In a very recent public spat, the board of Old Mutual and its CEO have had an acrimonious relationship, with the CEO wanting to declare the entire board of Directors delinquent after having been fired for conflict of interest. Being declared a delinquent director is not a common occurrence and we thought it may well be of interest to list the grounds for Delinquency.
To be declared delinquent a director must have:
- Acted as a director or prescribed officer whilst ineligible or disqualified by the Act or by the Close Corporations Act
- Acted as a director in a manner that contravened a probation order
- Grossly abused the position of director
- Took personal advantage of information or an opportunity, or intentionally or by gross negligence inflicted harm on the company or a subsidiary of the company
- Acted in a manner which reflects “wilful misconduct” or a “breach of trust” (unauthorised acts, reckless trading or fraud)
- Was repeatedly subject to a compliance notice or similar enforcement mechanism
- Was personally convicted, at least twice, of an offence or subjected to an administrative fine or penalty in terms of any legislation
- Within a period of five years, acted as a director of one or more companies or was a managing member of one or more Close Corporations (CC’s), or controlled or participated in the control of a juristic person (irrespective of whether concurrently, sequentially or at unrelated times) that was convicted of an offence or subjected to an administrative fine or similar penalty in terms of any legislation
All references to director apply equally to members of CC’s who are participating in its management regarding probation and delinquency, and all references to a company applies equally to CC’s.
Should you have any queries or require clarity in this regard feel free to contact us for professional advice.
DISCLAIMER: The material and information contained in this article is for general information purposes only. You should not rely upon the material or information in this article as the basis for making any business, legal or other decisions.