LML 4806 – COMPANY LAW
2022
MAY /JUNE EXAM
DUE ON 14 JUNE 2022
(4 Hours)
,QUESTION 1
1.1 Discuss how the social and ethics committee enhances corporate social
responsibility in South African companies.
(10)
Businesses have a responsibility towards the societies in which they operate and
that this responsibility needs to be managed. The term, Corporate Social
Responsibility (CSR) seeks to make companies responsible members of the
community. It means that CSR is, therefore, a voluntary commitment by
companies to manage their role within society responsibly and to contribute to
sustainable development through co-operation with their stakeholders in general
to improve the stakeholders’ quality of life.
The Companies Act requires certain categories of companies to appoint a Social
And Ethics Committee to monitor the company’s activities with regard to matters
relating to social and economic development (includes the company’s standing in
terms of the goals and purposes of the 10 principles set out in the United Nations
Global Compact
Principles; the OECD recommendations regarding corruption, the Employment
Equity
Act; and the Broad-Based Black Economic Empowerment), good corporate
citizenship (includes the company’s promotion of equality, prevention of unfair
discrimination reduction of corruption; contribution to development of the
communities in which the company’s activities are predominantly conducted or its
products or services are marketed; and recording of sponsorship, donations and
charitable giving), the environment, health and public safety, consumer
relationships, and labour and employment issues (s 72 and Regulation 43).
Examples:
, • One of the purposes of the Companies Act 71 of 2008, is to promote the
development of the South African economy by encouraging transparency and high
standards of corporate governance, given the significant role of enterprises within
the social and economic life of the nation (s 7(b)(iii)).
• The Companies Act specifically seeks to reaffirm the concept of the company as
a means of achieving economic and social benefits (s 7(d)).
• The Companies Act seeks to promote the development of companies within all
sectors of the economy, and to encourage active participation in economic
organisation, management and productivity (s 7(f)).
• The Companies Act also seeks to encourage the efficient and responsible
management of companies (s 7(j)). Sound management of companies prevents
corporate collapses due to mismanagement that may also have dire
consequences on society.
• The Companies Act provides for non-profit companies that are incorporated for
social activities, public benefits, cultural activities or group interests.
• Corporate activities may affect a wide circle of stakeholders. As such, the
Companies Act has extended locus standi to a broad category of stakeholders
(not only company shareholders) to enforce its provisions and to seek redress
where company directors have abused their position, for example, in the
application to declare a director delinquent or under probation (s 162). Such
stakeholders may include directors, prescribed officers, trade unions or other
representative of employees.
1.2 You are approached by Zelda, the chairperson of the board of directors
of TMT Ltd for legal advice. She informs you that TMT Ltd will be holding
its annual general meeting (AGM) in person next month. She further
informs you that some of the company’s shareholders and their proxies
have indicated that they will not be able to attend the AGM in person at
the time it is to be held, although they would want to participate at the
2022
MAY /JUNE EXAM
DUE ON 14 JUNE 2022
(4 Hours)
,QUESTION 1
1.1 Discuss how the social and ethics committee enhances corporate social
responsibility in South African companies.
(10)
Businesses have a responsibility towards the societies in which they operate and
that this responsibility needs to be managed. The term, Corporate Social
Responsibility (CSR) seeks to make companies responsible members of the
community. It means that CSR is, therefore, a voluntary commitment by
companies to manage their role within society responsibly and to contribute to
sustainable development through co-operation with their stakeholders in general
to improve the stakeholders’ quality of life.
The Companies Act requires certain categories of companies to appoint a Social
And Ethics Committee to monitor the company’s activities with regard to matters
relating to social and economic development (includes the company’s standing in
terms of the goals and purposes of the 10 principles set out in the United Nations
Global Compact
Principles; the OECD recommendations regarding corruption, the Employment
Equity
Act; and the Broad-Based Black Economic Empowerment), good corporate
citizenship (includes the company’s promotion of equality, prevention of unfair
discrimination reduction of corruption; contribution to development of the
communities in which the company’s activities are predominantly conducted or its
products or services are marketed; and recording of sponsorship, donations and
charitable giving), the environment, health and public safety, consumer
relationships, and labour and employment issues (s 72 and Regulation 43).
Examples:
, • One of the purposes of the Companies Act 71 of 2008, is to promote the
development of the South African economy by encouraging transparency and high
standards of corporate governance, given the significant role of enterprises within
the social and economic life of the nation (s 7(b)(iii)).
• The Companies Act specifically seeks to reaffirm the concept of the company as
a means of achieving economic and social benefits (s 7(d)).
• The Companies Act seeks to promote the development of companies within all
sectors of the economy, and to encourage active participation in economic
organisation, management and productivity (s 7(f)).
• The Companies Act also seeks to encourage the efficient and responsible
management of companies (s 7(j)). Sound management of companies prevents
corporate collapses due to mismanagement that may also have dire
consequences on society.
• The Companies Act provides for non-profit companies that are incorporated for
social activities, public benefits, cultural activities or group interests.
• Corporate activities may affect a wide circle of stakeholders. As such, the
Companies Act has extended locus standi to a broad category of stakeholders
(not only company shareholders) to enforce its provisions and to seek redress
where company directors have abused their position, for example, in the
application to declare a director delinquent or under probation (s 162). Such
stakeholders may include directors, prescribed officers, trade unions or other
representative of employees.
1.2 You are approached by Zelda, the chairperson of the board of directors
of TMT Ltd for legal advice. She informs you that TMT Ltd will be holding
its annual general meeting (AGM) in person next month. She further
informs you that some of the company’s shareholders and their proxies
have indicated that they will not be able to attend the AGM in person at
the time it is to be held, although they would want to participate at the
