Page 14 - Nexia SAB&T Business in South Africa Guide 2024

are required to be more and more accountable, transparent and responsive to
stakeholders and to society. Directors and officers are required to be cognisant
of corporate legislation pertaining to their office, and have a duty to ensure that
the company complies with all other applicable laws, industry or sector specific
legislation. Directors are required to ensure that managers and employees are
aware of the legislation, and that all within the company are committed to act
honestly, with integrity, and with a high level of competence and knowledge.
Adherence to non-binding rules, codes and standards of good corporate
governance are considered to be key to the effective management and control of a
company. The King IV ™ Report and Code of Corporate Governance is a guideline
for best practice and provides the main standard for corporate governance in SA.
The King Report distinguishes between two types of directors:
■ Executive director: a full time salaried employee and under a contract of
service with the company who is involved in the daily running of the business.
■ Non-executive director: a part time director who is not an employee of the
company and is not involved in the day to day running of the business. A
non-executive director is independent from management and can therefore
offer objective judgement.
Prescribed Officers
A prescribed officer is any person who fulfils the role of a director but who
operates under a different designation, including anyone who:
■ Exercises general executive control over and management of the whole, or a
significant portion, of the business and activities of the company, or
■ Regularly participates to a material degree in the exercise of general
executive control over and management of the whole, or a significant portion,
of the business and activities of the company.
A company secretary, may, for example, fall within the definition of a prescribed
officer in terms of the Act, even although he may not be a director appointed to the
board of the company. Prescribed officers are bound by the same codified duties
and liabilities of directors which are referred to in numerous sections of the Act.
It is very important that the board is able to identify who the prescribed officers
are. Equally important is that the prescribed officers know who they are, and

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