Disclosure of corporate political donations and expenditure to shareholders: Why South Africa should follow the United Kingdom’s legislative approach

Abstract

Whilst corporate political donations and expenditure is legally permissible in South Africa, and whilst some companies may be making such donations and incurring such expenditure for valid reasons, corporate political donations and expenditure is frequently associated with secrecy and poor corporate governance practices within companies. One strategy that some corporate-law jurisdictions have adopted to regulate corporate political donations and expenditure is to require company boards to disclose relevant information about such donations and expenditure directly to their shareholders. However, South African law currently does not require companies to disclose their political donations or expenditure directly to the shareholders, either in the annual financial statements, or in the directors’ report that must be included in the annual financial statements, or in the annual report. Following an examination of key policy considerations relevant to the disclosure of corporate political donations and expenditure to shareholders, and an examination of the legislative approach in the UK, the article argues for the effective disclosure of corporate political donations and expenditure to shareholders under the Companies Act 71 of 2008. It then makes detailed recommendations on how such disclosure requirements could be introduced and implemented in South Africa.