The duty of care, skill and diligence : the King Report and the 2008 Companies Act

Abstract

Corporate governance is a broad concept and includes not only the common-law and statutory duties of directors, but also refers to the codes of practice of various (usually extra judiciary) entities (see generally on corporate governance and its regulation Du Plessis, Hargovan and Bagaric Principles of contemporary corporate governance (2011) 156 ff and Naidoo Corporate governance (2009) 27ff). The difference between these two meanings is that the former includes possible liability under the law for non-compliance, while the latter implies what it says, namely, it is a recommendation and non-compliance will result in “sanctions” other than direct liability. In a recent South African case the court referred to principles of good governance and it would appear that these principles (which are not contained in legislation or which are not mere restatements of common law principles) are not always mere recommendations. Instead, directors may have to adhere to these recommendations to prevent liability for breaching their legal duties.