Can directors be held personally liable to shareholders in the context of South African law

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dc.contributor.advisor Delport, P.A. (Piet A.)
dc.contributor.postgraduate Sparis, Lauren Cheryl
dc.date.accessioned 2020-02-28T06:56:11Z
dc.date.available 2020-02-28T06:56:11Z
dc.date.created 2020-04
dc.date.issued 2019
dc.description Mini Dissertation (LLM (Corporate Law))--University of Pretoria, 2019. en_ZA
dc.description.abstract Considering the recent corporate scandals over the past couple years – VBS Mutual Bank, McKinsey & Trillian, Steinhoff, EOH and possibly Tongaat Hulett to name but a few – many shareholders may seek to hold the directors and management of such entities personally liable for their involvement or negligence. Especially where their actions were tantamount to fraud, they benefited in some way and or as a result the company, and possibly the shareholders, suffered damages. This is especially true when a company as consequence is liquidated and cannot institute action on its behalf. It is submitted that directors are rarely held personally liable for failing to fulfill their duties, let alone liable to the shareholders. The risk of failing to monitor internal controls or business risks, and to hold those acting on behalf of the company responsible and accountable for their actions, is dangerous due to the significant effect that such failure could have on the economy, for example the economic collapse with respect to the recent Steinhoff debacle. Whereas the earlier Companies Act 61 of 1973 did not necessarily ‘spell out’ directors’ duties in detail, the Companies 71 of 2008 comprehensibly records their statutory and common law duties. To this extent the board is held accountable and can ensure proper governance in the company’s internal affairs. Shareholders expect management to maximise the value of a company for the benefit of the shareholders and to act in their best interest. In achieving this, directors are required to act in the best interests of the company. However, directors may use their elevated position for their own personal gain and self-interests. Thus, in which circumstances will courts pierce the corporate veil, stepping aside from a company’s unique legal personality, to impute liability to the wrongdoers lurking behind? The relationship between directors, a company and its shareholders is a fiduciary one which imposes certain duties upon directors. However, it is well established in law that directors’ duties are owed to the company itself. Thus, considering common and statutory law, on what legal basis would shareholders be able to bring a claim against directors for the loss or damage they suffered due to an act of the directors? Considering the above, this paper seeks to explore directors’ liability to shareholders within South Africa’s common and statutory law, bearing in mind entrenched legal principles, such as the argument that fiduciary duties are duties owed to the company and not to individual shareholders; and that as a result only the company can impose liability on its directors. en_ZA
dc.description.availability Unrestricted en_ZA
dc.description.degree LLM (Corporate Law) en_ZA
dc.description.department Mercantile Law en_ZA
dc.identifier.citation Sparis, LC 2019, Can directors be held personally liable to shareholders in the context of South African law, LLM thesis, University of Pretoria, Pretoria, viewed yymmdd http://hdl.handle.net/2263/73595 en_ZA
dc.identifier.other A2021 en_ZA
dc.identifier.uri http://hdl.handle.net/2263/73595
dc.language.iso en en_ZA
dc.publisher University of Pretoria
dc.rights © 2019 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.
dc.subject UCTD en_ZA
dc.subject Directors' liability en_ZA
dc.subject directors' liability to shareholders en_ZA
dc.subject separate legal personality en_ZA
dc.subject nature of a company en_ZA
dc.title Can directors be held personally liable to shareholders in the context of South African law en_ZA
dc.type Mini Dissertation en_ZA


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