Post-Resignation Duties of Directors: The Application of the Fiduciary Duty not to Misappropriate Corporate Opportunities

Abstract

This article examines when it would be appropriate to hold a former director accountable for the appropriation of corporate opportunities which take place after his resignation from a company. It identifies and discusses various principles which may be deduced from the common-law jurisprudence which may serve as a guideline on the circumstances when a director’s duty not to misappropriate a corporate opportunity would continue to apply after his resignation. In evaluating the application of these principles to directors post-resignation, this article examines the recent trades in this area of the law both in South African jurisprudence and relevant foreign jurisprudence and questions whether South African law is bound to the strict absolutist approach traditionally adopted on the duty of a director not to place himself in a position of a confit of interest, or whether a flexible and pragmatic approach, may, and ought to be, applied in a modern commercial world. This article argues that, while the common-law principles may provide a guideline, there is indeed scope for South African law to adopt a flexible and pragmatic approach to a director’s fiduciary duty post-resignation, and that such an approach would be more appropriate to modern commercial reality.