Creditors of the corporate business form are in a vulnerable position. Recognition of the plight of corporate creditors led to the implementation of various legal measures aimed at protecting their financial interest in the company. These measures proved disappointingly inadequate in many instances. As a result the judiciary in some jurisdictions felt compelled to develop existing legal principles pertaining to directors’ duties in such a way that they could be used to facilitate protection of corporate creditors’ interests. This development did not meet with universal approval. Those opposed to the extension of directors’ duties to protect creditors’ interests have three main arguments against it. The first is related to conceptual issues and policy concerns. The second argument is that existing remedies are more than adequate to protect creditors’ interests. A last argument against a directorial duty to creditors pertains to the practical implementation of this extended duty. It is argued that the existing legal framework with regard to directors’ duties is not suitable to provide protection for creditors’ interests. However, it was shown in this study that the extension of directors’ duties to protect creditors’ interests is indeed justifiable on a sound conceptual basis and that policy concerns regarding such an extension are either unfounded, or should be addressed in some other way. An analysis of existing protective measures and remedies often referred to by opponents of an extension of directors’ duties, namely statutory personal liability of directors, traditional insolvency remedies, and the piercing of the veil doctrine furthermore showed that these measures are inadequate. This leads to the conclusion that there is a definite need for an alternative remedy, such as the extension of directors’ duties to include creditors’ interests. The existing legal framework in respect of directors’ duties furthermore proved to be capable of being successfully adapted to include creditors’ interests. Central issues in this respect, as was indicated by an analysis of case law, are the point in time when the duty to creditors is triggered, the beneficiary of the duty, in other words who would have locus standi in case of a breach of the duty, and the type of protection afforded to creditors’ interests by way of fiduciary duties and the duty of care and skill. The existing legal framework also provides measures in terms of which honest and diligent directors may be relieved from liability, such as indemnification, relief granted by the courts and director liability insurance. These measures, if formulated correctly, may achieve and maintain the essential balance between accountability and entrepreneurial freedom. The legislature appears to have adopted a cautious approach to the issue of directors’ duties to creditors. It thus seems to be up to the judiciary to develop directors’ duties to creditors in a meaningful way. Pioneering in this respect has already been done in Australia, New Zealand, England, Canada and the United States of America. It is to be hoped that the South African judiciary will follow suit when the opportunity to do so arises. / Thesis (LLD (Mercantile Law))--University of Pretoria, 2007. / Mercantile Law / unrestricted

Magister Legum - LLM / The global financial crisis resulted in a corporate collapse in different parts of the world. The global financial crisis was caused by poor governance. Consequently many countries, including South Africa, began to place more emphasis on good governance. The framework and guidelines for the development of good governance in South African company law was published by the Department of Trade of Trade and Industry (hereafter DTI) in a document referred to as The South African Company Law for the 21st Century: Guidelines for Corporate Law Reform (hereafter the DTI Policy Document) published by the DTI. The DTI Policy Document recognised the need for a regulatory framework within which enterprises operate to promote growth, employment, innovation, stability, good governance, confidence and international competitiveness. In order to further develop governance, the effectiveness of directors’ standards as well as the liability of directors was also said to have developed. Prior to the development of South African corporate law, liability of directors was to a large extent governed by the common law and the King Codes, despite the existence of the Companies Act 61 of 1973 (as amended). As of the 1st of May 2011, corporate law in South Africa appears to have dramatically changed the duties and liabilities of directors. The 1st of May 2011 marked the implementation of Companies Act 71 of 2008 (hereafter the Act). The Act is written in plain language in an attempt to make it more accessible and align it with international trends. The Act has also theoretically changed the roles and duties of directors as well as the liability that they may face in that it potentially changes the existing common law and alters policies and philosophies of corporate law in general. The Act partially codifies the common law and introduces the business judgement rule to South Africa. The business judgment rule will draw a balance between the directors’ ability to steer a company and the shareholders' right to hold directors accountable for their decisions. It is perceived as a mechanism that can be used to balance the tension between these opposing rights.

This thesis explores the extent to which the law in the UK, Delaware and Germany imposes an obligation on directors of solvent public companies to take into account the long-term consequences of their decisions while establishing the content and scope of long-termism in these three legal systems. It adopts a comparative methodology with the aim of determining whether the approaches taken in the chosen jurisdictions regarding both the parameters of long-termism and its legal sources and forms are radically different or very similar. It is also scrutinised here if it can be stated with any certainty that the approach taken in any particular jurisdiction regarding long-termism is ‘better’ for the protection of a company’s interests. This thesis makes four original contributions. Firstly, it conducts a comprehensive, comparative study on the relevance of long-term considerations. The concept of long-termism is analysed in the contexts of current legislation, case law, soft law, academic literature, and incentives that encourage long-termism decision-making. Secondly, hard law in the UK, Delaware and Germany does not currently offer much guidance regarding the content and scope of long-termism. A key original contribution made by this research draws on the academic literature and performs a gap-filling exercise by identifying examples of long-term decision-making in these jurisdictions, as well as examples of decision-making and conduct that is not long-term in nature. In the gap-filling exercise, case studies are presented in the context of (i) the contemporary shareholder v. stakeholder debate in corporate governance scholarship and (ii) the relevance of the share ownership structure of the company. These two important debates are used as variables to cast light on the ambit of the notion of long-termism, and the structural differences and similarities between the corporate governance systems and concepts of long-termism in the UK, Delaware and Germany. Thirdly, this thesis identifies specific and concrete factual examples of the incentives that the legal systems in the UK, Delaware and Germany do or could provide to encourage long-term managerial decision-making. Finally, it will make a positive contribution to the ongoing ‘convergence v. divergence’ debate, as the thesis has the scope to offer insights into whether the law on the duties of directors is converging in different legal systems particularly in the specific context of what is meant by long-term decision-making by such directors.

Traditional scholarship on corporate law evidences the lack of analysis undertaken to understand the interconnectivity between businesses and the societies in which they operate where , scholarship and case law had favored shareholder primacy. However, an analysis of Section 122 of the Canadian Business Corporations Act (CBCA), reveals that the ambiguous language of director’s duties under the CBCA allows for the courts to continue modernize the law inclusive of stakeholder rights without requiring statutory amendments. Therefore, this thesis argues that courts have the flexibility to interpret that directors are within their duties to balance the rights of both shareholders and stakeholders. In fact, this thesis argues that stakeholder theory is superior to shareholder theory in consideration of law and morality. By concluding that stakeholder theory is the new accepted standard in Canadian Corporate law, this paper offers directors guidance on how to perform their role in accordance with the CBCA.

Traditional scholarship on corporate law evidences the lack of analysis undertaken to understand the interconnectivity between businesses and the societies in which they operate where , scholarship and case law had favored shareholder primacy. However, an analysis of Section 122 of the Canadian Business Corporations Act (CBCA), reveals that the ambiguous language of director’s duties under the CBCA allows for the courts to continue modernize the law inclusive of stakeholder rights without requiring statutory amendments. Therefore, this thesis argues that courts have the flexibility to interpret that directors are within their duties to balance the rights of both shareholders and stakeholders. In fact, this thesis argues that stakeholder theory is superior to shareholder theory in consideration of law and morality. By concluding that stakeholder theory is the new accepted standard in Canadian Corporate law, this paper offers directors guidance on how to perform their role in accordance with the CBCA.

There are two tasks of this dissertation. Firstly, it will make a contribution from a theoretical perspective. Some Western scholars conclude that rules and institutions transplanted from Western jurisdictions have not worked well in the Chinese legal system so far. This is because the level of consistency between the transplanted rules or institutions and the local context is still at a low level. However, this dissertation takes a different position. By solving a series of unanswered questions, it will make a theoretical contribution to the scholarship on comparative corporate governance in the context of the transitional economy. By and large, it will answer the question: "why can China, as representative of a transitional economy, not escape from the faith of legal transplant in its legal reform of corporate governance". Secondly, this dissertation will make a contribution from a practical perspective. Many Chinese lawyers and Western scholars complain that Chinese company law is suffering deeply from the problem of ambiguity. Indeed, it is poorly and inconsistently drafted. There is, nevertheless, no systematic study on how to solve this problem in a pragmatic manner. In light of the proposed theoretical research, this dissertation will provide an important response on this issue. It rebuilds the director's fiduciary duties and shareholder's fiduciary duties by inserting some workable legal rules from the UK into the existing legal regime in China.

IN ENGLISH The purpose of this paper is to analyse all segments of the duty of due managerial care of member of an elective body of a limited company and propose de lege ferenda approach to segments of the duty. Another goal of this master's thesis was to examine new business judgment rule and present an alternative British model of the rule. To provide a comparative approach the paper utilizes the British company law approach. The first chapter introduces the origin of the duty of due managerial care, in particular its roots in Roman law and Austrian civil code. The second chapter is divided into five subchapters. The first subchapter highlights the recent changes to the duty of due managerial care after recodification of private law. The second subchapter examines duty of care as one of two integral parts of the duty of due managerial care. Firstly, it analyzes the quality of care expected of directors. Secondly, it focuses on the test for determination of necessary standard of care. Thirdly, following a critical examination of the test for determination of a standard of care, the paper suggests de lege ferenda test of due care. Finally, the first subchapter considers the British duty of care, skill and diligence. The third subchapter covers the duty of loyalty including duties derived from it...

Magister Legum - LLM / Directors of companies are the forerunners in overseeing and strategically managing a company.1 The Companies Act 71 of 2008 (the Companies Act) gives the board of directors the legislative obligation for a company to be managed by or under the direction of the board of directors.2 The board of directors have a central role in the decision making and operation of a company; this position also applies to the board of directors of State owned Companies (SOC). This dissertation explores methods to hold directors of SOCs personally liable for irregular, wasteful and fruitless expenditure Irregular expenditure is defined as expenditure that does not comply with the provisions of the Public Finance Management Act 1 of 1999 (PFMA), the State Tender Board Act 86 of 1968 or any legislation that provides for provincial government procedure.3 Fruitless and wasteful expenditure is defined as ‘expenditure which was made in vain and would have been avoided had reasonable care has been exercised’.This research aims to analyse legislative mechanisms put in place that hold directors of SOCs personally liable for irregular, reckless, wasteful and fruitless expenditure. Section 77(2)(b) and 218(2) of the Companies Act contains the legislative basis for the personal liability of directors of SOCs for irregular, wasteful and fruitless expenditure.

Depuis les dernières années, les marchés financiers ont été marqués par une volonté des investisseurs, dont les fonds d’investissement privés, de privatiser des sociétés publiques. Plusieurs fermetures de capital se sont matérialisées par des acquisitions par voie d’emprunt (aussi connues sous le nom « leverage buy-out »), en raison notamment des taux d’intérêt peu élevés, d’un crédit plus accessible et d’un certain resserrement de la réglementation applicable aux sociétés publiques. S’inscrivant dans ce contexte, le présent mémoire de maîtrise s’intéresse particulièrement à l’impact des jugements rendus dans le cadre du litige relatif à l’offre d’acquisition par voie d’emprunt de BCE inc. sur les conceptions traditionnelles des devoirs des administrateurs. Dans cette affaire, les détenteurs de débentures de la filiale à part entière de BCE inc., Bell Canada, se sont vigoureusement opposés à cette acquisition. Cette transaction, d’une envergure sans précédent dans l’histoire du Canada, a été scrutée jusqu’à la plus haute instance décisionnelle au pays quant à son caractère raisonnable et équitable et à son effet potentiellement oppressif envers les détenteurs de débentures. Cette étude abordera d’abord l’évolution de la jurisprudence du Delaware sur les devoirs des administrateurs, dans le contexte d’un changement de contrôle, juridiction phare en droit des sociétés aux États-Unis et source d’inspiration marquée en droit canadien. Ensuite, nous nous attarderons sur la position du droit canadien et sur un arrêt marquant rendu par la Cour suprême du Canada, dans l’affaire Peoples. Sur cette toile de fond, cette analyse sera complétée par un examen des motifs des décisions rendues par les trois instances judiciaires dans l’affaire BCE et une réflexion sur l’impact de ces décisions sur le droit des sociétés au Canada. / In recent years, financial markets have been marked by investors’ willingness, including private investment funds, to privatize public corporations. Several privatizations have been realized through acquisitions by way of a leveraged buy-out, partly because of low interest rates, a more available credit and a certain tightening of regulations applicable to public corporations. In this context, this master thesis focuses on the impact on traditional legal concepts of the directors’ duties, further to the series of judgments rendered in the litigation regarding the leveraged buy-out offer by a consortium led by Teachers on BCE Inc. In this case, the debentureholders of the wholly owned subsidiary of BCE Inc., Bell Canada, have strongly opposed the acquisition. On an unprecedented scale in Canadian history, this transaction has been scrutinized by the highest Court of the country for its fair and reasonable character and its potentially oppressive character on debentureholders. This study will initially address the evolving jurisprudence of Delaware on directors' duties in the context of a change of control. Delaware is the leading jurisdiction in corporate law in the United States and has therefore inspired the Canadian law. Then, this thesis will more particularly focus on the position of Canadian law and a landmark decision rendered by the Supreme Court of Canada in the case Peoples. This analysis will be complemented by a study of the underlying reasons rendered by the three levels of courts in the case of BCE and a discussion on the impact of these decisions on corporate law in Canada.

The degree to which a country’s public entities observe basic principles of good corporate governance is an increasingly important factor for attracting investment capital, maintaining economic stability and encouraging growth. Zimbabwe is faced with the challenge of restructuring for greater efficiency and creating an investment-friendly environment, therefore practicing good corporate governance in public entities is crucial for success and economic growth. As business entities, public entities need to be managed effectively by a competent board, which is able to construct and implement strategies that are in the best interests of the entity and all stakeholders. This study focuses on the corporate governance initiatives, laws and regulations aimed at enhancing the effectiveness of boards of public entities in Zimbabwe. The key question addressed is whether or not the corporate governance initiatives and legal and regulatory reforms in Zimbabwe are sufficient to enable boards of public entities to effectively discharge their duties and meet internationally accepted corporate governance standards. A comparative analysis of Zimbabwe’s public entities corporate governance framework to that of South Africa (a developing country like Zimbabwe) and Australia (a developed country with similar common law heritage) is also conducted. Recommendations are made on how best to enhance the effectiveness of boards of public entities in order to promote good corporate governance practices in Zimbabwean public entities. The research established that the existing corporate governance framework has not been effective in improving the effectiveness of Zimbabwe public entity boards due to lack of commitment and consistency, political interference, weak enforcement mechanisms, corruption and general disregard for the rule of law. The research found that South Africa and Australia have performed better than Zimbabwe in terms of creating conducive environments for boards of public entities to effectively discharge their duties. To improve the effectiveness of public entity boards, it was found that boards should be properly empowered, government intervention should be minimised, board appointment processes should be transparent and merit-based, boards should be properly composed, board remuneration should be fair and performance related, the performance of the board should be regularly evaluated and effective enforcement mechanisms should be put in place. / Mercantile Law / LL. D.