How Emerging Technologies Are Reshaping Governance Standards and Legal Expectations
In our previous article, “Embracing AI: A New Dimension for Directors’ Duties of Skill, Care, and Diligence”, we explored how Artificial Intelligence is transforming the way directors are expected to lead, make decisions, and exercise oversight. Building on that discussion, we are taking this conversation further—because the AI revolution isn’t just theoretical anymore. It’s here, it’s real, and it’s forcing boards to reassess what diligence truly means in practice.
From evolving legal risks to high-profile legal proceedings—such as the ongoing case involving former directors of Star Entertainment in Australia—directors today face growing pressure to be technologically literate, actively engaged, and ethically grounded.
The Star Entertainment Case: A Trial with Lessons Already Emerging
While the case is still underway and the court has not yet delivered a final verdict, the proceedings have already highlighted critical themes relevant to all directors. Justice Michael Lee, presiding over the matter, questioned the argument raised by the defence—that the directors were too overburdened by paperwork to properly review materials that may have revealed money laundering risks.
During trial, Justice Lee expressed visible frustration with this line of defence. His pointed commentary—widely paraphrased in the media as “If you take the cash, you must do the job”—reflected an important expectation: directors who accept fees cannot disengage from their responsibilities, regardless of how demanding the work may be.
While the court’s judgment is still pending and may take several months to conclude, this trial underscores a vital principle already resonating across boardrooms: governance is not a passive duty.
The Rise of AI, and What It Demands of Boards
AI is not just disrupting industries—it’s reshaping governance. These technologies are providing directors with access to deeper insights, faster analytics, and more accurate forecasts than ever before. But that also means the bar for what qualifies as “informed” decision-making is getting higher.
As we considered in our earlier piece, if a board ignores available AI tools that have become standard in the industry, that could soon be interpreted as negligence.
There is therefore an unwritten and underlying expectation that directors today are expected (or will increasingly be expected) to:
- Be familiar with the role of AI in their sector
- Ensure their companies are using these tools responsibly
- Maintain a record of well-informed, tech-supported decisions
- Seek expert guidance where appropriate
- Promote a governance culture that embraces innovation without sacrificing accountability.
Passive Directorship? No Longer a Shield
In South Africa, Section 76 of the Companies Act requires directors to act with care, skill, and diligence. King IV Report on Corporate Governance expands this, highlighting the need for ethical and effective leadership that supports value creation.
What the Star Entertainment trial is already making clear—even before judgment—is this: being overwhelmed by the volume of board material is not an acceptable excuse for failure to act. And amongst the other things that directors can possibly do to be informed would be to utilise some of these tools and resources in discharging of their duties. Directors who disengage risk:
- Personal liability for oversight failures
- Loss of protection under the Business Judgment Rule
- Disqualification and possible declarations as delinquencies
- Lasting reputational damage.
AI and Confidentiality: A Governance Imperative
As we noted in our earlier article, the adoption and utilization of AI cannot be pursued in a vacuum. Directors must ensure that AI is integrated within an ethical framework—one that safeguards the confidentiality, security, and integrity of proprietary company data. This includes:
- Implementing robust data governance policies
- Ensuring transparency in how AI systems process and utilize company information
- Guarding against algorithmic bias and ethical lapses
- Balancing innovation with strict compliance and accountability protocols.
Neglecting these responsibilities—whether by failing to act on red flags, ignoring AI’s capabilities, or mismanaging its risks—can expose directors to serious legal and reputational consequences.
A New Era of Boardroom Responsibility
Directorship in the age of AI requires more than financial literacy or strategic vision—it demands a working understanding of technology and its implications for compliance, reputation, and innovation.
The evolving trial of Star Entertainment may still be months away from a verdict, but it’s already demonstrating how courts are scrutinising not only the outcomes of board decisions—but the processes that support them.
Final Reflections
Governance today isn’t about keeping up appearances—it’s about showing up prepared and proactive.
Whether it’s hundreds of pages of board papers or complex data flowing from AI systems, what matters is that directors ask the right questions and make decisions from a place of understanding, not convenience.
And in that sense, even without a final verdict, the Star Entertainment trial is teaching us something profound: being a director means doing the work—fully, consistently, and consciously.