Page 16 - Profmark BSA Guide 2025

Section 20 (4) and (5): Restraining Orders
One or more shareholders, directors or prescribed officers or the trade union
representing employees of the company may apply to the High Court for an
appropriate order to restrain a company from doing anything inconsistent with the
Act, or from doing anything that is inconsistent with any of the limits, restrictions or
qualifications of the MOI.
Each shareholder may have a personal claim for damages against any person,
including a director, who intentionally, fraudulently or due to gross negligence causes
the company to do anything inconsistent with the Act, or to do anything that is
inconsistent with any of the limits, restrictions or qualifications of the MOI (unless the
action does not contravene the Act and has been ratified by shareholders).
Section 218: Civil Actions
A shareholder (and any other stakeholder) can also have a claim against the directors
or any person who contravenes the Act for damages for any loss or damaged suffered
as a result of that contravention. The action does not need to be fraudulent or carried
out with gross negligence for a valid claim in terms of this Section.
The Act does however provide some form of relief to directors – by way of Indemnity
and Insurance for Directors.
In terms of the Act, a possible defence is open to a director who asserts that he/
she had no financial conflict, was reasonably informed and made a rational business
decision in the circumstances. This is known as “the business judgement rule”.

Sections 20 and 218 of the Act enable shareholders to sue directors/officers for
civil damages, or any losses suffered by them.
If a company is a personal liability company, the directors (including past
directors) are jointly and severally liable together with the company for any debts
and liabilities of the company that contracted during their respective periods of
office.

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