Companies Act reform. Accountability versus governance

Abstract

The Companies Act, Act 61 of 1974 came into effect on 1 January 1974, more than thirty years ago. Although the Act has been amended a few dozen times since then, the basic principles that established the accountability arrangements between the providers and stewards of capital have remained essentially unchanged. These fundamental arrangements are based on English law dating back to the Victorian era. There is no dispute that company law is in urgent need of reform – it is a widely accepted fact. Not only has the South African Constitution changed fundamentally, but corporate failures have exposed the current structures as incapable of effectively and efficiently dealing with irresponsible and self-serving company directors and officers. In South Africa we now live in a society where openness and transparency, inclusivity and accountability are the established societal norms. The Companies Act was not designed to support these principles.