What are the legal standards and best practices for delegation of company business by Boards of Directors?

Author:

Brighton M. Mupangavanhu

Summary:

Can the board of directors that sits only about four to six times at most in a year manage and run the important business of a company on their own without relying on others' expertise/knowledge and/or without delegating some tasks to company officers? This important question is part of what this article interrogates. This article in particular critically analyses standards of delegation and reliance under South Africa's Companies Act 71 of 2008 in the light of similar standards and recent experiences or legal developments in the UK and Australia. The paper seeks to answer the research question whether South Africa has now established globally competitive legal standards of directors' delegation and reliance on the performance of others in line with company law reform objectives prior to 2008. One such objective is ensuring compatibility and harmonisation of South African company law with the best practice jurisdictions internationally as a way of promoting the global competitiveness of the South African economy. It is concluded that South Africa has established globally competitive principles of reliance and delegation. Lessons to shore-up the gaps identified are drawn from the critical analysis of the relevant provisions of the Act and from analyses of the laws and experiences of the UK and Australia.

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