Ramaphosa Enacts Laws to Boost Business and Transparency

President Cyril Ramaphosa has signed into law significant amendments to the Companies Act of 2008, designed to simplify business operations and increase corporate transparency. These changes include mandatory disclosures on executive remuneration and measures to address income inequality within companies.

The Companies Amendment Bill and Companies Second Amendment Bill, now enacted, aim to reduce the regulatory burden on businesses, streamline company laws, and enhance the pursuit of delinquent directors and officers. These reforms are expected to improve domestic economic efficiency and attract foreign investment.

Key provisions of the Companies Amendment Act require public and state-owned companies to prepare a detailed remuneration report for the previous financial year. This report must include the company’s remuneration policy and an implementation report, detailing the total pay for each director and officer, as well as the highest and lowest paid employees. Companies must also disclose the average and median total remuneration of all employees, and the pay gap between the top 5% highest paid and bottom 5% lowest paid employees.

Additionally, public and state-owned companies must present a remuneration policy for shareholder approval, promoting greater transparency and accountability. The Act also empowers courts to validate the creation, allotment, or issue of shares that would otherwise be invalid, ensuring stakeholder protection.

The Companies Second Amendment Act extends the period during which proceedings can be launched to recover losses, damages, or costs from delinquent directors. This law, responding to recommendations from the State Capture Commission, extends the time limit for declaring a company director delinquent from 24 months to 60 months, with the possibility of further extension by the court on good cause shown.