Dudu Myeni’s appeal shows she is still ignorant over Companies Act demands
Lawyers of disgraced former SAA chair seem to have done no research into the topic of delinquent directors
The appeal by disgraced former SAA chair Dudu Myeni against the order of Judge Ronel Tolmay in the North Gauteng High Court declaring her a delinquent director — on the basis that, among other reasons, it supposedly violated her constitutional rights — clearly confirms that Myeni still has no idea of what the Companies Act expects of directors.
One must ask whether her lawyers have done any research into the topic of delinquent directors. The Companies Act is clear about the type of conduct that can lead a director to be declared delinquent, and the consequences of such an order. These include personal liability for debts of the company, in addition to criminal liability.
Myeni’s lawyers also appear to have missed the 2017 Supreme Court of Appeal (SCA) decision of Gihwala vs Grancy Property Ltd, in which the directors challenged the constitutionality of the delinquency provisions of the Companies Act, without success. The court said the following about an order of delinquency: “Its purpose is to protect the investing public, whether sophisticated or unsophisticated, against the type of conduct that leads to an order of delinquency, and to protect those who deal with companies against the misconduct of delinquent directors.”
The SCA’s view is that the rights of those who suffer due to the actions of delinquent directors are more important than the putative constitutional rights of the directors. One can only admire the courage of Myeni’s legal team to try an argument that has already been scathingly dismissed by the very court she is now turning to. A quick glance at the case law on delinquent directors makes it clear that Myeni, like so many delinquent directors before her, should expect no mercy from the SCA.
Reading Judge Tolmay’s judgment one gets the impression that Myeni could not care less about the fate of SAA. The embarrassment she caused the airline and the country when she snubbed Emirates, and the fiasco with the Airbus swap, were worthy of Tolmey’s condemnation who did not mince her words about how far Myeni’s conduct fell short of the standard expected of directors.
Disregard for law
The judge’s description of Myeni’s conduct covers almost every kind of delinquent conduct foreseen in the Companies Act, from gross abuse and taking personal advantage of her position to inflicting harm on the company, wilful misconduct and breach of trust. Any one of these breaches would be sufficient to warrant a declaration as a delinquent director. Myeni breached most if not all of these provisions, turning her into a case study of the type of director proscribed by the Companies Act.
For her now to allege that Judge Tolmay erred in her judgment, and that there is a reasonable chance of success on appeal (the two fundamental requirements to obtain leave to appeal), smacks of disregard for the law and the plight of thousands of SAA employees and their families, here and abroad, who are now agonising over what will happen to them after this disastrous business rescue procedure is finalised (if that ever happens). As an order of delinquency can lead to personal liability for the company’s debts, if I were one of the unpaid pilots or cabin crew of SAA I would sue Myeni in her personal capacity for my salary.
Directors work with other people’s money and owe fiduciary duties towards their companies. When they breach those duties their actions can have far-reaching and tragic consequences for shareholders, employees and the public. The SAA debacle has made this clear for all of us to see. There is no reason directors who can cause such widespread agony and distress should be able to hide behind the constitution.
Myeni’s application for leave to appeal, or if leave is granted an eventual appeal, must surely fail. The public should not be exposed to the risk of dealing with companies run by delinquents like her.
• Myburgh is an attorney in Johannesburg.
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