JSE: New Binding Remuneration Amendments 2026 South Africa

• The JSE's updated Listings Requirements for corporate governance, effective December 7, 2026, will streamline remuneration voting processes.
• Sections 30A and 30B of the Companies Amendment Act 16 of 2024 mandate binding ordinary resolutions for remuneration policies (every three years or upon material change) and annual reports for public and state-owned companies.
• The JSE will discontinue non-binding advisory votes for most domestic Main Board issuers, replacing them with the Companies Act's statutory requirements.
• A non-binding advisory vote is retained for foreign primary issuers and companies with weighted voting share structures, requiring specific disclosures and shareholder engagement, with directors undertaking actions if 25% or more of votes are cast against the policy.
• A "two-strike mechanism" applies to the annual remuneration report, where repeated rejection can lead to re-election requirements and ineligibility for remuneration committee service for non-executive members.

Lawyers and compliance officers must advise South African listed companies to revise their remuneration policies and shareholder engagement strategies to align with the binding Companies Act resolutions and the JSE's updated Listings Requirements by December 2026, paying close attention to the 'two-strike' mechanism and classification risks for hybrid structures.

The Johannesburg Stock Exchange (JSE) is set to implement substantial revisions to its Listings Requirements concerning corporate governance and related matters, effective December 7, 2026, under FSCA Board Notice 1006 of 2026. These changes are not intended as a complete overhaul but rather as a strategic de-duplication of existing regulations. This move comes as sections 30A and 30B of the Companies Amendment Act 16 of 2024, which became effective on May 22, 2026, have already introduced mandatory binding votes for remuneration policies and reports for public and state-owned companies in South Africa.

The JSE's updated approach marks a departure from the non-binding advisory votes it established in 2017 under paragraph 5.7(k). This adjustment aims to streamline processes, preventing listed entities from having to manage parallel voting procedures. For the majority of Main Board issuers, this represents a welcome simplification, transforming what was previously a system of soft pressure into a framework of hard, statutory constraints. Companies that fail to recognize this fundamental shift from mere compliance theatre to substantive obligation will quickly face the ramifications.

Under the Companies Amendment Act 16 of 2024, South African public and state-owned companies are now legally required to submit their remuneration policy for a binding ordinary resolution. This vote must occur at least every three years or whenever a material amendment to the policy is proposed. Furthermore, an annual remuneration report must also be presented for a binding ordinary resolution, which must include specific disclosures regarding remuneration gaps. Crucially, the Act also outlines consequences for companies if this annual report fails to secure shareholder approval.

This statutory mandate replaces the previous non-binding advisory votes that domestic Main Board issuers were required to table for both their remuneration policy and implementation report. The practical implication is that the binding nature of the Companies Act vote, coupled with a less prescriptive JSE overlay on share schemes, places significantly greater emphasis on the integrity of the remuneration policy itself and the rigorous discipline exercised by the remuneration committee. Boards that once viewed advisory votes as primarily reputational now face a statutory three-year approval cycle, necessitating policies with genuine strategic flexibility and defensible discretions.

While the general trend is towards binding statutory votes, the JSE remuneration amendments 2026 South Africa retain a non-binding advisory vote for two specific categories of issuers: foreign applicant issuers holding a primary listing on the JSE, and companies with weighted voting share structures. For these entities, the remuneration policy must still detail the actions directors will undertake if 25% or more of the votes are cast against it. Additionally, the announcement of voting results must include an invitation for dissenting shareholders to engage, specifying the date and time of such engagement.

Foreign primary issuers may be granted a waiver from this requirement if they can demonstrate that their home jurisdiction imposes a binding vote substantively equivalent to sections 30A and 30B of the Companies Amendment Act. Issuers with weighted voting share structures JSE will continue to follow an enhanced voting process for remuneration matters as per paragraph 2.72(f). This creates a hybrid regime where dual-class companies and certain foreign entities operate under a different set of rules compared to pure domestic issuers, who are now fully aligned with the Companies Act. This hybrid approach, while sensible, introduces a classification risk, requiring boards and sponsors to clearly identify which category applies to them early on to avoid either unnecessary dual votes or a failure to meet continuing obligations.

A critical component of the new framework is the "two-strike mechanism" applied to the annual remuneration report. If the annual report fails to receive shareholder approval, the remuneration committee is mandated to explain at the subsequent Annual General Meeting (AGM) how shareholder concerns have been addressed. Concurrently, relevant non-executive committee members must stand for re-election to the committee at that same AGM.

Should the remuneration report be rejected again at the following AGM, those specific non-executive committee members may only continue as directors if they are re-elected. Furthermore, they will become ineligible for service on the remuneration committee for a period of two years. Statutory exceptions to this rule apply only to committee members who served for less than 12 months during the year under review. This robust executive remuneration two-strike mechanism underscores the heightened accountability for remuneration committees and board members, pushing for more transparent and responsive governance practices in South Africa. Lawyers and compliance officers must advise South African listed companies to revise their remuneration policies and shareholder engagement strategies to align with the binding Companies Act resolutions and the JSE's updated Listings Requirements by December 2026, paying close attention to the 'two-strike' mechanism and classification risks for hybrid structures.

Lawyers and compliance officers must advise South African listed companies to revise their remuneration policies and shareholder engagement strategies to align with the binding Companies Act resolutions and the JSE's updated Listings Requirements by December 2026, paying close attention to the 'two-strike' mechanism and classification risks for hybrid structures.

Source: Original reporting via legal analysis