Public and state-owned companies are now subject to a statutory remuneration governance framework under sections 30A and 30B of the Companies Act. These sections require shareholder approval of remuneration policies and annual remuneration reports, with prescribed consequences for non-approval – including the re-election of non-executive directors serving on the remuneration committee and, in certain circumstances, their standing down from the committee and re-election to the board.
Concurrently, amendments to section 30(4) clarify and strengthen remuneration disclosure obligations in audited annual financial statements for all companies required to prepare audited annual financial statements. These amendments (and others) took effect on 22 May 2026. In-scope companies should review their remuneration policies, update their reporting structures, annual reports and notices of annual general meetings, and ensure that their audited annual financial statements individually name and disclose individual directors' and prescribed officers' remuneration and benefits.
On 22 May 2026, President Cyril Ramaphosa proclaimed amendments to the Companies Act, 2008 (Companies Act) in respect of remuneration disclosures and the audit of remuneration reports. Section 30 has been amended and new sections 30A and 30B, establish a statutory framework for remuneration policies and remuneration reports. The President has also proclaimed amendments to section 166 of the Companies Act to centralise alternate dispute resolution in the Companies Tribunal. This development follows the 27 December 2024 proclamation declaring the Companies Second Amendment Act, 2024 and certain provisions of the Companies Amendment Act, 2024 effective from that date.
This alert focuses on the remuneration related amendments under section 30A and 30B of the Companies Act and section 30.
Sections 30A and 30B: Remuneration Provisions
Some of the key remuneration provisions introduced by sections 30A and 30B of the Companies Act are outlined below.
- Public and state-owned companies must prepare and present a remuneration policy for shareholder approval by ordinary resolution every three years, or when material amendments are made to the policy.
- In-scope companies must also present a remuneration report annually at the annual general meeting (AGM) for shareholder approval by ordinary resolution. While the duty to present the remuneration report as part of the AGM's minimum business became effective on 27 December 2024, public companies were already presenting remuneration policies and reports under the previous King IV, and now King V, recommendations and, in the case of listed public companies, the JSE Listings Requirements.
- Remuneration disclosures, including pay gap disclosures, must be made in the implementation report forming part of the remuneration report, including disclosure of the highest and lowest total remuneration, average total remuneration, and the pay gap between the top and bottom 5% of employees.
- If shareholders do not approve the remuneration report at the AGM, the remuneration committee must explain at the next year's AGM, how shareholder concerns have been addressed, and non-executive directors on the remuneration committee (serving 12 months or more) must stand for re-election as committee members.
- Thereafter, there are further consequences if the remuneration report is again not approved, including that in-scope non-executive directors must stand down from the committee for a period of two years. They can, however, remain as directors on the board, provided they successfully stand for re-election.
Amendments to Section 30: Remuneration Disclosures and Audit of Remuneration Reports
The amendments to section 30(4)(a) clarify that remuneration disclosures in audited annual financial statements must include the remuneration and benefits received by each individual director and each prescribed officer, both of whom must be named. Previously, the provision referred to "each director or individual holding any prescribed office", which gave rise to uncertainty as to the scope of the disclosure obligation. The amendment intends to remove ambiguity and ensure consistent and transparent disclosure. The disclosure obligation applies to all companies required to prepare audited annual financial statements under the Companies Act.
In addition, new section 30(4A) provides that where any provisions of the directors' remuneration report contemplated in section 30B become subject to an audit under section 30, company policies or the background statement of the remuneration report must not be made subject to such audit. This distinction intends to recognise that the background statement and remuneration policy are forward-looking and qualitative in nature, and accordingly not necessarily amenable to the same audit procedures applicable to the implementation report. This carve-out may, however, give rise to differing levels of assurance within the remuneration report on which shareholders are asked to vote. Companies may consider obtaining voluntary independent assurance over the background statement and remuneration policy to enhance the overall credibility of the remuneration report.
Practical Steps for Public and State-Owned Companies in Light of the New Remuneration Framework
If they have not already done so, public and state-owned companies should take immediate steps to address the impact of the new statutory remuneration framework on their corporate governance and reporting. Among others, they should:
- review and update their remuneration policies to align with the new legislative requirements;
- review their remuneration reporting structure to incorporate the new disclosure requirements under the implementation report, including pay gap disclosures between the top and bottom 5% of employees, as well as the highest and lowest total remuneration and average total remuneration;
- update their AGM notices and agendas to include the remuneration policy and remuneration report as ordinary resolutions, and cater for re-election of non-executive directors as required, as well as develop contingency plans for potential non-approval scenarios;
- assess remuneration committee composition and director appointment and rotation provisions, and review nomination committee terms of reference; and
- implement proactive shareholder engagement strategies in advance of AGMs as well as broader stakeholder engagement initiatives.
King V and JSE Listings Requirements
The new remuneration provisions introduced by sections 30A and 30B intersect with existing remuneration governance and disclosure obligations under the King V Code on Corporate Governance and the JSE Listings Requirements. A separate communication will follow addressing these interactions.
Companies are encouraged to seek legal and governance advice to ensure compliance with the new framework and to ascertain steps to be taken in respect of pending AGMs which shareholders have already received notices of.
This summary is not intended to, and does not, constitute legal advice, and may not be relied upon. For further information or tailored advice, please contact
Madelein van der Walt or your usual Webber Wentzel contact.
