Historically it has been commonplace for board resolutions,
produced for the purposes of ordinary transactions or for
litigation, to signed only by the company secretary or by the
chairperson of a company.
In terms of s66 of the Companies Act (71 of 2008), the business and
affairs of the company must be managed by and under the direction
of its board. It has the authority to exercise all the powers and
perform all the functions of the company, except to the extent that
the Act or the company's Memorandum of Incorporation (MOI)
By definition "board" means the board of directors of the
company. The Act does not define chair or chairperson of the board
meeting, but from the context it is safe to assume that the chair
must be one of the members of the board. In other words the chair
must be a director.
In terms of s73(8):
"Any minutes of a meeting, or a resolution, signed by the
chair of the meeting, or by the chair of the next meeting of the
board, is evidence of the proceedings of that meeting, or
adoption of that resolution, as the case may be."
It must be borne in mind that signature of the minutes of a
meeting, or a resolution of a company by the chairperson of the
meeting constitutes no more than rebuttable evidence of its
proceedings. s73(8) does not provide for the secretary of a company
to sign the minutes or resolution of a meeting but it is submitted
that the MOI of a company may imbue the company secretary with that
authority. To impose such a function on a company secretary in the
MOI should not legally be unacceptable. One of the duties imposed
on a company secretary in terms of s88(2)(b) is to ensure that
minutes of all shareholders' meetings, board meetings and the
meetings of any committees of the directors, or of the
company's audit committee, are properly recorded in accordance
with the Act.
Should the MOI of a company make provision for its company
secretary to sign the minutes or resolution of its directors'
meetings, the signature would also constitute no more than
rebuttable evidence of the proceedings of the meeting. In terms of
s86 it is, however, mandatory only for public and state owned
companies to appoint company secretaries, which means many private
companies will not have one.
There is the risk to a third party relying on a resolution signed
by the chairperson of a counter party that such resolution is void
because the meeting was never held. Theoretically a third party may
be able to rely on the provisions of s20(7) of the Act:
"20(7) A person dealing with a company in
good faith, other than a director, prescribed officer or
shareholder of the company, is entitled to presume that the
company, in making any decision in the exercise of its powers, has
complied with all of the formal and procedural requirements in
terms of this Act, its Memorandum of Incorporation and any rules of
the company unless, in the circumstances, the person knew or
reasonably ought to have known of any failure by the company to
comply with any such requirement."
However, the requirements that the person dealing with a company
must do so in good faith and that he should not be aware of the
non-compliance of the formal and procedural requirements in terms
of the Act, are often absent because he is frequently aware, or
should be aware, that the meeting never took place since the
resolution was pre-prepared by him or on his behalf.
The better solution may be to apply s74, which provides for the
adoption of a resolution by written consent of the majority of the
directors. s74 reads:
"74(1) Except to the extent that the
Memorandum of Incorporation of a company provides otherwise, a
decision that could be voted on at a meeting of the board of that
company may instead be adopted by written consent of a majority of
the directors, given in person, or by electronic communication,
provided that each director has received notice of the matter to be
"(2) A decision made in the manner
contemplated in this section is of the same effect as if it had
been approved by voting at a meeting."
A pre-prepared written resolution would serve both as a notice of
the matter to be decided and would constitute the necessary written
consent to the adoption thereof if signed be the majority of the
directors of a company
In conclusion, it is not a good practice to accept a board
resolution signed by the chairperson of the meeting or signed by
the company secretary tasked in the MOI with that function. The
better practice is to require a resolution consented to by the
majority of directors in terms of the provisions of s74 of the
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Court of Appeal has recently considered whether a director of a holding company was liable to one of its subsidiaries for breach of fiduciary duties, despite not having been appointed as a director of the subsidiary company.