Corporate Governance Under the South African Companies Act: A Critique

Abstract

Corporate governance in South Africa has traditionally been based on the shareholder value approach. In terms of this approach, directors are expected to manage a company in the best interests of the shareholders collectively. This approach is however, increasingly being questioned. With the surge of interest in the recognition of not only shareholder interests, but also the interests of other stakeholders, the corporate governance approach in South Africa merits a deeper analysis. This paper critiques the corporate governance approach under the Companies Act 71 of 2008. The main concern is whether the Companies Act gives recognition to a broader spectrum of stakeholders and whether it reflects the new thinking in corporate governance. The investigation identifies the lacuna in the law and makes recommendations for reform. The findings of this paper will be of benefit to the legislators, directors, shareholders and all other stakeholders.