DIRECTOR’S ROLE AMIDST RECENT TRENDS IN THE BUSINESS WORLD

Some of the recent trends in the business world, which directors should take cognisance of, are:

• Environmental, social and governance (ESG): This is an approach to evaluating and operating businesses that goes beyond the sole focus of shareholder return. ESG has three main focus points, being:
  • An environmental aspect: the focus is on preserving the natural world, such as climate change, greenhouse gas emissions, biodiversity loss, deforestation, pollution, energy efficiency and water management.
  • A social aspect: the focus is on people and relationships including working to support gender and diversity, equity, and inclusion, enhancing customer satisfaction and employee engagement.
  • A governance aspect: the focus is on moving beyond how organisations have been typically governed in the past. Examples of specific topics include board composition, cybersecurity practices, management structure, executive compensation, and the prevention of bribery and corruption.

ESG has become a necessary component in many proposed deals with enhanced ESG due diligence and disclosure requirements. Numerous regulations and taxonomies have been released globally in this space, including South Africa’s Draft National Green Finance Taxonomy. Over the next few years, millennials and new technologies will be driving forces in the wider adoption of the ESG principles.

• The “new look” workforce: Even although the crisis of the Covid-19 pandemic has eased, companies have nevertheless permanently incorporated some of the measures that were implemented during the crisis, such as the way meetings are held, the upskilling, reskilling and digitisation of employees. More and more employees are continuing to work remotely, but from time to time working in office, as the need arises (the hybrid work environment).

  The Companies Act (no.71 of 2008), hereinafter referred to as ‘the Act’ makes provision for operating in a virtual world, which includes:

  • A signature or an initial on a document may be made by or on behalf of a person by the use of an electronic signature or an advanced electronic signature

  • Proxy forms, annual financial statements, prospectuses and annual reports may be lawfully created, signed, retained and sent electronically

  • Meetings of shareholders and directors respectively may be conducted entirely by electronic communication

  • The definition of “present at a meeting” includes a “virtual presence” or representation by electronic proxy.

• Increased regulatory compliance: A steady increase in regulatory and compliance requirements and reporting (as is required by the Companies Act, The Protection of Personal Information Act (no.4 of 2013) [hereinafter referred to as POPIA], and the Financial Intelligence Centre Act (no.38 of 2001) [hereinafter referred to as FICA].

• Cryptocurrency: An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes.

Should you have any queries as to what your role as a director is, do not hesitate to contact our offices for professional advice.