Question

In their Annual Integrated Report, Capitec makes the following statement: Our directors have a fiduciary duty to act with care and skill, and to exercise their powers and perform their functions as directors in the best interest of the group. (2021, pg. 59)

3.1 Discuss the concept of fiduciary duties, indicate where it originates and what it implies for Directors (10)

3.2 Explain the remedies that are available to shareholders in the event of a director not fulfilling his or her fiduciary duty. (10)

Answer 1

Fiduciary duties are obligations placed on directors to act in the best interest of the group or organization. Shareholders have remedies available if a director fails in their fiduciary duty.

Step-by-step explanation:

3.1 Discuss the concept of fiduciary duties

Fiduciary duties are obligations placed on directors to act in the best interest of the group or organization they serve. These duties require directors to exercise care, skill, and diligence in making decisions and performing their functions. The concept of fiduciary duties originates from the legal principle that directors have a relationship of trust and confidence with the shareholders.

3.2 Explain the remedies available to shareholders in the event of a director not fulfilling their fiduciary duty

If a director fails to fulfill their fiduciary duty, shareholders have several remedies available to them. These may include:

1. Filing a lawsuit against the director for breach of fiduciary duty, seeking damages or other legal remedies.
2. Requesting an injunction to prevent the director from taking actions that are not in the best interest of the group.
3. Voting to remove the director from their position through a shareholders' meeting.