Abstract
Civil actions under the Companies Act 71 of 2008: Assessing the impact of the no-reflective loss principle, the proper plaintiff rule and the rule against double recovery
When the conduct of a director of a company causes it to suffer harm, shareholders may also experience such harm in the form of a diminution in the value of their shares. Many of these shareholders wishing to recover their losses, turn to the wording of section 218(2) of the 2008 Companies Act to institute a claim against the directors personally at the hands of whom they suffered such loss. Over the past decade, our courts have had to rule on this same situation in cases like Hlumisa Investment Holdings (RF) Limited & Another v Kirkins & Others, Itzikowitz v Absa Bank Limited and De Bruyn v Steinhoff International Holdings NV. While the Supreme Court of Appeal in Itzikowitz v Absa Bank Limited has attempted to provide clarity in this regard, arguments to the contrary under the wording of section 218(2) of the Companies Act continued to make their way before the courts. It is for this reason that this dissertation investigates whether section 218(2) can be used as an avenue for shareholders to hold directors personally liable for the diminution in their share value and how the no-reflective loss principle, the proper plaintiff rule and the rule against double recovery impacts its utilization.