Evaluation of governance challenges associated with the exercise of fiduciary duties by the board members of the state-owned entities

Tshegofatso Kgarabjang ORCID logo

DOI:10.22495/clgrv2i1p1

Abstract

There are fundamental challenges encountered by the non-executive directors (board members) of state-owned entities in a course of exercise of fiduciary duties. These challenges are, inter alia, conflict of interests, failure to uphold the fundamental principles of corporate governance, lack of necessary skill and competencies, and this impact on the ultimate performance of the company. The article seeks to evaluate the potential challenges encountered by board members of state-owned entities in the course of exercise of their fiduciary duties. The results indicate that failure to comply with fiduciary duties may have drastic effects on a state as a shareholder and may lead to a decline in corporate governance of state-entity. The article will make a brief reference to fiduciary duties in terms of common law, the Companies Act, PFMA and King IV, secondly examine potential challenges and thirdly conduct a comparative approach with the international instruments with the aim of making recommendations/best practices. The article makes reference to various case laws dealing with fiduciary duties, journal articles, internet sources and textbooks, common law and legislations.

Keywords: Governance, Fiduciary Duties, Board Members, Common Law, Directors, Companies Act, PFMA

Authors’ individual contribution: The author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G38, K2, O16

Received: 18.03.2020
Accepted: 04.05.2020
Published online: 08.05.2020

How to cite this paper: Kgarabjang, T. (2020). Evaluation of governance challenges associated with the exercise of fiduciary duties by the board members of the state-owned entities. Corporate Law & Governance Review, 2(1), 8-17. https://doi.org/10.22495/clgrv2i1p1



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