Executive remuneration governance in South Africa has entered a new and more demanding phase.With the coming into force of the Companies Amendment Act 16 of 2024 provisions on remuneration, public companies and state-owned entities are now subject to binding shareholder approval requirements that materially reshape remuneration oversight.

As the 2026 AGM season approaches, boards and remuneration committees should prepare for heightened scrutiny and adopt a more rigorous and proactive approach.

From advisory to binding
Historically, shareholder votes on remuneration policies and reports were advisory in nature. While significant dissent often triggered shareholder engagement, boards retained ultimate discretion to implement remuneration decisions.

This position has fundamentally changed. The amended Companies Act 71 of 2008 now requires shareholder approval, by ordinary resolution at each AGM, of:

• The remuneration policy (the forward-looking framework governing the remuneration of directors and prescribed officers); and
• The remuneration report, including the implementation report, which reflects how the policy has been applied in practice.

The remuneration policy must be approved at least once every three years and may not be materially amended without shareholder approval. Where a revised policy is not approved, the previously approved policy generally remains in force.

Significantly expanded disclosure
The enhanced disclosure requirements applicable to the implementation report introduce a new level of transparency and will require careful preparation and validation. 

Companies are now required to disclose:

• Individual remuneration for each director and prescribed officer;
• Average and median employee remuneration; and
• A prescribed pay gap metric comparing higher- and lower-paid employees.

These disclosures broaden the focus from executive remuneration in isolation to the overall distribution of pay within the organisation. In practice, this is likely to attract attention not only from shareholders, but also from employees, proxy advisors, regulators, and the public.

Boards should therefore be prepared to contextualise these metrics and provide a clear and defensible rationale for remuneration outcomes.

The two-strike mechanism
The Act introduces a “two-strike” mechanism that gives real consequence to shareholder dissent.

Where the implementation report is not approved:

• The company must, at the following AGM, explain how shareholder concerns have been addressed; and
• Members of the remuneration committee are required to stand for re-election.

If shareholders again do not approve the implementation report at the subsequent AGM, the Act provides for restrictions on certain committee members continuing to serve in that capacity, subject to the detailed provisions of the legislation.

This framework creates a direct and consequential link between shareholder sentiment and the composition, and accountability, of the remuneration committee.

Key implications for boards
The practical effect of these reforms is that remuneration governance can no longer be treated as an internal process reported on after the fact. Shareholder approval must be actively secured.

Boards and remuneration committees should prioritise:

• Policy review: ensuring remuneration frameworks are clearly aligned with company strategy, performance, and long-term value creation;
• Data readiness: confirming that remuneration data is accurate, auditable, and capable of withstanding scrutiny;
• Shareholder engagement: proactively engaging key investors ahead of the AGM to identify and address concerns; and
• Narrative clarity: articulating a coherent, transparent, and credible explanation for remuneration outcomes.

Early and sustained engagement will be critical, particularly given the growing influence of institutional investors and proxy advisors.

Alignment with King V
These statutory changes align closely with King V on Corporate Governance, effective for financial years commencing on or after 1 January 2026. King V reinforces principles of fairness, responsibility, and transparency in remuneration, and introduces a more structured approach to disclosure within its apply-and-explain framework.

The Companies Act amendments give these principles greater practical effect by embedding binding shareholder rights and enforceable consequences within the statutory framework.

The shift to binding shareholder votes marks a significant development in South African corporate governance. For boards, the focus must now extend beyond technical compliance to demonstrable accountability and stakeholder alignment.

Organisations that combine robust remuneration frameworks, reliable data, and proactive shareholder engagement will be best positioned to navigate this evolving landscape. Those that do not should expect increased scrutiny — and the potential for direct governance consequences.


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