CGF Articles & Editorials
HOLDING DIRECTORS PERSONALLY LIABLE: WHERE TO DRAW THE LINE? (2017-02-09)
By Terrance M. Booysen, Lucien Caron and Robert Davies
There is no doubt that directors in South Africa are being scrutinised for their role within organisations ̴ and far more than in previous times. Board and executive decision-making is being challenged in parliament and in court and, at the very least, some directors have suffered significant reputational damage for not being seen to have properly and diligently fulfilled their fiduciary duties.
Where the old South African Companies Act of 1973 did not specifically spell out directors’ functions and duties in detail, the new Companies Act of 2008 articulately records their statutory and common law duties. To this extent, the board is held ultimately accountable for managing the affairs of the organisation, both jointly and severally. Quite different to the previous Companies Act, under the new Act directors are personally accountable for a great deal more when things go wrong, and when this happens the consequences can be devastating for the organisation and its directors.
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