Towards good corporate governance in state-owned industries : the accountability of directors

• Author: Emily Makuta
• DOI: 10.10520/EJC76218
• Date: 01 January 2009
• Pages: 55-69
• Published date: 01 January 2009

TOWARDS GOOD CORPORATE

GOVERNANCE IN STATE-OWNED

INDUSTRIES: THE ACCOUNTABILITY OF

DIRECTORS

Emily Makuta*

ABSTRACT

This article examines the importance of corporate governance for

state-owned industries. It argues that directors’ accountability is the basis for

ensuring the success of any corporation. It singles out state-owned industries

because of the challenges faced by these industries in separating ownership

and control and in defining their objectives, the economic significance of

state-owned industries in developing economies and the far-reaching effects

of any failures of such industries on the general public. As a template for

analysis, the article adopts the governance principles outlined in the

Commonwealth Association for Corporate Governance (CACG) Guidelines.

Of all principles of good corporate governance,1this article employs the

principle of accountability as its main analytical tool because it supports the

very basis for which legal personalities in the form of companies or

corporations were created. It is recommended that measures should be put in

place to ensure the accountability of those entrusted with the control and

management of state-owned enterprises. Such measures should include

legislation and the reduction of shareholder involvement in the day-to-day

functions of these enterprises.

GOOD CORPORATE GOVERNANCE IN STATE OWNED INDUSTRIES 55

Head of Legal Compliance and Company Secretary for INDE Bank Limited. LLM (Warwick)

LLB (Hons) (UNIMA); Associate ICSA (UK); Int Dip in Compliance (Manchester Business

School & International Compliance Association). An earlier version of this article was presented

at the Malawi Law Journal Launch Conference at Mount Soche in Blantyre on 16 17 July 2008.

*

1BCoyleCorporate governance (ICSA Publishing Ltd, 2004) 24.