DefinePK

Abstract

The integration of Artificial Intelligence (AI) into corporate governance structures presents both significant opportunities and serious legal and ethical challenges. As companies increasingly adopt AI systems for decision-making, risk assessment, compliance, and stakeholder management, the need for transparent and accountable mechanisms becomes paramount. This article explores the critical issue of ensuring accountability and transparency in AI-driven corporate governance, focusing on the potential risks, regulatory gaps, and legal implications. The purpose of this study is to examine how existing legal frameworks address—or fail to address—the governance of AI in corporate settings and to propose mechanisms to reinforce corporate responsibility. The research design adopts a doctrinal legal method, supplemented by comparative analysis and case studies from jurisdictions actively regulating AI technologies. Key findings highlight the inadequacy of current corporate governance laws in overseeing algorithmic decisions and the potential threat to stakeholder trust and corporate integrity. The study advocates for the development of robust regulatory guidelines, mandatory AI audit trails, and the redefinition of fiduciary duties to include oversight of algorithmic systems. Ultimately, this research underscores the need for a legal evolution that ensures AI enhances, rather than undermines, corporate governance standards in the digital age. efficiency, AI's use in governance raises fundamental concerns about transparency, accountability, and legal liability. This article examines the impact of AI on corporate governance frameworks and analyzes how current legal regimes address or fail to address these concerns. The study adopts a doctrinal and comparative approach, reviewing statutes, case law, and policy documents from jurisdictions such as the European Union, United States, and Pakistan. It identifies significant gaps in regulation, particularly concerning explainability, fiduciary responsibility, and algorithmic bias. The article argues that existing corporate law principles must evolve to accommodate AI technologies and ensure that their deployment upholds principles of accountability and transparency. Legal reforms, including algorithmic audits, enhanced disclosure requirements, and board oversight responsibilities, are proposed as mechanisms to bridge the gap. The article concludes by stressing the need for international cooperation and ethical AI frameworks to manage corporate AI use responsibly.