NOWHERE TO HIDE FOR EXECUTIVES Fourie v FirstRand Bank Ltd (578/2012) [2012] ZASCA 19 (18 September 2012)

Abstract

The personal liability of managers and executives for damages arising out of fraudulent and reckless conduct of their employees is an emotive and important issue. The prestige that was once associated with holding a position in top management in a company is now overshadowed by the potential of increased personal vulnerability. The case of Fourie v FirstRand Bank Ltd ((578/2012) [2012] ZASCA 119 (18 September 2012)) sends out a strong message to those who occupy management positions and who conduct the affairs of a company in a fraudulent or reckless manner that such conduct will not be tolerated and that should they produce false and misleading financial statements regarding the affairs of their company they run the risk of being held personally liable for any damages that may be incurred. The Supreme Court of Appeal (SCA) stated that any damages that arise from such managers’ fraud or recklessness under section 424 of the
Companies Act 61 of 1973 will be paid by the perpetrators in their personal capacity.