Maltech-Africa | Compliance & Governance Insight | By Innocent Muchererwa Mutara | 28 September 2026
Many business owners believe there is a comfortable middle ground between running a company and leaving it. A friend, spouse, partner or relative stays on as a director 'on paper' while someone else handles the daily work. The name remains on the CIPC record, and the person stops attending, stops reading the financials and stops taking part. The arrangement feels harmless until a court, SARS or a liquidator says otherwise.
South African law has no such thing as a silent director. There is a director or there is not, and the Companies Act 71 of 2008 attaches the same duties and the same personal exposure to every person on the register. If your company has fallen behind, read our guide to staying compliant alongside this article.
Section 76 requires every director to act in good faith, for a proper purpose and in the best interests of the company. It also requires the care, skill and diligence expected of a person with that director's actual knowledge and experience. An accountant or compliance professional on the board is judged against those qualifications. A director who never asks for financial statements or reads a tax notice is hard-pressed to show reasonable care.
The older Jorgensen line of cases accepted that directors are not required to give continuous attention to the company and may rely on management. That protection has weakened. The 2008 Act codified a standard that combines an objective test with the director's own knowledge and experience, and courts increasingly expect directors to be informed.
• OUTA v Myeni (Pretoria High Court, 27 May 2020): the former non-executive chair of South African Airways was declared a delinquent director for life. The court treated her as a director for all intents and purposes. Her conduct was active and egregious, but the case shows that the non-executive label offers no shelter.
• Gihwala v Grancy Property [2016] ZASCA 35: the Supreme Court of Appeal held that delinquency under section 162 requires serious misconduct. Passivity alone is not the usual trigger, but passivity that allows wrongdoing to continue can move into the serious-misconduct category.
• Venator Africa v Watts [2024] ZASCA 60: the SCA confirmed that section 77(3)(b), read with section 22, makes a director liable to the company for losses where the director acquiesced in the business being carried on recklessly or fraudulently. A director who does not look can later be found to have known what looking would have revealed.
• Msibithi Investments v African Legend Investment [2025] ZASCA 61: the SCA declared a director delinquent for seven years for serious breaches of fiduciary duty, confirming that section 162 has teeth.
Directors can be held jointly and severally liable for company losses arising from breach of duty, reckless trading or approving misleading financial statements. A finding under section 77(3) can also lead to a delinquent director declaration, which bars the person from serving as a director for at least seven years, and in serious cases for life.
Section 77(9) gives courts discretion to relieve a director wholly or partly, except in cases of wilful misconduct or breach of trust, where the director acted honestly and reasonably. Evidence carries this defence: minutes, written queries, requests for financial statements and recorded objections all help. A director with no paper trail has little to rely on. Keeping the company's CIPC annual returns current is part of that record.
A director may resign under section 70(2) by written notice, and CIPC must be notified of the change on form CoR39. Three points are often missed:
1. Resignation ends future exposure but does not erase liability for the period of service.
2. Until CIPC's records are updated, banks, SARS, creditors and courts may continue to treat you as a director.
3. Resigning as director does not end your shareholding, personal sureties or guarantees, or your obligations under a shareholders' agreement.
Since 1 April 2023, CIPC has run a beneficial ownership register under the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022, with filing rules in Companies Regulations 32A and 32B. A beneficial owner is a natural person who ultimately owns or effectively controls the company, and the chain of ownership must be followed through every layer.
• Companies must keep a register of persons holding a beneficial interest of 5% or more of their securities and keep it current.
• Companies incorporated after 24 May 2023 must file within 10 business days of incorporation, and changes in beneficial owners or their holdings must be filed within 10 business days.
• Companies incorporated earlier had a hard deadline of 24 May 2024, and CIPC announced a hard-stop from 1 April 2024 that blocks non-compliant entities from other filings.
For a silent partner or nominee arrangement, the consequences are direct. If you hold shares as a nominee shareholder for someone else, or someone holds shares on your behalf, the real owner must be identified and disclosed. A silent shareholder who influences decisions, receives the profits or funds the business will likely appear on the register, whatever the share certificate says. Banks apply the same test under FICA, and an undisclosed arrangement can lead to frozen accounts and failed onboarding. Our Starter Company Setup Bundle includes the UBO filing for new companies, and foreign owners can use our non-resident business setup service.
Dividends: dividends paid to individuals generally carry dividends withholding tax, and a company that pays out without proper records exposes itself and its directors to SARS queries.
Disposal of shares: selling or transferring shares can trigger capital gains tax. Transfers to family or partners at less than market value can attract donations tax or be treated as a deemed disposal.
Nominee arrangements: SARS looks at who benefits, not whose name is on the certificate. A nominee who receives income on behalf of another person, or a true owner who does not declare it, can face understatement penalties.
Company tax compliance: PAYE, VAT, provisional tax and annual returns remain the company's obligations (see our guide to UIF, PAYE and SDL registration), but the Tax Administration Act allows SARS to pursue persons who control or are responsible for a company's financial affairs where tax debts go unpaid. A director who claims not to have known is at a disadvantage if the documents were available.
Loan accounts and director benefits: loans between a company and its shareholders or directors, and unrecorded benefits, create tax and Companies Act exposure that quiet arrangements tend to leave undocumented.
• Your name is on the CIPC record but you cannot say what the company owes SARS.
• You have not seen financial statements in the last year.
• Someone else signs everything, and nobody has told you what is being signed.
• The company has stopped paying creditors or is behind on PAYE or VAT.
• Shares are held in one name while another person receives the dividends.
• The beneficial ownership filing was never done, or was done by someone else and never checked.
• You gave a personal guarantee and have lost track of it.
Any one of these means the exposure is live, not theoretical. If the company is behind, our Promise to Pay service offers a structured way back.
Maltech-Africa is a Pretoria-based compliance and business facilitation firm and a registered Trust and Company Service Provider (ID 65232). We help directors and shareholders establish where they stand and close the gaps. See all our services.
• Director exposure review: checking CIPC records, filing status, beneficial ownership submissions and tax compliance for companies you are attached to.
• Clean exit: drafting resignation notices, preparing CoR39 filings and building an evidence file that records the date and terms of your departure.
• Beneficial ownership compliance: preparing registers and CIPC filings, and untangling nominee and silent-partner structures.
• Governance repair: getting a dormant or neglected company back into compliance with CIPC and SARS.
• Family business and diaspora oversight: independent monitoring for owners and directors who are not on the ground, including Zim-SA business integration clients.
Every engagement starts with a Consultation & Assessment session, and the fee is credited toward the follow-on service if you proceed.
You don't have to wait for a consultation to start closing the gaps. The services most relevant to director and shareholder exposure are available directly from our online SA-Biz Shop:
• Company Director Update — R850 — appoint, resign or remove a director, update director contact details, plus Beneficial Ownership update and Foreigner Assurance verification. (SARS update and passport certification are charged separately.)
• CIPC Company Maintenance & Amendments — update director, shareholder and company details with CIPC.
• Beneficial Ownership Declarations (BOREG) — file or correct your beneficial ownership declarations.
• CIPC Annual Returns — keep the company in good standing and avoid deregistration.
• Company Name Change — official CIPC company name change and MOI amendment.
• Inactive Company Returns Submissions — catch up on annual returns for a dormant company.
• Re-Instate a Company — bring a deregistered company back into good standing with CIPC.
• Share Certificate & Register Package — properly issued share certificates and a maintained shareholder register.
Not sure which one you need? Start with a Consultation & Assessment and we’ll point you to the right service.
Or email info@maltechafrica.co.za
Disclaimer: this article is general information, not legal or tax advice. Legislation, regulations and CIPC practice change, so confirm the position for your situation with a qualified professional.