Artificial intelligence (AI) is rapidly developing and may in the future get a seat at the boardroom table.

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. Technology, however, may soon surpass a supporting function to directors by replacing them.

As far back as 2014, a Hong-Kong based venture capital firm appointed Vital, an algorithm, to its board of directors. 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.

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.

South Africa’s Companies Act disqualifies juristic persons from serving on the board of directors of a company. Directors have fiduciary duties to act in good faith and in the best interest of the company. 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’s competence. Such a person includes a juristic person.

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.

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. 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. The Companies Act would of course have to be amended.