Bill pushes reports for shareholders

Trade & industry minister Rob Davies has gazetted the Companies Amendment Bill, which proposes a number of changes, including steps that companies must take in the development of often contentious remuneration policies.

Trade & industry minister Rob Davies has gazetted the Companies Amendment Bill that proposes a number of changes including steps that companies must take in the development of remuneration policies.

These are usually a bone of contention between shareholders demanding accountability and transparency and managements eager to hold on to highly mobile executive talent.

The bill has proposed that directors of a public company should prepare a directors’ remuneration report for presentation to shareholders at the entity’s annual general meeting (AGM) for each financial year.

According to the proposed changes, the report should entail a background statement, an overview of the main provisions of the company’s policy on remuneration and an implementation report with details of remuneration and benefits awarded to individual directors.

“The directors’ remuneration report must be approved by the board and signed on behalf of the board by a director of the company,” the bill said.

Shareholder activist Theo Botha said on Monday said that provisions required the board to take ownership and accountability for the policy.

The King 4 report on corporate governance, which generally guides how companies handle remuneration, recommends that shareholders get an opportunity to pass separate nonbinding advisory votes on the remuneration policy and the implementation report.

“King 4 requires the board to engage with shareholders if more than 25% of them vote against the remuneration policy,” Botha said.

The bill also makes it mandatory for a public or state-owned company to appoint a social and ethics committee at each AGM. It gives the minister of public enterprises authority to prescribe the minimum qualification needed for members of a social and ethics committee.