Compliance with legislation

General

Although directors are not expected to know the law completely, they are expected to have a good working knowledge of the law and how it affects them and their companies. Duties imposed by legislation upon directors are not always immediately apparent, as the term ‘director’ is not often used outside the Companies Act. Instead, the terms ‘chief officer’, ‘manager’, ‘employer’ or even the innocuous ‘any person’ are often used.

The Annexures to this guide focus on Acts that impose direct obligations on directors of companies in their capacity as such. Annexure B contains a list of Acts that may affect you and your company and which may require that action be taken or not taken in terms of your role as a director.

Companies that have international operations need to consider obtaining legal advice on the application of foreign laws and should clarify what law will prevail should different legal systems ostensibly have jurisdiction. Companies involved with e-commerce should likewise ensure that the jurisdiction for disputes involving on-line contracts is clear.

Compliance officer

Directors should conduct an audit to ensure that they are complying with all regulations that affect their organisation and then establish monitoring systems with regular reporting to the board. Some companies may consider appointing a dedicated compliance officer although most companies can reasonably expect a suitably qualified company secretary to fulfil this role. Banks and other financial institutions are now required by law to appoint compliance officers.

Role of the company secretary

Directors of public companies are obliged to appoint a capable and experienced company secretary. At the very least, the compant secretary should have an in-depth knowledge of:

• corporate law, particularly the Companies Act
• JSE Listings Requirements (if listed)
• the Code on Corporate Governance
• legislation generally, as it affects the particular organisation.

The key elements of the statutes that create direct obligations for directors are dealt with in Annexure A.

Again, it is emphasised that the coverage of the legislation in this guide is not exhaustive and its purpose is to give directors a working understanding of the plethora of legislation which affects their roles and obligations as directors. Directors who need more in-depth instruction on the legislative framework should, in the first instance seek the guidance of their company secretary, alternatively should obtain professional counsel from either Grant Thornton or Edward Nathan.


Key questions:

• Does the company have a person fulfilling the role of compliance officer? 
• Does the company have a suitably qualified and experienced company secretary? 
• Am I aware of all laws that apply to my sphere of responsibility? 
• Do I understand the implications of these laws? 
• Does a procedure exist in terms of which I, as a director, am made aware without delay of any changes to any of the applicable laws and their impact on the company?
• How can I implement them in practice in order to avoid contravening the law? 
• Are employees aware of these laws as they apply to them?