Authored by Richard de la Harpe and Lukrisha Ramadu.

South Africa’s corporate remuneration rules have shifted from transparency to accountability. Amendments to the Companies Act, 2008 were brought into effect from 22 May 2026 requiring public and state‑owned companies to secure shareholder approval of their remuneration policy and an annual remuneration implementation report. For directors and in‑house counsel, this changes the rhythm of preparation for an AGM and raises the stakes for remuneration committee members personally.

What has changed 

The regime applies to South African public companies and state‑owned companies. In terms of section 30A, a remuneration policy must be tabled at the AGM for approval by the shareholders by way of an ordinary resolution and, if approved, will remain in force for three years. A remuneration policy must be approved every three years, unless replaced sooner. Any material amendment to the policy must also be approved by an ordinary resolution of the shareholders at a shareholders’ meeting before implementation. If the policy is not approved at the AGM, the policy must be presented at the following AGM or at a shareholders meeting called for that purpose.

In addition, section 30B requires that a separate remuneration report, covering the previous financial year, must be presented and approved at every AGM.

Private companies do not fall into the policy/report approval net. However, all companies that are required to have their annual financial statements audited must disclose named director and prescribed‑officer remuneration and their benefits in their annual financial statements. 

What must the remuneration report cover

The remuneration report comprises a short background statement, a copy of the company’s remuneration policy, and an implementation report. The implementation report must include the total remuneration of each director and each prescribed officer, the total remuneration in respect of the highest and lowest paid employees, the median and average employee remuneration, and a “pay gap” ratio between the top five per cent and bottom five per cent of employees. 

To the extent any provisions of the remuneration report are subject to an audit, the amendments make it clear that the policy and background statement are excluded from the audit.

Why this matters to directors and in‑house counsel

The shift from advisory to binding votes is important, in particular with regard to the remuneration report. A failure to procure shareholder approval for the remuneration report has significant consequences. A first failed vote requires the remuneration committee (which includes any committee dealing with remuneration matters) at the next AGM to address shareholder concerns. The non‑executive directors that are members of the remuneration committee must stand for re‑election by the shareholders in order to remain members of the committee. If the report is not approved at the second AGM (second strike rule) then the non‑executive committee members are no longer eligible to serve on the remuneration committee for the following two years, even if they are successfully re‑elected as directors. This personal accountability will concentrate minds on proper implementation, quality reporting, and appropriate shareholder engagement.

There is an exception for members of the remuneration committee who served on the committee for less than 12 months in the year under review.

Implementation challenges

There are a number of interpretational and implementational challenges. We highlight a few of them.

There is a gap regarding an “unapproved‑policy”. The Companies Act requires an approved remuneration policy but does not spell out how boards should manage the remuneration if a proposed policy is not approved by the shareholders. The board cannot implement a policy that has been rejected by the shareholders. A practical approach is to engage early with the shareholders to try to avoid rejection. If the policy is rejected, re-engage and develop a new proposed policy and call a dedicated shareholder meeting to consider a revised policy rather than waiting a full year. In the meantime, continue to manage the remuneration in the ordinary course having due regard to any prior approved policy.

There is tension between the general provisions regulating board committees and the new remuneration committee election mechanics. Shareholder‑driven re‑elections for a board committee sit awkwardly with the board’s usual powers of appointing, removing, and replacing board subcommittee members under section 72 of the Companies Act, which is often reflected in the memorandum of incorporation. The issue is further complicated when the directors have to comply with additional requirements. For instance, financial institutions are obliged to appoint a stated number of regulator-approved independent directors. Companies should align their memorandum of incorporation and committee terms to give effect to the new mechanics cleanly and avoid governance friction.

There is a need to ensure that appropriate information is available. Calculating the top/bottom five per cent ratio and median pay requires complete, reliable employee data and information, careful treatment of part‑year service, expatriates and secondments, and a defensible approach to inclusions in “total remuneration.”

JSE listed companies 

The JSE has proposed amendments to its Listings Requirements, electing to defer to the Companies Act for South African companies to prevent confusion and regulatory overlap (see Amendments to the JSE Listings Requirements re Remuneration). Pending the amendments, the JSE has stated that for South African primary‑listed issuers, compliance with the binding Companies Act votes should stand in for legacy non‑binding advisory votes, with transitional guidance applying.

What to do now

Public companies and state‑owned companies should, if they have not done so already, take steps to ensure compliance, including:

  • Separate “policy” from “implementation”: develop a principles‑based policy with the three‑year horizon in mind.
  • For the remuneration report, set up appropriate information systems to ensure that the company has records for pay‑gap, median and average disclosures, with remuneration committee, HR, finance, and internal audit alignment.
  • Prepare for the remuneration policy and remuneration report to be presented to the shareholders for approval in accordance with the new provisions.
  • Develop or refresh the shareholder engagement plan, messaging, and Q&A for remuneration hotspots.
  • Update the memorandum of incorporation and committee charters and mandates to align with the amendments and fill in any gaps.

If you require assistance with compliance, we would be pleased to help.