JOHANNESBURG - Apart from the fact that the recent appointment of board of the Public investment Corporation (PIC) by the Minister of Finance broke the longstanding tradition by not designating the Deputy Minister of Finance as its chairperson, the other notable feature of the new PIC board is that it has three workers representatives within its ranks.
This development is more fitting in the case of the PIC whose raison d’etre is to be an asset manager of government employees’ pensions in South Africa. The pressure exerted by workers to have a say in the management of their life savings has not gone unnoticed.
The representation of workers on employers’ boards has in the recent past re-emerged as a subject of debate.
This is evident in no less a place than the United States of America. The democratic presidential hopeful senator Elizabeth Warren has made this subject a key selling point of her presidential campaign. She has promised the American workers that if elected president she will secure them seats on corporate boards. Some have viewed this as the reinvention of the “co-determination” practice pioneered by the United Automobile Workers Union when they demanded board representation at Chrysler Motors in the 70s.
If the PIC’s example is anything to go by, it may be a question of time before the idea takes root in South Africa. As matters stand, the South African Companies Act is already quite generous to the workers’ voice in the governance of employers’ affairs from a company law perspective. The fingerprints of workers of the South African workers are visible throughout the Companies Act. The question is whether the workers have fully exploited these rights so far.
The 2008 Companies Act brought about the concept of delinquent directors in South African company law. Section 162 empowers our courts do declare directors delinquent or put them on probation for grossly abusing their position as a directors or generally conducting themselves in a manner unbecoming of a directors of a company.
The right to declare a director delinquent is accorded to shareholders and employees and/or their trade unions. This is a powerful implement in the hands of workers. Properly used this provision can see workers permanently force directors out of boards if they fail to discharge their duties.
The current Companies Act also reincarnated the concept of judicial management to mirror the American chapter 11 bankruptcy regime. Business rescue as provided in Chapter six of the Companies Act has received much attention as companies and lawyers stress test the efficacy of this new regime. What is understated is that employees in like manner as shareholders and creditors are defined as affected persons for the purposes of business rescue. This means that employees and their unions are entitled to apply to court to put a company in business rescue if the company is in financial distress as defined in the Companies Act. ''
Further, in the event of business rescue, whether brought about by workers or not, employees as affected persons should be consulted by the business rescue practitioner in formulating a business rescue plan. A business rescue plan is essentially the blueprint of rescuing a company in which employees can make a significant contribution. This right brings the employees a lot closer to the bosses in the boardroom in determining the future of their employer.
On the face of it, section 214 of the Companies Act is a somewhat benign provision dealing with the making of false statements. A closer reading of this section reveals that it is a criminal offence for any person if by action or they are party to an act that is calculated to defraud employees, creditors and shareholders. Section 214 read with section 218 which entitles any person who suffers a loss of any form due to the contravention of the Companies Act by another, is a potent tool in the arsenal of employees against errant directors and executives.
The provisions of the Companies Act on protection of whistle blowers is another useful device for employees and their unions in fending off the abuse of powers afforded to directors, shareholders and companies in general in the event of improprieties.
It is noteworthy that since the coming into effect of the Companies Act in 2011 there have been no significant cases if any that have been brought before the courts by workers’ unions and employees to assert the rights afforded to workers in terms of the Companies Act. This appears to be the result of the unions and employees not being fully cognisant of the rights that the Companies Act afford them.
Matodzi Ratshimbilani is a director at Tshisevhe Gwina Ratshimbilani Inc.
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