The Reform of Corporate Law in South Africa

Abstract

Following a 30-year period of relatively little change to company legislation in South Africa, a comprehensive review of South African company law was undertaken by the South African Department of Trade and Industry. The first stage of the review culminated in the release of a policy paper in June 2004, entitled South African Company Law for the 21st Century: Guidelines for Corporate Law Reform, which set out the framework and guiding principles of the new Companies Act. This article discusses the changes proposed in the Policy Paper with a view to substantially reworking company law in South Africa. The key fundamental question, which is at the core of every company law reform process, is discussed, namely, in whose interest the corporation should be run. Our interpretation is that the Policy Paper proposes a model that lies somewhere between pluralism and the enlightened shareholder value approach. This article also discusses the guiding and fundamental policy principles which are to form the basis of the new Companies Act and the areas of primary focus of these principles, including company formation, corporate finance, shares, corporate governance, statutory standard of directors’ conduct, indemnification of directors, disclosure and reporting, and other areas of reform.