Abstract
The protection of stakeholders: The South African social and ethics committee and the United Kingdom's enlightened shareholder value approach: Part 1
Highlights
A basic element of the duties of directors is that directors must act in the interest of the company. The company in this sense was always interpreted as the ‘metaphysical entity’, and this translated into the interest of all the members, present and future, and, in certain instances, such as when the company is insolvent, the creditors. ‘[T]he interests of the consumers of the company’s products, the nation as a whole and even... the employees are legally irrelevant.’[1]. This philosophy changed and, in South Africa at least, it was initially led by codes
We will consider the protection afforded to stakeholders, focusing on the social and ethics committee in South Africa and the codified duty of directors to promote the success of the company having regard to various matters in the United Kingdom
It is submitted in this article that a committee such as the Social and Ethics Committee is a move to protect the interests of stakeholders in the context of company law in South Africa.[55]
Summary
A basic element of the duties of directors is that directors must act in the interest of the company. Protection of stakeholders: Part 1 99 employees and creditors, and not just those of the shareholders.[4] The various interests of different stakeholders should be determined on a case-by-case basis, and the decision to act in the best interests of the company and a particular stakeholder may well, in a particular situation, receive preferential treatment, provided it serves the ultimate interests of the company best This self-regulatory approach was complimented with some legislative provisions and stakeholders in general are at least indirectly, protected in the 2008 South African Companies Act.[5] Various provisions of the 2008 Companies Act provide stakeholders with some form of protection,[6] while particular classes of stakeholders, such as employees, are afforded specific protection measures.[7] A critical analysis of these provisions is not within the scope of this article and our aim is to focus on the new procedural requirement of a social and ethics committee in respect of certain companies and the protection that it offers stakeholders in general. In Part 2 we discuss the practical application of the stakeholder concepts in South Africa and in the United Kingdom and reach certain conclusions and form a view on whether or not the South African procedural approach of a social and ethics committee or the United Kingdom’s rule approach of a codified duty best protects the interests of stakeholders
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