Board Committees

Committees allow closer attention to specialised areas of oversight. They examine information, engage with management and advisers and develop recommendations for the board. Their work should strengthen the board rather than divide its responsibilities into disconnected areas.

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Delegation without abdication

Section 72 permits the board to establish committees and delegate authority to them, unless the Memorandum of Incorporation provides otherwise. The board resolution and committee charter should identify whether the committee may decide a matter or only recommend a course.

Creating a committee does not by itself satisfy the duties of directors. A board member who does not serve on the committee may rely on its work where that reliance is reasonable, but should still understand the recommendation and any material limitation.

A committee report should give the board enough information to exercise its own judgement. Significant alternatives, unresolved risks and differences of view should not disappear from the report in the interests of presenting a single conclusion.

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Committee structure and composition

Some committees are created because the board considers them useful. Others arise from the Companies Act or sector legislation. Their source of authority affects appointment, composition and reporting.

The structure should reflect the company’s size, activities, regulation and risk profile. A smaller board may combine related mandates, provided that statutory requirements are met and one part of the mandate does not displace the other.

Membership should follow the work assigned to the committee. Relevant expertise, independence and availability are important. External specialists may contribute, but their status and voting rights should be clear.

The committee chair should agree the annual programme, keep discussion focused and report fairly to the board. Material disagreement should be disclosed rather than filtered out to create an appearance of unanimity.

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The audit committee

Public companies and state-owned companies must generally have an audit committee, as must a company whose Memorandum of Incorporation requires one. Members are elected by shareholders at the annual general meeting and must satisfy the statutory eligibility requirements.

The committee oversees external auditor appointment and independence, audit fees, non-audit services, financial reporting and complaints concerning accounting or internal financial control. The mandate often extends to risk and internal audit through additional board delegation.

The audit committee should have direct access to internal and external assurance providers. Private sessions may be needed where a concern cannot be discussed effectively in the presence of management.

Its report to the board and shareholders should explain the work performed and the basis for its conclusions. A statement that the committee fulfilled its charter will not give meaningful insight where significant reporting or control issues arose.

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The remuneration committee

Remuneration governance now carries a more extensive statutory framework for public companies and state-owned companies. Sections 30A and 30B require a remuneration policy and an annual remuneration report for presentation and approval at the annual general meeting. The provisions became operative for relevant meetings after 22 May 2026, subject to the transitional guidance issued by CIPC.

The remuneration report includes the background statement, policy and implementation report required by the Act. The committee should ensure that the documents explain how remuneration supports strategy and how the company has responded to shareholder concerns.

The role extends beyond approving packages. The committee should consider fairness, internal pay relationships, performance measures, incentives, malus and clawback arrangements, succession and the consequences of remuneration decisions for the company’s reputation and workforce.

Where shareholders do not approve the policy or implementation report, the company must follow the statutory response. The committee should prepare for engagement rather than treat the vote as a final procedural step.

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The social and ethics committee

The 2024 amendments changed the appointment and composition of social and ethics committees. Public companies and state-owned companies elect the committee at the annual general meeting, while other companies required to have the committee appoint it through the board.

The committee must have at least three members. The composition rules differ according to the company. Public and state-owned companies require a majority of directors who are not involved in daily management and have not been so involved during the preceding three financial years. Other companies require at least one qualifying non-executive director alongside the permitted directors or prescribed officers.

The committee monitors matters linked to social and economic development, good corporate citizenship, the environment, health and public safety, consumer relationships, labour and employment. The board should ensure that the committee’s work is connected to the company’s actual impacts rather than confined to a generic compliance report.

A company may qualify for exemption or rely on a group committee in the circumstances allowed by the Act. The basis should be confirmed and recorded rather than assumed from group structure alone.

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Committee information and records

Committee reporting should show performance against approved policies, risk limits or statutory duties. Broad confirmation of compliance gives little basis for oversight where exceptions and trends are not visible.

Information should move between committees where mandates overlap. A cyber incident, for example, may concern audit, risk, technology, legal compliance and social and ethics oversight. The company secretary can help coordinate the annual programmes and clarify which committee owns the recommendation.

Committee minutes should identify the information considered, the material concerns and the conclusion reached. They should distinguish a recommendation from a final decision taken under delegated authority.

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Reviewing the committee structure

Committee mandates should be reviewed as the company changes. Growth, new regulation or a changed risk profile may require a different structure or greater expertise.

The board should consider whether each committee completed its annual programme, received suitable information and reported effectively. Attendance does not establish that the committee discharged its role.

The structure remains effective only while it supports a coherent board view of the company. Committees should deepen oversight without becoming separate territories of authority.