In most growing businesses the executive committee is where the real decisions are taken. A credit limit is raised, a new product is approved, a funder’s term sheet is accepted, a senior appointment is made. Often the committee has no founding document at all. It began as a Monday meeting between the founder and two managers, and it grew as the business grew.
That works until someone from outside asks a simple question: who decided this, and on what authority? For a finance house the question tends to come early, from a funder doing its due diligence, from an auditor, or from a regulator.
One · The authority starts with the board
Section 66(1) of the Companies Act 71 of 2008 says the business and affairs of a company “must be managed by or under the direction of its board”, which may exercise all the powers of the company except where the Act or the Memorandum of Incorporation provides otherwise.
The Act does not set up an executive committee for a company. An Exco has the authority the board has given it, and no more. That can happen in two ways. The board may establish it as a board committee under section 72 and delegate to it “any of the authority of the board”. More often the Exco is a management committee, and its authority runs through what the board has delegated to the chief executive. Either route is sound, but only if it is written down.
Two · Delegating does not discharge the board
Section 72(3) is blunt. Creating a committee, delegating a power to it, or action taken by it “does not alone satisfy or constitute compliance by a director” with the duties in section 76.
A director is entitled to rely on the people to whom the board may reasonably have delegated its functions, and on employees the director reasonably believes to be reliable and competent (section 76(4)(b) and (5)). The reliance has to be reasonable, though, and a board that never sees what its Exco decided has little to point to. Regular written reporting from the Exco to the board is what makes that reliance defensible.
Three · Exco members may carry a director’s duties
Regulation 38 of the Companies Regulations, 2011 makes a person a prescribed officer if he or she exercises general executive control over and management of the whole, or a significant portion, of the business, or regularly participates in that to a material degree. The job title does not matter.
For the purposes of sections 76 and 77, “director” includes a prescribed officer and a member of a board committee. So the standards of conduct, and the personal liability that follows a breach, can reach people who have never sat on the board.
There is a newer consequence. Section 30(4)(a), as amended with effect from 22 May 2026, requires the annual financial statements of every company that must be audited to show the remuneration and benefits received by each individual director and prescribed officer, “both of whom must be named”. A company cannot comply without first deciding who its prescribed officers are, and the membership of the Exco is where that exercise starts.
Four · A lender answers to more than one regulator
Under item 11 of Schedule 1 to the Financial Intelligence Centre Act 38 of 2001, a credit provider is an accountable institution. That includes a business that provides credit under agreements which the National Credit Act itself excludes in section 4(1)(a) or (b), so a lender is not outside the FIC Act merely because the Credit Act does not apply to its book.
The FIC Act then puts the responsibility at the top. The Risk Management and Compliance Programme must be approved by “the board of directors, senior management or other person or group of persons exercising the highest level of authority” (section 42(2B)). The board must ensure that the institution and its employees comply (section 42A(1)), and the institution must have a compliance function and assign a person with sufficient competence and seniority to make it effective (section 42A(2)).
In practice those approvals and reports pass through the Exco. Its minutes are the evidence that they did.
King V, which replaced King IV for financial years starting on or after 1 January 2026, is voluntary. Funders and investors ask about it all the same, and an organisation that wishes to claim that it applies King V must now complete the standard Disclosure Framework.
Five · What to put in writing
None of this calls for the apparatus of a listed bank. A business of thirty people needs five short documents that are actually used.
Terms of reference. Purpose, members, chair, quorum, how often the committee meets, what it decides, what it recommends to the board, and what is reserved for the board. Adopted by the Exco and approved by the board.
A schedule of decision rights. Who may approve what, and up to which limit: credit, expenditure, contracts and appointments, with each line traced to a board resolution.
A meeting calendar and a paper standard. Dates fixed for the year, papers out a set number of days before each meeting, and a one-page cover sheet for every item stating the decision asked for and the authority relied on.
A decision and action register. Every decision numbered and dated, every action given a named owner and a due date, and carried forward until it is closed.
A reporting line. A standing report from the Exco to the board, so that the board’s reliance on its executives rests on something it has read.
If the Exco is a board committee, section 73(6) requires minutes of its meetings to be kept. If it is a management committee, nothing in the Companies Act requires minutes, which is exactly why many have none. Keep them anyway. They are the cheapest protection an executive has.
Some businesses bring in an independent chair for the first few months, to set the discipline while the executives settle into it. That is sensible, provided the plan from the start is for the chair to hand over.
MBM Valkyrie Advisory sets up and supports executive committees: terms of reference, decision rights, a meeting protocol, the secretariat and, where wanted, an independent chair for a defined period.
See how the engagement runsFor accountable institutions, see the AML and FICA Compliance Programme.
Sources: Companies Act 71 of 2008, sections 30(4), 66(1), 72, 73(6), 76 and 77, as published on LawLibrary (lawlibrary.org.za) in the version of 22 May 2026; Companies Regulations, 2011, regulation 38; Companies Amendment Act 16 of 2024, section 5 of which came into operation on 22 May 2026; Financial Intelligence Centre Act 38 of 2001, sections 42 and 42A (LawLibrary) and item 11 of Schedule 1 (as set out by the Financial Intelligence Centre at fic.gov.za); Institute of Directors in South Africa, media statement on the release of King V, 3 November 2025. All read on 2 October 2026. This piece is general commentary. It is not legal advice on any specific matter, and no professional relationship arises from reading it.