Friday, 21 September 2012

South Africa: liability for fraudulent conduct under the Companies Act 1973

The Supreme Court of Appeal gave judgment earlier this week in C Fourie v FirstRand Bank Ltd. (578/2012) [2012] ZASCA 119: see here (pdf). The decision is an important one concerning the operation of section 424 ("Liability of directors and others for fraudulent conduct of business") of the Companies Act 1973 (one of a group of sections which appears to have remained in force notwithstanding the passing of the Companies Act 2008 and a provision very similar to the UK's section 213 of the Insolvency Act 1986). Against the background of apparently conflicting authorities, the court unanimously held that section 424 did not require proof of a causal link between the relevant conduct and the company's inability to pay.

Update (21 September 2012): a summary of the decision has been published here (pdf).

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