Enforcement of Actions in Corporate Law by Non-Shareholder Constituencies: Lessons for the Common Law World from South Africa

Enforcement of Actions in Corporate Law by Non-Shareholder Constituencies: Lessons for the Common Law World from South Africa advocates for a complementary enforcement regime for the current (and proposed) corporate legislative measures in the Anglo-American corporate law. Doing so would empower non-shareholder interests in corporate decision-making. Mongalo argues that corporate legislative initiatives ought to provide for non-shareholder constituencies’ considerations in decision-making within corporate entities, and that failure to enforce such frameworks reduces the law to lip service. By offering a comprehensive critique of corporate constituency statutes and benefit corporation statutes in US and the enlightened shareholder value approach in the UK, Mongalo makes the case that a shift from the current enforcement philosophy in Anglo-American jurisdictions--which is based on the preference of those to whom fiduciary duties are currently owed--is necessary and that the Actionable Enlightened Shareholder Value (AESVA), with its origins in South Africa, should be preferred.

Tshepo Herbert Mongalo is professor of corporate law at the University of the Witwatersrand’s School of Law.