Artificial intelligence (AI) is rapidly developing and may in the future get a seat at the boardroom table, according to Adriaan Louw and Patrick Bracher of law firm\u00a0Norton Rose Fulbright South Africa,<\/p>\n
They note that the ability of AI to fulfil certain tasks, such as data collection and processing, at a pace exponentially faster than its human counterparts means that businesses cannot function properly without the use of AI in some shape or form.<\/p>\n
Technology, however, may soon surpass a supporting function to directors by replacing them, the legal experts said.<\/p>\n
“As far back as 2014, a Hong-Kong based venture capital firm appointed Vital, an algorithm, to its board of directors.<\/p>\n
“While Vital only enjoyed observer status, it was given the right to vote on whether the company invests in a specific company or not. Unlike its human colleagues, Vital has the ability to automate due diligence and use historical data-sets to uncover trends.”<\/p>\n
“The rise of AI requires a fundamental change in the anatomy of corporate law to accommodate AI directors. These robo-directors, their ability to vote, and liability, bring about a range of novel, unprecedented legal questions. Corporate law is, after all, tailored to cater for humans being the managing minds and not an algorithm or AI.”<\/p>\n
According to the legal experts,\u00a0South Africa\u2019s Companies Act disqualifies juristic persons from serving on the board of directors of a company.<\/p>\n
This is because directors have fiduciary duties to act in good faith and in the best interest of the company.<\/p>\n
Section 77 of the Companies Act does allow a director to rely on the performance of and to delegate to another person those matters involving skills or expertise within the delegatee\u2019s competence. Such a person includes a juristic person.<\/p>\n
“While AI may be superior at making predictions, humans need to make judgments. To make these judgments, directors must retain the ultimate management function even where a power has been delegated,” they said.<\/p>\n
“A survey by the World Economic Forum predicts that the first AI director may be serving on the board of a company as soon as 2025<\/strong>.<\/p>\n “While it remains a mystery whether we could one day see a boardroom filled with only robo-directors, there is no doubt that AI will play an increasingly important role at board level and inevitably influence the future well-functioning of corporate law.<\/p>\n “The Companies Act would of course have to be amended.”<\/p>\n
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