OPINIONISTA: Why company law and the King Codes can’t save corporate SA By Xolisa Phillip
South Africa’s corporate governance framework has often been described as “ground-breaking” and “world class”. And on the surface, this seemed an apt descriptor.
The 2008 Act, and proposed amendments thereto, covers both the private sector and state-owned entities . One of the important express aims of the Companies Act of 2008 was to decriminalise company law, with the caveat being that anyone who signed “false or misleading” financial statements or prospectus, or acted recklessly in the conduct of a company’s business would be liable for a fine or 10 years’ imprisonment. Added to this arsenal of oversight is the King Code on Corporate Governance.
The 2008 Act also brought in the concept of social and ethics committees, which are intended to act as a company’s or SOE’s conscience. South Africa is awash with many instances of corporate malfeasance, both in the private sector and within SOEs, with boards and management at the heart of the rot. In the process, the concept of corporate governance has been unmasked as nothing more than a smoke screen.
Would management have had a right to veto all the dodgy Steinhoff deals that involved board members? Is it even conceivable for management to push back against an overly active board? In other words, what tools and recourse are at management’s disposal when boards go rogue or overstep their mandates? Furthermore, who is the final accounting authority? And what powers are at a board chair’s disposal versus those of a CEO? Who is the boss of whom?A director-general is the final accounting...
By way of example, look no further than the boardroom brawl between erstwhile SAA CEO Khaya Ngqula and the airline’s board. And the subsequent skirmishes between Dudu Myeni and the national carrier’s long roster of CEOs and other executives. Think about the governance lapses at Prasa and the fights that ensued between the passenger rail agency’s board and its former CEO.
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