Outa challenges delinquent director law
The Organisation Undoing Tax Abuse (Outa) is heading to court to ensure that state-owned enterprises (SOE) directors can also be declared delinquent. The Public Finance Management Act protects most SOE boards, CEOs and CFOs from being declared delinquent directors.
The Citizen reports that the civil rights organisation wants that changed. ‘We want the Public Finance Management Act (PFMA) changed so that malfeasant accounting authorities at SOEs may be declared delinquent directors, even if the SOE is not a registered company,’ said Outa Advocate Stephanie Fick.
The Citizen reports that he said the law currently allows delinquent director actions against directors of registered companies, which excludes many SOEs: ‘Changing the law will enable civil society to take such actions to hold individuals who mismanage and abuse SOEs to account.’
Fick says the Companies Act, which enables delinquent-director actions, applies only to registered companies.
The SOEs which are not registered as companies fall under the PFMA, where a ‘lacuna’ exists in law which prevents their accounting authorities from being declared delinquent.
The Citizen notes that Outa’s action was filed on 20 August in the High Court in Pretoria.
Fick made the founding affidavit.
The respondents are the Minister of Finance (responsible for the administration of the PFMA), the Minister of Trade, Industry & Competition (responsible for the administration of the Companies Act), the Department of Trade, Industry & Competition and the Companies & Intellectual Property Commission.
In May 2020, Outa won a High Court order which declared former SAA chair Dudu Myeni a delinquent director for life, which was confirmed by the SCA in April 2021.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
