Part (d) Discuss, with reference to section 2, the corporate governance concerns you may have regarding the conduct of C2C’s directors with reference to the King IV Report and the Companies Act.
ANSWER
Corporate Governance Concerns
The directors' conduct at C2C raises serious corporate governance concerns, violating both the Companies Act and the King IV Report.
Conflict of Interest: The CFO, Palesa Vuma, gave a maintenance contract to her father-in-law's company without a proper tender process. This is a clear breach of her duty to act in C2C's best interest.
Ethical Breaches: The offer of a bursary to a union leader's daughter is a form of bribery, which is a significant ethical violation and goes against the principles of effective and ethical leadership.
Reckless Trading: The company is in financial distress, with high debt and a denied loan, yet the directors are continuing to trade. This could be considered illegal reckless trading under the Companies Act.
Shareholder Fairness: The CFO's plan to buy share rights from other directors to keep control of the company is a concern, as it could be seen as an attempt to unfairly disadvantage other shareholders.
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