Page 19 - KZN Business Sense 10.4 - Jay Patel - Ebook

STRICT LIABILITY OF DIRECTORS

Michael Jackson, is reasonably to be expected an appeal by Murray Munro, officer of Steinhoff throughout The PWC Investigation into
Partner, Cox Yeats from him, having regard to his the chief financial officer and the period in question. Directors Tongaat Hulett had identified that
Attorneys knowledge and experience. He director of Tongaat Hulett. The of issuers fulfil a critical role in there had been an overstatement
is, I think, not bound to bring JSE had found that Munro had ensuring that listed companies in Tongaat Hulett’s annual
ur any special qualification to been involved in the material comply with the Listing financial statements affecting
Companies his office. He may undertake mis-statements of the financial Requirements. Issuers of securities assets, income and liabilities in
OAct the management of a rubber statements of Tongaat Hulett, listed on the JSE are only able excess of R10 billion.
codified the company in complete ignorance of between 2011 and 2018, and that to comply with the Listing This fact and that Munro
common law on everything connected with rubber, he should receive a penalty of Requirements if their directors was a central figure in the
the obligations without incurring responsibility R6 million, a public censure and take appropriate action (or refrain manner in which the financial
of directors for the mistakes which may be disqualified from holding from taking unlawful actions) to records of Tongaat were
and the result from such ignorance; the office of a director of a listed ensure that such issuers comply prepared and reflected, was, in
preparation while if he is acquainted with the company for 10 years. in all respect with its provisions the Tribunal’s view, sufficient
of financial rubber business, he must give the Munro appealed the decision and to ensure that the financial evidence to conclude that
statements. Our common law company the advantage of his of the Johannesburg Stock information of listed companies Munro had breached the Listing
and the Companies Act does not knowledge when transacting the Exchange contending that the are, in all aspects, accurate and Requirements and that the fine of
impose strict liability on directors. company business”. information which the Stock correct and that it represents a R6 million should be upheld.
They are only liable if they fail to The general rule has been that Exchange had relied upon (three fair and accurate exposition of the
exercise reasonable skill and care. directors must make reasonable property transactions) had not company’s financial information”. The Tribunal differentiated
The standard of director conduct effort to understand the company been placed before Munro and Every director of a listed between a penal statute (such
as the Companies Act) which
required is contained in Section affairs and exercise his or her own there was no evidence to the effect company is required to complete a requires fault and a regulatory
76 of the Companies Act. A judgement based on personal that Munro was aware of the declaration which reads: one (such as the JSE Listing
director is obliged to exercise knowledge and experience and mis-statements. Munro further “I agree to be bound by and Requirements) which imposed
his or her powers in good faith, the information and advice contended that he was entitled to comply with the JSE Listings strict liability.
for a proper purpose, in the best provided by company officials and rely on experts to ensure that the Requirements, as amended from
interests of the company and professional experts. financial statements were properly time to time, and, in my capacity Steinhoff and Tongaat are not
with the degree of care, skill and Section 29(2) of the Companies prepared. In particular, he was as a director, I undertake and usual examples. However, this
diligence that may reasonably be Act states that any financial entitled to rely on the auditor’s agree to discharge my duties in ruling is a reminder for directors
expected of a person having the statements prepared by a company interpretation. ensuring such compliance whilst to be careful of the consequences
knowledge, skill and experience of must not be false or misleading The issue arose as to whether I am a director. The delegation of their actions. Directors can
that director. in any material respect. It follows Munro was strictly liable for the of any of my duties to any sub- be held strictly liable for a
breach of the duty of skill and
In performing his or her that the Companies Act and mis-statements or whether he committee or anyone else will cannot rely on advice given by
obligations, the director is common law requires a director could rely upon the principles not absolve me of my duties and company officials and professional
entitled to rely on employees of to act with reasonable skill in contained in the Companies Act. responsibilities in terms of the expert. 
the company whom the director preparing financial statements. The Tribunal found that the Listing Requirements”.
reasonably believes to be reliable The director, in doing so, is JSE was entitled to rely on The Listing Requirements Should you require advice or assistance,
and competent. The director entitled to rely on expert advice the provisions of the Listing oblige listed companies to please contact Michael Jackson on
may also rely on legal counsel, provided by, for example, the Requirements which imposed prepare financial information in T: +27 (0)82 808 7891 or (0)31 536 8512
accountants or other professionals company’s auditors. a different legal test to the accordance with IFRS. E: mjackson@coxyeats.co.za
retained by the company. These principles were considered Companies Act. W: www.coxyeats.co.za
In the Brazilian Rubber case, the by the Financial Services Tribunal The Tribunal referred to an
English Courts described the duty in a recent judgment handed earlier decision against Markus
of skill to be “… a director’s duty down on 31 July 2024. The Jooste which stated:
has been laid down as requiring Tribunal was chaired by Judge
him to act with such care as Dennis Davis and considered “Jooste was the chief executive

NEW FLIGHT ROUTE START DATES ANNOUNCED

ing Shaka International (Wednesdays, Fridays, Sundays), Botswana’s flights connecting on routes between Gaborone- between the cities for the
Airport is looking forward and Kasane-Cape Town Kasane-Johannesburg, Maun- Cape Town, Gaborone-Harare, advancement of economic
Kto welcoming Air Botswana (Tuesdays, Thursdays, Saturdays). Johannesburg, and Francistown- and Gaborone-Lusaka. activities in all the countries,
to its flight schedule in October. In addition, the airline has Johannesburg will soon be “The new additions are popular particularly Botswana. We are
Air Botswana has recently announced the reinstatement of available once again. destinations for business and also excited that this strategic
revealed that, starting in October, routes that were suspended due Air Botswana is also increasing tourism, and we are excited move is directly linked to the
Durban air travellers will have to the COVID-19 pandemic. Air the frequency of existing flights to offer convenient air travel airline’s expansion plans and
the convenience of direct flights sustainability. Furthermore,
between King Shaka International both these new and reinstated
Airport and Gaborone, the capital routes as well as increased
city of Botswana. frequencies will strengthen
our footprint in the region
These flights are part of a broader
announcement of new routes and simultaneously offer
increased flight options to the
connecting Botswana and South travelling community within
Africa, marking a significant Botswana and beyond,” said
expansion of Air Botswana’s
network. This strategic move aims Lulu Rasebotsa, Chief Executive
Officer of Air Botswana.
to enhance flight connectivity
within Southern Africa, offering The airline also announced that
passengers greater flexibility. it had recently taken delivery of
three Embraer aircraft in June
Beginning 1 October, the and that it is likely to require
Gaborone-Durban route the purchase of a fourth aircraft
will operate on Wednesdays,
Fridays, and Sundays. From 1 soon. 
November, three additional routes
will commence: Maun-Cape For more information about flight
schedules and fares and to book tickets,
Town (Tuesdays, Thursdays, please visit https://airbotswana.co.bw/
Saturdays), Kasane-Mpumalanga or contact sales@airbotswana.co.bw

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