A company incorporated in terms of the Companies Act, No 71 of 2008, as amended (the “Companies Act”), is the principal form of corporate/business organisation used in South Africa. Companies are separate legal entities with shareholders that provide share capital and in certain instances debt finance, and have a board of directors (Board) that manages the company and its affairs. The Companies Act distinguishes between profit companies and non-profit companies.

Profit Companies Profit companies include:

• public companies – Limited/Ltd;
• private companies – Proprietary Limited/(Pty) Ltd;
• personal liability companies – Incorporated/Inc.; and
• state-owned companies – SOC Ltd.

A private company cannot offer its securities to the public, and its memorandum of incorporation (MOI) must restrict the transferability of its shares/securities. A public company can freely transfer its shares to the public. Public companies are ordinarily listed on a stock exchange, with the primary stock exchange being the Johannesburg Stock Exchange (JSE). Personal liability companies are private companies in which former and current directors may be held jointly and severally liable for debts and liabilities incurred during their tenure.

Non-Profit Companies

Non-profit companies may be incorporated with or without members. They are limited liability corporations exempt from various provisions of the Companies Act.

Ring-Fenced Companies

When a company is ring-fenced (indicated by “(RF)”), third parties are regarded as having notice of any restrictive conditions in its MOI.

Other Business Entity Models

Further business entity models include:

• partnerships, which are not separate legal entities;
• trusts, which have separate legal personality for certain purposes;
• sole proprietorships trading under their own name with no limited liability; and
• close corporations, which are simplified limited liability corporations (noting that the ability to form new close corporations ceased on 1 May 2011).

Foreign Companies

Foreign companies carrying on business in South Africa may be required to register as an external company in South Africa and comply with certain provisions of the Companies Act.

For this chapter and unless otherwise specified, “corporate governance” is used widely to include the laws listed below as well as practices and rules imposed through instruments such as the stock exchange rules and the King Report on Corporate Governance for South Africa (King V).

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.
• The Companies Act has been amended by the Companies Amendment Act No 16 of 2024 (the “Companies Amendment Act”) and the Companies Second Amendment Act No 17 of 2024 (the “Companies Second Amendment Act”), both signed into law on 26 July 2024.
• The common law (derived from case law) and the Companies Act with respect to the regulation of the fiduciary duties of directors of companies.
• The Companies Regulations, 2011 (the “Regulations”), subsequently amended by the Companies Amendment Regulations 2023.
• The JSE Listings Requirements, recently updated and simplified with effect from January 2026 (the “Listings Requirements”), applicable to public companies listed on the JSE (see 1.3 Companies With Publicly Traded Shares).
• The Financial Markets Act No 19 of 2012, which regulates financial markets and exchanges, and contains South African Insider Trading and Market Abuse Legislation.
• King V, issued by the Institute of Directors in Southern Africa. The latest iteration was published on 31 October 2025, effective for financial years beginning on or after 1 January 2026 (see 1.3 Companies With Publicly Traded Shares).
• Sector-specific legislation and/or codes – for example, the Code for Responsible Investing in South Africa prescribes governance standards for institutional investors and their service providers.
• The Public Finance Management Act No 1 of 1999, contains financial governance measures for state-owned entities.

The key source of a company’s corporate governance requirements is its MOI. The Companies Act contains both mandatory “unalterable” provisions and default “alterable” provisions, the latter allowing variation by a company in its MOI. Certain provisions relating to corporate governance concerns (such as shareholder rights, annual disclosure requirements and directors’ duties) cannot be altered.

In addition to the requirements referred to in 1.2 Corporate Governance Legislation and Regulation, companies listed on the JSE must comply with the following.

The Listings Requirements

The Listings Requirements impose continuing obligations on issuers, including standards of disclosure and corporate governance practices relating to:

• Board composition;
• appointment of various board committees, such as the remuneration committee, as well as statutory committees such as the audit and social and ethics committees; and
• adoption of governance-related policies and compliance with King V.

King V

King V is South Africa’s authoritative corporate governance code. While compliance is voluntary, the Listings Requirements oblige issuers to adopt certain recommendations, with the remainder implemented in accordance with King V’s “apply-and-explain” disclosure policy. In order to give effect to this policy, a company should:

• apply the recommended practices with common sense and proportionally in accordance with its size, resources and complexity of its activities;
• provide a narrative explanation of that application; and
• provide a concluding statement on whether the application has realised value for the organisation within its economic, social and environmental context.

Non-compliance with King V can be interpreted as non-compliance with the Listings Requirements and result in censures, penalties and/or enforcement action by the JSE. Whilst King V is intended to apply to companies, it also applies to other organisations 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, organisations and organs of state.

There have been significant changes to the Listings Requirements with the JSE simplification project effective January 2026.

Key corporate governance changes include:

• certain corporate actions now require approval by ordinary shareholder resolution instead of the previous special resolution (ie, 75%) requirement;
• the introduction of mandatory fit-and-proper assessments before all prospective directors’ nomination or appointment, including independent background and qualification checks;
• the issuer’s board diversity policy being made available on its website;
• the scope of the director’s declaration has been expanded to include additional integrity matters; and
• where the remuneration policy and implementation report is voted against by shareholders exercising 25% or more of the voting rights exercised, in addition to the company being required to provide an invitation to dissenting shareholders to engage with the company, the company must also disclose in its next annual report whom it engaged with, the manner of engagement and steps taken to address concerns, indicating a move towards enhanced shareholder oversight on executive remuneration. However, proposed amendments to the Listings Requirements (as set out in 3.10 Payments to Directors/Officers) indicate a shift away from this regime for domestic issuers, with reliance placed on the Companies Act only, while a modified non-binding advisory framework will be retained for foreign and certain other issuers.

The principal bodies and functions involved in governance and management are as follows.

The Board

The Companies Act entrusts the Board with the authority to direct and regulate the business and affairs of the company, save to the extent that the Companies Act or the MOI provides otherwise. The Board can delegate functions to individual directors, committees, management and employees. By virtue of Section 66(1) of the Companies Act the Board has original powers.

The Company Secretary

A public company or state-owned company is required to appoint a company secretary. A company secretary must maintain independence from the Board and is tasked with providing guidance to the board on their roles, responsibilities, powers, compliance with applicable laws and the company’s MOI.

Prescribed Officers

A prescribed officer is a person who exercises general executive control over, and management of, the whole or a significant portion of the business and activities of the company, or who regularly participates to a material degree in such control and management. Prescribed officers have the same fiduciary responsibilities as directors and can be held personally liable for breaching their duties.

Social and Ethics Committee (SEC)

SECs are statutory governance structures governed by the Companies Act and the Regulations. The SEC is not a sub-committee of the Board but is entitled to require information or explanation from any director or prescribed officer, and may attend any annual general meeting (AGM), and be heard at AGMs on relevant business. Its functions include inter alia, monitoring the company’s activities, having regard to relevant legislation and codes of best practice, ensuring good corporate citizenship, and reporting to shareholders at the AGM on matters within its mandate.

The Companies Amendment Act has introduced key provisions governing SECs. A SEC must comprise no fewer than three members; for public and state-owned companies, the majority must be non-executive directors who held that role during the previous three financial years. For other companies required to have a SEC (private companies with a PI Score exceeding 500), at least one member must be a non-executive director. King V provides that the chairperson of the Board may be a member but may not chair the SEC.

Public and state-owned companies must appoint their SECs at each AGM and present an SEC report to shareholders.

Shareholders

Ownership and control of a company vests with the shareholders, whose primary governance role relates to monitoring and holding the Board accountable (see 2.2 Types of Decisions, 2.3 Decision-Making Processes, 4.1 Companies and Shareholders and 4.2 Role of Shareholders).

Other Stakeholders

King V endorses a “stakeholder-inclusive approach”, in which the Board takes into account the legitimate needs, interests and expectations of all material stakeholders. Employees are afforded the right to apply to a court to prevent a company from acting inconsistently with the Companies Act, and a trade union or employee representative may invoke the statutory derivative action.

A company’s MOI ordinarily designates the decision-making powers to the Board (although there are some decisions that are reserved for shareholder consideration). The main decisions made at each level of the management of the company are as follows:

• Board– the Board makes the majority of decisions customarily related to a company’s strategy and general management. In this regard, the business and affairs of a company must be managed by or under the direction of its Board, which has the authority to exercise all of the powers and perform any of the functions of the company, except to the extent that the Companies Act or the company’s MOI provides otherwise.
• Management – in instances where the Board is different to the management team, the latter will make decisions on a company’s day-to-day operations within the ambit of the powers delegated to management by the Board.
• Shareholders – in accordance with the Companies Act, there are a number of decisions specifically reserved for shareholders and which can only be passed by either a special or ordinary shareholder resolution (see 2.3 Decision-Making Processes for further details). A company’s MOI might include matters in addition to those prescribed by the Companies Act. In certain instances, the shareholders’ approval relates to decisions of directors.

The Board, management team and shareholders ordinarily make decisions as follows.

Board

The Board acts through Board resolutions and makes decisions by majority vote, with each director normally carrying one vote (this may be varied in the MOI). Board meetings must be called on reasonable notice, and the quorum necessitates the presence of a majority of directors at the meeting. A company’s MOI may require unanimous or another consent threshold. The Board can also make decisions via “round robin” written resolutions requiring majority approval. The Board may appoint as many committees as it deems necessary and assign any of its authority to them (while maintaining ultimate accountability). See 1.2 Corporate Governance Legislation and Regulation regarding the mandatory committees for public companies.

Management

The management team implements Board decisions within its delegated authority. Management may include prescribed officers (see 2.1 Principal Bodies or Functions).

The Shareholders

The following matters require shareholder approval by special resolution (generally 75%, subject to MOI variation provided it is 10% higher than the ordinary resolution threshold):

• amending the MOI;
• ratifying ultra vires acts by the Board;
• providing financial assistance to directors or related companies (note: the Companies Amendment Act has amended the Companies Act so that Section 45 no longer applies to financial assistance by a company to its local subsidiaries);
• approving fundamental transactions such as major asset disposals, schemes of arrangement or statutory mergers;
• certain issues of shares, securities or options;
• certain share repurchases;
• remunerating directors in that capacity; and
• winding up the company voluntarily.

Shareholders must approve the appointment of auditors and an audit committee (where applicable) by ordinary resolution (generally 50% plus one vote). A company’s MOI may stipulate additional reserved matters. The Listings Requirements require shareholder approval before certain transactions, either by ordinary or special resolution. The approval threshold for JSE-listed companies is 75% for special resolutions and 50% for ordinary resolutions.

South African company law provides for a single-tier, unitary Board structure in which Boards are vested with original statutory power. The Companies Act does not distinguish between executive and non-executive directors, though King V does distinguish between and recommend specific roles for each. A private company or personal liability company must have a minimum of one director, whereas a public, non-profit and state-owned company must have a minimum of three. Certain industries may impose additional governance requirements. King V recommends that the Board should assume responsibility for its balanced composition, including the processes required to achieve the appropriate balance of knowledge, experience, competencies, independence and diversity. King V recommends that the Board should consist of a majority of independent non-executive members.

In determining the required number of board members, King V recommends that the board considers, inter alia:

• the appropriate mix of executive, non-executive and independent non-executives;
• diversity across age, culture, race, gender and competencies; and
• the need for sufficient members that qualify to serve on board committees.

Regarding committees, King V recommends an audit committee (a statutory requirement for some companies), a nominations committee, a risk governance committee, a remuneration committee and a social and ethics committee.

Position Under King V

King V recommends that the Board comprises a combination of executive, non-executive and independent non-executive directors. As a minimum requirement, King V recommends that a chief executive officer (CEO) and one other executive – for example, a chief financial officer (CFO) – should be appointed to the Board so as to ensure that the Board has more than one point of direct contact with management.

In addition to the role of CEO (and CFO), it is recommended that the Board elects an independent non-executive director as chair to lead the Board o in the effective and objective discharge of their governance role and responsibilities. The CEO of the organisation should not also chair the Board and a retired CEO should not become the chair until three complete years have passed after the end of the CEO’s tenure. The CEO leads the implementation and performance of a Board-approved strategy and policies, and should serve as the main link between management and the Board.

The Companies Act prescribes minimum numbers of directors as set out in 3.1 Board Structure. A company’s MOI may require a higher number. King V recommends that a Board should possess the appropriate mix of skill, knowledge, expertise and experience, including the business, industry and commercial experience needed to govern a company (see 3.1 Board Structure for further details).

B-BBEE

B-BBEE encourages companies to constitute diverse Boards, which impacts a company’s ability to conduct business or conclude contracts with the state or state-owned companies (see 7.1 ESG Requirements).

Position Under the Companies Act

Appointment of directors

Directors are generally elected by a majority vote of shareholders. The MOI can allow directors to be appointed directly by any specified party, or allow directors to serve as ex officio directors. At least 50% of the directors of a profit company must be elected by shareholders

Removal of directors

Directors can resign or be removed by shareholders or the remainder of the Board.

Shareholder removal

The Companies Act contains an unalterable provision for removal of directors by ordinary resolution at a general meeting. The director(s) must be given proper notice and a reasonable opportunity to make a presentation to the shareholders.

Board removal

If a director becomes incapacitated, ineligible or disqualified, or has neglected or been derelict in their duties, the Board may remove the director. The MOI may indicate additional processes. A shareholder, director, prescribed officer or company secretary can also approach the High Court to remove a director by invoking the oppression remedy or having a director declared delinquent for material or gross breach of duties. The Second Amendment Act has extended the time bar to declare a director delinquent from 24 to 60 months and grants the court discretion to extend the period for commencing proceedings to recover loss, damages or costs (currently within three years after the act or omission).

Position Under the Companies Act

Conflicts of interest

Avoiding a conflict of interest is a central fiduciary duty of a director. A director who has a material personal financial interest in a matter before the board, or who knows that a “related person” has an interest, must disclose it and recuse themselves. Family members within specific degrees of consanguinity or affinity, second entities of which the director is also a director, and organisations under the director’s control are all “related persons”. For the audit committee of a public or state-owned company, the test for independence requires that the director must not be:

• involved in day-to-day management (nor have been so during the previous financial year);
• a prescribed officer or full-time employee (nor have held such office during the previous three financial years);
• a material supplier or customer such that a reasonable third party would conclude their objectivity is compromised; or
• related to any person falling within the above categories.

Position Under King V

Independence and conflicts

King V recommends that a majority of non-executive directors should be independent and that the chair of the Board should be independent. Factors to consider when determining independence include amongst others whether:

• the director holds material securities in the company or group;
• the director holds directorships on other group companies;
• the director is a material lender or financier;
• the director’s remuneration is based on company performance; or
• the director stands in a significant relationship to a related party of the organisation.

Under King V, exceeding nine years’ tenure is a key factor in evaluating independence, removing the previous flexibility for directors to serve as independent directors beyond nine years subject to periodic reassessment.

Position Under the Takeover Regulations

The Takeover Regulations require an independent Board to be established in certain circumstances relating to affected transactions, including fundamental transactions such as major disposals, schemes of arrangement and mergers, as well as acquisitions of control of a regulated company.

Directors and prescribed officers are subject to duties under both the Companies Act and the common law, traditionally categorised as:

• fiduciary duties; and
• the duty of care, skill and diligence.

Position Under the Companies Act and the Common Law

Fiduciary duties

The Companies Act codified, in part, common law fiduciary principles, mandating that directors, alternate directors, prescribed officers and members of board or audit committees must:

• exercise their powers in good faith, for a proper purpose, and in the best interests of the company;
• disclose personal financial interests in certain instances; and
• not use their position to secure an advantage or knowingly cause harm to the company.

Directors remain subject to common law fiduciary duties to act within designated powers, maintain unfettered discretion and independent judgement, and avoid conflicts of interest. Each director should act with the degree of care, skill and diligence reasonably expected of a person carrying out the same functions and having the general knowledge, skill and experience of that director.

Under South African law, directors owe their fiduciary duties and the duty to act with reasonable care, skill and diligence to the company. Directors owe no fiduciary duty to shareholders individually. King V endorses a stakeholder-inclusive model, requiring the Board to take into account the long-term and short-term impact of decisions on all stakeholders, including employees, consumers, suppliers, the environment and the local community, whilst prioritising shareholder interests. Directors do not owe fiduciary duties to third parties and creditors, save that when a company becomes financially distressed, directors also owe fiduciary duties to creditors. The Companies Act provides that a company may not trade recklessly, with gross negligence or with intent to defraud creditors. In the event of a breach, directors may be held personally liable where loss or damage was suffered.

The Companies Act provides that a director may be held responsible in accordance with the principles of common law relating to:

• breach of a fiduciary duty, for any loss, damages or costs sustained by the company; or
• delict for any breach of the duty of care, skill and diligence, certain other provisions of the Companies Act, or any provision of the company’s MOI.

This liability is to the company and not to third parties, consistent with the principle of reflective loss recently reaffirmed in South African courts. Only the company may sue for its loss, and a shareholder cannot claim for a reduction in the value of its shares (see 4.4 Shareholder Claims). Defaulting directors are jointly and severally liable to the company for any loss. The Companies Act provides a legal avenue to pursue an action on behalf of a company to recover losses (see 4.4 Shareholder Claims)

Position Under the Companies Act

A director is liable for loss, costs or damages suffered by a company as a consequence of a director having:

• acted without requisite authority, despite knowing they lacked it;
• acquiesced in reckless trading;
• engaged in conduct calculated to defraud stakeholders; or
• been party to false or misleading financial statements or prospectus.

Directors may be subjected to criminal penalties in limited circumstances, with stricter consequences designated for offences including false statements or reckless behaviour.

Directors may not be relieved of any legal duties, liabilities or any legal consequences arising from an act or omission constituting wilful breach of trust or wilful misconduct on the part of a director negated or limited by virtue of a company’s MOI, any agreement or any resolution of a company.

Limitation of Liability

Business judgement rule

The Companies Act provides the business judgement rule as a protective mechanism for directors facing liability (see 3.6 Legal Duties of Directors/Officers). The defence is available (other than for breaches of good faith duties) if:

• the director took reasonably diligent steps to become informed;
• the director had no material personal financial interest in the matter and had no reasonable basis to know that a related person had one, or had dealt with such interests as required by law; and
• the director had a rational basis for believing, and did believe, the decision was in the best interests of the company.

Director’s indemnity insurance

Companies are prohibited from providing indemnity or insurance for wilful misconduct or wilful breach of trust. On a case-by-case basis, the company may indemnify its directors or purchase insurance for non-wilful breaches. A company is prohibited from indemnifying or insuring its director for fines from criminal offences, reckless or fraudulent trading, or acting without proper authority. A director may obtain personal liability insurance, and the company may pay the premium with requisite approvals.

Position Under the Companies Act

The Companies Act provides that directors may be remunerated for their services (as director) subject to a special resolution of shareholders, which must be approved within two years prior to payment. The Companies Act also requires shareholder approval to limit certain benefits to directors and prescribed officers, including:

• an issue of shares that will equal or exceed 30% of the voting power of that class;
• a decision by the Board for the company to acquire its own shares; and
• a decision for the company to provide financial assistance to a director or prescribed officer.

Listings Requirements and King V

The Listings Requirements currently require the remuneration policy and implementation report to be tabled for separate non-binding advisory votes at the AGM, with a 25% dissent threshold triggering an obligation to disclose shareholder engagement and steps taken to address concerns in the company’s next annual report. The JSE has in its proposed amendments to the Listings Requirements published on 25 May 2026 (comments in respect of which close on 26 June 2026) proposed deleting this requirement for domestic issuers on the basis that Sections 30A and 30B of the Companies Act (as set out in below) now adequately regulate remuneration approval, but proposes to retain the non-binding advisory vote for foreign companies with a primary JSE listing and issuers with weighted voting share structures, with the dissent threshold increased from 25% to 50% of votes exercised.

Consequences for Failing to Comply

The company may pay remuneration to its directors for their service as directors, except to the extent that the MOI provides otherwise. If the Board proceeds to remunerate its directors without first obtaining the requisite shareholder approval, such payment is unlawful (see 3.6 Legal Duties of Directors/Officers for further discussion) and could be liable to the company for any loss, damages or costs suffered by the company as a result. The shareholders could challenge the Board decisions relating to director remuneration (see 4.4 Shareholder Claims and 3.4 Appointment and Removal of Directors/Officers for further discussion).

Disclosure of Payments to Directors/Officers

A company required to have its annual financial statements audited (including public companies, state-owned companies and private companies exceeding the applicable public interest score threshold) must disclose, on an individualised and named basis, the remuneration and benefits received by each director and prescribed officer. This includes salaries, bonuses, benefits, pension contributions, share-based remuneration and other emoluments, in accordance with the amended Section 30 of the Companies Act.

Companies Amendment Act

The Companies Amendment has introduced an amendment related to the access of information, this amendment was not yet in force as at April 2026. In this regard, Section 26(1) sets out a list of company records a beneficial interest holder (which includes a shareholder) is entitled to inspect and copy, which has been expanded to include a company’s register of the disclosure of beneficial interest. A beneficial interest holder will therefore have the right to inspect and copy information from a company’s MOI, the records in respect of a company’s directors, reports to annual meetings, notices and minutes of annual meetings, securities register, register of the disclosure of beneficial interests and a company’s AFS.

Sections 30A and 30B of the Companies Act, which came into effect on 22 May 2026, require public and state-owned companies to prepare a remuneration policy for shareholder approval by ordinary resolution and to present remuneration reports each year to shareholders at annual general meetings.

Companies required to have their AFS audited must now include the remuneration and benefits received by each individually named director and prescribed officer. Public and state-owned companies must prepare and present a remuneration policy (requiring ordinary shareholder resolution approval, valid for three years) and a remuneration report. The remuneration report must include a background statement, the remuneration policy and an implementation report detailing total remuneration for each director and prescribed officer, the highest and lowest paid employees, average and median remuneration, and the remuneration gap ratio. If the remuneration report is not approved at the AGM, the remuneration committee must present an explanation at the next AGM addressing shareholder concerns, and non-executive Remco (remuneration committee) members must stand for re-election. If not approved again the following year, those non-executive directors may continue as directors but will be ineligible to serve on the Remco for two years.

The relationship is statutory and contractual, regulated by the Companies Act and the company’s MOI, which sets out rights attaching to shares. A shareholders’ agreement may also regulate the relationship but must be consistent with the MOI; any inconsistent provision is void to that extent. The principle of separate legal personality means shareholders are not liable for the company’s acts or omissions and owe no legal duties to the company. Only in exceptional circumstances can a court impose personal liability on shareholders or invoke the Companies Act’s statutory mechanism to pierce the corporate veil in cases of “unconscionable abuse” of separate legal personality. Shareholders are entitled to a share of distributed profits in proportion to their holdings and, on winding-up, to surplus assets after creditors have been fully paid. Preference shareholders are typically entitled to receive their portions before ordinary shareholders.

As mentioned in 3.4 Appointment and Removal of Directors/Officers, shareholders are responsible for appointing a certain percentage of directors. The management of a company is primarily conducted by the directors but, in addition to matters requiring shareholder approval under the Companies Act (see 2.3 Decision-Making Processes), a company’s MOI may set out reserved matters requiring shareholder approval. The Companies Act enables shareholders to invoke a statutory derivative action to hold directors accountable (see 4.4 Shareholder Claims).

Position Under the Companies Act

A public company must convene an AGM no more than 18 months after incorporation, and annually thereafter (within 15 months after the preceding AGM). AGMs are not required for private companies, though they are commonly included in the MOI. At minimum, the following must be covered at an AGM:

• presentation of the directors’ report, audited AFS, audit committee report, SEC report and remuneration report;
• election of directors as required;
• appointment of auditors, audit committee and SEC; and
• any other issue raised by shareholders.

Shareholders’ meetings may also be convened for specific matters when requisitioned by the board, a person indicated in the MOI, or shareholders holding at least 10% of the relevant voting rights (except where a court determines the matter is frivolous, vexatious or already decided).

Meetings may be conducted entirely or partially by electronic communication.

Default Positions

The following default positions may be altered by the MOI:

• notice period – 15 business days for public and non-profit companies, ten business days for others;
• quorum – shareholders representing at least 25% of total votes exercisable, with a minimum of three shareholders present (if the company has three or more);
• if no quorum, the meeting is postponed by a week and those present at the postponed meeting comprise a quorum; and
• for JSE-listed companies, round robin resolutions are permitted for very limited shareholder decisions only. The Board or any person specified in the MOI may call a shareholders’ meeting at any time. The Board must call a meeting if demanded by shareholders with at least 10% of voting rights. Any two shareholders can require particular proposed resolutions on the agenda.

A shareholder may seek judicial relief if subjected to oppressive or prejudicial conduct due to any act or omission of a company, or the exercise of a director’s powers. A court may make any order it deems appropriate, including restraining the conduct or setting aside an agreement or transaction. Shareholders may also approach the court to safeguard their rights or remedy harm caused by:

• the company violating the Companies Act or
• the MOI; or
• a director breaching their legal duties.

In limited instances, a shareholder may apply to prevent the company or directors from breaching the Companies Act or MOI. A claim for damages may also be brought where shareholders have suffered loss due to a breach of the Companies Act.

Statutory Derivative Action

The Companies Act empowers shareholders to demand that a company institute legal proceedings to protect its legal interests. The company may apply within 15 business days to set aside such demand only on grounds that it is frivolous, vexatious or devoid of merit.

Disclosures by Shareholders in Publicly Traded Companies

The amendments to the Companies Act introduced by the GLAA (see below) have inserted the definition of an “affected company”, which essentially means a regulated company and a private company that is controlled by or is a subsidiary of a regulated company.

In terms of Section 122, a person must notify an affected company in the prescribed manner and form within three business days after that person:

• acquires a beneficial interest in sufficient securities of a class issued by that company such that, as a result of the acquisition, the person holds a beneficial interest in securities amounting to 5%, 10%, 15% or any further whole multiple of 5% of the issued securities of that class; or
• disposes of a beneficial interest in sufficient securities of a class issued by a company such that, as a result of the disposition, the person no longer holds a beneficial interest in securities amounting to a particular multiple of 5% of the issued securities of that class.

Upon having received such notice, an affected company must file a record of that notice with the CIPC and a regulated company must:

• file a copy with the Takeover Regulatory Panel (TRP); and
• report the information to the holders of the relevant class of securities, unless the notice concerned a disposition of less than 1% of the class of securities.

The Takeover Regulations require a mandatory offer to be made to the remaining shareholders when a party (operating alone or in concert) acquires securities in a regulated company that increase the acquiring party’s beneficial interest in the voting rights of such company to 35% or more.

Amendments to the Companies Act Brought About by the GLAA

The GLAA introduced the definition of “beneficial owner”, meaning a natural person who, directly or indirectly, ultimately owns or exercises effective control of a company, including through holding beneficial interests, exercising voting rights, exercising control over director appointments, or the ability to otherwise materially influence management. It is important to note here that the concept of “beneficial interest” pre-dates the GLAA and was therefore already in the Companies Act and is distinct from beneficial ownership. When used in relation to a company’s securities, “beneficial interest” means the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person, to:

• receive or participate in any distribution in respect of the company’s securities;
• exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or
• dispose or direct the disposition of the company’s securities or any part of distribution in respect of the securities.

It does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, No 45 of 2002.

The distinction between beneficial ownership and beneficial interest is important as the reporting obligations in relation to beneficial interests are applicable to “affected companies”, whereas the reporting obligations flowing from beneficial ownership apply to companies that are “non-affected”.

In this regard, an affected company must establish and maintain a register of the persons who hold beneficial interests equal to or in excess of 5% of the total number of securities of that class issued by the company, together with the extent of those beneficial interests, and must file a copy of its register of the disclosure of beneficial interest with the CIPC, together with its annual return.

On the other hand, a non-affected company must record in its securities register prescribed information regarding the natural persons who are the beneficial owners of the company, and must also file a record of the beneficial owners with the CIPC.

In certain respects, the guidelines published by the CIPC titled “User Guidelines Beneficial Ownership” seem to sometimes conflate beneficial ownership with beneficial interest, even though, as discussed above, these concepts are not one and the same according to the definitions in the Companies Act. In any event, it should be noted that both affected and non-affected companies have reporting obligations.

The General Laws Amendment Bill 2026 proposes enhanced CIPC enforcement powers, including the ability to impose administrative fines directly (with increased thresholds), deregister companies for repeated failures to file securities or beneficial ownership registers, and require reporting of material discrepancies in beneficial ownership information.

Listings Requirements

The Listings Requirements mandate issuers to disclose:

• shareholdings of 5% or more in their annual report and circulars;
• all directors’ interests in securities; and
• beneficial interests in securities and requires issuers to establish and maintain a register of the disclosures made in terms of Section 56 of the Companies Act.

On an annual basis, a company must prepare AFS within six months after the end of its financial year, or within such shorter period as may be appropriate in accordance with the Companies Act.

The Companies Act provides that the AFS of a public company must be audited and, in the case of profit and non-profit companies, the AFS may be:

• audited if it is in the public interest to do so under the Regulations;
• audited voluntarily if the company’s MOI so provides; or
• independently reviewed in a manner required by the Companies Act.

The AFS must be approved by the Board and be presented to the first shareholders’ meeting after the AFS have been approved by the Board and generally include the following information:

• a director’s report detailing the state of the company; and
• an auditor’s report.

The AFS must satisfy financial reporting standards as to form and content if such standards are prescribed.

Position Under the Listings Requirements

In addition to the requirements discussed in 5.1 Financial Reporting Requirements, the Listings Requirements impose ongoing obligations on public companies in areas such as periodic financial information, price-sensitive information, profit forecasts and major company activities. As per King V, good governance is attained through its “apply-and-explain” disclosure framework, requiring a company to apply the recommended practices proportionally and provide a descriptive account of that implementation, together with a concluding statement on whether the application has realised value for the organisation (see 1.3 Companies With Publicly Traded Shares for further details). This account, together with the company’s AFS, code of conduct, ethical codes and integrated reports, should be published on the company’s website.

All companies (including external companies and close corporations) must file annual returns with the CIPC within 30 business days after the anniversary of their registration date. The GLAA amendments require companies to include a copy of their AFS and securities registers in annual returns and, for affected companies, a copy of the register of disclosure of beneficial interest. If annual returns are not filed within the specified timeframe, the CIPC may deregister the company, terminating its juristic personality. All entities must also file taxable returns with the South African Revenue Services.

AML Reporting Requirements

The Financial Intelligence Centre Act, No 38 of 2001 (FICA) imposes comprehensive reporting obligations on accountable institutions (entities the Minister reasonably believes are used or likely to be used for money laundering, such as banks, legal practitioners, long-term insurers and company service providers). Accountable institutions must report suspicious or unusual transactions to the Financial Intelligence Centre where they know or suspect that funds are proceeds of unlawful activities or where transactions have no apparent business or lawful purpose. There is a prescribed threshold for cash and electronic transfers, and all transactions above it must be reported. FICA requires that companies maintain records of client identities, business relationships and transactions for a minimum of five years from the date the business relationship is terminated or the transaction concluded. The GLAA has amended the Companies Act to require significant beneficial ownership transparency (see 4.5 Shareholders in Publicly Traded Companies for further details).

FICA further requires that companies maintain records of clients identities, the nature of the business relationships as well as the transactions and accounts involved in the transaction. The minimum record keeping period is five years from the date on which the business relationship is terminated or the transaction is concluded.

For listed companies there are additional record-keeping and disclosure requirements which are set out in the Listing Requirements.

Board Oversight of AML-Related Matters

FICA places responsibility on the Board to ensure AML and counter-terrorist financing governance and compliance with FICA and its Risk Management and Compliance Programme. Failure to ensure compliance is subject to an administrative sanction. King V reinforces Board accountability through principles requiring compliance with all applicable law in a manner promoting ethics and responsible corporate citizenship. The Board may delegate compliance oversight to a risk governance committee.

Personal Liability of Directors in Relation to AML Non-Compliance

Directors face personal liability under FICA and the Companies Act. The duty to act with care, skill and diligence (see 3.6 Legal Duties of Directors/Officers) is central to liability in all contexts, including AML compliance. A Board that fails to ensure appropriate governance, oversight and resourcing for compliance may be in breach of its fiduciary duties. Conversely, where a director can demonstrate informed, good-faith judgement, personal liability is less likely to arise.

It is mandatory for public and state-owned companies to appoint an auditor and have their financial statements audited. The appointment must occur upon incorporation or within 40 business days of incorporation. The first auditors hold office until the first AGM and are re-appointed annually. An appointed auditor may not be a:

• director, prescribed officer, employee or consultant of the company;
• director, officer or employee of the company secretary;
• person who habitually performs accountant or bookkeeper duties for the company; or
• person appointed as auditor in the immediately preceding five years.

Pursuant to current amendments, a period of two years (previously five) must lapse before an auditor with certain prior involvement can be appointed. Auditors of private companies required to be audited can now be appointed at a shareholders’ meeting, not only at an AGM. It is not mandatory for a private or personal liability company to appoint an auditor unless it is required to produce audited financial statements (see 5.1 Financial Reporting Requirements).

The Regulations provide that a private profit company’s financials must be audited if:

• it holds assets in a fiduciary capacity exceeding ZAR5 million in aggregate value;
• its PI Score is 350 or more; or
• its PI Score is at least 100 (but less than 350) and its AFS were internally compiled.

If a company is not required to be audited but is not exempt in terms of the Companies Act, its AFS must be independently reviewed.

Geopolitical Risk Management

King V does not explicitly address geopolitical risk as a separate category. However, Principle 8 states that governing bodies should govern risk in a manner that sustains and optimises strategy and objectives, including assessing risks arising from the economic, social and environmental context.

Board Level Oversight

FICA gives effect to United Nations Security Council (UNSC) targeted financial sanctions through Sections 26A and 26B. Section 26A provides that a UNSC resolution adopted under Chapter VII providing for financial sanctions has immediate effect upon adoption, without requiring Gazette publication. Section 26B prohibits any person from directly or indirectly acquiring, collecting, using, possessing or owning property, or providing property, financial services or economic support for the benefit of, or under the control of, a person or entity designated pursuant to a UNSC resolution. FICA implicates the Boards of accountable institutions, mandating compliance. King V does not explicitly address international sanctions but its principles of ethical and effective leadership require Boards to assess all risks relating to their entities.

ESG Considerations

Important ESG issues in South Africa include sustainable development, a just energy transition, black economic empowerment, climate change resilience, employment equity, improved governance and anti-corruption practices.

Obligations of JSE-Listed Companies

The Listings Requirements mandate that Main Board issuers adopt and apply the King Code through its application and disclosure regime. King V requires annual integrated reporting and emphasises sustainability reporting. In July 2021, a King IV Guidance document on “Responsibilities of Governing Bodies in Responding to Climate Change” was published, which continues to contain relevant principles under King V.

Furthermore, the JSE launched its JSE Sustainability Disclosure Guidance and JSE Climate Change Disclosure Guidance in 2022. The JSE’s disclosure guidance documents are based on international best practice and are an important distillation of the recommendations of multiple global initiatives on sustainability and climate risk disclosure, including GRI Sustainability Reporting Standards, the Taskforce on Climate-related Financial Disclosures recommendations, the IFRS Foundation’s ISSB prototypes and the Value Reporting Foundation’s Integrated Reporting Framework and Sustainability Accounting Standards Boards. They are also not mandatory, but bring much-needed guidance for consistent, comparable, transparent and reliable disclosures.

Regulation 28 of the Pensions Funds Act requires funds to consider all factors (including ESG) relevant to long-term success. South Africa’s first national Green Finance Taxonomy was published in April 2022. Although not yet mandatory, it provides a useful benchmark for tracking green activities.

Environmental Legislation

ESG reporting requirements are contained in specific legislation, including reporting obligations under the National Environmental Management Act No 107 of 1998 and the National Environmental Management: Air Quality Act No 39 of 2004. Certain emitters must report under the National Greenhouse Gas Emission Reporting Regulations, covering sectors including energy, transport, industry, agriculture and forestry. The Climate Change Act No 22 of 2024, assented to on 23 July 2024 and largely operative from 28 February 2025, enables the development of an effective climate change response and a just transition to a low-carbon economy.

Employment Equity

The Employment Equity Act No 55 of 1998, as amended (EEA), imposes obligations on “designated employers” (those employing 50 or more employees) to prohibit unfair discrimination and take progressive measures to improve representation of suitably qualified employees from designated groups (black South Africans, women and people with disabilities). Designated employers must develop Employment Equity Plans and submit annual reports to the Department of Employment and Labour. Recent amendments to the EEA require designated employers to meet sector-specific employment equity targets over five-year periods, and a certificate of compliance is now a prerequisite for conducting business with the State.

B-BBEE

Broad-Based Black Economic Empowerment (B-BBEE) is a government policy aimed at increasing participation by previously disadvantaged South Africans in economic activities. The B-BBEE Act No 53 of 2003, as amended, implements measures including increasing equity ownership by black people, participation in management, skills development, enterprise and supplier development, and corporate social investment. JSE-listed companies and government entities must report annually on B-BBEE compliance to the B-BBEE Commission.

Sustainability Reporting/ESG Guide

The second Code for Responsible Investing in South Africa (CRISA 2), published by the CRISA Committee, builds on the original CRISA (2011) and sets out five voluntary principles for stewardship and investment. CRISA 2 has been endorsed by various institutions, including the FSCA.

The corporate reporting landscape is undergoing significant changes. The JSE launched its Sustainability Disclosure Guidance and Climate Disclosure Guidance in 2022. A 2025 review confirmed alignment with the IFRS S1 and IFRS S2 standards published by the ISSB in June 2023. CIPC has introduced ESG reporting on IFRS S1 and IFRS S2 for public and state-owned companies, which is currently voluntary. In January 2025, CIPC published Notice 6 of 2025 regarding public consultations on implementing mandatory sustainability reporting obligations. The Department of Trade, Industry and Competition has requested CIPC to join a Steering Committee overseeing a Regulatory Impact Assessment on adopting the ISSB Sustainability Disclosure Standards.

In October 2024, the Centre for Environmental Rights and the Institute of Directors in South Africa released a legal opinion detailing that directors risk breaching their fiduciary duties if they fail to manage and disclose material climate-related financial risks. A director’s failure to consider foreseeable and material climate risks could constitute a failure to act in good faith. Failure to disclose material climate change impacts in financial statements could render them “incomplete” or “false and misleading” under Section 29(2) of the Companies Act. These developments reflect increased emphasis on environmental and sustainability components.

In South Africa, there are currently no specific legal or regulatory requirements that expressly mandate Board oversight of artificial intelligence, nor any prescribed rules on Board composition or AI-specific committees. However, Boards are indirectly required to oversee AI through existing laws and governance standards.

King V provides a governance framework addressing AI use-related risks. Principle 10 states that the governing body should govern data, information and technology to sustain and optimise strategy and objectives. The governing body must oversee that the organisation’s use of emerging and disruptive technologies, particularly AI, adheres to values of ethics, human centricity, accountability, transparency, explainability, security, privacy, fairness and trustworthiness, with clear accountability for decisions, outputs and outcomes. AI-related risks fall within the scope of the organisation’s risk governance committee (see 3.1 Board Structure), which will need to expand its risk assessment accordingly.

Unfair Practices

AI systems that produce discriminatory or biased outputs may expose a company to liability under relevant legislation. Where the Board has breached its fiduciary duties regarding AI use, it may be held liable under the Companies Act (see 3.6 Legal Duties of Directors/Officers).

IP/Data Breaches

The use of AI can expose companies to liability where copyrighted material is used without permission, or where AI generates outputs reproducing protected content sufficiently to infringe third-party intellectual property rights. Organisations face risks of exposing confidential information through insecure AI systems. Where AI systems are linked to the processing of personal information, organisations face additional liability for breaching the Protection of Personal Information Act, No C4 of 2013 (POPIA).

Enforcement

Third parties who have suffered loss from AI governance failures may take action against the company. To the extent directors have breached their fiduciary duties in the context of AI usage, they may be held liable to the company through Section 77 of the Companies Act. Although fiduciary duties are owed by directors to the company and not to individual shareholders, Section 165 extends legal standing to shareholders, directors and other persons the court permits, allowing them to demand that the company commence or continue legal proceedings to protect its legal interests.

There are currently no mandatory disclosure requirements relating to AI in South Africa and accordingly, any disclosure requirements in relation to AI arise out of companies’ existing frameworks for disclosures in relation to risks, strategy, governance and the voluntary adherence to the King V principles relating to AI.