S72 Social and Ethics Committee

COMPANIES ACT AMENDMENT NO. 16 OF 2024

Social and Ethics Committee Amendment of Section 72 of the Companies Act

Public companies and state-owned companies must report yearly on how the Social and Ethics Committee performed its mandate and elect the committee at each Annual General Meeting. The board of other companies must elect its Social and Ethics Committee annually.

In addition:

The minimum qualification and experience requirements of a Social and Ethics Committee member may be prescribed through regulations by the Minister.
A subsidiary company does not require its own Social and Ethics Committee if the holding company’s Social and Ethics Committee will perform the functions for that subsidiary. This aligns with the Companies Regulations to date.
Public and state-owned companies now require at least two non-executive directors on the Social and Ethics Committee, irrespective of whether the company is listed. Other entities (private companies) require at least one non-executive director on the committee.
Additional publication and payment of prescribed fees would be required should a company wish to apply for exemption from having a Social and Ethics Committee. Such an exemption may only be approved by the Companies Tribunal based on the criteria set out in Section 72 of the Companies Act.

The Social and Ethics Committee must prepare a report each year on how the committee performed its mandate. This report must be presented at an Annual General Meeting of public companies and state-owned companies or at a shareholder meeting, or by written resolution to shareholders of a private, non-profit, or personal liability company.

The Companies Act Amendments 2024:

Pertinent changes were made to our South Africa Companies Act recently after the Companies Amendment Act 2024, No. 16 and the Companies Act Second Amendment, 2024 No. 17 were ascended into law on 25 July 2024.

The amended provisions are not yet operational and will come into effect after President Cyril Ramaphosa makes proclamation in the Gazette as to the effective date.

Statucor continues to unpack the amendments and the effect that they may have on our valued clients, and we look forward to publishing further communications on our observations in future. Click here for a full summary of all changes made to the Companies Act through the 2024 Amendments or view our News page for our latest articles on the Companies Act, Governance and Compliance matters that may be pertinent to you.