Analyses: Implications of the re-enacted discretionary power to grant judicial relief to directors in section 77(9) of the Companies Act 2008

• Jurisdiction: South Africa
• Pages: 145-152
• Author: Richard S Bradstreet
• Citation: (2015) 27 SA Merc JL 145
• Date: 25 May 2019
• Published date: 25 May 2019

Analyses

IMPLICATIONS OF THE RE-ENACTED

DISCRETIONARY POWER TO GRANT

JUDICIAL RELIEF TO DIRECTORS IN

SECTION 77(9) OF THE

COMPANIES ACT 2008*

RICHARD S BRADSTREET

Lecturer, Department of Commercial Law, University of Cape Town

I INTRODUCTION

‘A f‌iduciary relationship will occur where one person undertakes,

either expressly or by implication, to act in relation to a matter in

the interests of another, in a manner that is def‌ined or understood

by them, and is entrusted with power to affect such interests. The

other person relies on or is otherwise dependent on this undertak-

ing, and, as a result, is in a position of vulnerability to the exercise of

such power; and the f‌irst person knows, or should know, of such

reliance and vulnerability. The nature and circumstances giving rise

to the undertaking are such that loyalty and good faith are intrinsic

elements of the consequent duty.’ (Gautreau, ‘Demystifying the

Fiduciary Mystique’ (1989) 68 Can Bar Rev 1 at 7).

Directors of a company have always been bound by certain duties which

are owed by each director to the company to which they stand in a

f‌iduciary relationship by virtue of their off‌ice (Whitehouse v Carlton

Hotel Pty Ltd (1987) 162 CLR 285 at 314). In addition to the delictual

liability that a company’s directors may incur as a result of their

negligent conduct (in terms of the duty of reasonable care, skill and

diligence), the common law has also imposed a number of ‘f‌iduciary’

duties on directors that arise by virtue of their relationship with the

company. A director’s f‌iduciary duties at common law include the duties

* The author acknowledges the assistance of unpublished research notes on the common

law f‌iduciary duties of directors prepared by the late Professors Blackman and Larkin, and

would like to thank Kathy Idensohn for her helpful comments.

145

(2015) 27 SA Merc LJ 145

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