The influence of section 78 of the companies act 71 of 2008 on personal Liability insurance taken out by directors of companies

• Main Author: Van staden, Elrica Gaylon
• Other Authors: Basson, Yvette
• Language: en
• Published: University of the Western Cape 2021
• Subjects: Companies Act; Liability; Common law
• Online Access: http://hdl.handle.net/11394/8326

Magister Legum - LLM === In order to understand the context of the research paper, a brief discussion has to be made as to the important fact that a director has to be appointed in a role to assist with the decision-making in running of a company.1 A director is an officer of a company that is ordinarily appointed in order to make daily business reporting, decisions and to take business risks on behalf of the company.2When taking up a position as a director, duties and responsibilities must be fulfilled. A failure to comply with these duties will result in serious consequences for the company and often for the director himself.3 Director’s fiduciary duties previously developed from our common law and was established through the precedents set by our courts.4 These duties were partially codified in the Companies Act 71 of 2008.5 It can be clearly seen that the Companies Act 61 of 1973, only mentions the duties but does not specify directly the types of duties.6 The standard of conduct expected of directors is provided for in section 76 of the Companies Act 71 of 2008.7 Furthermore, section 77 contains the liability of directors for any breach of their duties.8 This raises the point that a director can incur various type of liability for a breach of their duties. The type of liability that can be incur is personal liability and criminal liability.9