“Directors have clear responsibilities to the public in the form of investors, creditors, shareholders, employees to perform in a fashion wherein not only does the company behave in an accountable manner to these stakeholders but that it adheres to a level of transparency which ensures that the principle of accountability is vindicated” (extract from judgment below)
Directors face many challenges, not least amongst them the constant danger of being held personally liable for any failure to comply with their statutory duties. In addition to facing civil claims for losses sustained, and even possible criminal liability, directors risk being declared “delinquent”.
And that’s no small thing, with serious categories of misconduct risking disqualification from holding any directorship or senior management position for a period ranging from 7 years to a lifetime.
A range of less serious categories of misconduct could result in “probation” – risking disqualification for up to 5 years, supervision by a mentor, remedial education, community service and payment of compensation.
Who can apply for a delinquency order?
Applying for a delinquency order is an effective means of holding directors to account. Thus, most applications are by the affected company itself, its shareholders, its officers, or trade unions/employee representatives. Application can also be made by the Takeover Regulation Panel, certain organs of state and the CIPC (Companies and Intellectual Property Commission).
7 years in the wilderness after an International Airport plan fails
Now, in what could be a sign of things to come, the CIPC has itself taken the bull by the horns and applied successfully for a delinquency order –
Note that although this particular case involved a public company, these provisions apply to all directors of all types of company.
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