The Companies Amendment Act is a go, isn’t it? Maybe not

The president has signed off the long-awaited act. But the fact that it still has to be gazetted means changes to rules around executive pay may never see the light of day.
2 mins read

It’s happened again. Excitement, as well as much dread as President Cyril Ramaphosa signs off on another piece of controversial legislation. Then slowly comes the realisation that, for now, actually nothing has changed. Remember the brouhaha around the National Health Insurance (NHI) Act, which was signed on the eve of the general elections? 

Then, on a Friday evening in late July, Ramaphosa signed off on the Companies Amendment Act, six long years after the amendments were initially billed. Naturally, most assumed that the new legislation relating to matters such as share repurchases, remuneration disclosure and intra-group financial assistance was now operational.

It turns out that’s not the case. And, as it happens, it rarely is. The very last paragraph of the Government Gazette containing details of the Companies Amendment Act, signed off by the president, contains an amazing punchline: “This Act is called the Companies Amendment Act, 2024, and comes into operation on a date to be fixed by the President by proclamation in the Gazette.” 

If you think that sounds a bit vague, well, it is.

Until such a proclamation, nothing changes and the old act remains in force. So much for all the excitement about companies having to reveal the gap between their highest- and lowest-paid employees or about unlisted companies having to disclose details of executive remuneration. Some of these new requirements, which we all assumed were in the bag, may never see the light of day. Or the whole act might be promulgated within the next week or so.

Possible pushback

This uncertainty is not new; it’s frequently unavoidable, as new legislation often needs to be accompanied by regulations. The regulations cannot be devised until the legislation has been finalised. Devising regulations, which requires input from the public, can be a drawn-out process, particularly when contested issues are involved. And it doesn’t get more contested than executive remuneration.

But there’s a further complicating factor. As one law expert notes, quite often institutions first need to be created to oversee implementation of the legislation. Just imagine how this requirement could delay the NHI Act coming into operation.

But it’s not just the timing of a proclamation that is completely unknown; also unknown and unknowable is whether the president will proclaim one date for all the amendments or stagger the proclamation. “The latter [staggering] approach would be preferred, as companies will need to prepare themselves for implementing the provisions of the amendment acts,” says law firm Cliffe Dekker Hofmeyr.

However, a reread of that final sentence about the act coming “into operation on a date to be fixed by the president” suggests that staggering the proclamation is not a legal option. That makes the situation less flexible and could cause problems as various interest groups push back against different parts of the act. 

For instance, it’s not hard to imagine that the remuneration issues would get bogged down in ongoing lobbying by the business community, which now has an ally in government in the form of the DA.

The issue of an ally raises another complicating and potentially delaying factor. Not only is a delay justified by the appointment of so many new ministers – and deputy ministers – who have to be brought up to speed, but there is now a government of national unity. So, it’s not just ANC policy issues that have to be taken into consideration. It could be a long wait.

Top image: Collage. Currency.

Ann Crotty

Winner of just about every financial journalism prize going, Ann has kept the business sector on its toes for years. Uncompromisingly independent, if there’s a shady executive pay plan out there or shenanigans a company is trying to keep hidden, Ann will find it.

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