3.5.2 Statutory Liabilities of Directors
S 77(3) provides that the Director is liable for any loss, damages, or costs sustained by the company as a direct or indirect consequence of the Director having-
a. Acted in the name of the company, signed on behalf of the company and purported to have been acting for the company despite knowing that he did not act for the company and lacked the authority to do so.
b. Tacitly agreed to carry on business despite knowing it was prohibited in terms of s 22(1) because it was reckless, negligent or fraudulent behavior.
c. Being party to an act or omission despite knowing that it was calculated to defraud a creditor, employee or shareholder of the company.
d. Signed or consented to or authorised the publication of any financial statements which are false and misleading or a prospectus which was untrue.
SECTION 77(3) (e) is a consolidation of various Sections being 38(3), 41(5), 42(4), 44(6) and 45(7) 46(6) and 48(7). Listed below are the issues.
1. The issue of unauthorised shares despite knowing that those shares had not been authorised.
2. The issue of any authorised securities despite knowing that the issue of those securities was inconsistent with s 41.
3. The granting of options to any persons contemplated in s 42(4) despite knowing that any shares of which the options could be exercised or to which any securities could be converted had not been authorised in terms of s 36.
4. The provision of financial assistance to any person contemplated in s 44 for the acquisition of the company securities, despite knowing that the provision of financial assistance was inconsistent with s 44, or the Company’s MOI.
5. Provision of financial assistance to Directors for the purpose contemplated in s 45 despite knowing that the provision of Financial Assistance was inconsistent with s 45 or the Company’s MOI.
6. Subject to s 77(4) a resolution approving a distribution despite knowing that the distribution was contrary to s 46.
7. The acquisition by the Company of any of the Shares or the Shares of its holding company despite knowing that the acquisition was contrary to ss 46 and 48.
8. An allotment by the company despite knowing that the allotment was contrary to any provision of Chapter 4 public offerings.