‘Knowledge’ as a mechanism to hold directors personally liable for adverse distributive decisions under the Companies Act 71 of 2008

Authors Simphiwe S Bidie

ISSN: 2521-2575
Affiliations: Lecturer, Nelson R Mandela School of Law, University of Fort Hare
Source: Journal of Corporate and Commercial Law & Practice, The, Volume 4 Issue 1, 2018, p. 1 – 46


It has been almost a decade since the Companies Act 71 of 2008 became operational. However, the veracity of some of its provisions remains untested. As such, its purpose with regard to those provisions remains unravelled. In this regard, ss 46(6) and 77(3)(e)(vi) are a case in point. The intention in this paper is to analyse these provisions. In engaging with these provisions the aim of the 2008 Act seems to be to encourage directors to make decisions which contribute to social stability and enhance economic development. To achieve its purpose, the 2008 Act has entrusted boards of directors with the responsibility to make proper decisions informed by that which the Act seeks to achieve. The wording of the Act suggests that directors are expected to assist to achieve the purpose of the Act by undertaking this duty voluntarily without necessarily being compelled by legislative provisions. However, if looked at through the lens of the many corporate failures to date, this task is proving to be idealistic. It is even more so where corporate failure is caused by directors’ deliberate conduct. Because of the important role which courts occupy within our legal system, they naturally become the vanguard to drive the interpretative objective envisaged by the Act. It is this interpretative objective which forms the basis of this paper to critically engage with the above provisions which are among many aimed at instilling accountability in directors.