Responsibilities of the Board of Directors of a Company

Key Responsibilities of Board Directors in South Africa

The board of directors of a company carries a wide range of responsibilities that go far beyond day-to-day operations. These responsibilities are vital to the long-term success, sustainability, and governance of the company. In this article, we explore the core duties of board directors in the South African context.

Fiduciary Duties

At the heart of a director’s role is their fiduciary duty—the obligation to always act in the best interests of the company and its stakeholders. Directors must exercise their powers with due care, skill and diligence, and act honestly and in good faith.

Key requirements include:

  • Avoiding conflicts of interest

  • Disclosing any actual or potential conflicts through a formal Declaration of Interests

  • Recusing themselves from decisions where such conflicts may arise

Digital platforms like BoardCloud make it simple for directors to complete and update their Declaration of Interests forms.

Strategic Direction

Setting and overseeing the strategic direction of the organisation is a core responsibility of the board. This includes:

  • Defining the company's mission, vision, and objectives

  • Approving and monitoring long-term strategic plans

  • Evaluating the company’s performance against set targets

Directors must be thorough in reviewing all materials and documentation provided in board packs, which support effective decision-making.

Risk oversight is also a key responsibility. Both executive and non-executive directors must assess strategic and operational risks, with non-executives often offering valuable external perspectives and industry insight.

Financial Oversight

Directors are ultimately accountable for the financial health of the organisation. This responsibility includes:

  • Reviewing and approving budgets and financial statements

  • Ensuring the company remains solvent and financially stable

  • Overseeing dividend policies and financial reporting

In South Africa, directors must also ensure compliance with the Companies Act 71 of 2008, which places specific obligations on directors regarding financial accountability and reporting standards.

Legal and Regulatory Compliance

Directors must ensure that the company operates within the bounds of all relevant South African legislation and regulations, including:

  • Tax law

  • Labour law

  • Occupational health and safety legislation

  • Broad-Based Black Economic Empowerment (B-BBEE) codes

  • Environmental regulations

In many South African organisations, the Company Secretary plays a crucial advisory role on compliance and governance matters. Directors and the Chairperson should engage regularly with the Company Secretary to ensure sound governance practices are followed.

It is also essential that directors uphold ethical standards and promote corporate responsibility at all levels.

Corporate Governance

Strong corporate governance is a fundamental aspect of a director’s role. Directors must:

  • Oversee internal control systems

  • Monitor risk management processes

  • Ensure accountability and ethical leadership

  • Promote transparency and integrity within the company

The King IV Report on Corporate Governance provides an important framework for governance in South Africa. Directors should familiarise themselves with its principles and apply them in the boardroom to support ethical and effective leadership.

Conclusion

Board directors in South Africa have broad and vital responsibilities that underpin the success and reputation of their organisations. From fiduciary duties and strategic oversight to financial and legal accountability, directors must lead with integrity and diligence.

By fulfilling these responsibilities, board members help to ensure that their organisation is well-managed, legally compliant, and aligned with best-practice governance principles—contributing to long-term value creation for all stakeholders.

[Updated: May 2025]