Directors’ Conflicts of Interest
Directors’ Conflicts of Interest under Section 75 of the Companies Act
Directors’ Conflicts of Interest under Section 75 arise where a director has a personal financial interest in a matter being considered by a company, or knows that a related person has such an interest, triggering statutory disclosure, recusal and corporate-approval requirements under the Companies Act 71 of 2008.
Conflicts of interest are not inherently unlawful.
Directors frequently have interests in other businesses, investment companies, family enterprises, trusts or commercial ventures. A person may legitimately serve on more than one board. The legal problem arises when a director’s personal financial interest intersects with a decision that the director must make on behalf of the company and the conflict is not managed according to the Companies Act and applicable fiduciary duties.
Section 75 provides a detailed statutory procedure.
Where the section applies, the conflicted director must disclose the interest and its general nature before the matter is considered, disclose material information known to that director, leave the meeting following the permitted disclosures, refrain from participating in consideration of the matter and refrain from executing documents concerning the matter unless specifically requested or directed by the board.
Section 75 operates alongside the broader standards of directors’ conduct contained in section 76. A director must generally act in good faith and for a proper purpose, in the best interests of the company and with the prescribed degree of care, skill and diligence. Compliance with the statutory conflict procedure is also relevant to the business-judgment protections contained in section 76(4).
The consequences of non-compliance can be substantial.
Section 75(7) regulates the validity of decisions, transactions and agreements involving undisclosed personal financial interests. A transaction can be valid where proper disclosure occurred, or may subsequently be ratified by shareholders after disclosure or declared valid by a court under section 75(8).
Recent South African decisions also demonstrate that breaches of section 75 can intersect with shareholder oppression proceedings, fiduciary-duty claims, director liability and challenges to transactions concluded with related persons.
Relevant long-tail search concepts include director conflict of interest South Africa, section 75 Companies Act, personal financial interest director, director disclosure requirements South Africa, related party transaction Companies Act, director recusal South Africa, breach of fiduciary duty director, section 75 shareholder approval, conflicted director board meeting, and director personal liability South Africa.
What Directors’ Conflicts of Interest under Section 75 Actually Cover
Section 75 does not regulate every conceivable disagreement, loyalty issue or personal relationship.
Its central statutory concept is a personal financial interest.
The Companies Act defines a personal financial interest as a direct material interest of a financial, monetary or economic nature, or one to which a monetary value may be attributed, subject to the statutory definition and exclusions.
The word material is important.
The Act is concerned with interests sufficiently significant to affect the director’s position rather than every trivial financial connection.
The interest can arise directly through the director or through a related person.
Section 75 extends the relevant concept of related persons and specifically contemplates circumstances where the director or a related person is connected with another company or close corporation.
Consider a director of Company A who owns a substantial interest in Company B.
Company A is considering awarding a major supply contract to Company B.
The director’s economic position may benefit if Company B receives the contract.
That is precisely the type of situation in which section 75 should be considered.
The Supreme Court of Appeal confirmed in Recycling and Economic Development Initiative of South Africa v Minister of Environmental Affairs that there is nothing inherently unlawful about being a director or shareholder of multiple companies. A conflict does, however, clearly arise where a director participates in a decision for one company concerning a contract with another company in which that director has an interest and fails to disclose that interest.
The issue is therefore not the existence of multiple commercial interests.
The issue is whether those interests intersect with the director’s decision-making responsibilities.
Who Must Comply With Section 75?
For purposes of section 75, the statutory concept of “director” is broader than an ordinary formally appointed board member.
It includes an alternate director, a prescribed officer and a person who serves on a committee of the board, irrespective of whether that person is also a board member.
This extended scope is important in large corporate structures.
A chief executive or another senior executive may therefore fall within the relevant statutory regime as a prescribed officer even where that person is not formally registered as a director.
Similarly, an external person serving on a board committee cannot necessarily avoid the statutory conflict rules merely because that person does not sit on the full board.
Companies should therefore avoid maintaining conflict-of-interest declarations only for CIPC-registered directors.
The governance system should identify all persons to whom the statutory regime applies.
Section 75 also contains specific provisions for sole-director companies.
Where a person is the only director but does not hold all beneficial interests in all the company’s issued securities, that director cannot simply approve an agreement in which the director or a related person has a personal financial interest. Section 75(3) requires shareholder approval after the nature and extent of the interest have been disclosed.
The position is different where one person is both the only director and the holder of all beneficial interests in all issued securities, because section 75 contains a specific statutory exception for that configuration.
This distinction is frequently overlooked in owner-managed companies.
A sole director who owns only 60% of the company cannot necessarily treat corporate assets and related-party transactions as though there were no other economic stakeholders.
Disclosure and Recusal in Directors’ Conflicts of Interest under Section 75
When a director has a personal financial interest in a matter to be considered by the board, section 75(5) establishes a defined process.
Before the matter is considered, the director must disclose the interest and its general nature.
The director must also disclose material information relating to the matter that is known to the director.
The other directors may ask for observations or pertinent insights, in which event the conflicted director may provide them.
Once the permitted disclosure has been made, however, the director must leave the meeting and may not participate in further consideration of the matter.
The director is treated as present for purposes of establishing whether the meeting has a quorum but is not treated as present for purposes of determining whether the resolution receives sufficient support.
The director must also not execute a document concerning the matter on behalf of the company unless specifically requested or directed to do so by the board.
These requirements should be followed literally.
Disclosure without recusal is not enough.
A director cannot ordinarily announce, “I own 30% of the supplier, but I believe I can remain objective,” and then continue participating in negotiations and voting.
The statutory mechanism removes the director from consideration of the matter after the permitted disclosure.
That distinction was emphasised in Mthimunye-Bakoro v Petroleum Oil and Gas Corporation of South Africa, where the court considered section 75 together with the common-law fiduciary obligations governing conflicts of interest.
A sound board process should therefore record both the disclosure and the recusal in the minutes.
Related Persons and Indirect Commercial Interests
Directors sometimes assume that disclosure is unnecessary because the contracting party is technically owned by a spouse, sibling, family trust or related company rather than by the director personally.
Section 75 is designed to address this type of issue.
Its related-person rules extend beyond direct ownership.
For purposes of section 75, the concept includes related persons within the Companies Act and is broadened to include, among other relationships, another company of which the director or related person is also a director and a close corporation of which that director or related person is a member.
The practical enquiry should therefore not stop at:
“Does the director personally own shares in the supplier?”
The better questions include:
Does the director’s spouse or another statutorily related person have an economic interest?
Does the director control the entity?
Does a related person control it?
Is the director also a director of the counterparty?
Is there another economic arrangement through which the director or related person will benefit?
Atlas Park Holdings v Tailifts South Africa considered the relationship between the statutory personal-financial-interest regime and related-person structures, including the extent to which the statutory formulation addresses interests mediated through connected persons or entities.
The decision is also important because the statutory conflict rules do not entirely eliminate the wider common-law fiduciary framework.
A transaction that falls outside the technical definition of personal financial interest may still require consideration under section 76 and the common-law conflict rule.
Governance should therefore not become an exercise in searching for technical loopholes in section 75.
Sole Directors and Directors’ Conflicts of Interest under Section 75
Sole-director companies deserve particular attention.
Section 75(3) applies where one person is the only director but does not own all the beneficial interests in all issued securities of the company.
That director may not approve or enter into an agreement in which the director or a related person has a personal financial interest, or determine another matter involving such an interest, unless the agreement or determination is approved by ordinary resolution of the shareholders after disclosure of the nature and extent of the interest.
The rule protects shareholders from precisely the governance problem created when there is nobody else on the board capable of acting as an independent decision-maker.
The Supreme Court of Appeal considered section 75(3) in Caratco (Pty) Ltd v Independent Advisory (Pty) Ltd. The judgment confirms the statutory significance of shareholder knowledge and approval where a sole director has a financial interest in an agreement.
More recently, Smuts v Kromelboog Conservation Services (Pty) Ltd concerned a sole director authorising payments to himself without proper entitlement. The SCA referred to the section 75(3) restrictions and the associated director-liability provisions.
In Zecha JV Rosstech Xerox v Zecha Holdings, decided in November 2025, the Northern Cape High Court again applied section 75(3) to a sole director who was not the sole shareholder and had acted in relation to transactions involving related persons.
Owner-managed businesses should therefore be particularly disciplined regarding related-party payments.
The fact that one individual controls day-to-day operations does not eliminate the legal personality of the company or the interests of other shareholders.
What Happens If an Interest Is Acquired Later?
A conflict can arise after a transaction has already been approved.
Section 75(6) deals expressly with that situation.
If a director acquires a personal financial interest in an agreement or matter in which the company has a material interest after approval, or becomes aware that a related person has acquired such an interest, the director must promptly disclose to the board the nature and extent of the interest and the material circumstances surrounding its acquisition.
This is an important continuing obligation.
A director may have had no conflict when the contract was originally awarded.
Six months later, the director might purchase shares in the supplier.
Alternatively, the director’s spouse could acquire an interest in the contracting entity.
The fact that the director was unconflicted when the original resolution was adopted does not mean that the later financial interest is irrelevant.
Boards should therefore require directors to update declarations continuously rather than relying only on annual forms.
Annual disclosure registers are useful governance tools.
They are not substitutes for transaction-specific disclosure when a conflict actually arises.
Validity, Ratification and Directors’ Conflicts of Interest under Section 75
Section 75(7) gives non-compliance potentially serious consequences.
A board decision, transaction or agreement involving a director’s personal financial interest is valid despite that interest only if it was approved following disclosure in accordance with section 75, or if the absence of proper disclosure is subsequently cured through one of the statutory mechanisms.
One curing mechanism is ratification.
The shareholders may ratify the transaction by ordinary resolution after the relevant interest has been disclosed.
The second is court validation under section 75(8).
An interested person may ask a court to declare an agreement or transaction valid notwithstanding the director’s earlier failure to comply with the disclosure requirements.
Lancaster 101 (RF) (Pty) Ltd v Steinhoff International Holdings NV considered a request for validation under section 75(7)(b)(ii) read with section 75(8), illustrating the statutory mechanism by which a court may be asked to preserve an otherwise problematic corporate decision.
The legal characterisation of an improperly approved transaction has generated judicial discussion.
In De Wit NO v Smit, the Western Cape High Court concluded in 2025 that agreements approved or entered into in violation of section 75(3) or section 75(5) are properly regarded as voidable, unless validated through section 75(7), rather than automatically void in every respect.
Earlier cases contain formulations describing non-compliant transactions as invalid unless properly ratified or validated. The precise consequences should therefore be analysed carefully in light of the particular transaction, pleadings and applicable authority rather than assumed from a single shorthand description.
Section 75 and the Director’s Wider Fiduciary Duties
Compliance with section 75 is not the full extent of a director’s obligations.
Section 76(2) separately prohibits a director from using the position of director or information obtained in that capacity to gain an advantage for the director or another person other than the company or a wholly owned subsidiary, or knowingly to cause harm to the company or subsidiary.
Section 76(3) requires directors to exercise their powers and perform their functions in good faith and for a proper purpose, in the best interests of the company and with appropriate care, skill and diligence.
The common-law fiduciary duties are also relevant.
Mthimunye-Bakoro emphasised that the statutory regime did not simply eradicate the traditional common-law rule against placing oneself in a position where personal interests conflict, or may conflict, with duties owed to the company.
This matters because not every ethical or fiduciary conflict necessarily falls neatly within the statutory definition of personal financial interest.
A director could possess confidential information relevant to competing businesses.
A director could divert a corporate opportunity without receiving an immediate financial payment.
A director could favour another entity for reasons connected to loyalty or personal affiliation.
The legal analysis should therefore ask both:
Does section 75 apply?
And, independently, do section 76 and the common law impose wider obligations?
Personal Liability for Directors’ Conflicts of Interest under Section 75
A director who breaches section 75 may face personal financial consequences.
Section 77 provides for director liability in specified circumstances.
In relation to breaches of section 75 and certain fiduciary duties under section 76, section 77 applies principles of the common law relating to breach of fiduciary duty to determine liability for loss, damages or costs sustained by the company.
The Companies Second Amendment Act 17 of 2024 amended the time-bar provisions applicable to proceedings under section 77. The amendment came into operation on 27 December 2024 and now permits a court, on good cause shown, to extend the statutory period in circumstances contemplated by the amended provision.
Accordingly, directors should not assume that a breach of section 75 merely creates an administrative defect in the board minutes.
If the conflicted decision causes the company financial loss, a damages claim may follow.
Section 75 breaches may also provide evidence relevant to proceedings for removal of a director, delinquency proceedings, shareholder-oppression relief under section 163, or other remedies depending upon the facts.
The severity of the consequences will depend upon the nature of the conflict, the director’s conduct, loss suffered and relief pursued.
Secret Benefits, Related-Party Deals and Modern Enforcement
The risks become particularly acute where a conflict is concealed for personal gain.
In Dimension Data Facilities (Pty) Ltd v Identity Property Co (Pty) Ltd, the Gauteng High Court dealt with a complex transaction involving the beneficial ownership of the Dimension Data Campus. The Court found that individuals involved in the transaction had placed themselves in conflict with the boards they served and considered the arrangement under both section 75 and common-law fiduciary principles. The transaction was declared void and invalid in the circumstances of that case.
The decision illustrates the difference between a properly managed conflict and a concealed scheme.
Section 75 does not prohibit every transaction involving an interested director.
The Act instead creates a disclosure and approval mechanism capable of allowing legitimate related-party transactions to proceed transparently.
A company might have sound commercial reasons to lease premises from a company controlled by one of its directors.
The legal problem is not necessarily the relationship itself.
The problem arises if the interested director conceals the relationship, influences the decision, participates in the vote, executes the agreement without proper authorisation or uses confidential information or corporate power for personal benefit.
Transparency is therefore central to the statutory scheme.
Board Minutes and Governance Controls
Good section 75 compliance should be visible from the company’s records.
The board agenda should identify potential conflict matters where reasonably known.
At the beginning of the meeting, directors should be asked to declare relevant interests.
The minutes should record the identity of the conflicted director, the nature of the disclosed interest, the material information disclosed, the time at which the director left the meeting and the fact that the director did not participate in the deliberation or vote.
The minutes should then record the remaining directors’ resolution.
If the conflicted director is subsequently authorised to execute a particular document, that authorisation should be recorded expressly because section 75(5)(g) otherwise prevents the director from executing documents concerning the matter.
Companies should also maintain a standing register of directors’ interests.
Directors should update that register when circumstances change.
Procurement systems can require bidders to disclose relationships with directors and senior employees.
Board papers for significant related-party transactions should contain pricing comparisons, valuations or other material supporting the conclusion that the transaction is commercially fair to the company.
These procedures protect more than legal compliance.
They make later challenges easier to defend because the company can demonstrate that the conflict was identified, disclosed and managed transparently.
Conclusion: Directors’ Conflicts of Interest under Section 75
Directors’ Conflicts of Interest under Section 75 are not resolved merely by announcing that a director has an interest.
The Companies Act creates a structured governance process.
A conflicted director must disclose the personal financial interest, provide required material information, leave the meeting, refrain from participating in deliberations and voting, and avoid executing documents concerning the matter unless specifically authorised by the board.
The statutory regime also extends beyond formally appointed directors to alternate directors, prescribed officers and board-committee members. Related-person interests must also be considered.
Sole-director companies require particular care where the sole director is not also the sole beneficial holder of all issued securities. In that situation, section 75(3) requires shareholder involvement in conflicted transactions. Caratco, Smuts and the more recent Zecha decision demonstrate the practical importance of those restrictions.
Non-compliance can also affect the transaction itself.
Section 75(7) provides mechanisms for proper approval, subsequent shareholder ratification and court validation. Recent authority such as De Wit NO v Smit demonstrates the continuing importance of determining whether and how a transaction concluded in breach of the statutory rules can be challenged or preserved.
Most importantly, section 75 should not be viewed in isolation.
The director’s broader fiduciary obligations under section 76 and the common law continue to regulate conflicts, corporate opportunities and the use of corporate power.
A director confronted with a potential conflict should therefore disclose early rather than attempt to determine privately whether the interest is sufficiently insignificant to mention.
Transparent recusal is considerably easier to defend than an undisclosed conflict discovered after the transaction has failed.
What Are Directors’ Conflicts of Interest under Section 75?
Directors’ Conflicts of Interest under Section 75 arise where a director has a qualifying personal financial interest in a matter being considered by the company, or knows that a related person has such an interest.
Section 75 regulates disclosure, recusal, participation and approval of the relevant matter.
What Is a Personal Financial Interest?
The Companies Act defines the concept broadly as a direct material interest of a financial, monetary or economic nature or one to which monetary value may be attributed, subject to the statutory definition and exclusions.
Whether an interest is sufficiently direct and material requires consideration of the particular facts.
Must a Director Disclose a Conflict Before a Board Meeting?
If the relevant interest concerns a matter to be considered at the meeting, section 75 requires disclosure of the interest and its general nature before the matter is considered.
Material information known to the director concerning the matter must also be disclosed.
Must the Conflicted Director Leave the Meeting?
Yes, where section 75(5) applies.
After making the permitted disclosures and any observations specifically requested by the other directors, the conflicted director must leave and may not participate further in consideration of the matter.
Can the Conflicted Director Vote?
No.
The director is not treated as present for determining whether the relevant resolution has sufficient support to be adopted.
Does the Conflicted Director Count for Quorum?
Section 75 provides that the director remains regarded as present for purposes of determining whether sufficient directors are present to constitute the meeting, although the director cannot participate in the relevant resolution.
Can a Conflicted Director Sign the Contract?
Not ordinarily unless specifically requested or directed to do so by the board.
Section 75(5)(g) expressly addresses execution of documents concerning the conflicted matter.
Does Section 75 Apply to Prescribed Officers?
Yes.
For purposes of section 75, “director” extends to alternate directors, prescribed officers and board-committee members even where the committee member is not formally a director.
What If the Director’s Spouse or Related Company Has the Interest?
Section 75 also regulates situations in which a related person has the personal financial interest.
The statutory related-person concept is therefore an important part of the conflict analysis and extends beyond direct personal ownership by the director.
Can a Sole Director Approve a Transaction With Their Own Business?
This depends upon the company’s ownership.
If the sole director does not hold all beneficial interests in all issued securities, section 75(3) requires shareholder approval after disclosure of the director’s interest.
A specific statutory exception applies where the same person is both sole director and holder of all beneficial interests in all issued securities.
What Happens If the Director Becomes Conflicted After Approval?
Section 75(6) requires prompt disclosure where the director or a related person acquires a qualifying financial interest after the company has already approved the agreement or matter.
The director must disclose the nature and extent of the interest and the material circumstances surrounding its acquisition.
Is a Transaction Automatically Invalid If Section 75 Was Breached?
The legal consequence requires careful analysis.
Section 75(7) states when a decision, transaction or agreement remains valid despite the director’s interest and permits subsequent shareholder ratification or court validation.
In De Wit NO v Smit, the Western Cape High Court characterised non-compliant agreements in the circumstances before it as voidable rather than automatically void, subject to the statutory validation mechanisms.
Can Shareholders Ratify an Undisclosed Conflict?
Section 75(7)(b)(i) expressly allows subsequent ratification by ordinary shareholder resolution after disclosure of the relevant interest.
Proper disclosure must therefore precede the ratifying resolution.
Can a Court Validate the Transaction?
Yes.
Section 75(8) permits an interested person to apply to court for an order declaring an agreement or transaction valid notwithstanding failure to comply with the disclosure requirements.
Lancaster 101 v Steinhoff provides an example of litigation involving this statutory validation mechanism.
Can a Director Be Personally Liable for Breaching Section 75?
Potentially.
Section 77 provides for director liability for loss, damages or costs sustained by the company as a consequence of specified breaches, including breach of section 75, applying principles associated with breach of fiduciary duty.
The amended section 77 time-bar provisions have been operative since 27 December 2024.
Does Disclosure Completely Protect the Director?
No.
Compliance with section 75 manages the statutory personal-financial-interest process but does not eliminate the director’s broader duties under section 76 and the common law.
A director must still act in good faith, for a proper purpose and in the best interests of the company.
References
| Legal authority | Substance | Importance |
|---|---|---|
| Companies Act 71 of 2008, section 75 | Regulates directors’ personal financial interests. It prescribes disclosure, provision of material information, recusal, non-participation, treatment for quorum and voting purposes, execution of documents, later-acquired interests, validity, shareholder ratification and court validation. | Section 75 is the primary statutory framework for managing directors’ financial conflicts of interest in South African companies. |
| Companies Act 71 of 2008, section 76 | Establishes statutory standards of directors’ conduct, including duties to act in good faith, for a proper purpose and in the company’s best interests, and regulates use of corporate position and information. | Section 75 should be read with section 76 because complying with the conflict procedure does not remove the director’s wider fiduciary duties. Compliance with section 75 is also relevant to section 76(4)’s business-judgment framework. |
| Companies Act 71 of 2008, section 77, as amended by Companies Second Amendment Act 17 of 2024 | Provides for personal liability of directors for specified breaches of statutory and fiduciary duties. The 2024 amendment changed the applicable time-bar framework and permits judicial extension on good cause in the circumstances provided by the amended section. | A section 75 breach can have direct financial consequences for directors where the company sustains loss, damages or costs. The amendment has been operative since 27 December 2024. |
| Recycling and Economic Development Initiative of South Africa v Minister of Environmental Affairs; Kusaga Taka Consulting (Pty) Ltd v Minister of Environmental Affairs (1260/2017; 188/2018; 1279/2017; 187/2018) [2019] ZASCA 1; 2019 (3) SA 251 (SCA) | The SCA considered directors’ interests in contracting companies and section 75. It recognised that serving multiple entities is not itself prohibited but that a conflict clearly arises where a director participates in contracting decisions involving another company in which that director has an undisclosed interest. | This is important appellate authority connecting section 75’s statutory requirements with the practical reality of directors participating across corporate groups or related entities. |
| Caratco (Pty) Ltd v Independent Advisory (Pty) Ltd (982/18) [2020] ZASCA 17; 2020 (5) SA 35 (SCA) | The SCA considered section 75(3) in the context of a sole director and a disputed agreement in which a personal financial interest was alleged. | The case is important for owner-managed companies because it explains the special shareholder-approval regime where the sole director is not also the sole beneficial shareholder. |
| Smuts v Kromelboog Conservation Services (Pty) Ltd and Another (511/2023) [2024] ZASCA 156 | The SCA considered conduct by a sole director involving payments to himself and referred to breaches of section 75(3) together with the director-liability provisions of section 77. | The decision demonstrates that conflicted self-payment can result in substantive personal-liability consequences rather than merely defective board procedure. |
| Omar v Inhouse Venue Technical Management (Pty) Ltd and Others (14227/2014) [2015] ZAWCHC 10; 2015 (3) SA 146 (WCC) | The High Court described section 75 as an important statutory regime regulating personal financial interests and reproduced the procedural obligations imposed on a conflicted director. | The case is an early and influential judicial treatment of section 75 and remains useful for understanding the relationship between conflict regulation and broader governance standards under section 76. |
| Mthimunye-Bakoro v Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd and Another (12476/2015) [2015] ZAWCHC 113; 2015 (6) SA 338 (WCC) | The Court considered directors’ conflicts and the statutory requirement that a director with a personal financial interest leave the meeting and refrain from participating. It also addressed the continuing relevance of common-law fiduciary principles. | The case confirms that section 75 operates alongside rather than completely replacing the broader fiduciary rule against conflicts of interest. |
| Atlas Park Holdings (Pty) Ltd v Tailifts South Africa (Pty) Ltd (28817/2020) [2022] ZAGPJHC 109; 2022 (5) SA 127 (GJ) | The Court examined section 75’s concepts of personal financial interest and related persons and discussed the continuing interaction between the statutory framework and common-law fiduciary rules. | The judgment is particularly useful where the relevant financial interest is mediated through another company, connected person or related corporate structure. |
| Lancaster 101 (RF) (Pty) Ltd v Steinhoff International Holding NV and Others (16389/19; 6578/19) [2021] ZAWCHC 193 | The litigation included an application concerning validation of a resolution under section 75(7)(b)(ii) read with section 75(8). | The case demonstrates the statutory court-validation mechanism available where a relevant decision was approved despite defective compliance with the disclosure requirements. |
| Dimension Data Facilities (Pty) Ltd and Others v Identity Property Co (Pty) Ltd and Others (2022/040174) [2024] ZAGPJHC 1209; 2025 (2) SA 459 (GJ) | The High Court dealt with a transaction involving undisclosed beneficial economic interests and found serious conflict between directors’ private interests and their corporate duties, applying both section 75 and common-law fiduciary principles. | The decision is a significant modern illustration of the consequences that can follow when conflicts are deliberately concealed and corporate opportunities or assets are used for private financial benefit. |
| De Wit NO and Another v Smit and Others (19076/2024) [2025] ZAWCHC 348; [2025] 4 All SA 387 (WCC) | The Court considered related-party loan agreements approved in breach of section 75 and held that agreements falling foul of section 75(3) or (5) were voidable unless valid under the statutory approval, ratification or validation mechanisms. | This recent authority is important for the legal consequences of non-compliance and the relationship between section 75 and shareholder-oppression relief under section 163. |
| Zecha JV Rosstech Xerox (Pty) Ltd and Others v Zecha Holdings (Pty) Ltd and Others (990/2025) [2025] ZANCHC 109 | The High Court applied section 75(3) where a sole director who was not the sole beneficial shareholder acted in relation to transactions involving related persons. | The case provides recent practical confirmation that sole-director status does not permit conflicted related-party transactions to be approved unilaterally where other shareholders possess beneficial interests. |
Useful Links
South African Government – Companies Act 71 of 2008 provides official access to the Companies Act and its amendment history. It is the primary legislative source for sections 75, 76 and 77 governing conflicts of interest, directors’ duties and personal liability.
South African Government – Companies Second Amendment Act 17 of 2024 provides the amendments to the section 77 liability time-bar provisions, which became operative on 27 December 2024.
Southern African Legal Information Institute provides free access to South African judgments concerning directors’ fiduciary duties, section 75 conflicts, related-party transactions, shareholder remedies and director liability.
If you would like to know more about shareholders agreements in general click here.
If you would like to know more about memorandums of incorporation click here.
If you would like to know more about the removal of directors click here.
If you would like to know more about the effect of failing to reach a quorom click here.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for errors, omissions, loss, or damage arising from reliance upon any information herein. Don’t hesitate to contact Meyer and Partners Attorneys Incorporated if you require further information or specific and detailed advice. Errors and omissions excepted (E&OE).
