Exercise your responsibilities carefully as the penalties for failure to do so can be severe. You may be personally liable for losses, damages and costs incurred by the entity as a consequence of a breach of any of your duties as a director. You may also personally liable for loss, damages or costs in, amongst others, the following instances:
Most of these actions are offences which are punishable by a fine or imprisonment up to 10 years, or both.
However, be aware that generally directors will not be held liable for decisions taken by them where their decision:
The liability in terms of the Act is joint and several with any other person who is or may be held liable for the same act. A company cannot generally restrict a director’s liability for a breach of their fiduciary duties.
Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/or limitations upon you being able to continue in your role
A company may recover losses, damages or costs sustained by the company from acts/omissions of the directors. A derivative action can be bought by a shareholder, a director or prescribed officer of the company or a related company, a registered trade union that represents employees of the company or another representative of employees of the company or if the person has been granted leave of the court to do so.
In terms of the Act, a company may indemnify a director in respect of any liability other than that arising from:
You are empowered to delegate aspects of your authority to persons whom you believe to be reliable and competent in the functions performed.
The directors may appoint at any time, by power of attorney, any person to be the attorney(s) of the company for such purposes and with such powers, authority and discretions (however, not exceeding those vested in the directors) for such period and subject to any conditions the directors deem suitable.
In South Africa a company is entitled to take out indemnity insurance to protect a director against any liability or expenses for which the company is permitted to indemnify a director.