The Companies Act Amendments Have Raised The Stakes For Boards

Several provisions of the Companies Amendment Act, 2024 came into operation on 22 May 2026, introducing a far more prescriptive approach to executive remuneration governance in South Africa. 

This is not simply another compliance update for public and state-owned companies. The amendments materially change the relationship between boards, remuneration committees and shareholders, particularly where executive pay decisions are already under scrutiny. 

Executive remuneration is no longer sitting quietly in the governance section of the annual report. 

Boards are increasingly being forced to defend pay decisions in public and now face binding shareholder consequences when they fail to secure support. 

A shift from advisory to binding 

The newly introduced sections 30A and 30B of the Companies Act 71 of 2008 establish a statutory remuneration governance framework for public and state-owned companies. 

One of the more significant changes is that remuneration policies must now be approved by shareholders through an ordinary resolution at annual general meetings. 

JSE-listed companies can no longer treat remuneration votes as largely symbolic or advisory. The previous position under the JSE Listings Requirements gave shareholders influence, but not binding authority. 

That distinction matters. 

Boards can no longer rely on post-meeting engagement to soften shareholder dissatisfaction after a failed vote. Where a proposed remuneration policy is rejected, the existing policy remains in force until shareholders approve a replacement. Proposed changes cannot simply be implemented regardless. 

Remuneration committees are therefore likely to come under pressure far earlier in the reporting cycle. Companies with inconsistent shareholder engagement, weak disclosure practices or poorly aligned remuneration structures may find themselves exposed fairly quickly. 

Expanded disclosure requirements 

The amendments also introduce far more detailed remuneration disclosure obligations. 

Companies must now prepare an annual remuneration report comprising a background statement, the remuneration policy itself and an implementation report explaining how the policy was applied during the relevant financial period. 

The implementation report must include the total remuneration paid to each director and prescribed officer, identified by name, together with disclosure relating to average and median employee remuneration and the remuneration gap ratio between the top 5% and bottom 5% of earners within the organisation. 

The amendments to section 30(4)(a) further remove ambiguity around disclosure obligations by expressly requiring named disclosure of remuneration and benefits paid to directors and prescribed officers. 

Producing the information itself may prove to be the easier part. 

The greater pressure is likely to come from how that information is interpreted by shareholders, employees, regulators and the media. Disclosure around remuneration gaps in particular is likely to attract attention in sectors already facing broader scrutiny around inequality, governance and executive accountability. 

The two-strike rule 

The amendments also introduce a “two-strike rule” affecting non-executive directors serving on remuneration committees. 

Where shareholders reject a company’s remuneration report at two consecutive annual general meetings, non-executive directors who served on the remuneration committee during that period may not continue serving on the committee for two years. 

Affected directors may remain on the board, but the restriction creates obvious governance and reputational consequences for committee members. 

More cautious decision-making around executive incentives, performance metrics and remuneration structures is likely to follow. Boards may also find themselves engaging with major shareholders far earlier and far more strategically than before. 

What boards should be thinking about now 

One of the more difficult aspects of the amendments is the absence of any meaningful transitional period. 

The provisions are already in force, meaning affected companies should be reviewing their remuneration governance frameworks immediately. 

Many existing remuneration policies were drafted primarily with King IV and the JSE Listings Requirements in mind. They may not adequately address the statutory obligations now imposed under sections 30A and 30B. 

Boards should also be asking whether existing remuneration committee structures remain appropriate, whether current reporting systems can produce the required disclosures accurately and whether annual report, AGM and shareholder engagement processes can withstand greater scrutiny. 

Companies delaying these assessments may find themselves under pressure much closer to AGM season, particularly where shareholder sentiment around executive remuneration is already sensitive. 

The real difficulty for many boards may only emerge once remuneration decisions start attracting sustained shareholder resistance or public criticism. By that stage, the discussion has usually moved well beyond executive pay itself and into broader questions around governance, leadership credibility and board oversight. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.