In South Africa, the fiduciary duties of directors are governed by the Companies Act, 2008. Directors of a company have a fiduciary duty to the company, and these duties are critical to the proper governance and ethical management of a company. The fiduciary duties continue even after a director resigns; however, the extent to which these duties bind a former director of a company are lessened in some way.

The fiduciary duties of a director include, duty of care, skill, and diligence, duty of loyalty, and duty of good faith. Directors should act in good faith, with honesty and fairness, promoting the best interests of the company. Directors must avoid situations where a conflict of interest arises and must not exploit their position for personal gain. Directors are required to carry out their duties with a degree of care, skill, and diligence that would be reasonably expected from a person in a similar position.

After a director resigns, the nature and scope of certain fiduciary duties change but do not disappear entirely. Former directors have a continuing duty to maintain the confidentiality of information acquired during their tenure. They must not misuse confidential information or disclose it to third parties, unless required by law, as this duty continues indefinitely and does not terminate upon resignation; they sought to protect the company’s proprietary information. A resigned director must not exploit for their own benefit, or for the benefit of others, any opportunities or confidential information acquired during their tenure. This duty is aimed at preventing former directors from using their inside knowledge to compete unfairly with the company. Former directors may be restricted from soliciting the company’s employees, clients, or customers, whereby the former director is limited from engaging in businesses that compete directly with the company for a certain period after resignation.

Statutory Provisions and Judicial decisions play a significant role in defining the post-resignation fiduciary duties of directors. Factors that are considered generally include the nature of the information, the timing of the resignation, and the director’s subsequent actions.

Notable cases include:

Da Silva and Others v C H Chemicals (Pty) Ltd (2008): This case reaffirmed that directors owe fiduciary duties to the company and that these duties include the obligation to avoid conflicts of interest and to act in the best interest of the company. It also emphasised that these duties do not necessarily cease upon resignation.

Phillips v Fieldstone Africa (Pty) Ltd and Another (2004): The court in this case highlighted that directors cannot appropriate for themselves opportunities that belong to the company. This duty persists even after the director has left the company.

Big Catch Fishing Tackle (Pty) Ltd & Others v J Kemp & Others (2019): The court held that a former director will be in breach of his fiduciary duties towards a company, post-resignation, to the extent that he uses confidential information, trade secrets or appropriates a “corporate opportunity” of his former company. There is a clear breach of fiduciary duties if a director resigns with the motive of diverting the company’s maturing opportunity.

Certain statutory provisions of the Companies Act, 2008, emphasise the fiduciary duties:

Section 75: Addresses the duty to disclose personal financial interests.

Section 76: Stipulates standards of conduct required from directors, emphasising the duty to act in good faith and for proper purposes.

Section 77: Outlines the liability of directors, including post-resignation conduct if it pertains to actions during their tenure.

While the fiduciary duties of directors are most prominent during their directorship, certain duties and obligations persist even after resignation. The obligations become limited, and the primary focus for the continuation of these duties is to ensure that former directors do not unfairly leverage their prior position for personal gain or to the detriment of the company, to protect the company’s interests and prevent unfair competition or misuse of information obtained. Understanding these continuing obligations is crucial for both current and former directors to ensure compliance with legal and ethical standards.