The Companies Amendment Bill is signed into law: what does this means for companies?

By Kouthar Sambo

The Minister of Employment and Labour, Nomakhosazana Meth, has welcomed the signing into law of the Companies Amendment Bill. The Act aims to streamline company law to be clear, user-friendly, and less burdensome when conducting business.

Speaking on VOC’s PM Drive show on Monday, a legal expert, Professor Piet Delport, explained what the bill means for businesses and companies moving forward.

“The Act was introduced around 2008, and the outcry is about the value of remuneration of executive directors within a company while the concerns are centered around more equity.”

“Additionally, a company must have financial statements, and the statements from private companies are private. However, the amendments allow for the statements to be open to the public and Amendment Section 30 says the names of the people and the remuneration must be revealed,” he detailed.

He further narrowed this down by saying: “It’s like an Act stipulating I should showcase my payslip to the public.”

He added that Section 30A, aimed at public and state-owned companies, requires approval of remuneration and consequences if the remuneration is not approved. According to Delport, this is new in South African company law.

“There is a popular misconception that a public company would be a listed company. All listed companies must be public companies but not all are listed companies. A lot of public companies are not listed and would have to comply with this,” he stressed.

He outlined two main issues within the Bill:

“(1) The remuneration must be approved by shareholders within the first instance. (2) The information should be widely disclosed.”

Company law exists to regulate how companies should be run, he said, but these acts do not exist to tackle concerns or inequalities within a company.

From a business perspective, there must be a remuneration policy, explained Delport, and shareholders must decide what the policy is to remunerate the executives of the company.

He added that this remuneration must be approved by the remuneration committee. However, not all companies have a remuneration committee – this is where the problem arises.

“A remuneraiton committee is not something required by law but it is something the board usually do by appointing a remuneraiton commitee to advise them on how to remunerate the exectuvies of the company,” he clarified.

“The impression one gets is that if the company does something that is not within the policy, the action becomes invalid – however it is not very clear because different dynamics unfold in different companies. There should also be an implementation report on how the remuneration policy will be implemented,” reiterated Delport.

Photo: Department of Employment and Labour/Facebook

Picture of Aneeqa Du Plessis
Aneeqa Du Plessis

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