SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
ment (eg, MOI, articles of association or trust deeds). The Companies Act contains both mandatory “unalterable” provisions and default “alterable” provisions, in terms of which the latter allows for variation by a company in its MOI. Significantly, certain provisions relating to corporate governance concerns (such as share - holder rights, annual disclosure requirements in the case of regulated companies and directors’ duties) cannot be altered by the MOI. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares In addition to the requirements of the sources referred to in 1.2 Sources of Corporate Gov- ernance Requirements , companies with shares that are publicly traded and listed on the JSE are required to comply with the following. The Listings Requirements The Listings Requirements impose continuing obligations on issuers, including standards of disclosure and specific corporate governance practices relating to: • the board composition of a company; • the appointment of various board commit - tees, such as the remuneration committee, as well as statutory committees such as the audit and social and ethics committees; and • the adoption of particular governance-related policies and compliance with King IV. King IV King IV is South Africa’s authoritative corporate governance code. While King IV compliance is voluntary, the Listings Requirements oblige issuers to adopt certain of its recommenda - tions, with the remainder being implemented in accordance with King IV’s “apply and explain”
disclosure policy. In order to give effect to this policy, a company should: • apply the recommended practices meticu - lously, with common sense, and proportion - ally in accordance with the company’s size and resources, and the extent and complexity of its activities; and • provide a narrative explanation of that appli - cation with reference to the recommended practices. It is important to note that non-compliance with the principles of King IV can be interpreted as non-compliance with the Listings Requirements and result in censures, penalties and/or enforce - ment action being imposed by the JSE. In addition to the annual reporting requirement, certain facets of governance as set out in King IV must be complied with in terms of the Listings Requirements. Whilst King IV is intended to apply to companies, it is also intended to apply to other organisa - tions irrespective of their form of incorporation, to broaden acceptance of corporate governance by making it accessible and relevant so that it can be applied across various sectors, organisa - tions and organs of state. 2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance Greylisting of South Africa In late February 2023, South Africa was “grey- listed” by the Financial Action Task Force (FATF) for failing to comply with certain international standards relating to the combatting of money laundering and other serious financial crimes. In response to the 2021 FATF Mutual Evalua -
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