President Cyril Ramaphosa has signed into law amendments to the Companies Act of 2008. The new amendments are said to help make it easier to do business in South Africa.
Moreover, the new amendments would provide more corporate transparency on the earnings gap between the highest and lowest-paid persons in a company.
According to government, the Companies Amendment Bill and Companies Second Amendment Bill are initiatives that will make the conduct of business less burdensome, to tighten the pursuit of delinquent directors or prescribed officers for wrongdoing, including state capture and address disparities in earnings.
High levels of inequality
The Presidency said in a statement that the law addresses public concerns regarding high levels of inequalities in society.
The law will introduce better disclosure of senior executive remuneration and the reasonableness of the compensation.
“The law requires the preparation of a remuneration report by all public and state-owned companies concerning the previous financial year,” the Presidency said.
Essentially, government wants each company to produce a remuneration report that will also have a remuneration policy and an implementation report. This report will explain each employee's salary, from the highest-paid person to the lowest-paid individual.
Government also noted that companies must report the average and median total remuneration of all employees, and disclose the remuneration gap between the total remuneration of the top 5% highest paid employees and the total remuneration of the bottom 5% lowest paid employees of the company.
Holding company for SOEs
Last week, Ramaphosa also said that government is moving ahead with plans to establish a holding company for state-owned enterprises (SOEs).
The president made these statements during the debate on the Presidency Budget Vote speech and said that the Department of Planning, Monitoring and Evaluation has been assigned the responsibility to finalise the processes.
He said that government is introducing legislation to establish a holding company to manage and coordinate key strategic SOEs.
“The legislation will assign the functions of the holding company, which will cover issues of governance, financial management, remuneration standards and similar matters,” Ramaphosa explained.
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