Andre de Lange discusses the amendments to the Companies Act

Andre de Lange discusses the amendments to the Companies Act

Podcast

Andre de Lange discusses the amendments to the Companies Act

Podcast

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Andre notes that although the Companies Act has been signed into law, it has not yet come into effect as we await the proclamation of its operational date.

One of the key changes to the Act is that public and state-owned companies will now be required to draft a remuneration policy and have it approved by shareholders every three years. Additionally, they must annually prepare an implementation report detailing the total remuneration of each director and prescribed officer, as well as the highest, lowest, average, and median remuneration of all employees. They must also disclose the pay gap between the top 5% and bottom 5% of earners. These reports need shareholder approval by ordinary resolution.

In a country like South Africa, where inequality is prevalent, Andre highlights that these income discrepancies can be quite stark, and many companies may be uncomfortable disclosing such large gaps. As a result, some may consider outsourcing, dismissing low-paid employees, or even becoming private to avoid disclosing remuneration gaps.

Andre says that while remuneration gaps between CEOs and the lowest-paid employees are common in the job market, Andre believes the Amendment Act could foster meaningful discussions about fair pay disparities, which may encourage companies to address these gaps more equitably.