SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
2. Corporate Management 2.1 Principal Bodies or Functions The principal bodies and functions involved in govern - ance and management are as follows. The Board The Companies Act entrusts the Board with the authority to direct and regulate the business and affairs of the company, save to the extent that the Companies Act or the MOI provides otherwise. The Board can delegate functions to individual directors, committees, management and employees. By virtue of Section 66 (1) of the Companies Act the Board has original powers. The Company Secretary A public company or state-owned company is required to appoint a company secretary. A company secretary must maintain independence from the Board and is tasked with providing guidance to the board on their roles, responsibilities, powers, compliance with appli - cable laws and the company’s MOI. Prescribed Officers A prescribed officer is a person who exercises general executive control over, and management of, the whole or a significant portion of the business and activities of the company, or who regularly participates to a material degree in such control and management. Prescribed officers have the same fiduciary responsi - bilities as directors and can be held personally liable for breaching their duties. Social and Ethics Committee (SEC) SECs are statutory governance structures governed by the Companies Act and the Regulations. The SEC is not a sub-committee of the Board but is entitled to require information or explanation from any director or prescribed officer, and may attend any annual general meeting (AGM), and be heard at AGMs on relevant business. Its functions include inter alia, monitoring the company’s activities, having regard to relevant legislation and codes of best practice, ensuring good corporate citizenship, and reporting to shareholders at the AGM on matters within its mandate.
Non-compliance with King V can be interpreted as non-compliance with the Listings Requirements and result in censures, penalties and/or enforcement action by the JSE. Whilst King V is intended to apply to companies, it also applies to other organisations irrespective of their form of incorporation, to broad - en acceptance of corporate governance by making it accessible and relevant so that it can be applied across various sectors, organisations and organs of state. 1.4 Stock Exchange Requirements Developments There have been significant changes to the Listings Requirements with the JSE simplification project effective January 2026. Key corporate governance changes include: • certain corporate actions now require approval by ordinary shareholder resolution instead of the pre - vious special resolution (ie, 75%) requirement; • the introduction of mandatory fit-and-proper assessments before all prospective directors’ nomination or appointment, including independent background and qualification checks; • the issuer’s board diversity policy being made available on its website; • the scope of the director’s declaration has been expanded to include additional integrity matters; and • where the remuneration policy and implementation report is voted against by shareholders exercis - ing 25% or more of the voting rights exercised, in addition to the company being required to provide an invitation to dissenting shareholders to engage with the company, the company must also disclose in its next annual report whom it engaged with, the manner of engagement and steps taken to address concerns, indicating a move towards enhanced shareholder oversight on executive remuneration. However, proposed amendments to the Listings Requirements (as set out in 3.10 Payments to Directors/Officers ) indicate a shift away from this regime for domestic issuers, with reliance placed on the Companies Act only, while a modified non- binding advisory framework will be retained for foreign and certain other issuers.
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