Abstract
The practice of holding more than one office as a director has become increasingly common in the South African landscape and this is commonly known as “dual” or “multiple” directorships. Although this practice can positively influence the respective company’s performance, it can equally give rise to a potential for conflicts of interest and questions pertaining to the fiduciary duties of directors holding dual or multiple offices.
Directors have a well-established fiduciary duty to exercise their powers in good faith and in the best interests of the company, and this duty is partially codified in the Companies Act 71 of 2008. This duty encompasses further duties, including the duty of directors to not make secret profits and acquire corporate opportunities belonging to a company for themselves. This dissertation focuses on the misappropriation of corporate opportunities and the fiduciary duties of directors holding dual or multiple offices.
Where directors serve on more than one board, there is an increased risk of conflicts of interest relating to the misappropriation of corporate opportunities. Furthermore, where legislation in South Africa is concerned, no limit is placed on the number of offices that directors can hold, and this has proven to have an impact on the effectiveness of how they exercise their fiduciary duties. Modise v Tladi Holdings highlights the aforementioned and serves as a cautionary judgment for directors who serve on the boards of more than one company when they find themselves in situations of conflict relating to corporate opportunities.
The problem is that South Africa has no specific and clear guidelines on the regulation of the number of boards on which directors can serve, and as it will become apparent from an analysis of Modise v Tladi, this leads to an increased risk of the misappropriation of corporate opportunities. This dissertation adopts a comparative method and with the use of primary and secondary sources, analyses the position and approach used in South Africa in comparison to the United Kingdom, Nigeria, India and Singapore, to provide recommendations for South Africa in guarding against the increased risk of the misappropriation of corporate opportunities by directors holding dual or multiple offices. The basis for electing these countries for comparison is pinned on the relevance of their existing frameworks which are designed to regulate multiple directorships and how they may provide some much-needed guidance for South Africa.