Section 76 of the Companies Act 71 of 2008 as a mechanism of enforcement for the King IV Code on corporate governance for South Africa.
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Date
2019
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Abstract
This dissertation examines the severe problems of corporate governance experienced at
Steinhoff International Holdings NV (Steinhoff) and ESKOM Holdings SOC Ltd (Eskom).¹ These failings
suggest that South African corporate governance standards are ineffective on account of a poor
ethical culture in companies; in particular, members of governing boards have shown a conscious
disregard for the rules. Steinhoff, a foreign-based company with a secondary listing on the
Johannesburg Stock Exchange, has shown a scant concern for the strictures of the Companies
Act 71 of 2008 (2008 Act). As an external company with secondary listing, the King IV
Code on Corporate Governance for South Africa² (King IV Code) does not apply to Steinhoff. This
study recommends a broadening of the definition of ‘company’ in section 1 of the 2008 Act
to include external companies to ensure that companies such as Steinhoff are bound by
governance legislation and exercise the enhanced accountability and transparency provisions set out
in chapter three³. The enforceability of the King Code is also investigated − specifically the use
and application of section 76 of the 2008 Act⁴ as a mechanism of enforcement, based on the
assumption that the King Code is legally enforceable under and in terms of section 76(4),
read with section 76(3), section 5, section 7(b)(iii) and section 158(a) of the 2008 Act⁵. The
study recommends the inclusion of selected King IV principles into hard legislation to assist and
guide boards of governors to practice good governance.
Description
Masters Degree. University of KwaZulu-Natal, Durban.