DIRECTORS’ FIDUCIARY DUTIES AND THE COMMON LAW: THE COURTS FITTING THE PIECES TOGETHER Mthimunye-Bakoro v Petroleum Oil and Gas Corporation of South Africa (SOC) Limited (12476/2015)  ZAWCHC 113; 2015 (6) SA 338 (WCC) (4 August 2015)
Keywords:fiduciary duties, directors’ duties, codification, statutory duties, common-law duties, personal financial interest
The partial codification of directors’ duties in section 76 of the Companies Act (71 of 2008, hereinafter “the Act”) is not a comprehensive statement of directors’ duties. Section 158 of the Companies Act requires of a court to develop the common law as necessary to improve the realisation and enjoyment of the rights created in the Act. In a partial codification the common law is still applicable to the extent that it has not been excluded. The courts can develop the duties and even create new duties as opposed to complete codification where the courts may refer to the common law when interpreting the statutory duties, but cannot create new duties .
Partial codification allows the courts to do ground-breaking work. It allows for the development of the law in a way that would be relevant to the demands of modern company and commercial law. On the other hand it can be argued that creating new duties amounts to judicial law-making, contravenes the principle of iudicus est ius dicere non dare and is inconsistent with the principle of separation of powers. In Mthimunye-Bakoro v Petroleum Oil and Gas Corporation of South Africa (SOC) Limited Davis J indicated that the case raised important questions with regard to the common-law duties of directors, the purpose of those duties and the relationship between the common law and the Companies Act (71 of 2008). The court’s decision confirms the importance of considering the facts and circumstances of each case in order to determine whether resolutions taken at meetings are valid. This case is a discussion and analysis of the judgment of the Western Cape High Court. Reliance on the statutory provisions and the common law allowed Davis J to avoid an extremely strict construction of the meaning of “personal financial interest”. The case includes some comments on judicial law-making but does not propose to be a detailed discussion of this matter. The case concludes with a recommendation to amend section 75(5) and 71(4) of the Companies Act (71 of 2008).
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