Pitfalls of Shareholder-Centric Corporate Law in an Unequal Society: A South African Perspective

Abstract South Africa is the most unequal society in the world, and this is exacerbated by the enduring legacy of apartheid. Policy and statutory interventions have been introduced to address inequality, albeit with minimal success. This article argues that the persistence of inequality necessitates a more profound normative recalibration within corporate law. It proposes incorporating the values of transformative constitutionalism, distributive justice and Ubuntu into corporate law, conceptualized as transformative corporate law. This reorientation enhances the enlightened shareholder value (ESV) model by shifting its emphasis from a predominantly shareholder-centric focus towards a more inclusive stakeholder model. The article situates shareholder primacy as occupying “the right”, stakeholderism “the left” and the ESV model “the centre” of the corporate governance spectrum. South Africa’s extreme inequality demands a paradigm shift that moves decisively towards the centre-left, a position embedded in the African philosophy of Ubuntu and termed the “progressive ESV” model in this article.