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Thread: Action for unauthorized distribution of company docs by director

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    Action for unauthorized distribution of company docs by director

    Hi,
    One of the directors of our company has forwarded communications and company financials to an external person with no relevance to the company.
    Is there any form of action that can be taken against this director for their actions?

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    Silver Member Greig Whitton's Avatar
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    Impossible to say without understanding the director's reasons for forwarding the documentation or the identity and role of the external party. Much would also depend on the company's Memorandum of Incorporation, shareholders agreement, internal policies, etc.

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

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    Silver Member PlatinumWealth.co.za's Avatar
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    Quote Originally Posted by Greig Whitton View Post
    Impossible to say without understanding the director's reasons for forwarding the documentation or the identity and role of the external party. Much would also depend on the company's Memorandum of Incorporation, shareholders agreement, internal policies, etc.
    Pretty much this, it will depend from company to company.

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    Is this director also a shareholder?

    In terms of the Companies Act, any person who holds any shares in the Company is entitled to receive the annual financial statements of the Company without any demand. Public Companies publish their annual financial statements anyway.

    In terms of the PAIA Act, individuals have a right of access to certain records of any private body. A private body is any Company, Close Corporation, Trust, Partnership or Individual who trades on a commercial basis.

    The MOI, shareholders agreement and so on cannot be contrary to the various Acts that govern access to information. You mention that the person is a director and I would suggest that if the requester availed himself of the various access methods available in law then he would get that information anyway and the director was most likely within his rights to release it, more so if he is a shareholder.

    "Communications" is another matter entirely. Much depends on nature, details and motive. It's impossible to say given the absence of detail.

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    Quote Originally Posted by BJH View Post
    Hi,
    One of the directors of our company has forwarded communications and company financials to an external person with no relevance to the company.
    Is there any form of action that can be taken against this director for their actions?
    If he is a Director what are you ?

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    Hi,
    Thanks for the replies.
    The company is a private company and basically only a property holding company as it does not trade.
    There are 3 Directors, myself and 2 others, all 3 Directors are also shareholders, of which I am the majority shareholder.
    The external person that received the info etc. Is not a shareholder nor do they have any interest in the company. It turns out that the person is the private doctor of the director that sent the info.
    Pure neglegance of the director that sent the info.
    The communications that was sent was regarding the sale of a property and the distribution of funds between the directors/shareholders.

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    That is not good. That is negligence and pure incompetency !

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