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Under certain circumstances, the court may refer the matter to the National Prosecuting
Authority.
In the case of a company that has failed to comply, been fined, and continues to
contravene the Act, the Commission or Panel may apply to a court for an order dissolving
the company.

A derivative action is when the shareholders sue a third party (such as a director or
officer) on behalf of the company.
A class action is when a group of people take a person (such as a director or officer)
to court.
Section 157 of the Act simplifies the application for a class action which can be
made to a Court, the Companies Tribunal, the Take-Over Panel, or the Commission.
For example: A class action complaint from outside investors stating that directors
failed to disclose material information, which could have indicated that the company
would eventually be liquidated.

The Act does provide some form of relief to directors – by way of Indemnification and
Insurance for directors.
In terms of the Act, a possible defence known as ‘the business judgement rule’ is
available to a director who asserts that he had no financial conflict, was reasonably
informed and made a rational business decision in the circumstances.

ACTIONS REQUIRING SHAREHOLDER APPROVAL

The directors are ultimately responsible to the shareholders. They act as their “agents”,
and are required at all times to act in the shareholder’s best interests. The doctrine of
separation of powers, whereby the directors are ultimately responsible and answerable
to shareholders, has always been entrenched in South African law. This doctrine ensures
that the correct checks and balances on power and control are upheld in a company.
The Act does provide for shareholder approval for certain transactions carried out by
directors, including (but not limited to):
■ Disposal of greater part of assets or undertaking
■ Amendment of MOI
■ The issue of shares in certain cases
■ Making additional rule/s permanent.
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