By Dorette van Deventer

Image supplied by Resolve

The Companies Act 71 of 2008 (the “Act”) imposes a fiduciary duty on all directors of a company. Directors have a duty to act in good faith, exercise reasonable care, skill and diligence and act in the best interests of the company.

The fiduciary duties of a director may be relinquished if they choose to resign, or if they are removed from the board.

Removal of a director

What happens if a director fails to meet their fiduciary duty and a danger arises of that same director harming the company’s reputation?

Directors may be removed from the board of a company either by a shareholders’ resolution, or by an order of the court.

Shareholders have the power to keep directors accountable for their actions and, if necessary, to remove directors from the Board. In terms of s71(1) of the Act, a director may be removed from the Board of Directors by a shareholders’ resolution passed at a shareholders’ meeting. Assuming that the correct procedures have been followed, this may be done despite anything to the contrary stipulated in the company’s Memorandum of Incorporation, rules, or any agreement between the company, its shareholders, and a director.

Procedurally, a shareholders’ meeting must be called and the director in question must be invited to attend the meeting. The meeting notice should include the reasons for the proposed director removal. At the meeting, the director must be afforded a reasonable opportunity to make representation in person, or through a representative to the meeting before the resolution is put to a vote. If most shareholders are in agreement, then the company can apply to the Companies and Intellectual Property Commission (“CIPC”) to have the director removed.

Alternatively, a director may be removed by an order of the court, if the court is satisfied that the director is ineligible or disqualified, incapacitated, or has been negligent or derelict. Although the reasons for removal may be similar, removal by shareholders’ resolution does not require justification, but simply a majority vote in favour of removal.


A director may resign at any time but may still be liable if she/he acted negligently during his/her directorship. The resignation of a director must be noted by the Board and the company must lodge the notice of the resignation with the CIPC.

If there are no directors left after the resignation of a director, any individual who has voting rights to vote on a matter concerning the appointment of directors can vote to appoint a new director.

Once resigned, a director may be permitted to take steps to create a competing company. However, she is not entitled to divert business opportunities to herself, nor may she engage in unlawful competitive behaviours. This would include the apportionment of the company’s business.

In conclusion, the onus is always on the director to uphold their fiduciary duties. A director may be removed by shareholders’ resolution, or by the court for failing to exercise these duties. Alternatively, a director may resign, but can continue to be held liable for failure to uphold their fiduciary duties during their tenure.

Should you require professional advice in this regard do not hesitate to contact our offices.

Duties of Trustees – Beneficial Ownership

By Robyn Delbridge

One of the duties of trustees is to maintain accurate and up-to-date records of the beneficial owners of the trusts they administer. Beneficial owners are those who have a direct or indirect interest in the trust property or who exercise control over the trust. The information that must be kept by trustees in relation to beneficial owners includes:

  • The name, date of birth, nationality, and address of each beneficial owner
  • The nature and extent of each beneficial owner’s interest or control over the trust
  • The date on which each beneficial owner acquired or ceased to have an interest or control over the trust.
  • Any other information that may be required by law or regulation.

The trustees must keep this information for as long as they are trustees of the trust and for at least five years after they cease to be trustees. The trustees must also provide this information to the relevant authorities upon request or when they are obliged to do so by law or regulations.

New rules for resolving tax disputes with SARS

By Robyn Delbridge

Taxpayers who have a dispute with the South African Revenue Service (SARS) can now benefit from new rules that aim to simplify and expedite the resolution process. The new rules, which came into effect on 1 July 2023, replace the previous dispute resolution rules that were in place since 2003.

The main features of the new rules are:

  • A pre-dispute resolution mechanism that allows taxpayers to engage with SARS before lodging an objection or appeal, and to request reasons for an assessment or decision if they are not clear or adequate.
  • A revised objection and appeal process that reduces the timeframes for both parties to submit documents and evidence and introduces penalties for non-compliance with the rules.
  • A streamlined alternative dispute resolution (ADR) process that encourages the use of mediation, conciliation, or facilitation to resolve disputes without going to court.
  • A simplified tax court procedure that allows for the appointment of a single judge, the use of electronic communication and filing, and the possibility of awarding costs against the unsuccessful party.

The new rules are expected to improve the efficiency and fairness of the tax dispute resolution system, and to reduce the backlog of cases that have been pending for years. They also align with international best practices and standards, such as the OECD’s Model Tax Convention and the UN’s Practical Manual on Transfer Pricing.

Taxpayers who have a dispute with SARS should familiarise themselves with the new rules and seek professional advice if necessary.

Should you require professional advice in this regard please do not hesitate to contact us.

Editor’s Comment

We believe these issues are important to all those running companies that are registered at whatever level. Fiduciary duties are often overlooked and yet they are the very duties that keep an organisation running and responsible.