How businesses are at sea over Companies Act obligations
New findings show that 56.5% of South African business owners and directors have failed to grasp their duties according to the law
More than half of South African business owners and directors have, by their own admission, failed to grasp their duties as set out in the new Companies Act.
This is according to a study launched by Sanlam subsidiary SHA Specialist Underwriters.
The Annual Specialist Risk Review interviewed 200 local business leaders.
The findings show that 56.5% of South African business owners and directors do not have a clear understanding of what their obligations are under the Companies Act.
But this lack of comprehension is not limited to the Companies Act, with the review finding that overall South African businesses showed limited understanding of their obligations under other key pieces of legislation as well.
As awareness and activism from business stakeholders grows on the back of corporate scandals such as Steinhoff’s accounting woes and Tiger Brands’s alleged ties to the national listeriosis outbreak, company directors are under more intense scrutiny.
Consequently, directors’ and officers’ insurance, which paid defensive costs and possibly a sanction should a director be sued or charged in his or her personal capacity, was becoming a more active space for niche insurers, said Gareth Beaver, the CEO of SHA.