The Use of Artificial Intelligence in South African Boardrooms: Company Law Implications and Challenges

Artificial intelligence (AI) is increasingly playing a crucial role in how boards of directors manage companies and make decisions within companies. This article examines the following key company law implications and challenges arising from the use of AI in South African boardrooms: (i) whether by consulting AI the board of directors will be regarded as having complied with its fiduciary duties; (ii) whether directors may rely on the business judgement rule under the South African Companies Act 71 of 2008 when AI-assisted decisions result in negative consequences for the company; (iii) whether directors may lawfully delegate their functions to AI systems, and rely on AI-generated advice without incurring liability for incorrect decisions made by those systems; and (iv) whether any person is liable when AI errors cause harm to third parties. This article argues that the Companies Act 71 of 2008 has not kept pace with technological advancements and should be reviewed to regulate AI use by boards of directors. It concludes by submitting recommendations to support this necessary legislative reform.