INTRODUCTION
Director resignations are a fact of corporate life. What many companies fail to appreciate, however, is that a resignation does not sever all legal ties between the director and the company. Certain fiduciary duties continue after departure — and companies that do not understand this, or fail to put appropriate safeguards in place, risk losing valuable opportunities and confidential information with no effective remedy.
THE FIDUCIARY FRAMEWORK
From the moment of appointment, a director owes fiduciary duties to the company. These include: (i) the duty of loyalty — to act in the company’s best interests, not the director’s own; (ii) the no-profit rule — to account to the company for any personal gain derived from the position; (iii) the corporate opportunity doctrine — not to divert business opportunities that belong to the company; and (iv) the duty of confidentiality — to protect the company’s proprietary information.
These common-law duties are reinforced by statute. Section 76(2)(a) of the Companies Act No. 71 of 2008 prohibits directors from using their position or information obtained as a director to benefit themselves (or others) at the company’s expense. Section 77(2)(a) confirms that directors may be held personally liable for losses caused by breach of these duties.
THE KEY PRINCIPLE: RESIGNATION IS NOT A CLEAN BREAK
Directors are generally free to resign at any time, even if this causes difficulty for the company. However, resignation cannot be used as a mechanism to evade fiduciary duties. As the court in Spieth v Nagel [1997] 3 All SA 316 (W) made clear, a company is entitled to protection where a director resigns and then exploits an opportunity that was developed in breach of duty.
The policy reason is straightforward: if duties ended the moment a director resigned, any director could simply resign and immediately pursue opportunities that properly belong to the company. The law prevents this.
Unlike the UK Companies Act 2006, which expressly addresses post-resignation duties, South African law does not codify this area. The scope of continuing duties must therefore be determined from case law.
FIVE FACTORS COURTS CONSIDER
The Supreme Court of Appeal’s decision in Da Silva v CH Chemicals (Pty) Ltd 2008 (6) SA 620 (SCA) sets out the key principles. These are not rigid rules but fact-sensitive factors that courts weigh in each case:
Was there a maturing opportunity?
A director may not resign to take personal advantage of a business opportunity that the company is actively pursuing. The critical question is whether the opportunity had sufficiently “ripened” at the time of resignation. If so, it belongs to the company, not the departing director.
What was the motive for resignation?
If a director resigned specifically to pursue an opportunity, the resignation provides no protection. Where the director resigned for unrelated reasons and only later became aware of the opportunity, the position may be different — the causal connection between the directorship and the opportunity matters.
How did the director learn of the opportunity?
Even if a director learns of an opportunity in a personal capacity, the duty to disclose it to the company may still apply. The principle from Industrial Development Consultants Ltd v Cooley [1972] 2 All ER 162 is that opportunities falling within the company’s line of business must be disclosed. A director cannot exploit such opportunities without the company’s consent.
Could the company have taken the opportunity?
It is no defense that the company lacked the funds to pursue the opportunity, or that the third party would not have dealt with the company. The law is concerned with deterring disloyalty, not with what might have happened.
Was confidential information misused?
Directors may not use the company’s confidential information to pursue opportunities or cause harm. However, confidentiality and the corporate opportunity doctrine are separate. A director can breach fiduciary duty by taking an opportunity even without misusing confidential information — and can breach confidentiality without taking any opportunity.
WHAT DIRECTORS CAN TAKE WITH THEM
The law does not prohibit all post-resignation competition. Section 22 of the Constitution protects the right to pursue a trade or profession. Courts are reluctant to impose undue restraints on former directors. The challenge is drawing the line between legitimate competition and breach of duty.
Directors are entitled to take with them the general skills, experience, and industry knowledge they have acquired. Personal relationships and professional expertise belong to the director, not the company. What they cannot take are trade secrets, confidential data, and proprietary business information.
Directors may also take preparatory steps during a notice period — incorporating a new company, securing premises, conducting market research — provided they do not actually compete, divert opportunities, or trade while still in office.
PRACTICAL STEPS FOR COMPANIES
The case of Big Catch Fishing Tackle Proprietary Limited v Kemp (17281/18) 2019 ZAWCHC 20 demonstrates the risks of inadequate protection. The company had no restraint of trade in place and waited nearly a year to seek relief. By then, the court held, any “springboard” advantage had dissipated. The lesson: companies must plan ahead and act quickly.
Companies should consider the following protective measures:
Restraint of trade agreements
These remain the most effective tool. In South Africa, restraints are prima facie enforceable unless the restrained party proves they are unreasonable. Courts consider the scope, duration, and geographic reach of the restraint, the interests being protected, and the parties’ relative bargaining positions.
Non-solicitation clauses
These offer targeted protection for customer relationships without the breadth that courts may find unreasonable. Draft them carefully to specify the protected relationships and prohibited conduct.
Confidentiality agreements
Clear definitions of what constitutes confidential information — customer lists, pricing, product plans, trade secrets — provide the evidentiary foundation for court relief. Vague agreements make enforcement difficult.
Timely enforcement
The advantage from confidential information does not last indefinitely. Companies suspecting misuse must act promptly. Delay weakens both the factual case and the prospects of meaningful relief.
THE COURTS’ APPROACH: FLEXIBLE BUT PRINCIPLED
South African courts take a flexible, fact-sensitive approach. In clear cases of abuse — where a director resigns to divert an opportunity — the law intervenes without hesitation. In less obvious cases, courts weigh all the circumstances: the nature of the opportunity, the director’s role in developing it, the time since resignation, the reason for departure, and whether there was bad faith.
As the SCA emphasized in Da Silva, this area calls for “commonsense and merits-based” solutions, not rigid rules. The equitable origins of fiduciary law demand flexibility in application.
KEY TAKEAWAYS FOR COMPANIES
Directors may resign, but they cannot take the company’s opportunities, confidential information, or business relationships with them. The law draws a principled line between using personal skills and experience — which is permitted — and exploiting corporate assets — which is not. Companies that understand this distinction and put appropriate contractual safeguards in place before a resignation will be far better positioned to protect their interests.
VDMA Law’s corporate governance team advises companies on director appointments, fiduciary duties, restraint of trade agreements, and corporate governance best practices. Contact us for guidance tailored to your circumstances.
Get in touch to find out how we can protect your business.
REFERENCES
R Cassim “Post-Resignation Duties of Directors: The Application of the Fiduciary Duty Not to Misappropriate Corporate Opportunities” (2008) 125 South African Law Journal 731–753
R Cassim “Post-Resignation Survival of Fiduciary Duties: Big Catch Fishing Tackle Proprietary Limited v Kemp (17281/18) 2019 ZAWCHC 20 (5 March 2019)” (2021) 24 Potchefstroom Electronic Law Journal 1–28
Companies Act No. 71 of 2008, ss 75, 76(2), 77(2)
Constitution of the Republic of South Africa, 1996, section 22
Da Silva v CH Chemicals (Pty) Ltd 2008 (6) SA 620 (SCA)
Big Catch Fishing Tackle Proprietary Limited v Kemp (17281/18) 2019 ZAWCHC 20 (5 March 2019)
Spieth v Nagel [1997] 3 All SA 316 (W)
Canadian Aero Service Ltd v O’Malley (1973) 40 DLR (3d) 371 (SCC)
Industrial Development Consultants Ltd v Cooley [1972] 2 All ER 162
Foster Bryant Surveying Ltd v Bryant [2007] EWCA Civ 200
Published 24 July 2026
