LML4806 –Assignment 02 Semester 2 Solutions
Due date:
FOR EXAMS, PORTFOLIO, AND ASSIGNMENT
ASSISTANCE WHATSAPP
083 286 8465 EMAIL:
Disclaimer: This document is provided for educational purposes only and represents the
original work of the author, intended solely for learning, research, and reference. No part of
this material has been generated using AI tools, and all sources, where applicable, have been
properly acknowledged to ensure zero plagiarism. By using or submitting this document, you
agree to use it only as a guide for academic purposes, accept full responsibility for any
academic or legal consequences arising from plagiarism, misuse, or institutional violations, and
comply with your institution’s code of conduct and academic regulations. Unauthorized
copying, distribution, resale, or commercial use of this material is strictly prohibited.
, QUESTION 1
The legal problem is whether Lerato, a former director of Internet World (Pty) Ltd,
breached her fiduciary duties by concluding a contract personally with Skylab (Pty)
Ltd for the design, installation, and maintenance of a database system, an
opportunity she had negotiated on behalf of Internet World. Lerato argues that
because she signed the contract after resigning, she did not breach any fiduciary
duties owed to Internet World. The key issue is whether her resignation absolves her
of fiduciary obligations regarding this corporate opportunity.
Directors owe fiduciary duties to their companies at both common law and under
statutory provisions in the Companies Act 71 of 2008. These duties include acting
bona fide in the best interests of the company, avoiding conflicts of interest, and
refraining from exploiting company opportunities for personal gain. 1The fiduciary
relationship exists regardless of whether the director is executive or non-executive.
As established in Cyberscene Ltd and others v i-Kiosk internet and information (Pty)
Ltd, all directors stand in fiduciary relationships to the company and must act with the
utmost good faith.2
Statutorily, sections 75 and 76 of the Companies Act reinforce these duties. Section
75 requires directors to disclose any personal financial interest in company matters,
while section 76 prohibits using one’s position or information obtained as a director
to gain an advantage or cause harm to the company. 3 These statutory duties
complement and do not replace common law fiduciary obligations. 4
The fiduciary duty extends beyond resignation concerning corporate opportunities
that originated during the director’s tenure. The principle is well illustrated in
Industrial Development Consultants v Cooley, where a managing director who
resigned and thereafter secured a contract personally that was initially for the
1
Companies Act 71 of 2008, ss 75, 76;
2
Cyberscene Ltd and others v i-Kiosk internet and information (Pty) Ltd [2005] 4 All SA
40 (SCA).
3
Companies Act 71 of 2008, ss 75, 76.
4
Davis D et al, Companies and Other Business Structures in South Africa (5th ed, Oxford
University Press Southern Africa 2021).
Due date:
FOR EXAMS, PORTFOLIO, AND ASSIGNMENT
ASSISTANCE WHATSAPP
083 286 8465 EMAIL:
Disclaimer: This document is provided for educational purposes only and represents the
original work of the author, intended solely for learning, research, and reference. No part of
this material has been generated using AI tools, and all sources, where applicable, have been
properly acknowledged to ensure zero plagiarism. By using or submitting this document, you
agree to use it only as a guide for academic purposes, accept full responsibility for any
academic or legal consequences arising from plagiarism, misuse, or institutional violations, and
comply with your institution’s code of conduct and academic regulations. Unauthorized
copying, distribution, resale, or commercial use of this material is strictly prohibited.
, QUESTION 1
The legal problem is whether Lerato, a former director of Internet World (Pty) Ltd,
breached her fiduciary duties by concluding a contract personally with Skylab (Pty)
Ltd for the design, installation, and maintenance of a database system, an
opportunity she had negotiated on behalf of Internet World. Lerato argues that
because she signed the contract after resigning, she did not breach any fiduciary
duties owed to Internet World. The key issue is whether her resignation absolves her
of fiduciary obligations regarding this corporate opportunity.
Directors owe fiduciary duties to their companies at both common law and under
statutory provisions in the Companies Act 71 of 2008. These duties include acting
bona fide in the best interests of the company, avoiding conflicts of interest, and
refraining from exploiting company opportunities for personal gain. 1The fiduciary
relationship exists regardless of whether the director is executive or non-executive.
As established in Cyberscene Ltd and others v i-Kiosk internet and information (Pty)
Ltd, all directors stand in fiduciary relationships to the company and must act with the
utmost good faith.2
Statutorily, sections 75 and 76 of the Companies Act reinforce these duties. Section
75 requires directors to disclose any personal financial interest in company matters,
while section 76 prohibits using one’s position or information obtained as a director
to gain an advantage or cause harm to the company. 3 These statutory duties
complement and do not replace common law fiduciary obligations. 4
The fiduciary duty extends beyond resignation concerning corporate opportunities
that originated during the director’s tenure. The principle is well illustrated in
Industrial Development Consultants v Cooley, where a managing director who
resigned and thereafter secured a contract personally that was initially for the
1
Companies Act 71 of 2008, ss 75, 76;
2
Cyberscene Ltd and others v i-Kiosk internet and information (Pty) Ltd [2005] 4 All SA
40 (SCA).
3
Companies Act 71 of 2008, ss 75, 76.
4
Davis D et al, Companies and Other Business Structures in South Africa (5th ed, Oxford
University Press Southern Africa 2021).
