SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
form new close corporations ceased as of 1 May 2011). Foreign Companies Foreign companies that carry on business activi - ties within South Africa may be required to regis - ter as an external company in South Africa and are only required to comply with certain provi - sions of the Companies Act. 1.2 Sources of Corporate Governance Requirements For this chapter and unless otherwise specified, the term “corporate governance” is used widely to include the laws listed below as well as prac - tices and rules (effectively guidelines) that are imposed through instruments such as the stock exchange rules and the King Report on Corpo - rate Governance for South Africa ( “King IV” ). The principal sources of corporate governance in South Africa are as follows. • The Companies Act, which replaced the 1973 Companies Act with effect from 1 May 2011, and which (with certain surviving provisions from the 1973 Companies Act applicable to the winding-up and liquidation of companies) is the regime that governs the incorporation and management of companies in South Africa and which has been amended in terms of the Companies Amendment Act No 16 of 2024 (Companies Amendment Act) and the Companies Second Amendment Act No 17 of 2024 (Companies Second Amendment Act), which were both signed into law on 26 July 2024 and are discussed in further detail in 2.1 Hot Topics in Corporate Governance . • The common law and the Companies Act with respect to the regulation of the fiduciary duties of directors of companies.
• The Companies Regulations, 2011 (the “Regulations” ), which came into effect with the Companies Act on 1 May 2011 and have subsequently been amended by the Compa - nies Amendment Regulations 2023. • The JSE Listings Requirements (the “Listings Requirements” ), which apply to public com - panies listed on the JSE (see 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares ). • The Financial Markets Act, No 19 of 2012, which, amongst other things, regulates finan - cial markets and exchanges, and contains the South African Insider Trading and Market Abuse Legislation. • King IV, issued by the Institute of Directors in Southern Africa. The latest iteration of the code came into effect on 1 April 2017 (see 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares for further details). It is worth noting that a draft King V Code has been published for public comment (see 2.1 Hot Topics in Corporate Governance for further details). • The common law (derived from case law). • Sector-specific legislation and/or codes that regulate the corporate governance of enti - ties within the same industry – for example, the Code for Responsible Investing in South Africa prescribes governance standards for institutional investors as asset owners (pen - sion funds and insurance companies, etc) and their service providers (asset managers, fund managers, etc). • The Public Finance Management Act, No 1 of 1999, contains financial governance measures and the responsibilities of persons entrusted with financial management of state- owned entities. The key source of a company’s corporate gov - ernance requirements is its constitutional docu -
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