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Exam (elaborations) LML4806 - Company Law (LML4806)
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Exam (elaborations) LML4806 - Company Law (LML4806) EXAM PACK MAYJUNE 2022
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LML4806COMPANY
LAW
SUPPLEMENTARY PORTFOLIO
FEBRUARY 2022
,QUESTION 1
1.1 Explain what the principle of corporate social responsibility entails and
provide examples of how this principle is reflected in the Companies Act
71 of 2008 (10)
Businesses have a responsibility towards the societies in which they operate and
that this responsibility needs to be managed. The term, Corporate Social
Responsibility (CSR) seeks to make companies responsible members of
the community.
It means that CSR is, therefore, a voluntary commitment by companies to
manage their role within society responsibly and to contribute to sustainable
development through co-operation with their stakeholders in general to improve
the stakeholders’ quality of life.
Examples:
1
• One of the purposes of the Companies Act 71 of 2008, is to promote the
development of the South African economy by encouraging transparency
and high standards of corporate governance, given the significant role of
enterprises within the social and economic life of the nation (s 7(b)(iii)).
• The Companies Act specifically seeks to reaffirm the concept of the
company as a means of achieving economic and social benefits (s 7(d)).
• The Companies Act seeks to promote the development of companies
within all sectors of the economy, and to encourage active participation in
economic organisation, management and productivity (s 7(f)).
• The Companies Act also seeks to encourage the efficient and
responsible management of companies (s 7(j)). Sound management of
companies prevents corporate collapses due to mismanagement that
may also have dire consequences on society.
, • The Companies Act provides for non-profit companies that are
incorporated for social activities, public benefits, cultural activities or
group interests.
• Corporate activities may affect a wide circle of stakeholders. As such, the
Companies Act has extended locus standi to a broad category of
stakeholders (not only company shareholders) to enforce its provisions and
to seek redress where company directors have abused their position, for
example, in the application to declare a director delinquent or under
probation (s 162). Such stakeholders may include directors, prescribed
officers, trade unions or other representative of employees.
1 Companies Act 71 of 2008.
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