In brief
Recent Companies Act amendments introduce a more rigorous and enforceable framework for remuneration governance in South Africa. From 22 May 2026, public and state‑owned companies must adopt shareholder‑approved remuneration policies, enhanced annual reporting and detailed pay‑gap disclosures. The introduction of a binding shareholder vote, alongside the “two‑strike rule”, significantly increases accountability for remuneration committees and strengthens shareholder influence. New disclosure requirements, including pay ratios between top and bottom earners, are likely to intensify scrutiny from employees, investors and regulators. Companies must now treat remuneration as a strategic governance issue, requiring careful alignment across legal, HR and investor relations functions, as well as proactive communication and robust, defensible methodologies.
Key takeaways
- A new statutory regime is now in force. The Companies Act amendments, effective 22 May 2026, convert remuneration governance from a listing-requirement expectation into a binding legal obligation for public and state-owned companies.
- Shareholder approval of remuneration policies is now mandatory. Public and state-owned companies must obtain shareholder approval by ordinary resolution at the Annual General Meeting (AGM) before implementing or changing a remuneration policy. The policy must be tabled every three years or on any material change. For Johannesburg Stock Exchange (JSE)-listed companies, this gives statutory force to what was previously a compliance expectation under listing requirements.
- Pay-gap disclosure will attract significant scrutiny. Companies must publish the ratio between the total remuneration of the top 5% and bottom 5% of earners in their annual remuneration report. This will make the scale of internal pay inequality visible to shareholders, employees, regulators and the media, without imposing a cap on executive pay.
- The “two-strike rule” raises the stakes for remuneration committees. Where shareholders reject the implementation report at two consecutive AGMs, non-executive directors serving on the remuneration committee are barred from that role for two years. A failed shareholder vote is now a structural governance consequence, not simply a reputational signal.
- Named disclosure of prescribed officers is now required. For companies required to have their financial statements audited, remuneration disclosures must now identify each prescribed officer by name. The previous practice of disclosing prescribed officer remuneration in aggregate or anonymously is no longer permitted.
- Immediate action is required across legal, governance and HR functions. Companies should review their remuneration policies against the new requirements, update annual reports, AGM notices and board papers accordingly, and develop a clear and defensible methodology for calculating total remuneration — particularly where long-term incentives, share-based awards and deferred benefits are involved. Remuneration governance must now be treated as a strategic, cross-functional priority.
In more detail
South Africa’s latest Companies Act amendments mark a decisive shift in how public and state-owned companies must approach remuneration policies. What was previously, for many companies, a governance expectation shaped by listing requirements and investor pressure has now become a statutory obligation with real consequences.
The amendments, which came into effect on 22 May 2026, introduce a more formal regime for remuneration disclosure, shareholder approval and pay-gap reporting. They apply most directly to public and state-owned companies, although one of the disclosure changes also affects companies that are required to have their annual financial statements audited.
At the centre of the amendments are sections 30A and 30B of the Companies Act. These provisions require public and state-owned companies to prepare a forward-looking remuneration policy and submit it to shareholders for approval by ordinary resolution at the annual general meeting. Once approved, the policy must be tabled again every three years, or sooner if there is a material change. Importantly, a company may not implement changes to the policy until shareholder approval has been obtained. Where approval is not secured, the previous remuneration policy remains in force until shareholders approve a new one.
This is a significant development for listed companies in particular. Many JSE-listed companies already publish remuneration policies and implementation reports in line with listing requirements. The practical difference is that the shareholder vote now carries statutory force. In other words, remuneration is no longer simply an annual governance conversation. It is now a legal approval process that companies must plan for properly.
The amendments also require public and state-owned companies to prepare an annual remuneration report. This report must include a background statement, the remuneration policy and an implementation report explaining how the policy was applied during the relevant year. The remuneration report must set out the total remuneration of each director and prescribed officer, the average and median total remuneration of employees and the remuneration gap between the highest and lowest earners.
The pay-gap disclosure requirement is likely to attract the most public attention. Companies must disclose the ratio between the total remuneration of the top 5% of highest-paid employees and the total remuneration of the bottom 5% of lowest-paid employees. In a country where income inequality remains a central economic and social concern, this requirement will place corporate pay structures under much sharper scrutiny. It does not impose a cap on executive pay, but it does make the scale of internal pay inequality visible to shareholders, employees, regulators, the media and the public.
This will also have a direct bearing on employee relations. Once pay-gap information is disclosed, employees will have a clearer view of internal pay disparities, which may lead to questions around fairness, reward structures and workplace equity. Companies will therefore need to manage the issue not only as a compliance obligation but as an internal trust matter that requires careful communication, credible explanations and evidence that remuneration practices are being reviewed responsibly.
There is also a clarification to the disclosure requirements for companies that are required to be audited. Remuneration disclosures in annual financial statements must now include the name of each director and prescribed officer, along with their remuneration and benefits. Historically, companies were able to avoid naming prescribed officers, disclosing the remuneration and benefits of these individuals in aggregate or by referring to them as “prescribed officer” benefits. The new amendments now require these individuals to be named.
The most consequential enforcement mechanism is the so-called “two-strike rule”. If shareholders reject the implementation report at two consecutive annual general meetings, the non-executive directors who serve on the remuneration committee may remain on the board, subject to re-election, but they are barred from serving on the remuneration committee for two years. Directors who served on the committee for fewer than 12 months in the year under review are exempt from this consequence.
This rule changes the risk profile for remuneration committees. A failed vote is no longer just a reputational embarrassment or a signal of shareholder dissatisfaction. Repeated failure can now affect committee composition and individual directors’ ability to continue serving in remuneration oversight roles. This is likely to strengthen shareholder leverage, increase public scrutiny and the pressure on boards to engage more meaningfully before AGMs.
For companies, the immediate priority should be readiness. Remuneration policies must be reviewed against the new statutory requirements. Annual reports, AGM notices and board papers may need to be updated. Remuneration committees should also assess whether their current reporting provides enough context to explain pay outcomes, incentive decisions and pay-gap figures in a way that is credible and defensible.
The amendments also raise practical questions. One is how companies should calculate “total remuneration” in a consistent way, especially where long-term incentives, share-based awards and deferred benefits are involved. Without a fully standardised approach, companies may comply with the law but still produce figures that are difficult to compare across sectors. This means legal compliance alone will not be enough. Companies will need to ensure that their methodology is clear, reasonable and capable of withstanding scrutiny.
The broader message is that remuneration governance has entered a new phase. Boards can no longer treat pay disclosure as a technical reporting exercise. They must be able to explain the link between pay, performance, fairness and long-term value creation. In practice, this requires closer alignment between legal teams, company secretaries, remuneration committees, investor relations teams and human resources.