The Congress of South African Trade Unions (COSATU) welcomes the Department of Trade, Industry and Competition’s tabling the Companies’ Amendment Bills at Parliament today. These are progressive and long overdue Bills. They will be powerful weapons in the fight against corporate sector corruption and help begin nudging the private sector towards a more equitable and just wage structure for South Africa.
The Bills, once enacted, will bring greater transparency to companies, helping to prevent the kind of shameful scandals seen in Tongaat Hulett, EOH and Steinhoff and to fight corruption and state capture. They will also assist in the country’s efforts to deal with extreme inequality.
The Bills have the added benefit of bringing South African company law in line with best practice and established norms, as prescribed in the King IV Report on Corporate Governance and that found in other countries, including the European Union, the United States, Australia and the United Kingdom.
Nedlac conducted extensive engagements on the Bills where COSATU and Organised Business’ leadership robustly debated each clause of the Companies Amendment Bill. Agreement, in the form of a Nedlac Report, was reached in 2021. Whilst what is contained in the Bill is not always COSATU’s preferred position, we recognise it is part of a negotiated outcome and respect the agreements reached at Nedlac. We are encouraged that the Nedlac negotiations resulted in minimal areas of disagreement and positive consensus in most areas was achieved on this important legislation.
Once it becomes law, the amended Companies Act will see large businesses having to publish more information about its remuneration, for instance, setting out the ratio between the highest paid executives and the lowest paid workers and the actual wages received by these lowest paid workers. This will allow workers and the public to compare companies’ wage gaps and help shareholders determine whether executive pay is justified. The Bills will strengthen shareholders’ ability to reject executive remuneration where it is regarded as excessive and unjustified.
These provisions are critical if we are to overcome our shameful apartheid wage gap. Some of the most offensive examples include the banking sector where the Chief Executive Officers make on average R150 000 daily whilst their bank tellers would not make that in a single year! We have seen mining companies squabble with mine workers asking for an additional R150 a month yet pay their CEOs R300 million in a single year! Other culprits in perpetuating South Africa’s status as the world’s most unequal society include the retail, insurance and financial sectors.
COSATU is encouraged that these Bills will further help to fight corruption, money laundering and state capture by concluding the process started last year when the law was amended by Parliament to compel businesses to disclose the actual persons owning them and not merely obscure trusts or shelf companies. The fact that the beneficial ownership of companies has stayed hidden has allowed fraud and corruption to thrive. The changes proposed in these Bills will shine an even brighter light on ownership and provide for greater access to company records. Our outdated legislation is why South Africa after repeated warnings was grey listed last year. This has a real and painful consequence to attracting investment, stimulating the economy and create jobs.
The Bills will also improve transparency around companies’ finances and governance, bringing South Africa on par with what is happening in other countries. This will allow workers to understand more about their employers and will strengthen and improve wage bargaining and consultation around retrenchments, as well as boost labour market stability.
Whilst some in the private sector may balk at financial transparency, they would best remember that it is workers’ pension funds that are invested throughout the economy and workers have a right to know how and to have a say in their hard earned monies are spent.
The Federation will engage with Parliament on the Bills to ensure their passage into law before the conclusion of the 6th Parliament. We simply cannot afford to defer such important laws for a future administration.
Issued by COSATU
For further comment please contact:
Acting National Spokesperson & Parliamentary Coordinator
Cell: 082 785 0687