oa Comparative and International Law Journal of Southern Africa - The regulation of directors' self-serving conduct: perspectives from Botswana and South Africa
Recent scandals in the corporate world have drawn attention to the extent and diversity of corporate malpractice and the need to curb them. Effective corporate governance practices encourage vigilance, transparency, accountability and proper levels of disclosure which, in turn, inspire investor confidence. This paper examines the regulatory mechanisms dealing with some forms of directors' self-serving conduct in the light of recent reform initiatives in Botswana and South Africa. It looks at directors' benefits and emoluments, loans to directors, compensation for loss of office, directors' interests in their companies' securities, insider dealing and directors' indemnity and insurance. Similar statutory provisions regulate most of these matters, but more needs to be done to effectively control those practices most likely to lead to abuse. It seems that successful supervision of directors' conduct is best achieved by a combined effort of legislative and market regulation, active shareholder participation, comprehensive reporting to shareholders and proof from the market that adhering to sound principles of corporate governance leads to long-term corporate health. Such regulation should, however, not stifle the company's ability to attract and retain directors, nor should it discourage robust yet responsible entrepreneurship and risk-taking.
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