Corporate governance achievable in Africa
Corporate governance cannot be 'bad' or 'good'. Every director has a fiduciary duty towards the company. Fiduciary duties are imposed on directors to ensure that they exercise their powers for the purposes for which they are given, and are enforced by statute and by the courts. The failure to comply with a fiduciary duty constitutes a breach of trust and gives rise to a particular form of liability which is not based on contract or delict. Likewise directors have a duty to act in good faith in the interests of the company.
A director may not place himself in a position in which there is a personal interest or a duty which conflicts with duties to the company. Directors of companies are precluded from dealing on behalf of the company with themselves and from entering into contracts in which they have a personal interest conflicting with the interests of the company.
King II sets out the guidelines for all boards of directors to follow and serves an essential role in reminding directors of the standards to which they should aspire.
However, without the penalty of criminal liability under the law, the excellent ideals espoused in King II are not always adhered to.
In support of King II the JSE Securities Exchange South Africa has incorporated aspects of King II into the Listings Requirements. For example, the roles of CEO and the chairperson must be separated, the chairpersons of the audit and remuneration committees must attend the AGM, a brief CV of each director standing for election or re- election must accompany the notice of the annual general meeting, and the audit committee must set principles for recommending using the accounting arm of the external auditors for non- audit purposes.
The Banks Act Amendment Act, 2002 (which is still in Bill form) in South Africa will introduce the concept of corporate governance into the Banks Act. It states that in relation to the management of a bank, corporate governance includes all processes, policies, systems and procedures whereby a bank is governed with the objective:
There are therefore more than sufficient guidelines available to each and every director or corporate executive as to what constitutes corporate governance. However, it remains for the executives to ensure that within their own domain and sphere of authority they give credence to corporate governance in the conduct of their business dealings.
The form exists. In complying with the guidelines executives can create the substance.
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