Transparency in corporate governance: Extent of directors duty to declare interest in company’s transactions

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The realization that the directors occupy important position in corporate governance, and as business men and women, cannot be prevented from having dealings with the company, demand a close scrutiny of corporate transactions in which they are directly or indirectly involved or have an interest to ensure that such interest is not placed above their duty to the company. One of the ways in which the law strives to achieve this balance is by imposing a duty on the director to disclose to the board any interest he has in company’s transactions. This requirement which was previously governed by the common law and the company’s articles, is presently increasingly finding a place in companies statutes in different jurisdictions. The paper examines, through a comparative analysis, the provisions on the duty of the director to disclose interest in company’s transactions in South Africa and United Kingdom with the aim of discovering the extent to which the statute in both jurisdictions upholds the common law prescriptions. The paper argues that the need for transparency in corporate governance and the preservation of the distinct legal personality of the company demand that the duty to disclose interest should be upheld even in those cases of companies run by a sole director.