Common law duties and section 76 of the Companies Act, 71 of 2008 compared

Abstract

Recently, the South African Legislature partially codified the common law duties of directors with the Companies Act, 71 of 2008 (hereafter referred to as „the 2008 Companies Act‟) which came into effect on 1st May 2011. Chapter 2 of the 2008 Companies Act is dedicated to the formation, administration and dissolution of companies. „Part F‟ thereof elaborately provides for governance of companies, and section 76 contained therein requires directors and other company office bearers to meet the standards of directors‟ conduct as prescribed therein. All of these duties are in accordance with the principles of common law as indicated in section 77 subsection (2) (a) where non-compliance will attract legislated liabilities as provided for in section 77 of the 2008 Companies Act. While the standards of directors‟ conduct remains within the bounds of common law, what impact will this codification have on South Africa‟s corporate law? And what are the realities of its enforcement?