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Directors' duty to use their powers for proper or permissable purposes

du Plessis, Jean 2004, Directors' duty to use their powers for proper or permissable purposes, South African mercantile law journal, vol. 16, no. 3, pp. 308-326.

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Title Directors' duty to use their powers for proper or permissable purposes
Author(s) du Plessis, Jean
Journal name South African mercantile law journal
Volume number 16
Issue number 3
Start page 308
End page 326
Publisher Juta & Company Ltd
Place of publication Capetown, South Africa
Publication date 2004
ISSN 1015-0099
1996-2185
Keyword(s) company law
Summary This article focuses generally on the interaction among several internal company law doctrines such as the supremacy of the articles of association; that other organs cannot interfere with powers exclusively conferred upon a particular organ; that courts will not readily interfere with internal company matters; that directors are under a duty to act in good faith and in the best interest of the company as a whole and under a duty to use their powers for proper or permissible purposes; and that there are some remedies available to shareholders if directors did not perform their powers for a proper or permissible purpose. The specific aim with the article is to establish when and why the courts will be prepared to set aside decisions by directors if they have taken them for an improper or impermissible purpose. The article concludes that the courts will be prepared to set the decisions of directors aside when they have used a particular power substantially or primarily for an improper or impermissible purpose. When the exercise of directors' powers is challenged under circumstances where there were both permissible and impermissible purposes for exercising a particular power, there is no alternative for the court but to inquire into the complex area of the state of mind of those who acted and the motive on which they acted. This is, in fact, second-guessing the decisions of directors.
Language eng
Field of Research 180109 Corporations and Associations Law
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2004, Juta & Company Ltd
Persistent URL http://hdl.handle.net/10536/DRO/DU:30002515

Document type: Journal Article
Collections: School of Law
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