LML4806
Assignment 2 Semester 2 2025
Unique Number:
Due Date: September 2025
QUESTION 1
Lerato breached her fiduciary duties to Internet World (Pty) Ltd despite having formally
resigned before concluding the contract with Skylab (Pty) Ltd. According to the Companies
Act 71 of 2008 and common-law principles, directors have duties that may continue even
after resignation, especially when a business opportunity that arose during their time as
directors is involved.1
Section 76(2)(a)(i) and (ii) of the Companies Act prevents directors from using their position
or any information they gained while acting as directors to benefit themselves or others, or to
cause harm to the company1.
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
Lerato breached her fiduciary duties to Internet World (Pty) Ltd despite having
formally resigned before concluding the contract with Skylab (Pty) Ltd. According to
the Companies Act 71 of 2008 and common-law principles, directors have duties that
may continue even after resignation, especially when a business opportunity that
arose during their time as directors is involved.1
Section 76(2)(a)(i) and (ii) of the Companies Act prevents directors from using their
position or any information they gained while acting as directors to benefit
themselves or others, or to cause harm to the company2. Lerato was involved in
direct negotiations with Skylab on behalf of Internet World (Pty) Ltd. She was
therefore in a privileged position and gained knowledge and access through her role
as director. Even though she only signed the contract with Skylab after her
resignation, the opportunity clearly arose from her position with the company. This is
a classic case of a corporate opportunity being diverted for personal benefit.3
The facts also align with the common-law principle applied in the case of Canadian
Aero Service Ltd v O’Malley. The court held that former directors could not use
opportunities that came to them while acting for their company, especially if their
resignation was motivated by the intention to exploit such opportunities.4 Similarly, in
Industrial Development Consultants Ltd v Cooley, the director was held liable for
taking a contract personally that the company was pursuing, even though he had
resigned before signing the contract.5
The court in Da Silva v CH Chemicals (Pty) Ltd also confirmed that resignation does
not cancel fiduciary obligations when the opportunity taken falls within the company’s
line of business or was being pursued by the company during the director’s tenure.6
The deciding factors are not just timing but also the connection between the
opportunity and the director’s prior position, access, and motive.
Rehana Cassim sets out further guiding principles that support Internet World’s
position. These include the principle that a director remains accountable if they
1
Cassim FHI et al, The Law of Business Structures 2ed (2021) Juta & Co at 246.
2
Companies Act 71 of 2008, section 76(2)(a)(i) and (ii).
3
Cassim et al, 2021:246.
4
Canadian Aero Service Ltd v O’Malley [1974] SCR 592.
5
Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443
6
Da Silva v CH Chemicals (Pty) Ltd 2008 (6) SA 620 (SCA). Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
Assignment 2 Semester 2 2025
Unique Number:
Due Date: September 2025
QUESTION 1
Lerato breached her fiduciary duties to Internet World (Pty) Ltd despite having formally
resigned before concluding the contract with Skylab (Pty) Ltd. According to the Companies
Act 71 of 2008 and common-law principles, directors have duties that may continue even
after resignation, especially when a business opportunity that arose during their time as
directors is involved.1
Section 76(2)(a)(i) and (ii) of the Companies Act prevents directors from using their position
or any information they gained while acting as directors to benefit themselves or others, or to
cause harm to the company1.
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning, comparison and reference purpose,
Terms of use
Not to duplicate, reproduce and/or misrepresent the contents of this document as your own work,
By making use of this document you agree to:
Use this document
Fully accept the consequences
solely as a guide forshould you plagiarise
learning, reference,or and
misuse this document.
comparison purposes,
Ensure originality of your own work, and fully accept the consequences should you plagiarise or misuse this document.
Comply with all relevant standards, guidelines, regulations, and legislation governing academic and written work.
Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is" without any express or
implied representations or warranties. The author accepts no responsibility or liability for any actions taken based on the
information contained within this document. This document is intended solely for comparison, research, and reference purposes.
Reproduction, resale, or transmission of any part of this document, in any form or by any means, is strictly prohibited.
, +27 67 171 1739
QUESTION 1
Lerato breached her fiduciary duties to Internet World (Pty) Ltd despite having
formally resigned before concluding the contract with Skylab (Pty) Ltd. According to
the Companies Act 71 of 2008 and common-law principles, directors have duties that
may continue even after resignation, especially when a business opportunity that
arose during their time as directors is involved.1
Section 76(2)(a)(i) and (ii) of the Companies Act prevents directors from using their
position or any information they gained while acting as directors to benefit
themselves or others, or to cause harm to the company2. Lerato was involved in
direct negotiations with Skylab on behalf of Internet World (Pty) Ltd. She was
therefore in a privileged position and gained knowledge and access through her role
as director. Even though she only signed the contract with Skylab after her
resignation, the opportunity clearly arose from her position with the company. This is
a classic case of a corporate opportunity being diverted for personal benefit.3
The facts also align with the common-law principle applied in the case of Canadian
Aero Service Ltd v O’Malley. The court held that former directors could not use
opportunities that came to them while acting for their company, especially if their
resignation was motivated by the intention to exploit such opportunities.4 Similarly, in
Industrial Development Consultants Ltd v Cooley, the director was held liable for
taking a contract personally that the company was pursuing, even though he had
resigned before signing the contract.5
The court in Da Silva v CH Chemicals (Pty) Ltd also confirmed that resignation does
not cancel fiduciary obligations when the opportunity taken falls within the company’s
line of business or was being pursued by the company during the director’s tenure.6
The deciding factors are not just timing but also the connection between the
opportunity and the director’s prior position, access, and motive.
Rehana Cassim sets out further guiding principles that support Internet World’s
position. These include the principle that a director remains accountable if they
1
Cassim FHI et al, The Law of Business Structures 2ed (2021) Juta & Co at 246.
2
Companies Act 71 of 2008, section 76(2)(a)(i) and (ii).
3
Cassim et al, 2021:246.
4
Canadian Aero Service Ltd v O’Malley [1974] SCR 592.
5
Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443
6
Da Silva v CH Chemicals (Pty) Ltd 2008 (6) SA 620 (SCA). Disclaimer
Great care has been taken in the preparation of this document; however, the contents are provided "as is"
without any express or implied representations or warranties. The author accepts no responsibility or
liability for any actions taken based on the information contained within this document. This document is
intended solely for comparison, research, and reference purposes. Reproduction, resale, or transmission
of any part of this document, in any form or by any means, is strictly prohibited.
