Commencement of amendments to South African Companies Act – remuneration disclosure, remuneration policy and report, and alternative dispute resolution

Sections 5, 6 and 19 of the Companies Amendment Act 16 of 2024 (Amendment Act) came into force on 22 May 2026 following publication of Proclamation Notice 313 of 2026 in Government Gazette 54722. These provisions amend the Companies Act 71 of 2008 (Companies Act) in three material respects:

• individual directors and prescribed officers expressly required to be named in audited annual financial statements;
• public and state-owned companies now required to prepare remuneration policies and reports for shareholder approval;
• the Companies Tribunal now designated as the sole forum for mediation, conciliation and arbitration under the Companies Act.

 

Remuneration disclosures in annual financial statements

Naming of directors and prescribed officers: Amended section 30(4) provides that annual financial statements of companies required to be audited must now include particulars of remuneration and benefits received by each director and prescribed officer, who must be named individually. The amendment clarifies that disclosures must be personalised rather than aggregated.

 

Remuneration policy and remuneration report

Remuneration policy (new section 30A): Public and state-owned companies must prepare a remuneration policy for shareholder approval by ordinary resolution at its annual general meeting (AGM). If not approved, the policy must be presented at the next AGM or a meeting called for that purpose. Once approved, the policy remains in force for three years. Material amendments require shareholder approval before implementation. Section 30A does not include an escalation mechanism equivalent to the two-strike rule under section 30B (discussed below). If the remuneration policy is not approved, the only prescribed consequence is re-presentation.

Remuneration report (new section 30B): Public and state-owned companies must annually prepare a remuneration report for the previous financial year, to be approved by ordinary resolution at the AGM. The report must comprise: (a) a background statement; (b) a copy of the remuneration policy; and (c) an implementation report detailing: (i) total remuneration of each director and prescribed officer; (ii) total remuneration of the highest and lowest paid employees; and (iii) average and median employee remuneration, together with the remuneration gap (ratio of the top 5% to bottom 5% paid employees). “Total remuneration” includes salary, benefits, employer contributions and all incentives (including share options).

Two-strike rule (section 30B(4) to (6)): If the remuneration report is not approved by ordinary resolution at the AGM (first strike): (a) the remuneration committee, or any other committee of the company responsible for remuneration matters, (Remco) must present an explanation at the next AGM of how shareholder concerns have been addressed; and (b) the directors who are not involved in the day-to-day management of the business of the company and who serve on the Remco must stand for re-election as Remco members at that AGM. If the report is again not approved at the following year’s AGM (second strike), those directors will not be eligible to serve on the Remco for a period of two years, although they may continue to serve as directors of the company, provided they successfully stand for re-election at that AGM. These consequences do not apply to Remco members who have served for a period of less than 12 months in the year under review.

Audit exclusion for remuneration report: New subsection 30(4A) provides that where the directors’ remuneration report is subject to audit under section 30, any company policies or the background statement of the remuneration report must not be made subject to such audit. This limits the scope of any audit of the remuneration report to the implementation data within the report, excluding the qualitative policy and background components.

 

ADR

Section 166 provides an alternative to applying for relief to a court, or filing a complaint with the Companies and Intellectual Property Commission (CIPC), by permitting a person who would be entitled to seek such relief or file such a complaint to refer the matter for resolution by mediation, conciliation or arbitration.

• Companies Tribunal as sole ADR forum: Previously, matters could be referred for mediation, conciliation or arbitration to the Companies Tribunal (Tribunal), an accredited entity, or any other person. Amended section 166(1) now provides that referrals may only be made to the Tribunal.

• Structured mediation/conciliation-then-arbitration process: The amended section 166 introduces a multi-stage dispute resolution process. If the Tribunal concludes that a party is not participating in good faith or that there is no reasonable probability of resolution, it must issue a certificate of non-resolution. The affected person may then refer the matter to the Tribunal for arbitration. A party objecting to arbitration by the same Tribunal member who attempted mediation or conciliation may request a substitute member. The arbitrator’s award is final and binding.

 

Recommended actions

Public and state-owned companies should prioritise the following:

• Remuneration policies and reports: Review and update internal remuneration policies for compliance with section 30A, including the three-year approval cycle and shareholder approval for material amendments. Prepare remuneration reports in the format prescribed by section 30B, ensuring the report includes the required pay gap analysis and individualised disclosure for directors and prescribed officers.
• AGM notice content: Companies that have not yet issued their AGM notice should ensure that it includes: (a) the proposed ordinary resolution for approval of the remuneration policy; (b) the proposed ordinary resolution for approval of the remuneration report; (c) a copy or summary of the remuneration report, or directions for obtaining it, in accordance with section 62(3)(d); and (d) a proxy form that allows shareholders to vote for or against each remuneration resolution separately.
• Remco composition and succession planning: Consider the implications of the two-strike rule for Remco composition and plan for possible re-election or replacement of members if the remuneration report is not approved (noting the exemption for members who have served less than 12 months).
• Annual financial statement disclosures: Ensure remuneration disclosures in audited annual financial statements name each director and prescribed officer individually.

Although the JSE Listings Requirements already incorporate the King V Code’s recommendations on non-binding advisory votes on remuneration (say on pay), sections 30A and 30B of the Companies Act now shift the paradigm from non-binding advisory votes to shareholder approval by ordinary resolution with consequences for non-approval. Notably, paragraph 5.7(k) of the JSE Listings Requirements (which requires the remuneration policy and implementation report to be tabled for separate non-binding advisory votes at each AGM, and which prescribes a 25% negative-vote threshold triggering mandatory engagement with dissenting shareholders) has not yet been amended to reflect the new statutory regime. Listed companies will, pending JSE guidance, need to comply with both the binding statutory vote under sections 30A and 30B and the existing JSE non-binding advisory vote and engagement obligations under paragraph 5.7(k).

Transitional uncertainty: The Proclamation brings sections 30A and 30B into immediate effect without providing for transitional arrangements. This creates practical difficulties for companies that have already issued AGM notices prior to 22 May 2026 or shortly thereafter (and could not have included the requisite remuneration resolutions), and for companies whose most recent financial year ended before the Proclamation, which may not have collected pay gap data to the standard now prescribed by section 30B(3)(c)(iv). A further interpretive question arises as to whether the “previous financial year” referred to in section 30B(2) must be a financial year that ended after the Proclamation, or whether a financial year that ended before 22 May 2026 is also captured. On a strict textual reading, compliance is required at the first AGM held after 22 May 2026; however, the section 62 notice requirements and the need for retrospective data collection may render literal compliance practically impossible for many companies in the immediate term. We recommend that impacted companies:

• adopt a proactive, documented approach to achieving compliance as swiftly as circumstances permit, including potentially rescheduling their AGM or convening a separate shareholders’ meeting where necessary; and
• monitor for guidance from the CIPC, the Minister of Trade, Industry and Competition, or the JSE on first-implementation timing.

It may be possible to approach the Tribunal under section 6(2) for temporary relief (though the scope of this exemption power for timing deferrals is untested).

Consequences of non-compliance: Sections 30A and 30B do not create a specific offence, or prescribe any civil fine or administrative penalty, for non-compliance. The principal enforcement mechanism is the CIPC’s power to issue a compliance notice under section 171, requiring the company to take steps to comply. Failure to satisfy a compliance notice is an offence under section 214(3), and the CIPC may apply to a court for the imposition of an administrative fine under section 175. Directors who knowingly permit the company to fail to comply may face personal liability under section 77.

 

Provisions not yet in force

Several further provisions of the Amendment Act remain pending, including (among others) amendments relating to access to company records, annual returns, validation of irregular share issuances, AGM agenda items for remuneration and social and ethics reports, minimum qualifications for social and ethics committee members, financial thresholds for regulated companies, and landlord protections in business rescue.

For further information or assistance in assessing the impact of these amendments on your business, please contact your usual DLA Piper adviser.