- The Chartered Governance Institute of South Africa is concerned about the governance of Johannesburg.
- This, after a letter by the acting city manager to suspend all strategic decisions taken by the city since September 2022.
- The institute said this move puts it’s secretaries in an uncomfortable position in terms of the law.
The Chartered Governance Institute of South Africa (CGISA) expressed its concern over the governance of Johannesburg.
This followed a letter by the acting city manager Bryne Maduka to the city’s group governance, accounting officers and company secretaries of the 13 entities last month.
The letter issued a blanket suspension of all major strategic decisions taken by the City since September 2022, while putting a pause on all board meetings of the City’s entities.
In a statement on Friday, the CGISA said Maduka did not appear to “understand the roles and functions of company secretaries, boards and their committees”.
The institute believes the letter serves to “obfuscate company law and governance principles”.
“Furthermore, this letter, has a chilling effect on the investigative and operational work currently underway at these entities. We note with concern that the acting city manager does not appear to understand the roles and function of company secretaries, boards and their committees since the letter serves to obfuscate company law and governance principles.
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“The Institute believes that this letter is ill-timed and should be immediately retracted if the City of Johannesburg wants to be known as an entity of good governance.”
CGISA CEO Stephen Sadie said the letter has placed company secretaries, “as the gatekeepers of good corporate governance in an invidious position”.
According to the CGISA, a company secretary must act in accordance with the prescripts of the Companies Act, the MFMA and the King IV report whilst simultaneously trying to implement the dictates of this letter.
“This role is being frustrated by the actions demanded in this letter. We find it surprising that … Maduka who holds an LLB LLM (Company Law) and was a former company secretary for one year at Johannesburg City Parks and Zoo in 2010, seems not to understand basic corporate governance. His misunderstanding of key legal and governance exhibited in the letter is concerning.”
It goes on to say that the letter’s instruction places the company secretary in direct conflict with the statutorily prescribed duty of accountability.
According to Sadie, “if this letter’s instructions are complied with, how is the company secretary meant to report to the board that the company and, or a director has failed in its duties if the board itself is unable to dictate the terms of its own agenda or the frequency of its meetings.
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“This letter seeks to undermine the statutory power that a company secretary holds in this regard, and furthermore, seeks to subvert the exercise of good governance that is the fiduciary duty of all Boards, which is greatly distressing,” Sadie said.
On Thursday, in response to concerns, the new executive mayor Thapelo Amad said there was nothing untoward about the letter.
“The new administration needed to be afforded an opportunity to acquaint themselves with the city’s business, hence the placing of strategic sessions and board meetings in abeyance until the new administration had settled in and internally communicated their new strategic agenda. The notices are sent out whenever a new administration comes aboard.”