How the right Committees keep Boards focused and Investors calm.
The finance team has spent weeks refining next year's budget. At 10pm on a Thursday the non-executive chair e-mails it back – fifty edits, deep into operational detail. By Friday morning the CFO is livid, management is paralysed and a seed investor on the board 'WhatsApps' the founder: "Is anyone actually steering this ship?"
Moments like this convince outside funders to walk away, even when revenue is climbing. They read board interference as a flashing warning light: poor checks and balances, blurred accountability and – ultimately – greater risk. South African law and King IV give fast-growing private companies a governance framework that prevents this spiral, but only if it is tailored and implemented before the funding roadshow.
Where growth ventures stumble
In young businesses the same directors often wear multiple hats – investor, mentor and de facto operations consultant. That overlap is survivable while the cap-table is small; it is fatal once the company chases larger money. King IV is explicit: non-executive directors should stay out of day-to-day execution, leaving only the CEO or managing director with both board and operational mandates. More than a guideline, this separation is now embedded in the 2024 Companies Amendment Act, which spells out which committees are legally non-negotiable and which are best practice.
Two extremes tend to appear when governance has been left to drift:
- The "shadow-executive" board. Directors rewrite budgets, sign off vendor contracts and even negotiate salaries, leaving management to wonder who is actually accountable for results.
- The "committee shield." Directors who fear liability push every tough call into sub-committees that lack authority or clear mandates. Accountability vanishes behind spreadsheets of recommendations that never land on the main agenda.
Either way, investors see noise where they expect discipline.
Turn governance into a growth asset
- Anchor Decision-making: A concise Delegation-of-Authority policy is the fastest route to clarity. It sets monetary limits, defines when the board must approve a deal and, crucially, stops non-executives meddling below that threshold.
- Install the core committees – only once: High-growth private companies are not (yet) public but adopting an Audit & Risk Committee and a Social & Ethics Committee early signals seriousness. King IV calls them best practice; VCs call them comfort. Keep charters tight: oversight, not execution. If a committee's terms of reference allow it to do no more than "make recommendations," sharpen the language or scrap the committee – it is dead weight.
- Publish a short policy portfolio: Investors perform desktop diligence before they ever request a data room link. Post a Privacy Notice, an ESG statement and a one-page IT-governance outline on your website. These documents show that strategy, ethics and data security are on management's radar, without turning policy into red tape.
- Benchmark success stories (and train wrecks): Naspers earns praise for a clean CEO/Chair split and transparent risk management; PRASA is still untangling the cost of blurred roles and missing oversight. Use those examples to brief your board: "Here's what future investors will compare us against – where do we sit?"
The payoff
When roles are clear and essential committees are active – not ornamental – businesses raise capital faster and on better terms. Audit time drops because information flows through defined channels. Liability insurance becomes cheaper because directors can prove where responsibility starts and ends. Most importantly, founders stay free to lead execution instead of refereeing board skirmishes.
Ready for a reality check?
Book a 30-minute Governance Gap Check with Nerishka Pillay and Gerard Verhoef. You will receive a one-page heat-map of committee, delegation and policy gaps – no charge, no strings. If the picture looks good, you are road show ready; if it needs work, we will outline a costed plan to fix it before investors start asking the hard questions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
