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PwC: Greater personal liability on South Africa’s non-executive directors
January 20, 2013
By Rob Starr, Content Manager, Big4.com
The duties and responsibilities of South Africa’s non-executives directors continue to be increasingly broadened in the wake of new legislation and corporate governance principles. As their roles and responsibilities continue to increase, non-executive directors, have in certain instances taken on additional positions in other companies, while retaining their present position, says the Sixth Edition of the PwC Annual Review of Non-Executive Directors’ Practices and Fees Trends Report.
The PwC report examined the boards of 373 companies listed on the Johannesburg Securities Exchange (JSE) and was based on information publicly available as at 30 November 2012.
Boards nowadays have complex businesses to oversee, exacerbated by increasing regulation and severe personal liability implications for directors. The new Companies Act of 2008 has changed the way in which South African companies will be managed and administered into the future. Directors and officers who breach the law, or who breach their fiduciary responsibilities to the companies they represent are personally liable for the losses they cause. This personal liability can be unlimited.
The talent pool in South Africa is plagued with a shortage of non-executive directors, with the number increasing by 1.2% to 2,294 (2,267 in 2011). Included in this year’s total count are 249 chairpersons, 76 deputy chairpersons, and 69 lead directors. Lead independent directors make up the majority of all directors since PwC began tracking the ratio of independent to non-independent directors last year. The most notable change has been found in the AltX group of companies where the percentage of independent directors has risen from 41% to 53%. The industry with the greatest percentage of independent directors is the industrials at 56%