments, read our insight: A snapshot of the key amendments in the Companies Amendment Bills, 2023.

Addressing the corporate impact of the amendments

Companies should promptly begin addressing the impact the new amendments, once effective, will have on their corporate and strategic operations if they have not started already. Among others:

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Companies should seek expert advice to help them navigate the new amendments and their impact on their businesses.

View our recent webinar unpacking the final amendments in the Companies Amendment Bill, 2023 and practical considerations for companies, below:

Next steps

Several amendments in the Companies Amendment Act, 2024 require the manner and form of documents, fees or other items to be prescribed or determinations to be published, for purposes of implementation of the relevant amendment. These would typically be set out in regulations.

Now that the Companies Amendment Acts, 2024 have been gazetted, we expect that updates to the Companies Regulations, 2011 will be published. The DTIC has not, to date, provided any indication of the timing of publication.

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  About Madelein van der Walt, Nasrin Kharsany and Serena Kalbskopf

  Madelein van der Walt, Partner, Nasrin Kharsany, Senior Knowledge Lawyer & Serena Kalbskopf, Senior Knowledge Lawyer from Webber Wentzel