The Regulation of Directors' self-serving Conduct: Perspectives from Botswana and South Africa

Abstract

Recent scandalsin the corporateworld have drawn attention to the extent and diversity of corporate malpractice and the need to curb them. Effective corporate governance practices encourage vigilance, transparency, accountability and proper levels ofdisclosure which, in tum, inspire investor confidence. This paper examines the regulatory mechanisms dealing with some forms of directors' self-serving conduct in the light of recent reform initiatives in Botswana and South Africa. It looks at directors' benefits and emoluments, loans to directors, compensation for loss of office, directors' interests in their companies' securities, insider dealing and directors' indemnity and insurance. Similar statutory provisions regulate most ofthese matters, butmore needs to be done to effectively control those practices most likely to lead to abuse. It seems that successful supervision of directors' conduct is best achieved by a combined effort of legislative and market regulation, active shareholder participation, comprehensive reporting to shareholders and prooffrom the market that adhering to sound principles of corporate governance leads to long-term corporate health. Such regulation should, however, not stifle the company's ability to attract and retain directors, nor should it discourage robust yet responsible entrepreneurship and risk-taking