Company directors in South Africa carry duties that go beyond the terms of any employment contract or shareholder agreement. They arise from the position itself, are partly codified in the Companies Act and partly drawn from the common law, and they attach to each director personally.
This guide explains what those duties mean in practical terms and where directors most often get into difficulty. It sits alongside the Management Leadership duties and responsibilities cluster, part of the wider job duties guide. It is general information and is not legal advice.
What Director Fiduciary Duties Mean
A director is entrusted with the affairs of a company that is a separate legal person. The company cannot act for itself, so the people who act for it must do so in its interests rather than their own. That is the essence of the fiduciary relationship, and it is why the standard is higher than ordinary commercial dealing.
Two points are routinely misunderstood. First, the duties are owed to the company, not to the shareholder who appointed you, which matters greatly for nominee directors. Second, they apply to every director equally: non-executive, part-time and unpaid directors carry them just as fully as the managing director.
Core Duties of Directors
The Companies Act sets out standards of directors’ conduct, and the common law adds to them. In broad terms a director must:
- Act in good faith and for a proper purpose.
- Act in the best interests of the company.
- Act with the degree of care, skill and diligence reasonably expected.
- Not use the position, or information obtained through it, for personal gain or to harm the company.
- Disclose personal financial interests as the Act requires.
- Communicate to the board any information that comes to their attention, unless it is immaterial or subject to a confidentiality obligation.
- Exercise powers within the limits set by the memorandum of incorporation and the law.
This is a plain-language summary rather than the statutory wording. Directors should read the relevant sections of the Companies Act, and their company’s memorandum of incorporation, directly.
Conflicts of Interest and Disclosure
Most director difficulties start as undisclosed interests rather than deliberate wrongdoing. A director has a stake in a supplier, assumes it is too small to matter, says nothing, and by the time it emerges the silence looks worse than the interest.
The Companies Act prescribes how a director must disclose a personal financial interest in a matter before the board, and what must then happen. In practice this means declaring the interest before the discussion, having the declaration minuted, and leaving the meeting for that item unless the Act or the board process provides otherwise.
A standing register of directors’ interests, reviewed at every meeting and updated annually, is the simplest protection a board can give itself.
Acting in Good Faith and for Proper Purpose
Good faith concerns honesty of intention. Proper purpose concerns using a power for the reason it exists. A board power exercised honestly but for a collateral reason, such as issuing shares primarily to dilute a shareholder rather than to raise capital, can still fall foul of the duty.
Acting in the best interests of the company also means the company as a whole, not a faction of shareholders and not the director’s own appointer. Nominee directors regularly find this uncomfortable, and it is precisely where advice is worth taking early.
Care, Skill and Diligence
This duty is about how a director does the job. It expects the director to apply the knowledge and experience they actually have, and at minimum the care a reasonably diligent person in that position would apply.
In practice that means attending meetings, reading the board pack before rather than during the meeting, asking questions when something is unclear, and not simply deferring to management or to a more confident colleague. Directors may rely on information from management and professional advisers in appropriate circumstances, but reliance is not the same as abdication.
The Act also contains a business judgement provision that can protect a director who took a decision on a properly informed basis, in good faith and without a conflict, even if the decision turned out badly. Its availability depends on the facts.
Record-Keeping and Governance Context
Directors’ duties are assessed after the event, usually from the minutes. A decision that was carefully considered but poorly recorded looks the same as one taken carelessly.
- Minutes should record what was considered, not only what was resolved.
- Declarations of interest and recusals should appear in the minutes every time.
- Board packs should be circulated far enough in advance to be read properly.
- A director who disagrees should have that dissent recorded.
- Solvency and liquidity considerations should be documented where the Act requires them.
Governance codes such as King add expectations about board conduct and disclosure that sit alongside the statutory duties. They are not the law, but courts and regulators are aware of them.
When Legal or Governance Advice Is Needed
Take advice promptly if any of the following applies: you have a personal interest in a matter before the board; the company may be trading in financially distressed circumstances; you are asked to approve something you believe is not in the company’s interests; you are a nominee director facing a conflict between the company and your appointer; you are being appointed as a director and have not read what that entails; or a claim or investigation has begun.
Resigning does not automatically end exposure for decisions taken while in office, which is another reason to take advice at the time rather than afterwards.
Related Fiduciary Duty Guides
- Fiduciary duties: the concept across trustees, executors, agents and advisers.
- Chairperson duties and responsibilities
- Trustee duties and responsibilities
- Segregation of duties
- Management, governance and leadership duties
This page is general information about a legal concept and is not legal advice. Directors’ duties in South Africa arise under the Companies Act, the common law and the company’s memorandum of incorporation, and their application depends on the specific facts. Consult a legal practitioner about your own position.
Last reviewed: 2 September 2026