Page 15 - FOL2023

Corporate Governance

Lesotho, both in terms of the common law and legislation, is founded, it may be
observed, upon the construct of this model. As an example, the fundamental
duties of directors in section 63 of the Companies Act revolve exclusively
around the best interests of the company.

The stakeholder model of corporate governance, by contrast,
conceives inherent relationships concerning a company more broadly

beyond its owners and controllers. There is now a growing consensus
amongst academic scholars and governance practitioners that
corporate governance is about “supervising management
performance and ensuring accountability of management to
shareholders and other stakeholders”. According to this model,

stakeholders are seen as tied in a symbiotic relationship
with the company such that the company’s success or
failure depends on the kind of relationship that it has with

its stakeholders. In recognition of the critical role that
other stakeholders play in relation to governance and
accountability management of a company, the OECD

observes:
The competitiveness and ultimate success
of a corporation is the result of teamwork that

embodies contributions from a range of different
resource providers including investors, employees,
creditors, customers and suppliers, and other
stakeholders. Corporations should recognise

that the contributions of stakeholders constitute
a valuable resource for building competitive and
profitable companies. It is, therefore, in the long-term
interest of corporations to foster wealth-creating

co-operation among stakeholders. The governance
framework should recognise the interests of
stakeholders and their contribution to the long-term
success of the corporation.

South Africa Corporate Governance Code,
colloquially known as the ‘King Code’, is probably

16 FOL Quarterly Issue 2022