Explain the extent of the boards responsibility

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Reference no: EM133613132

Question: Craft Constructions Ltd ('Craft') is a South African construction company with over 2,000 employees and a number of subsidiaries. The company recently experienced a difficult AGM, where a statement highlighting new initiatives on stakeholder engagement and non-financial and 'sustainability' reporting caused a big stir among shareholders, concerned that their interests were no longer the board's 'top priority'. The Chair took a lot of time at the AGM to detail 'the sustainability revolution' that the board believed was going on globally and also in South Africa, citing a number of legal, code, and policy sources.

A minority of institutional shareholders remain unsure and concerned that they could even be in breach of their fiduciary duties to underlying investors, if it were to become Craft's policy to (as they see it) 'divert from their core interests'.

You have been hired by the board as a consultant, and as a means to reassure and also 'engage' shareholders with the company's 'corporate social responsibility' (CSR) efforts. The chair has asked you to prepare a statement that:

Explains the extent of the board's responsibility to 'follow an inclusive stakeholder-approach to promote long-term sustainability' (King IV) in South African corporate law and governance. (You may wish to mention directors' duties, non-financial reporting, and stakeholder protection as per the Companies Act and King IV, and the potential benefits for the company and shareholders.) (50)

Reference no: EM133613132

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