The South African business judgement rule – An analysis of the rationality standard for reviewing the conduct of a director

Abstract

The legal nature of a company is that of an artificial person, which exists separately from the management and shareholders of that company.1 Consequently, it lacks the ability to act on its own and must act through representatives.2 In this regard, section 66(1) of the Companies Act 71 of 2008 (hereafter, the Companies Act) provides that: The business and affairs of a company must be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any functions of the company, except to the extent that this Act or the company’s Memorandum of Incorporation provides otherwise.