COSATU and SACTWU presented their submission on the Companies’ Amendment Bill’s to the National Council of Provinces today

20 February 2024

The Congress of South African Trade Unions (COSATU) and the Southern African Clothing and Textile Workers (SACTWU) presented their submission on the Companies’ Amendment Bills passage to the National Council of Provinces (NCOP) today.  These are progressive and long overdue Bills that will advance the war against crime and corruption, further empower the state to deal with grey listing and most critically compel large listed companies and State Owned Enterprises to disclose their financial reports to workers and the wage gap between their highest and lowest paid directors and employees to their shareholders.

COSATU and SACTWU engaged extensively on these Bills at the National Economic Development and Labour Council (Nedlac) and in both the Portfolio and Select Committees’ Parliamentary hearings in support of the Bills and how they can be further strengthened.  The Bills will be powerful weapons in the fight against corporate sector corruption and help nudge the private sector towards a more equitable and just wage structure.

Once enacted, they 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 assist the country’s efforts to deal with extreme inequality.

These 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 SACTWU 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 and SACTWU’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.  We are dismayed how some in business have opted to resort to populist hysterics and disinformation in attacking these progressive Bills which seek to promote transparency, tackle corruption and reduce wage inequality.

When they become law, the amended Companies Act will see large businesses having to publish more information about their remuneration policies, 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 morally 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 a Chief Executive Officers makes 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 a CEO R300 million in a single year!  Other amoral culprits in perpetuating South Africa’s status as the world’s most unequal society include the retail, insurance and financial sectors.

COSATU and SACTWU are encouraged that these Bills will further help 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 a 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 in 2022.  This has a real and painful consequence to attracting investment, stimulating the economy and create jobs.

The Bills will 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 and to have a say in their hard earned monies are spent.

We urge the National Council of Provinces to move with speed to ensure the Bills are passed into law before the conclusion of the 6th Parliament.  We cannot afford to defer such important amendments for a future administration.

COSATU and SACTWU, will as per the Nedlac agreement, will push for engagements to begin on further amendments to overhaul the Companies Act to address problems workers experience when companies are placed under business rescue as well as amendments to provide for worker representation on company boards as part of concretising the spirit of social compacts across public and private companies, enhancing transparency and building trust between employers and workers.

Issued by COSATU

For further information please contact:
Matthew Parks
Acting National Spokesperson & Parliamentary Coordinator
Cell: 082 785 0687