Delinquent director explained

A delinquent director is a term used under Section 162 of the South African Companies Act 71 of 2008, which allows shareholders and other stakeholders to apply to the court to declare a director of a company delinquent.

If found guilty of serious misconduct, gross abuse of position, gross negligence, wilful misconduct or a breach of trust, a director can be declared delinquent by the court. If declared delinquent, an order will ban a person from holding a director position for at least seven years, or for life in serious cases.

The delinquency order provides a way to ensure that directors remain accountable to the company, shareholders, fellow directors and employees. It sets out to raise standards of good behaviour expected of directors, and protects the public from incompetent and dishonest directors.[1] [2] [3] [4] [5] [6]

Notable cases

An example of a person declared a delinquent director in South Africa is Dudu Myeni, the former chairperson of SAA.[7] [8] Myeni was judged by a court to have "acted dishonestly and grossly abused her powers" and "exposed SAA to financial ruin".[9]

Notes and References

  1. Cassim . Rehana . Delinquent directors under the Companies Act 71 of 2008: Gihwala v Grancy Property Limited 2016 ZASCA 35 . Potchefstroom Electronic Law Journal/Potchefstroomse Elektroniese Regsblad . 2016 . 19 . 1 . 1 . 10.17159/1727-3781/2016/v19i0a1246 . free .
  2. Web site: How to get rid of a delinquent director in your business. theartmey.co.za. en-ZA. 2020-06-05.
  3. Web site: Why South African law on directors' delinquency is open to abuse. mg.co.za. en-ZA. 2020-06-05.
  4. Web site: Delinquent directors and the shareholder – Director conundrum. golegal.co.za. en-ZA. 2020-06-05.
  5. Web site: Court may declare a director delinquent. saica.co.za. en-ZA. 2020-06-05.
  6. Web site: The Delinquent Director. greeffattorneys.co.za. en-ZA. 2020-06-05.
  7. Web site: High court declares Dudu Myeni delinquent. mg.co.za. en-ZA. 2020-05-28.
  8. Web site: Meyer . Jaco . Kelly . Rachel. Delinquent Directors . www.cliffedekkerhofmeyr.com . Cliffe Dekker Hofmeyr . 30 June 2021 . 4 June 2020.
  9. News: Seven things you need to know about Dudu Myeni – including how silence could land her in jail . 30 June 2021 . Business Insider ZA . Business Insider Inc . 5 November 2020.

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