President Ramaphosa Amends Companies Act To Aid Ease Of Doing Business, Transparency

President Cyril Ramaphosa has signed new amendments to the Companies Act of 2008 to make doing business easier and increase transparency about pay differences within companies.

The Companies Amendment Bill and Companies Second Amendment Bill were both signed into law to simplify business operations, making it easier to hold directors accountable for misconduct and address pay disparities.

These changes make company law clearer and less complicated, which is crucial for a smooth-running economy and attracting foreign investment. The Act also aims to create fairness between directors and senior managers, and shareholders and workers.

"In addition, the law addresses public concerns regarding high levels of inequalities in society by introducing better disclosure of senior executive remuneration and the reasonableness of the remuneration," the Presidency said, SA News reported.

He added, "The law requires the preparation of a remuneration report by all public and State-owned companies in respect of the previous financial year."

The company must include its remuneration policy and an implementation report with the remuneration report featuring the total pay for each director and senior officer, as well as for the highest and lowest-paid employees.

Companies also need to report the average and median pay for all employees and reveal the pay gap between the top 5% highest earners and the bottom 5% lowest earners.

Public and State-owned companies now need to create and get shareholder approval for a remuneration policy.

The law also empowers 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.

The Companies Second Amendment Act, signed by President Ramaphosa, addresses a recommendation from the State Capture Commission, which investigated state corruption.

The new law changes the Companies Act to extend time for starting legal actions to recover losses, damages or costs someone may owe.

It follows the Commission's suggestion to amend Section 162 of the Companies Act so that legal action for declaring someone a delinquent can be taken even after two years if there is a valid reason.

The new law extends the time bar for declaring a director of a company a delinquent director, from 24 months to 60 months.