
Top stories




Marketing & MediaDaily Maverick launches a groundbreaking local bureau in Nelson Mandela Bay
Daily Maverick 13 hours


Tourism & TravelTumi celebrates 50th anniversary with campaign, 'Made for you since 1975'
Tumi 2 days
More news















This must be in compliance with existing requirements for these documents pursuant to the King IV Report on Corporate Governance and otherwise, since the requirements of the Act pertaining to these reports are not yet effective. Many companies are however already pro-actively complying with the new requirements in good faith.
However, exemption requirements have been slightly relaxed. An exemption may be made to the Tribunal if a social and ethics committee is not reasonably necessary in the public interest having regard to the nature and extent of the structure and activities of the company (as is the current position) or if the company has a formal mechanism that performs the functions of the social and ethics committee, even if that alternative structure is not a requirement by other legislation (previously an additional requirement).
Exemption applications will also now be more public. Companies must publish an intention to lodge the application for exemption in a yet to be prescribed manner. Exemptions still last five years or such shorter period determined by the Tribunal.
As is currently the position, companies have 12 months to make membership appointments from the effective date of the relevant provisions (27 December 2024) or the date on which the requirements are triggered. Social and ethics committee member appointments must be made annually at an annual general meeting for public and state-owned companies and by a board for other companies. Vacancies must be filled within 40 days.
Some of the amendments pertaining to the social and ethics committee have not yet come into force, including the requirement that:
(i) the social and ethics committee report must be prepared in a ‘prescribed manner and form’ describing how the committee performed its functions; and
(ii) the report must be presented for all companies, in addition to public and sate owned companies, annually at a shareholder meeting or with a resolution.
The minimum qualification requirements of committee members are also still pending.
In addition, companies contemplating the following corporate actions will need to take note of the following amendments that are now effective:
Section 45 otherwise requires that the giving of financial assistance to directors, officers and related and inter-related entities requires the passing of a special resolution, a solvency and liquidity and fair and reasonable board resolution, and notice to shareholders and trade unions.
Companies must, however, note that the amendments do not exempt approval requirements for certain intra-group financial assistance, such as where financial assistance is provided in 30/30/40 structures or to an offshore subsidiary. Companies must be sure to understand these exceptions to the exemption.
Instead, a special resolution is now required for a buy-back:
(i) if any shares are to be acquired from a director, a prescribed officer, or a person related to a director or prescribed officer; or
(ii) if it entails the acquisition of shares other than as a result of a pro rata offer made to all shareholders of a class or a transaction effected on a stock exchange licensed under the Financial Markets Act.
Other requirements for a buy back, such as the obligation to comply with solvency and liquidity requirements, remain unaltered.
Also noteworthy are the following changes which are now in effect:
When it comes to director delinquency and probation, the period to declare a person delinquent or under probation has been extended from two years to five years after that person ceases to be a director, or such longer period determined by a court on good cause. Both of these provisions apply retrospectively.
Excluded from these amendments are the more material and controversial changes pertaining to:
(i) remuneration disclosures;
(ii) access to private company financials; and
(iii) from a M&A transaction perspective, the new thresholds that will trigger the requirements for private companies to comply with the Takeover Regulations and the scrutiny of the Takeover Regulation Panel when implementing affected transactions.
Other changes that remain subject to promulgation include those
(i) removing the right of ‘accredited entities’ performing alternative dispute resolution in favour of using the Tribunal for this function;
(ii) provisions enabling the validation of irregular share issues; and
(iii) provisions placing additional obligations on Companies to publish where their records are kept and when financial statements need to be filed.
These provisions, along with the requisite regulations, are expected to take effect later this year.
In an effort to address the deficiencies identified by the Financial Action Task Force (FATF) and remove South Africa from the grey list, National Treasury has also published further proposed amendments to the Companies Act in the recently published draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024 (accessible here).
If enacted, non-compliance with securities register, beneficial owner, and beneficial interest register filing requirements may result in:
The proposed changes are open for public comment until 6 February.