The Role of Voluntary Corporate Governance Codes in the Interpretation and Application of the Statutory and Common Law Duties of the Company Director: A South African Perspective

Abstract

It is critical that regulators ensure appropriate regimes to govern juristic persons. Of the many techniques devised to ensure good governance, the self-regulatory Code has proven extremely popular across jurisdictions. This is also the case in South Africa where a self-regulatory Code demands high standards of governance and dictates that the so-called ‘independent non-executive director’ should be a key custodian of corporate governance. The relationship between the Corporate Governance Code and what can be termed ‘black letter law’ is not yet clearly established. In the South African context, the courts have been willing to consider the principles that the codes espouse when interpreting legal duties conferred upon directors by the common law and statute. Such a step has far reaching implications for the development of this area of the law. This thesis contributes to the discourse by analysing the legality, and consequences of such an approach. It does so by focusing on the South African context which is submitted to be unique. First, a codified constitutional imperative to develop the South African common law gives local courts greater flexibility and, potentially, a remit that accommodates a more vigorous interpretation. Furthermore, the South African Corporate Governance Code is ambitious in its application and aspirational in its contents - applying not only to listed companies but to all entities and vigorously promoting a stakeholder inclusive approach to company governance. This thesis asks: what are the legal and normative boundaries when interpreting this area of corporate law and attempting to align the two sources of regulation? In answering this question, the thesis will contribute in particular to the state of knowledge of South African company law and the application of Corporate Governance Principles in relation thereto and make suggestions for legislative reform.