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Upcoming Changes to Social & Ethics Committees: What Boards Need to Know

Posted on by Resolve Corporate and Legal
Diverse group of professionals in a boardroom discussion, with overlay text reading “Upcoming Changes to SEC Committees” and the Resolve logo in the top-left corner.

The Companies Amendment Act, 2024 has introduced new requirements for Social and Ethics Committees (SECs). These committees have long been a cornerstone of South African governance, tasked with overseeing ethics, stakeholder relations, and corporate responsibility. The changes bring statutory requirements closer to King IV principles and raise the bar for independence, accountability, and transparency.

Key Changes to SEC Requirements

Membership and Independence

  • Every SEC must have at least three members.
  • A majority must be non-executive directors who have not held management responsibilities in the previous three years.

Appointments

  • Vacancies must be filled within 40 business days.
  • Appointments must be renewed annually: at the AGM for public and state-owned companies, or by board resolution for other companies.
  • The Minister may prescribe minimum qualifications for members in future.

Reporting Duties

  • SECs must prepare a formal report annually in the prescribed format.
  • Public and state-owned companies must present this report at the AGM.
  • Other companies must present the report annually either at a shareholder meeting or by written resolution.
  • Shareholder approval is not required; the report only needs to be tabled.

Regulatory Watch

The detailed reporting requirements are not yet effective. We are still awaiting confirmation from the Minister on the prescribed manner and form for SEC reporting. Boards should plan ahead but remain alert to further regulatory updates.

Why Early Adoption Matters

Boards that act now will be ahead of the curve. Early adoption avoids compliance stress and positions the company as a leader in governance. Benefits include:

  • Continuity: Vacancies and renewals can be managed without last-minute pressure.
  • Improved Oversight: Independent voices strengthen ethical and sustainability accountability.
  • Shareholder Confidence: Clear, consistent reporting enhances transparency.
  • Risk Management: Well-defined processes reduce the chance of delays or non-compliance.
  • Credibility: Demonstrating proactive governance builds trust with regulators, investors, and stakeholders.

Practical Actions for Boards

To prepare for implementation, boards should:

  1. Update the SEC charter to reflect the amended Companies Act.
  2. Reassess membership for independence, skills, and capacity.
  3. Put in place a process to fill vacancies within 40 business days.
  4. Design a standardised reporting template drawing input from HR, risk, sustainability, and legal functions.
  5. Schedule shareholder engagement so that reporting requirements are met without disruption.

The changes to Social and Ethics Committees are more than compliance updates. They represent a shift toward stronger, more credible oversight of ethics and stakeholder engagement. Boards that embed these practices early will not only meet legal requirements but also strengthen trust, resilience, and reputation in the eyes of their stakeholders.