The New Social and Ethics Committee Regulations


The new Companies Act requires that many medium and large companies form a Social and Ethics Committee by March 2012. Transcend is uniquely able to help you convert your B-BBEE Transformation Committee into a Social and Ethics Committee, so that you can apply the high levels of corporate governance and transparency espoused in the Companies Act.

According to the Companies Act (71 of 2008), existing business entities that scored above 500 in the previous two years, are required to establish a Social and Ethics Committee within 12 months of 01 May 2011. The committee is required to compromise of a minimum of three directors, or prescribed officers, with a minimum of one director who has not been involved in the day-to- day management of the company for the past three years.


The score is calculated at the end of each financial year based on the sum of the following:-

• Number of point equal to the average number of employees of the company during the financial year;
• One point for every R1 million (or portion thereof) in third party liability of the company at the financial year-end;
• One point for every R1 million (or portion thereof) in turnover during the financial year;
• One point for every individual who, at the end of the financial year, is known by the company to:
       - Have an interest in company shares, if a profit company; or
       - Be a member or have an association with a member of the company, if a non-profit company


The Committee is tasked to:

• Monitor activities of the company for the purposes of:

- Social and Economic Development;
- Recommendations to the Organisation for Economic Cooperation and Development (OECD)
- The Employment Equity Act; and the 10 principles of the United Nations Global Company.

• Ensure corporate citizenship, that includes:

- The promotion of equality, prevention of unfair discrimination and the reduction of corruption;
- The contribution to the development of communities in which the entity’s activities are predominantly conducted; and
- Recording donations and other charitable giving.

• Promote environmental, health and public safety pertaining to:

- The impact of the company’s activities, products and services in this regard.

• Regulate consumer relationships to:

- Adhere with all consumer related legislation; and
- Promote a anti-corruption culture

• Develop sustainable labour and employment practices by:
- Formulating a protocol on suitable work and proper working conditions; and
- Promoting the educational, social and cultural development of employees.


The importance of a Social and Ethics Committee is prompted not only by mandatory regulations, but also the multiple benefits of its function. To this end Transcend has created a service offering specially designed to assist companies to establish and run an effective Social and Ethics Committee.


A half-day workshop explains the requirements of the Companies Act and committee and how Transcend can add value in setting up a Social and Ethics Committee. Content includes the role of the committee, its members, linkages with other board committees, as well as suggestions on the areas the committee will oversee.


Transcend can assist in recommending committee members and defining their respective roles. If necessary, Transcend can provide the services of an independent director to the committee.



Transcend can draft the overall mandate of the committee via a written manifesto once it has been constituted. The establishment and the apportioning of roles and responsibilities will also be advised, including how each member will interface with the company department they represent.


Transcend offers to facilitate Committee meetings and will capture the required notes and moderate where necessary.


The compilation and distribution of reports required by the Social and Ethics Committee based on meeting minutes and other supporting documentation can be handled by Transcend on request.


Transcend also provides in-depth services in relation to Broad-Based BEE transformation and sustainability that exceed the requirements of the Social and Ethics Committee, including the development and implementation of strategies that prepare companies for external B-BBEE verification and annual reporting to the public.

For more information on how we can assist, contact Brian Hendrikz on +27 11 442 2433, email 


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