Introduction
Statement of Purpose
There is much academic writing on the subject of the duties of directors, but no recent discussion evaluates the changes of common law fiduciary duties following the new partial codification in the 2008 Act. Director's ignorance as well as negligence has devastating repercussions for the management and running of the company.
Research Purpose and Research Questions
Where are these two duties derived from and how do these sources work in relation. How does the partial codification of common law duties affect the interpretation of these two duties, and does the common law still apply.
Rationale for the Study
Research Methodology and Theoretical Framework
This is because this thesis only examines the law as it currently stands in relation to statute and common law and the discussion is limited to what is the written law and the interpretations and views taken by the courts and leading academics on the area. This thesis will not involve any evaluation or exploration of morality or the 'correctness' of the law, but is concentrated on the law itself as it stands now.
Structure of Dissertation
The board of directors expressed satisfaction that they were acting in the best interest of the company. CHAPTER THREE: THE ORIGIN OF FIDUCIARY DUTIES AND THE RELATIONSHIP BETWEEN THE COMMON LAW AND THE STATUTE. This chapter briefly examines the origins of directors' fiduciary duties to act in good faith and for a proper purpose.
This chapter will focus on a director's primary duty to act in good faith or good faith in relation to the company. 40 would result in a breach of the directors' overriding duty to act in good faith. The subject of board members' fiduciary duties is one of great importance for company law.
Directors and the meaning of Fiduciary
The meaning of Fiduciary and the significance for Directors of a Company…
To whom the Directors owe their Fiduciary Duty
77 This is true even though the board of directors acts collectively when making decisions regarding the direction and management of the company. 18 the company was going out of business, so it couldn't be in the best interest of.
Directors versus Trustees
Directors are said to have duties similar to trustees, but directors are not trustees and their relationship in relation to the company is considered sui generis97 in our South African law98. The trustee asked the landlord to extend the lease regarding the trust, the landlord refused, but he personally leased the property to the trustee.
Conclusion
It should be noted that the directors of a company are elected by the shareholders of the company. The duty to exercise independent judgment is seen by some academic writers as a further facet of the directors' duty to act in good faith and in the best interest. As set out in this chapter, a director's fiduciary duty to act in good faith has now been partly codified in section 76(3)(a) of the 2008 Act.
This chapter examines the duty of a director of a company to act for a proper or permitted purpose in terms of the common law and the now partially codified version in terms of the 2008 Act. It should be noted that section 76(3) (a) is declaratory for the common law fiduciary duties and therefore has no legal effect on the common law fiduciary duty to act in good faith and for a. As mentioned earlier, this study has attempted to conduct a thorough exploration of the primary duty of a director to act in good faith and for a proper purpose.
The Origin of the fiduciary duties and the relationship between the common
The Partial codification of fiduciary duties and the relationship between Statute
Academic Opinions on the partial codification of the fiduciary duties of
26 instead repeated the common law but in such a limited sense that it cannot be understood except against the background of the common law.138. McLennan supports the view of Cassim discussed above and stated that his main reservations to the partial codification of the fiduciary duties were firstly whether it was necessary when the common law on the subject was so vast and well developed, and secondly that the partial codification would creates problems with the interpretation of provisions and actually creates more problems than solving any and giving clarity to the common law.139 Mclennan.
Developments since the Partial Codification
In contrast, Botha has expressed support for the partial codification of directors' fiduciaries, stating that the partial codification was a step in the right direction.141 Botha argues that the partial codification was necessary because of the shortcomings of the 1973 Act . and also leads to better protection of the company's stakeholders.142. Therefore, it can be said that the partial codification of the fiduciary obligations to act in good faith and for an appropriate purpose has not been developed or changed and is merely a reformulation of the common law148, however, this is subject to an exception, namely that the duty of good faith is now been extended to include subsidiaries for the first time.149.
Conclusion
This chapter will also explore the relationship between the duty of good faith and corporate governance in modern company law. This chapter will also review relevant case law and academic thinking regarding the duty of good faith.
Introduction
The duty to act in good faith is the primary duty from which other fiduciary duties arise, and it includes the duty to exercise independent judgment and act for good. Content of the duty to act in good faith and in the interest of the company As stated above, every director has a duty to act in good faith and fairly.
The content of the duty to act in good faith and the best interest of the
The court stated that the criterion is whether a reasonable person would have regarded the actions of the directors as being in the best interests of the company.182. The court ruled that the director acted in his own interest and not in the interests of the company and therefore violated his duty to act in good faith towards the company.188. Included is the duty of loyalty, acting in the best interests of the company and honestly addressing the issue before the board.
Particular emphasis should be placed on the fact that section 77(2)(a) of the 2008 Act provides that a director will be held liable under common law principles314 in relation to a breach of a fiduciary duty as provided for in section 77(3) . )(a) of the 2008 Act, in other words under a duty of good faith and to act for a proper purpose.
The duty to exercise an independent judgment
The overlap between corporate governance and the fiduciary duty of
218 The King's Report on Corporate Governance for South Africa (Institute of Directors in Southern Africa) 2002. 223 The King's Report on Corporate Governance for South Africa (Institute of Directors in Southern Africa) 2002.
Conclusion
Section 38(1) of the 2008 Act places more emphasis on the director's power to issue shares and has therefore increased the importance of the fiduciary duty of a director to act for a proper or permissible purpose. Therefore, it is clear to see from the brief summary of the findings that this study has fully explored the duties of a director to act in good faith and with a proper purpose.
The fiduciary duty of a director to act for a proper or permissible purpose
The content of the duty to act for a proper or permissible purpose
This principle was explained in the case of The Australian Metropolitan Life Assurance Co ltd v Ure273 where the court stated as follows-. 47 has been interpreted by the courts as an improper use of directors' power to issue shares288.
The tests developed by the courts
This power as mentioned above is a fiduciary power that must be exercised in good faith and for a proper or permissible purpose.307 As a result of section 38 of the 2008 Act, this specific fiduciary power to issue shares and the duty to to act for a proper purpose. more important. This issue of shares is a contentious issue regarding the fiduciary duty of a director to act for a proper purpose and therefore directors must be extra vigilant when issuing shares and ensure that it is not for a collateral purpose not.
Section 38 of the 2008 Act and the duty of proper purpose
Conclusion
The purpose of this study is therefore to investigate the specific fiduciary duties of a director to act in good faith and for a proper purpose in terms of common law and statute, as well as to investigate whether there have been any changes or developments since the change of common law. to partial codification. Chapter two(2) of this study examined the definition of a director in terms of the 2008 Act, as well as the meaning of a fiduciary in the context of company law.
Concluding Remarks
Findings of the study
This chapter showed that the partial codification of a director's fiduciary duties was in line with international trends and that the aim behind it was to make the fiduciary duties of directors more accessible and to provide clarity in the law.329 Many academics, However, like Cassim, the partial codification is seen as a missed opportunity because the legislature has failed to address problematic areas in common law, such as statute. The inquiry into the partial codification of the duty to act in good faith and for a proper purpose in terms of section 76(3)(a) of the 2008 Act found that there has been virtually no change or development in the common law interpretation of these duties, except that the duty of good faith was now extended to subsidiaries.
Contributions of the study
55 power of directors to issue shares and so the courts have introduced tests to help them determine when a director has abused his power or used it for an improper purpose.343 This chapter also discovered that section 38 (1) of the 2008 Act placed more emphasis on the director's power to issue shares and therefore led directly to the placing of a higher degree of importance on a director's duty to for a proper purpose to step.344. 56 It is therefore the opinion of the author that all the research questions and objectives have been fully answered or investigated during the process of this study and will be beneficial for the understanding of these two particular fiduciary duties in the context of modern company law.
