Governance Update: 2024 Companies Act of South Africa Amendments

Introduction:

The First and Second Companies Amendment Bills of 2023 have been passed by the National Council of Provinces and enacted into law as the Companies Amendment Act No.16 of 2024 and Companies Second Amendment Act No.17 of 2024. The President signed these on July 25, 2024, but the effective date is yet to be proclaimed.

Social and Ethics Committee Composition and Establishment (Section 72):

Every public and private company requires a Social and Ethics Committee (SEC) if it has, in the previous five years, had a Public Interest score above 500 points. There are the following requirements for an SEC:

• An SEC must at minimum have three members unless such is a public/state-owned company then the SEC must have members consisting of NEDs. For any other company, there must be at least one member who is an NED.
• An SEC must be appointed annually at the AGM for public/state-owned companies or by the board for other companies.’
• For private companies, there must be at least one annual presentation of the SEC report to shareholders at the company AGM
• Vacancies on the SEC must be filled within 40 business days.

For Section 5: the change affects subsection (a) in which it is required that a company must publish its intention to lodge an application for exemption. Apart from the previous change, the rest of the content remains the same.

For Regulation 43(2): there is a new inclusion for 6A which provides for circumstances under which a social and ethics committee is not required. 

In 6B the Minister may conclude minimum, qualifications, skills and experience requirements for social and ethic committee members/

For Regulation 43(4): the new inclusion dealing with the composition requirements of an SEC are as follows:

• An SEC must have at minimum three members.
• For public/state-owned companies an SEC must have members that consist of the majority of members being NEDs.
• For any other companies at least one SEC member must be an NED.

For Regulation 43(3): the new inclusion requires that an SEC for public/state-owned companies must be elected at every AGM. For any other companies, the SEC must be appointed annually by the board of directors. (s10A) There is also a new inclusion that will affect how vacancies for an SEC must be included, including a timeline for such a committee to fill vacancies. (s10B) The presentation of an SEC report must be reported to the shareholder at an AGM or a shareholder meeting.

The presentation of an SEC report must be reported to the shareholder at an AGM or a shareholder meeting.