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Companies Act, 2008 (Act No. 71 of 2008)

Chapter 2 : Formation, Administration and Dissolution of Companies

Part F : Governance of companies

69. Ineligibility and disqualification of persons to be director or prescribed officer

 

 

1) In this section, ‘‘director’’ includes an alternate director, and—
a) a prescribed officer; or
b) a person who is a member of a committee of a board of a company, or of the audit committee of a company, irrespective of whether or not the person is also a member of the company’s board.

 

2) A person who is ineligible or disqualified, as set out in this section, must not—
a) be appointed or elected as a director of a company, or consent to being appointed or elected as a director; or
b) act as a director of a company.

 

3) A company must not knowingly permit an ineligible or disqualified person to serve or act as a director.

 

4) A person who becomes ineligible or disqualified while serving as a director of a company ceases to be entitled to continue to act as a director immediately, subject to section 70(2).

 

5) A person who has been placed under probation by a court in terms of section 162, or in terms of section 47 of the Close Corporations Act, 1984 (Act No. 69 of 1984), must not serve as a director except to the extent permitted by the order of probation.

 

6) In addition to the provisions of this section, the Memorandum of Incorporation of a company may impose—
a) additional grounds of ineligibility or disqualification of directors; or
b) minimum qualifications to be met by directors of that company.

 

7) A person is ineligible to be a director of a company if the person—
a) is a juristic person;
b) is an unemancipated minor, or is under a similar legal disability; or
c) does not satisfy any qualification set out in the company’s Memorandum of Incorporation.

 

8) A person is disqualified to be a director of a company if—
a) a court has prohibited that person to be a director, or declared the person to be delinquent in terms of section 162, or in terms of section 47 of the Close Corporations Act, 1984 (Act No. 69 of 1984); or
b) subject to subsections (9) to (12), the person—
i) is an unrehabilitated insolvent;
ii) is prohibited in terms of any public regulation to be a director of the company;
iii) has been removed from an office of trust, on the grounds of misconduct involving dishonesty; or
iv) has been convicted, in the Republic or elsewhere, and imprisoned without the option of a fine, or fined more than the prescribed amount, for theft, fraud, forgery, perjury or an offence—
aa) involving fraud, misrepresentation or dishonesty;
bb) in connection with the promotion, formation or management of a company, or in connection with any act contemplated in subsection (2) or (5); or
cc) under this Act, the Insolvency Act, 1936 (Act No. 24 of 1936), the Close Corporations Act, 1984, the Competition Act, the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001), the Financial Markets Act, 2012, or Chapter 2 of the Prevention and Combating of Corruption Activities Act, 2004 (Act No. 12 of 2004).

[Section 8(b)(iv)(cc) amended by Section 111 of the Financial Markets Act, 2012]

 

9) A disqualification in terms of subsection (8)(b)(iii) or (iv) ends at the later of—
a) five years after the date of removal from office, or the completion of the sentence imposed for the relevant offence, as the case may be; or
b) at the end of one or more extensions, as determined by a court from time to time, on application by the Commission in terms of subsection (10).

 

10) At any time before the expiry of a person’s disqualification in terms of subsection (8)(b)(iii) or (iv)—
a) the Commission may apply to a court for an extension contemplated in subsection (9)(b); and
b) the court may extend the disqualification for no more than five years at a time, if the court is satisfied that an extension is necessary to protect the public, having regard to the conduct of the disqualified person up to the time of the application.

 

11) A court may exempt a person from the application of any provision of subsection (8)(b).

 

11A) The Registrar of the Court must, upon-
a) the issue of a sequestration order;
b) the issue of an order for the removal of a person from any office of trust on the grounds of misconduct involving dishonesty; or
c) a conviction for an offence referred in subsection (8)(b)(iv),

send a copy of the relevant order or particulars of the conviction, as the case may be, to the Commission.

 

11B) The Commission must notify each company which has as a director to whom the order or conviction relates, of the order or conviction.

 

12) [Subsection 12 has been deleted by Act No. 3 of 2011].

 

13) The Commission must establish and maintain in the prescribed manner a public register of persons who are disqualified from serving as a director, or who are subject to an order of probation as a director, in terms of an order of a court pursuant to this Act or any other law.