Mini-thesis submitted in partial fulfilment of the requirements for the LLM Degree, Uni

103 Pages·2016·7.39 MB·English

by  Lindiwe Mekwe

________________________________________

Mini-thesis submitted in partial fulfilment of the
requirements for the LLM Degree, University of
the Western Cape

Name : L. P. Mekwe
Student Number : 3482829
Proposed degree : LLM
Department : Mercantile Law and Labour Law
Title of mini-thesis :A CRITICAL REVIEW OF CORPORATE GOVERNANCE
REFORMS RELATING TO SOUTH AFRICAN STATE-OWNED
ENTERPRISES
Supervisor : Prof Riekie Wandrag
Academic Year : 2015
10 Keywords : Corporate Governance, Reforms, State Owned Enterprises /
State Owned Entities, Escom/ Foskor/ Sasol and Iscor,

Privatization process, Productivity analysis, Governance

framework, Shareholder/stakeholder models
TABLE OF CONTENT
Declaration i

Dedication ii

Acknowledgement   iii

Abstract iv
Key words v
Acronyms vi
CHAPTER ONE 1
1.1.Introduction 1
1.2 Problem statement 4
1.3 Research question 5
1.4 Objectives of the research 5
1.5 Significance of the research 6
1.6 Methodology 8
1.7 The structure of the research 9
CHAPTER TWO 10
AN OVERVIEW OF GOOD CORPORATE GOVERNANCE
2.1 Introduction 10
2.2 History of corporate governance 10
2.3 Definition of corporate governance 11
2.4 Structure and principles of corporate governance 14
2.5 Theories of corporate governance 19
2.6 Regulatory framework on corporate governance 25
2.7 Conclusion 29
CHAPTER THREE 31

AN OVERVIEW OF STATE–OWNED ENT ERPRISES (SOES)

3.1 Introduction 31

3.2 Establishment and roles of Eskom, Iscor, Sasol & Foskor 31
3.3 The situation analysis of the performance of existing SOEs 38
3.4 The role of the state as shareholder 40
3.5 Conclusion 43
CHAPTER FOUR 45
MEASURING THE EFFECTIVENESS OF CORPORATE GOVERNANCE
4.1 Introduction 45
4.2 Compliance levels 45
4.3 The factors that influence the level of compliance 49
4.4 International Perspective 53
4.5 South African Perspective 57
4.6 Conclusion 58
CHAPTER FIVE 60
COMPARATIVE INTERNATIONAL EXAMINATION
5.1 Introduction 60
5.2 Mandatory corporate governance regime 60
5.3 Voluntary corporate governance regime 63
5.4 Governance and value 66
5.5 Global initiatives on corporate governance 68
5.6 Corporate governance in commonwealth authorities and companies 70
5.7 Conclusion 70

CHAPTER SIX   72

CONCLUSION AND RECOMMENDATIONS

6.1 Conclusion 72
6.2 Recommendation 75
6.3 Further research 78
BIBLIOGRAPHY 79
DECLARATION

I declare that, A Critical Review of Corp orate Governance Reforms Relating to
South African State-Owned Enterprises; is my own work, has not been submitted

before for any degree or examination in any other university, and that all the sources

I have used or quoted have been indicated and acknowledged as complete
references.

Lindiwe Portia Mekwe

Signed……………..…………

Prof Riekie Wandrag

Signed………………………….

i
DEDICATION
I dedicate this mini thesis to my husband, Sydney and my children, Tshego, Dikano

and Tlotlo.

ii
KEY WORDS
Corporate Governance, Reforms, State Owned Enterprises / State Owned Entities,

Escom/ Foskor/ Sasol and Iscor, Privatization process, Productivity analysis,

Governance framework, Shareholder/stakeholder models

iii
ACRONYMS
ANC African National Congress

CEO Chief Executive Officer  

CSR Corporate Social Responsibility

DPE Department of Public Enteprise
ECB Electricity Control Board
ESCOM Electricity Supply Commission
IDC Industrial Development Corporation
IEC East India Company
ISCOR South African Iron and Steel Industrial Corporation Limited
FOSKOR Phosphate Development Corporation
FSB Financial Service Board
JSE Johannesburg Stock Exchange
NGOS Non- Governmental Organisations
OECD Organization for Economic Cooperation and Development
PFMA Public Finance Management Act
PRC Presidential Review Committee
SASOL South African Coal, Oil and Gas Corporation
SAPO South African Post Office
SOE State-Owned Entity
SOES State-Owned Entities
U S A United State of America
U K United Kingdom
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ACKNOWLEDGEMENT
First and foremost, I would like to express my sincere gratitude to my supervisor

Prof. Riekie Wandrag for the continuous support in this research. Her comments

inspired and pushed me to a higher level of thinking. Her unreserved help and

guidance lead me to produce this piece of work that will serve as literature for both

academic and business fraternities.
I further want to extend my gratitude to Advocate Ebrahim Hendricks for his valuable
suggestions in my proposal defence. His insightful comments and encouragement
without limiting the hard question that he often posed forced me to widen my
research from various perspectives. I am grateful to him for holding me to a high
research standard and enforcing strict validations for each research result, and thus
teaching me how to do research.
Ms Phumla Ngesi, my colleague is one remarkable lady that contributed immensely
towards the completion of this research. Her insightful comments and constructive
criticisms at different stages of my research were thought-provoking and they helped
me focus my ideas. I am deeply grateful to her for the long discussions that helped
me to sort out the technical details of my work.
My deepest appreciation to my spiritual mentor and also a friend Mr Tebogo
Motloung for continually and persuasively conveyed a spirit of adventure that was full
of excitement and inspiring towards this research and my LLM studies. His constant
support and encouragement made it easy and possible for me to complete this mini
thesis.
Last but not least to my children, Tshego, Dikano and Tlotlo thank you very much for
always supporting me and encouraging me with your best wishes. To my husband
Sydney, thank you very much for your unwavering love and support. Your
understanding and encouragement in my moment of difficulties has truly kept me
sane.

To God be the glory for His unfailing love and grace that has seen me through this
journey.

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