President Cyril Ramaphosa has signed major changes to South Africa’s Companies Act into effect, introducing stricter rules around executive pay, remuneration disclosures, and shareholder oversight at public and state-owned companies.
The amendments, which took effect immediately on 22 May 2026, were outlined by law firms Bowmans and Webber Wentzel, both of which warned that companies now need to urgently align their governance and reporting practices with the new legal framework.
“The President on 22 May 2026 gave immediate effect to several Companies Act amendments that were originally signed into law in 2024,” Bowmans said.
The most significant changes relate to how companies disclose and approve executive remuneration.
Public and state-owned companies are now legally required to prepare forward-looking remuneration policies that must be approved by shareholders through an ordinary resolution at annual general meetings.
These policies must be approved every three years, or sooner if material changes are made. Companies will not be allowed to implement changes to remuneration policies until shareholders approve them.
“If a vote on the policy fails, the prior remuneration policy will apply until such time as shareholder approval has been obtained,” Bowmans explained.
Companies must also prepare annual remuneration reports that include a background statement, the remuneration policy, and an implementation report detailing how the policy was applied.
The implementation report introduces extensive disclosure requirements, including the total remuneration paid to every director and prescribed officer, the average and median remuneration of employees, and the pay gap between the company’s highest and lowest earners.
According to Bowmans, the report must include the remuneration gap, which reflects the ratio between the total remuneration of the top 5% of the highest-paid employees and the total remuneration of the bottom 5% of the lowest-paid employees.
The amendments also introduce what has been described as a “two-strike rule” for remuneration reports.
Companies need to prepare
If shareholders reject a company’s remuneration report at two consecutive annual general meetings, non-executive directors serving on the remuneration committee will face penalties.
“They may continue as directors of the board, subject to re-election, but are barred from serving on the remuneration committee for two years,” Bowmans said.
Directors of a company who served on the committee for less than 12 months during the review period are exempt.
The changes are particularly significant for companies listed on the Johannesburg Stock Exchange (JSE), where remuneration votes were previously advisory rather than binding.
“For JSE-listed companies that annually publish a remuneration policy and the implementation report already in accordance with the Listing Requirements, the key change is that the vote will now be binding, rather than a non-binding advisory vote,” Bowmans said.
Webber Wentzel said the amendments create a formal statutory remuneration governance framework under sections 30A and 30B of the Companies Act.
Webber Wentzel said changes to section 30(4)(a) clarify that remuneration disclosures “must include the remuneration and benefits received by each individual director and each prescribed officer, both of whom must be named.”
The firm said the amendment removes ambiguity in the previous wording and is intended to “ensure consistent and transparent disclosure.”
The law firms warned that companies should move quickly to prepare for the changes, including updating remuneration policies, revising annual reports and AGM notices, reassessing remuneration committee structures, and preparing for possible shareholder pushback.
“Public companies should be prioritising efforts to align their policies and reports with the new statutory regime,” Bowmans said.
Webber Wentzel added that companies should also implement proactive shareholder engagement strategies in advance of AGMs and seek legal and governance advice to ensure compliance with the new framework.
