Business Leadership South Africa (BLSA) chief executive Busi Mavuso has warned against sections of the Draft Companies Amendment Bill that will impact South Africa’s attractiveness as a place to do business.
In an article published on BusinessDay, Mavuso said that there were two critical issues with the bill:
- Listed companies are going to be required to disclose the ratio of the top-paid to the bottom-paid 5% of workers;
- A requirement to identify shareholders who are the “true or beneficial” owners of shares in a company.
“Taken together, these elements diminish the attractiveness of South Africa as a place for companies to do business by adding to all the other onerous compliance requirements.
“Why would a company, local or foreign, want to list on a South African bourse when we’re putting up so many obstacles while others are doing all they can to attract them? Already we have a problem with companies domiciling or listing in Mauritius or London to avoid the bureaucracy of South Africa’s exchange controls – this is another reason for them to do so.”
Mavuso said that the government needs to view South Africa as a competitor for investment in a global market and offer a compelling case.
“Many of our natural competitive advantages have been systematically eroded by bad policy and over-regulation. The contrast with countries that promote business-friendly policies such as Rwanda is astounding. That country’s phoenix-like rise from the horrors of the 1994 genocide should serve as a lesson for our policymakers.”
The Draft Companies Amendment Bill, which is currently open for public comment, aims to make it easier to do business in South Africa, says Trade, Industry and Competition Minister Ebrahim Patel.
Patel said that the amendments contained in the bill also set out to improve accountability and scrutiny on remuneration practices, promote shareholder activism and corporate governance.
“Furthermore, they also relieve companies of onerous, impractical and burdensome provisions in previous iterations of companies legislation. “Lastly, they give South Africa instruments to undertake its role in the global offensive against illicit cross-border behaviour,” he said.
Amendments in the bill require that specific categories of firms disclose information on directors’ remuneration and prescribed officers.
Furthermore, it requires that companies disclose the average remuneration of all employees and the ratio between the total remuneration of the top 5% highest-paid employees and the total remuneration of the bottom 5% of the lowest-paid employees of the company.
Shareholder approval is also required for the company’s remuneration policy.
“Certain of the proposed amendments are designed to achieve better disclosure of senior executive remuneration and the reasonableness of the remuneration,” Patel said.
“These issues are addressed primarily in the proposed requirements of the Remuneration Report. These are issues that have raised similar concerns in other leading jurisdictions. The provisions relating to transparency on the pay gap and the reasonableness of remuneration provide an objective benchmark which will assist the public dialogue on this topic.”
Data published by Statistics South Africa this week shows that the average salary paid to employees in the formal sector was up marginally by 1.7% quarter on quarter from R23,127 in February 2021 to R23,526 in May 2021.
This equates to an annual salary of around R282,312 a year, excluding any additional bonuses or incentives.
By comparison, data published by Professional services company PwC in August shows that total guaranteed package (TGP) fees paid across the JSE give a median salary for chief executives at R5.17 million over the period.
The median pay for chief financial officers was R3.34 million, and the median pay for executive directors was R3.32 million.