Reference no: EM131686984

Mangaung Broadcasting Ltd. is a public company that provides a public service through the broadcasting of television and radio programmes. One of the largest shareholders (with 30% of the share capital) in this company is the South African government. Over the last decade the performance of this company has taken a turn for the worse. The company's turnover is seeing a decline and even the viewer and listener ratings have reduced. However, the board of the company is of the opinion that all is well. Since the state and general public have an interest the shareholders ask for a report on the operation of the board and the running of the company as well as the reasons for the company's poor performance. Upon receiving the report the shareholders could immediately ascertain that the members of the board might be the cause of the company's troubles. The report revealed that the Chief Operating Officer of the company lied about his qualifications and that his deceit was the only reason for his appointment. It further comes to light that the board members authorised the payment of large performance bonuses to themselves despite the company's apparent financial woes. Furthermore, the board, on several occasions, awarded contracts to close family members that were not in the best interest of the company.

One of the company's shareholders, Ms A, approach you for advice at an informal gathering. She informed you about the troublesome situation concerning Mangaung Broadcasting Ltd as identified above. She knows that you are currently busy with an MBA and asks for your advice. She suffered substantial losses and intends to recover damages from the company and/or other directors. Advise Ms A about the legal issues that can be of concern in the described situation. Recommend a course of action that she can follow to address these legal issues and to provide her with relief.