South Africa – Companies Act Reforms Strengthen Remuneration Disclosure and Shareholder Oversight

South Africa’s Companies Amendment Act, 2024 came into operation on the 22^nd of May 2026, introducing significant changes to remuneration disclosure requirements, shareholder oversight mechanisms and dispute resolution processes under the Companies Act, 2008.

The reforms are designed to improve transparency, strengthen corporate governance and increase accountability for public and state-owned companies.

Regulatory Background

The amendments introduce new obligations across several areas of corporate governance.

For companies required to prepare audited annual financial statements, Section 30(4)(a) now requires disclosure, by name, of the remuneration and benefits paid to each director and prescribed officer. This expands existing reporting obligations and increases transparency around executive remuneration.

The legislation also introduces substantial new requirements for public and state-owned companies through Sections 30A and 30B. These entities must now adopt a formal remuneration policy, obtain shareholder approval for that policy every three years, and present an annual remuneration report for shareholder consideration.

The remuneration report must disclose, among other matters by Sections 30A and 30B:

• The remuneration paid to each director and prescribed officer
• Details of the highest and lowest paid employees
• Average and median remuneration across the workforce
• Pay gap information between the highest and lowest earners

In addition, Section 166 has been amended to centralise alternative dispute resolution processes through the Companies Tribunal, reinforcing the role of mediation, conciliation and arbitration in resolving corporate disputes.

Applicability and Scope

The reforms affect different categories of entities depending on the provision involved:

• Remuneration disclosure requirements apply to companies preparing audited financial statements
• Alternative dispute resolution changes apply broadly across all companies
• Remuneration policy and remuneration report requirements apply specifically to public companies and state-owned companies

Practical Considerations and Ongoing Obligations

Companies should review their existing governance and reporting arrangements to assess the impact of the new requirements.

Organisations subject to audit requirements should ensure that remuneration reporting processes and financial statement disclosures are capable of capturing the expanded information now required by law.

Public and state-owned companies should consider:

• Developing or reviewing remuneration policies
• Preparing for periodic shareholder approval requirements
• Updating remuneration committee processes
• Reviewing workforce remuneration data collection and reporting capabilities
• Preparing enhanced annual remuneration reporting disclosures

Risks of Non-Compliance

While the amendments do not impose a standalone financial penalty specifically linked to remuneration reporting obligations, they introduce significant governance consequences where shareholders reject remuneration reports.

Where a remuneration report is not approved by shareholders, the remuneration committee must explain how shareholder concerns have been addressed. If shareholders reject the remuneration report in two consecutive years, non-executive directors serving on the remuneration committee will be required to stand for re-election and will be prohibited from serving on remuneration committees for a period of two years.

How Mercator® by Citco (Mercator) Can Help

Mercator can assist with:

• Assessing the applicability of the amendments
• Reviewing governance and remuneration frameworks
• Supporting remuneration policy development and documentation
• Assisting with annual general meeting documentation and shareholder resolutions
• Advising on corporate governance implications arising from the reforms

For assistance, please contact [email protected]