Judge Ronel Tolmay’s recent judgment declaring Dudu Myeni a delinquent director sets a legal precedent which will shake up SA’s corporate governance landscape, notes a Financial Mail commentary.

First, it notes, the finding is important since it’s the most stringent ruling yet against a director. The law allows a court to ban someone for more than seven years – but in this case, so awful was Myeni that she has been banned for life.

Second, it was the Organisation Undoing Tax Abuse (Outa) which launched the action alongside the SAA Pilots Association, rather than shareholders.

Professor Michael Katz, the chair of law firm ENSafrica, who helped draft the Companies Act, says: ‘For the first time, the court recognised that people acting in the public interest, in this case Outa, were allowed to bring the action under section 157 of the Companies Act, rather than just limiting it to shareholders and trade unions under section 162.’

Ansie Ramalho, a former CEO of the Institute of Directors SA, says this will hopefully usher in a new era of accountability.

‘There is nowhere left for delinquent directors to hide. Traditionally, only shareholders had the power to hold directors to account,’ she says.

Mervyn King, who gave his name to SA’s governance codes, also welcomed the judgment.

‘Whether a company is seen to be a good corporate citizen depends on the conduct and conscience of its corporate leaders … on the evidence, Dudu Myeni was not a conscientious leader.’

If Myeni doesn’t overturn it, Werksmans attorney Eric Levenstein said it ‘will be the lead judgment for some time to come on delinquency’.

Still, there’s scope to push for greater accountability using the law. Katz argues that it’s disappointing that boards and shareholders don’t take it a step further by suing errant directors for loss, as they’re entitled to.

‘I’m more keen on actions to recover loss than just declaring someone delinquent, as many of the delinquents aren’t on boards anymore. But what isn’t happening is that they’re now being forced to pay for the loss they caused,’ he says.

When that starts happening, we’ll have the beginning of true corporate accountability.

Financial Mail commentary