Legal Implications relating to being "Entitled to Serve" as a Director: A South African–Australian Perspective

Abstract

This article focusses on an Australian piece of legislation and interesting case law, as well as on how the Federal Court of Australia has applied Australia's Corporations Act, 2001 to characterise a person as a de facto director – that is, as a professed director whose appointment as such was defective. In this regard, the decisions of that Court will, as envisaged in the Constitution of the Republic of South Africa, 1996 constitute persuasive authority. The Australian decision to be discussed in this article is significant in that the South African Companies Act 71 of 2008 does not contain substantively similar provisions to those of Australia's Corporations Act 2001. For example, section 66(7) of South Africa's Companies Act, 2008 contains the phrase "entitled to serve" as a director. This article explains the legal implications relevant to that expression, including whether it imposes a statutory condition precedent. This article also considers the validity of decisions taken by a person who is not "entitled to serve" as a director.