Cosatu’s declaration of interests

A more recent article alluded to a new resolution from Cosatu requiring its leaders to declare their business interests and those of their immediate families.”We are doing so that we will be able to protect our leaders when they come under attack for failing to declare interests; it is not that we are against people engaged in business activities,” re-elected provincial secretary Zet Luzipo said. This was one of the resolutions taken at the end of a three-day provincial conference in Pietermaritzburg.

This view is however aligned to the requirements of the New Company’s Act with respect to Director’s and the declaration of their respective interests.

One of the fundamental duties of a director is to avoid any possible conflict of interests with the company. It is an accepted principle in South African law that, as a result of the trust placed in the director, he or she is bound to put the interests of the company before their own personal interests. Section 75 of the Companies Act makes clear provision for dealing with a director’s use of company information and conflict of interest. Section 75 of the Companies Act extends the application of the conflict of interest provisions to prescribed officers and members of board committees (even if those persons are not directors).

Where a director, prescribed officer or member of board committees has a conflicting personal financial interest (where his or her own interests are at odds with the interests of the company), he or she is prohibited from making, participating in the making, influencing, or attempting to influence any decision in relation to that particular matter.

This provision seems to impose a strict duty not to allow personal financial interest to impact, in any way, on the dealings with the company. In addition, where a director, prescribed officer or member of board committees has a conflicting personal interest in respect of a matter on the board agenda, he or she has to declare that personal interest and immediately leave the meeting. Such person is also prohibited from any action that may influence or attempt to influence the discussion or vote by the board, and is prohibited from executing any document on behalf of the company in relation to the matter, unless specifically requested to do so by the board.

It is important that all directors and prescribed officers comply with the conflict of interest declaration provisions, as non-compliance may render certain transactions and agreements void. The conflict of interest provisions apply equally to persons related to the director, prescribed officer or member of a board committee. Thus, where a director, prescribed officer or member of board committees knows that a related person has a personal financial interest in a matter to be considered at a meeting of the board, or knows that a related person has acquired a personal financial interest in a matter, after the board has approved that agreement or matter, he or she should disclose that fact to the board.

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