Page 56 - Profmark_2024_Directors Guide

INDEMNIFICATION AND DIRECTOR’S INSURANCE

Section 78 applies to the extended definition of a director.
Section 78(2): Director may not be Relieved of Liability
Subject to sub-sections (4) to (6), any provision of any agreement, the MOI, or rules
of the company, or resolution adopted by a company, whether express or implied, is
void to the extent that it directly or indirectly purports to relieve a director of a duty
contemplated in Section 75 or 76, or liability contemplated in Section 77, or which
negates, limits or restricts any legal consequences arising from an act or omission that
constitutes willful misconduct or willful breach of trust on the part of the director.
Section 78(3): Fines
Subject to sub-section (3A), a company may not directly or indirectly pay any fine that
may be imposed on a director of the company, or on a director of a related company,
as a consequence of that director having been convicted of an offence, unless the
conviction was based on strict liability.
Section 78(3A): Sub-section (3) does not apply to a private or personal liability
company if a single individual is the sole shareholder and sole director of that company,
or two or more related individuals are the only shareholders of that company, and there
are no directors other than one or more of those individuals.
Section 78(4): Indemnity of Directors/Company may Advance Legal Expenses
Except to the extent that a company’s MOI provides otherwise, the company:
■ May advance expenses to a director to defend litigation in any proceedings arising
out of his service to the company
■ May directly or indirectly indemnify the director for such expenses, irrespective of
whether it has advanced those expenses, if the proceedings are abandoned or
exculpate the director or arise in respect of any liability for which the company may
indemnify the director.
Section 78(6): The company may not indemnify a director in respect of any liability
resulting from the director’s failure to act in good faith and for a proper purpose or in the
best interests of the company or with the degree of care, skill and diligence required, willful
misconduct or willful breach of trust, or an offence or fine in terms of national legislation.
Section 78(7): Directors’ Insurance
Except to the extent that the MOI of a company provides otherwise, a company may
purchase insurance to protect:

54