I dedicate the entire work to my daughter Bohlala Ntene and my siblings Faith and William Ntene. Sincere thanks to my sisters and brother; Portia, Jaqueline, Faith and William; for their support and prayers.
Introduction
Historical background to the study
7Institute of Directors of Southern Africa “Code of Corporate Practices and Conduct; an Extract from the King Report on Corporate Governance' (1994), retrieved 3 March 2015. The next version of the King Report on Corporate Governance was introduced in 2009.15 The introduction of the King III Report was necessitated by the declaration of new companies. Act 16.
Statement of the Research Problem
Third, the failure to implement the eight turnaround strategies developed over a six-year period is indicative of the failure of the SAA board to provide strategic direction and follow-up. Needless to say, this is indicative of the Board's failure to fulfill its fiduciary duty and duty of care, skill and diligence to SAA.
Literature Review
It is argued in this paper that these challenges have resulted from poor interpretation and application of corporate governance principles. Solomon argued that despite all corporate governance structures developments and implementation initiatives, corporate failures still persist today.35.
Aims and Objectives of the Study
Second, it interprets and evaluates the application of the principles of corporate governance as contained in the King III and IV reports, particularly in the SAA. This paper helps to identify the gaps that are limiting factors for the effective SOC mechanisms that ensure the enforcement of corporate governance in SOCs.
Research Methodology
First, this paper analyzes and interprets the laws governing corporate governance in SAA by defining corporate governance and looking at the benefits and regulatory framework regarding corporate governance in SOCs. It benefits the board of SOCs by making them aware of the importance and relevance of practicing good corporate governance.
Scope and Limitation of the Study
This chapter analyzes the comparison of corporate governance in South Africa and the United Kingdom, as one of the influential countries in terms of corporate governance in South Africa. This chapter discusses the summary of the conclusions of the whole study and makes some recommendations.
Introduction
The Concept and Benefits of Corporate Governance
Van Der Merwe defines corporate governance as a way in which directors comply with the provisions of the Companies Act and laws that regulate and give effect to trusts. 47 Du Plessis "Corporate Governance and the Cadbury Report" (1994) Vol 6 South African Mercantile Law Journal at pp 81-82. Good corporate governance helps prevent corporate scandals, fraud, and potential civil and criminal liability for the organization.
A good image of corporate governance strengthens the organization's reputation and makes it attractive to customers, investors, suppliers, and in the case of non-profit organizations, also a contribution."57. The principles of corporate governance, if well explained and applied in SAA, can attract investors in the first place and lead them to sustainability in an intensive way. Finally, good corporate governance can lead SAA to distribute rights and responsibilities among the company's participants, such as the board of directors, managers, shareholders and other stakeholders.65.
Legislative Frameworks
The South African Airways Act (SAA Act)
The Public Finance Management Act (PFMA)
The Companies Act (CA)
King Reports on Corporate Governance
The history of the development of the King's Report on corporate governance was discussed above.104 This discussion is made purely for purposes of completeness and/or convenience. These principles are discussed in detail below.105 The most important fact that should be emphasized is that the King III Report on Corporate Governance was drafted on the principle of "comply and or explain".106. This means that although the King III Report is not binding, it requires SAA directors to comply with it and or explain their failure to comply with it.
Acting in the best interest of the company is usually a good basis for deviating from the principles of corporate governance as described in King III. King's Report IV was recently adopted and its fourfold objective is certainly not a departure from the basic principles of King's Report III. King's Report IV defines corporate governance as a process whereby the governing body exercises ethical and effective leadership.
The Protocol on Corporate Governance in the Public Sector
The Protocol complements and replicates the Royal Report, although both cannot be said to be considered in the SAA, as its directors were at some stage involved in tampering with tenders and falsifying their qualifications.
Constitutional Institutions and Structures Supporting Corporate Governance
- National and Provincial Departments
- The Auditor General
- The Public Service Commission
- The National Treasury
- The Public Protector
The PA has the power to audit and report on the accounts, financial statements and financial management of SAA. The reports made by the PA are in terms of the Constitution supposed to be made available to the public.115 It is clear that the aforementioned section promotes the principles of transparency and accountability which are essential in the concept of corporate governance. It is submitted that the audit in general should be understood by the managerial leadership of the SAA to avoid situations such as tender irregularities in the SAA.
SAA management must therefore be familiar with auditing processes for the purpose of effective corporate governance. SAA is a public entity and its affairs fall within the scope of the PSC. The NT must establish reporting guidelines to promote and enforce transparency regarding SOC revenues, expenditures, assets and liabilities.
Conclusion
The NT must receive the business plans121 and may prescribe information, declarations, documents, explanations and motivations as required by the PFMA.122 This document shares Siswana's sentiments that the NT was established simply to place corporate governance at the heart of business operations. public services.123 The NT promotes accountability, transparency and risk management in the public sector by drawing up fraud and risk plans that must be implemented to ensure good governance. The office of the Public Protector (PP) is established in terms of the provisions of the Constitution.124 The PP is required in terms of the Constitution to investigate any conduct in state affairs or in public administration in any area of the government, that it is alleged or suspected to be improper or leads to impropriety or prejudice.125 It must report on such conduct126 and take appropriate corrective action.127 The above constitutional duties imposed on the PP support corporate governance in the SAA by ensuring that the rights of the general public are not undermined. Despite the above-mentioned clear legal principles of corporate governance that the SAA must adhere to, there have been numerous reports in the media about the SOC's boards of directors.
This obviously raises corporate governance concerns about the manner in which the relevant Shareholders Minister has made these specific board appointments. Thus, it can be concluded that the principles of corporate governance in the above frameworks, if properly interpreted and applied, can help in eradicating the corporate governance challenges in SAA. Regardless of any legislation regulating SAA as a government entity, this research found that much work remains to be done to ensure compliance with the principle of corporate governance.
Introduction
Interpretation and Application of Corporate Governance Principles
- Ethical leadership and corporate citizenship
- Boards and Directors
- Audit committees
- The governance of risk
- The governance of information technology
- Compliance with laws, rules, codes and standards
- Internal audit
- Governing stakeholder relationship
- Integrated reporting and disclosure
136 The BOD must ensure that the behavior of the management and that of the BOD corresponds to the stated values.137 The company's ethical performance must be assessed, monitored, reported and dismissed.138. Ensure that the business rescue practitioner provides security for the value of the assets of the company.163. The meetings of the BOD must be held four times in a year171 for the sole purpose of fulfilling its duties.
The managers in the subsidiary must therefore act in the company's interest. BIR must familiarize itself with the content of applicable laws, regulations, codes and standards. 236. BIR must only prioritize the interests of other stakeholders if this will lead to the company's success for the benefit of shareholders in general.
Conclusion
The BOD should delegate overall oversight to the audit committee, which should assist the board of directors in reviewing the integrated reporting and ensure that the information in it is reliable and does not contradict the financial aspects included in it.266 .
Introduction
Historical Development of Corporate Governance in the UK
- The Cases of Guinness Plc. and Polly Peck International Plc
- The Cadbury Report
- The Greenbury Report
- The Hampel Report
- The Turnbull Report
- The Higgs Report
- The Smith Report
- Recent Corporate Governance Frameworks in the UK
- The UK Corporate Governance as a Model for South Africa
The CEO therefore had direct control over all the funds of the company and of its various subsidiaries. This led to the establishment of the committee by the London Stock Exchange (LSE), headed by Sir Andrian Cadbury, which published the Cadbury Report on corporate governance. The report is a very important part of UK corporate governance and provides useful guidance on executive remuneration.286 It is included in the 1998 UK Combined Code of Corporate Governance.
In 1998, the Cadbury, Greenbury and Hampel reports were combined to form the UK Combined Code of Corporate Governance, which was a prescriptive measure for listing on the LSE, referred to as the Turnbull Report. The Code follows the “comply or explain” approach and consists of the key and supporting principles of corporate governance. It further requires that the directors of companies be natural persons and that a register is kept of all persons involved in the day-to-day control of the company.
Conclusion
The principles in the UK Code cover aspects of independence and remuneration, board balance, risk management systems, shareholder relations and the maintenance of internal control systems. It provides fourteen voluntary principles of corporate governance that apply to unlisted companies in Great Britain.300 There is also the so-called UK Stewardship Code, issued by the FRC, which regulates the relationship between shareholders and directors. Finally, there is the Small Business, Enterprise and Employment Act, which has recently been passed into law in Britain.
The UK Code contains similar corporate governance principles as the South African King's Reports. Firstly, while the South African Institute of Directors is a voluntary body in South Africa, the FRC is a mandatory regulatory body in the UK. Finally, while the UK places more emphasis on director remuneration, South Africa does not place an emphasis on directors.
Conclusion
Recommendations
The SAA Board will thus be able to correctly interpret, apply and observe the principles of corporate governance. The effectiveness of corporate governance legislation and regulations depends on competence, integrity and strength. Having qualified, trained and experienced directors who strictly interpret and apply the principles of corporate governance on SAA's board will enhance SAA's performance.
Nevondwe L, Odeku KO and Tshoose CI 'Promoting the use of corporate governance in the South African public sector' (2014). Cliff Dekker Solicitors 'Corporate Governance Royal Report for South Africa: What it means for you' (2002). Institute of Directors of Southern Africa “Code of Corporate Practice and Conduct: Extract from the Royal Report on Corporate Governance” (1994).
