Director delinquency ruling – Stephanie Phillips | Compliance Officer

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We alert you to the recent High Court of South Africa judgement that has seen former SAA Chair, Dudu Myeni, being declared a delinquent director in terms of the Companies Act.

Judge Ronel Tolmay found that Ms Myeni had comprehensively failed to fulfil her duties as a director and ordered that she be declared a delinquent director for life, and she was further ordered to pay punitive costs. The Judge also referred the judgment and evidence to the National Prosecuting Authority for investigation regarding possible criminal conduct.

Judge Tolmay’s far-reaching judgement finally makes it clear that directors must inform themselves properly about the nature and extent of their duties towards the organisation or put themselves at risk. It is also clear from the evidence led that the courts will rely not only on legislation but also the King Reports on Corporate Governance — together, these provide a sound framework to guide directors in fulfilling their duties satisfactorily. Directors have a critical role to play, which they can only do if they are fully conversant with their legal and fiduciary obligations.

The judgment also made the important point that directors cannot use collective decision-making to evade individual responsibility and liability.

The case shows how important it is for organisations to appoint suitably qualified people to boards, and to ensure that they keep up to date with latest thinking and are regularly appraised.

We believe this judgment should act as an urgent call for directors and prospective directors to take steps to ensure that they are appropriately knowledgeable and experienced.

We urge you to contact us should you not be aware of your legal and fiduciary obligations to avoid putting yourself at risk. This judgement will pave the way for many more cases being brought against directors and now is the time to ensure you are aware of all your duties.