Companies Amendment & Second Amendment Bills

Transcript:Companies Amendment & Second Amendment Bills:
Companies Amendment & Second Amendment Bills Select Committee: Trade and Industry, Economic Development, Small Business, Tourism, Employment and Labour 20 February 2024 1 Problems to address SA grey listed last year because of outdated legislation, incl Companies Act Painful consequence for attracting investment & creating jobs Act not in line with international practices Huge, unsustainable pay discrepancies between highest and lowest paid, contributing to inequality Very little accountability for obscenely paid executives & pay often not linked to company performance Act not contributing to labour market stability 2 Nedlac negotiations background General agreement after tough negotiations with BUSA Out of all the clauses, only two areas of disagreement Clauses amended following Business’ inputs & concerns CAB not always Labour’s first choice but outcome of social dialogue & compromise 3 Scare tactics by some in Business “Adds administrative burdens” “Diminish SA’s attractiveness as an investment destination” “Scare away potential CEO / directors” “Reveal private information” “Not in compliance with the POPI Act” “Cause chaos between directors and shareholders” 4 Criticism not credible Legal framework in CAB already employed in other countries Current lax corporate regime creates space for businesses to capture the state and be corrupt Companies’ info is not automatically private & privacy legislation creates space for sharing Customers, suppliers & communities need to know who the companies are they interact with International investors weary of SA because of lack of transparency & risks posed by our inequality Our inequality needs important interventions such as those contained in CAB SA CEO salaries often out of touch with reality and shareholder expectations 5 Shareholder interest vs stakeholder interest Prof Michael Katz, chair of ENSafrica & specialist in corporate and commercial law, Daily Maverick, 7 January 2021: “There is wide recognition by experts in corporate governance, including academics and senior business leaders, that the duties of directors are not confined to advancing the interest of shareholders; there are other stakeholders whose interests are also relevant and require recognition. These include employees, customers, suppliers, the local community and the environment, among others.” So CAB cannot be measured against archaic 1970s and 1980s views on corporate governance, which regard shareholders as the only stakeholder of interest 6 Remuneration report provisions CAB will allow shareholders to reign in excessive executive pay & provide more information on pay gaps Greater transparency and the publication of the pay gap are in line with the King IV Report