Cape Town — President Cyril Ramaphosa has signed into law amendments to the Companies Act of 2008 that will bridge the gap between the highest and lowest paid people in a company.
The Companies Amendment Bill and Companies Second Amendment Bill that was referred to the president and is aimed to make the conduct of business less burdensome and to tighten to the pursuit of delinquent directors or officers of wrongdoing, including state capture or disparities in earnings, the Presidency said.
“The Companies Amendment Act as signed by the President streamlines company law to be clear, user-friendly and less burdensome on the conduct of business. This reform is important for the efficient and effective conduct of the domestic economy as well as the attraction of foreign investment,” Presidency spokesperson, Vincent Magwenya, said.
The Act also aims to achieve equity between directors and senior management, as well as shareholders and workers.
President @CyrilRamaphosa has signed into law amendments to the Companies Act of 2008 that promote the ease of doing business and impose greater corporate transparency on the earnings gap between the highest and lowest paid persons in a company. https://t.co/enJ5Gjq9WM
— The Presidency 🇿🇦 (@PresidencyZA) July 26, 2024
The law also addresses the public concerns over high levels of inequality within society by introducing better disclosure of senior executive payments and the reasonableness of that payment.
The law requires that all public and State-owned companies should prepare a remuneration report in respect to the previous financial year. It should also prepare and present a remuneration policy for shareholder approval.
“This remuneration report must be accompanied by the company’s remuneration policy and an implementation report that must set out detail on the total remuneration received by each director and prescribed officer as well as the total remuneration for the employee with the highest and lowest total remuneration.”
Other important indicators say that companies must report the average and total payments of all employees, and also disclose the total remuneration gap between the top 5% of earners and the bottom 5% of earners within the company.
“Other provisions include the empowerment of a court to validate the creation, allotment or issue of shares, which would otherwise be invalid, upon application before the court by a company or any person who holds an interest in the company,” Magwenya said.
South African News
President Cyril Ramaphosa has signed into law amendments to the Companies Act of 2008
Companies must report the average+median total remuneration of all employees
Moreover, they must disclose the remuneration gap of the top 5 highest + lowest paid employees pic.twitter.com/KUO0vkQmfZ
— MEHMET VEFA DAG (@AFRICANDEMOC) July 26, 2024
The Law requires that paid shares are transferred to a stakeholder until fully paid, and the measures are to prevent any malpractice within the company that will affect shareholders, workers and clients,
“The Companies Second Amendment Act signed by President Ramaphosa contains a response by Government to one of the recommendations of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector, including Organs of State (State Capture Commission),” Magwenya added.
This provision ensures that directors and prescribed officers in companies can be held accountable for a significant period after they have committed alleged offences.
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Compiled by Matthew Petersen
