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Corporate Governance

Area (KPA) IV, identified the strengthening of national governance and accountability systems as vital for the
delivery of the NSDP II itself by providing a conducive environment for private investment and inclusive growth.

Unsurprisingly, one of the outcomes of the KPA IV is improved corporate governance and protection of investor
rights.
This piece briefly defines the concept of corporate governance and casts a look at what informs
corporate governance in Lesotho. In this latter sense, an attempt is made to conceptualise corporate

governance from the broad mix of legal regulation, self-regulation and market regulation of companies.

Defining corporate governance the focus of corporate governance is the promotion
and protection of the interests of shareholders in a
company. To that end, corporate governance was
Corporate governance is a variegated
famously defined in the United Kingdom by the
concept and understood differently by different
Cardbury Report as “The system by which companies
people depending on such factors as background,
are directed and controlled, the primary concern being
history, tradition, experience and circumstances of
with those who supply finance to companies, the
whomsoever defines it. Thus, there is no unanimity on
shareholders.”
its definition. In the broadest sense, the definition of
Akin to the Cardbury Report’s take, the
corporate governance has over time been informed
Supreme Court of Delaware in MM Companies
by two analytical standpoints, namely, shareholder
Inc. v Liquid Audio Inc.stated that, the most
protection and stakeholder protection. In its
fundamental principles of corporate governance
traditional conception, and admittedly narrow sense,

are a function of the allocation for a separation of control and governance, with its lodestar as

of power within a corporation ownership,” the stockholder maximisation and preservation
between its stockholders and franchise has been characterized of shareholder investment and
its board of directors. … The as the “ideological underpinning” value. This model sees a corporate

power of managing the corporate upon which the legitimacy of the organisation as a private, rather
enterprise is vested in the directors’ managerial power rests. than a public, body defined by
shareholders’ duly elected board The above system a set of relationships between
representatives. Accordingly, of corporate governance is the principal (the shareholders)
while these “fundamental tenets commonly referred to as the and agent (the board and

of Delaware corporate law provide shareholder model of corporate management). Company law in

Issue 2022 FOL Quarterly 15