Is it Still Safe to Be a Company Director?

Is it still safe to be a company director?

2010 does not only see the arrival of the FIFA World Cup to the shores of South Africa but it is also the year in which the NEW COMPANIES ACT is due to be promulgated. This act will change the face and way of business in South Africa dramatically. Recent media comment has called the mind shift similar to that of a primary school scholar attending university without every attending high school. Wow, this is one big mind shift and it is extremely important that business owners do not wait till the promulgation of the act to clearly understand the act and its impacts.

Negative Media commentary has called the act a “sword of Damocles” whilst speculating that “a wave of litigation is soon to hit company directors”. In this tough economic times the last thing we need is a draconian act that can badly influence our personal and business liability. In short I am of the opinion that the new companies act is in fact very progressive and has taken a “river banks” approach. By that I mean that ethical and transparent business will be allowed a easy free flowing environment, whilst stepping out of “line” can be punished by severe fines and aggressive prosecution.

The sad reality however is that most of us try and run an ethical and honest business but are extremely ignorant when it comes to laws and rules and this ignorance can cost us dearly. It is extremely important that all business owners(even members in CC’s) immediately start investigating the impact that the act and the King III report will have on their business and its activities. Business owners should also start working towards understanding their internal and external stakeholders as this may be new definition in the act for most of us.

So in conclusion attend the seminars, it is the best investment you can make. Do a proper assessment on the risks and governance issues in your business and start spending some time ON your company and not just IN your company.

John-Ernest Fogwell is a founding member of Corporate Innitiatives and the CEO of VenCap Investments. CI offers bi-weekly seminars and workshops on the new companies act as well as offering risk and compliance assements. To contact the author mailto: john@vencap.co.za or visit http://www.corporateinitiatives.co.za.