SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
• amending the MOI; • ratifying ultra vires acts by the Board; • providing financial assistance to directors or related companies (note: the Companies Amend - ment Act has amended the Companies Act so that Section 45 no longer applies to financial assistance by a company to its local subsidiaries); • approving fundamental transactions such as major asset disposals, schemes of arrangement or statu - tory mergers; • certain issues of shares, securities or options; • certain share repurchases; • remunerating directors in that capacity; and • winding up the company voluntarily. Shareholders must approve the appointment of audi - tors and an audit committee (where applicable) by ordinary resolution (generally 50% plus one vote). A company’s MOI may stipulate additional reserved matters. The Listings Requirements require share - holder approval before certain transactions, either by ordinary or special resolution. The approval threshold for JSE-listed companies is 75% for special resolu - tions and 50% for ordinary resolutions. South African company law provides for a single-tier, unitary Board structure in which Boards are vested with original statutory power. The Companies Act does not distinguish between executive and non- executive directors, though King V does distinguish between and recommend specific roles for each. A private company or personal liability company must have a minimum of one director, whereas a public, non-profit and state-owned company must have a minimum of three. Certain industries may impose additional governance requirements. King V recom - mends that the Board should assume responsibility for its balanced composition, including the processes required to achieve the appropriate balance of knowl - edge, experience, competencies, independence and diversity. King V recommends that the Board should consist of a majority of independent non-executive members. 3. Directors and Officers 3.1 Board Structure
In determining the required number of board mem - bers, King V recommends that the board considers, inter alia: • the appropriate mix of executive, non-executive and independent non-executives; • diversity across age, culture, race, gender and competencies; and • the need for sufficient members that qualify to serve on board committees. Regarding committees, King V recommends an audit committee (a statutory requirement for some compa - nies), a nominations committee, a risk governance committee, a remuneration committee and a social King V recommends that the Board comprises a com - bination of executive, non-executive and independent non-executive directors. As a minimum requirement, King V recommends that a chief executive officer (CEO) and one other executive – for example, a chief financial officer (CFO) – should be appointed to the Board so as to ensure that the Board has more than one point of direct contact with management. In addition to the role of CEO (and CFO), it is recom - mended that the Board elects an independent non- executive director as chair to lead the Board o in the effective and objective discharge of their governance role and responsibilities. The CEO of the organisation should not also chair the Board and a retired CEO should not become the chair until three complete years have passed after the end of the CEO’s tenure. The CEO leads the implementation and performance of a Board-approved strategy and policies, and should serve as the main link between management and the Board. 3.3 Board Composition The Companies Act prescribes minimum numbers of directors as set out in 3.1 Board Structure . A com - pany’s MOI may require a higher number. King V rec - ommends that a Board should possess the appropri - ate mix of skill, knowledge, expertise and experience, including the business, industry and commercial and ethics committee. 3.2 Board Members Position Under King V
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