Vusi Mahlangu | Managing Director | Tamela | mail me |
Following several high-profile governance breakdowns, most notably the collapse of Daybreak, South Africa continues to grapple with the aftershocks. These failures follow persistent cases of state capture. As a result, company directors across sectors now face heightened scrutiny.
Boardroom accountability sits at the forefront of national debates, making the interrogation of fiduciary duty more urgent than ever. This renewed attention places a particular emphasis on the duty of care.
‘Duty of care’ is not a box-ticking exercise
A director exists because a company, as a legal entity, cannot act on its own. A board must therefore represent it. Given this, non-executive directors and independent directors carry a fiduciary duty to act in the company’s best interests.
Some boards treat the duty of care as a compliance exercise. They read reports, attend meetings and sign decisions. Then they consider the job done. However, this approach is insufficient. The duty of care demands informed and reasonable decisions. It also demands interrogating fiduciary duty beyond surface-level checks.
It is not enough to be present in meetings. Directors must interrogate assumptions, ask questions and demand clarity whenever uncertainty arises. The Daybreak collapse underscores this reality. Passive oversight is no oversight. Consequently, directors must commit to interrogating fiduciary duty with far greater intentionality.
Duty of care versus duty of loyalty
The duty of care deals with how decisions are made. By contrast, the duty of loyalty deals with why they are made. Directors must therefore prioritise the company’s interests above their own. This obligation includes avoiding conflicts of interest and steering clear of personal gain.
The Daybreak case illustrates this clearly. Accusations of conflicts and undue influence show how even the appearance of disloyalty can damage reputations and businesses.
Loyalty requires more than avoiding unethical actions. It also requires honesty and transparency about any conflicts. This expectation reinforces the importance of interrogating fiduciary duty when motives or relationships are unclear.
Avoiding legal and reputational pitfalls
Boards must guard against groupthink. Although consensus can help in some decisions, it should never replace critical thinking. A strong board culture encourages open debate and diverse perspectives.
Directors also have a responsibility to stay well-informed. This includes engaging with financial statements, operational updates and risk assessments. Most importantly, directors must understand the business they oversee.
A director who lacks familiarity with an organisation’s core operations or industry context risks poor decision-making, even when intentions are good.
So, what does fiduciary duty mean?
Fiduciary duty means treating the company’s affairs and people as if they were your own. Directors must protect more than shareholder value. They must safeguard the entire organisation. This responsibility requires good faith and a complete absence of self-interest.
Fiduciary duty also requires accountability, even when it feels uncomfortable. Every boardroom decision carries real-world consequences. Jobs can disappear. Investments can shrink. Public trust can erode. For this reason, interrogating fiduciary duty becomes a behavioural standard, not a theoretical concept.
Fiduciary duty demands vigilance, integrity and backbone. Today’s governance climate remains turbulent. Disastrous exposés and poorly judged appointments continue to dominate headlines. In this environment, the standards for directors cannot slip.
As regulators, shareholders, and the public call for more from corporate leadership, directors must move beyond superficial compliance. They must embrace a deeper and more honourable commitment. By doing so, they protect entire companies and strengthen South Africa’s overall risk profile.
