Corporate Objectives and for Whose Benefit Companies Exist
With the commencement of South Africaâ€™s constitutional dispensation came an inescapable opportunity for self-reflection, scrutiny and re-enactment of the manner in which people transacted with one another as well as the norms and vessels through which companies operate. This is at least one of the bases upon which South African company law was recently re-written. If one accepts, for instance, that the conception of a company, together with its purpose, in a libertarian, largely privatised and capitalist economy will be different to how it may be conceived of in a sufficiently regulated and mixed economy, then the need to unpack the concept of a company becomes more evident. And with this, factors such as the nature of a company, its purpose, its true beneficiaries and stakeholders, its raison dâ€™Ãªtre and its role in South Africaâ€™s gradually transforming constitutional democracy would necessarily feature in this analysis..
Historically, South Africa's society has been described as being â€œdeeply divided characterised by strife, conflict, untold suffering and injusticeâ€. Indeed in such a society, as Botha remarks, companies were regarded as nothing more than economic institutions which existed for the sole purpose of maximising profits for, almost exclusively, white shareholders. The result, of course, was the exclusion of the black majority from the economy and the racially-skewed distribution of wealth to the white minority. Such a conception of companies and their roles in South Africaâ€™s constitutional democracy would be, it is submitted, indefensible and open to constitutional scrutiny. The questions which therefore follow are: what is the appropriate conception of a company in South Africaâ€™s constitutional dispensation; and what is its role in South Africaâ€™s transformative enterprise?
The South African people have collectively made new hopes, choices and promises for themselves, which are embodied in the Constitution of the Republic of South Africa (hereafter â€˜1996 Constitutionâ€™ or â€˜the Constitutionâ€™). Inevitably, the role of a company in modern-day South Africa must also develop and be consistent with the countryâ€™s current and unique socio-economic and political context. It is submitted that how companies are conceived of under South Africaâ€™s current constitutional dispensation must similarly be consistent with the Constitutionâ€™s transformative mission which includes: the redistribution of corporate wealth, the fostering of equitable access to economic opportunities for all South Africans and the increase of the amount of equity stakes (or financial propertyâ€™) being held by black people in companies. Admittedly, while this statement does not purport to provide a lucid explanation of the conception of a company in todayâ€™s constitutional democracy in South Africa, it does serve the purpose of providing a broad theoretical framework or guideline as to how a company, concomitant with its role, should be conceived of in South Africaâ€™s constitutional democracy.
The aim of this article is to properly discuss and unpack the conception of a company and its role in South Africaâ€™s constitutional democracy. The paper is structured in four parts. In part 1, the theoretical nature of a company as well as its scope and purpose are discussed at an introductory level. What follows in part 2 is a brief and contextualised discussion of the directors of a company; together with their functions, roles and responsibilities. The third part of the paper has four subsections and each contains a discussion of the legitimate interests or stakeholders which, in a sense, make up a company. Lastly, Part 4 concludes with an analytical discussion of the afore-said â€˜company interestsâ€™ or â€˜stakeholdersâ€™ in light of existing theories and philosophies within the ambit of company law.
A few tentative remarks need to be made. The age-old â€˜Shareholder-Stakeholder debateâ€™, which was apparently pioneered by American scholars Berle and Dodd (â€˜the Berle-Dodd debateâ€™) is, although fascinating to probably all who encounter it for the first time, tired and deserves a rest by now. This is so, especially in South Africaâ€™s context, because the new Companies Act has, it is submitted, adopted the so-called â€˜enlightened shareholder value approachâ€™. Therefore, any debates about whether the â€˜shareholder primacy approachâ€™ or the â€˜stakeholder approachâ€™ is fitting are not only futile but do nothing to enrich and further develop South Africaâ€™s company-law jurisprudence and thought. What is however important is to salvage what we can from the Berle-Dodd debate and leave the rest to any circling vultures to feast on the dead debate.
It is important for our young constitutional jurisprudence; as it pervades all of South African law, including company law, to continuously develop new and workable legal methodologies and ways of thinking about legal, social, economic and political concepts. This requires innovation, fresh perspectives and a departure from unjustified conservatism. In this regard, this paper attempts to go beyond a pedestrian discussion of the Constitution and its infiltration into company law as a mere after-thought. Instead, a thorough analysis and assessment of prevailing legal, economic and social conceptions and understandings within South African company law shall be engaged in. This, I would submit, is far more helpful and resonant with present South African academic thinking.
* For the idea and philosophy, which I believe to begin in the heart and only later proceeds to the mind, behind this paper, I must thank my almighty God. For the strength and courage to begin to write and complete this paper, I would like to thank my parents (Mr Sifiso and Mrs Mpho Mnisi). Not forgetting also to thank my mentor and teacher Mr Sanele Sibanda for encouraging me to continue to articulate my thoughts in the scholarship space. I must also thank Dr Herbert Kawadza for his very helpful comments on a draft version of the paper. Finally, the editors of Inkundla Journal, without whom I would not have recognised the many errors that the draft version of this paper was riddled with, also deserve to be thanked. Otherwise, any errors which may be found in this paper are my own.
 See Foreword by Deputy Chief Justice Dikgang Moseneke in Davis D, Cassim F & Geach W (eds) Companies and other Business Structures in South Africa 2nd ed (2011).
 Companies Act 71 of 2008 (date of commencement: 1 May 2011). Hereinafter â€˜the new Companies Actâ€™.
, Chaskalson P in S v Makwanyane 1995 (3) SA 391 (CC) para 7.
 Botha D â€˜The Changing Business of Business in South Africa: Some comments on developments in the scope and control of the social responsibility of business in South Africaâ€™ (1994) 6 SA Mercantile Law Journal 90 at 92; Mogane N â€˜The Enlightened Shareholder Approach and Corporate Social Investmentâ€™ (unpublished LLM Thesis 7 University of the Witwatersrand, 2008).
 Mongalo T â€˜Self-Regulation versus Statutory Codification: Should the new Regime of Corporate Governance be accorded Statutory Backingâ€™ (2004) 67 THRHR 264 at 276; Currie I and De Waal J The Bill of Rights Handbook 5th ed (2005) at 532.
 Constitution of the Republic of South Africa, 1996.
 Mongalo op cit note 5 at 112.
 Moodley R â€˜The Shareholder vs Stakeholder debate: A comparison between English, American and South African lawâ€™ (LLM Thesis 11 University of the Witwatersrand, 2007).
 See Berle A â€˜Corporate Powers as powers in trustâ€™ (1931) 44 Harvard Law Review at 1049; Dodd E M â€˜For whom are corporate managers trustees?â€™ (1931-32) 45 Harvard Law Review at 1145. Professorâ€™s Berle and Dodd famously debated the objects that corporations in the United States of America should pursue. In particular, Berle was of the view that corporations should be in the business of solely maximising profits for their shareholders (â€˜shareholder primacy approachâ€™), while Dodd held the view that companies should seek to cater for a broader cluster of stakeholders (â€˜stakeholder approachâ€™).
 Botha op cit note 4 at 92.
 Davis op cit note 1 at10.
 Moseneke D â€˜Transformative Constitutionalism: Its Implications for the Law of Contractâ€™ (2009) 1 Stell LR 3 at 8.
 K Klare â€œLegal Culture and Transformative Constitutionalismâ€ (1998) 14 SAJHR 146.