A legal battle between
The drama has involved vitriolic public attacks, numerous court cases and claims and counter claims from both parties. It is seldom that such extensive publicity is given to the dismissal of a chief executive of a listed company and to the inner conflicts in a company. These matters are usually resolved internally.
The publicity given to the Moyo saga has brought to the fore some important lessons that should be noted by company directors. The first is about what it says about directors disclosing conflicts of interest. The second is about how tricky it is to reinstate a director once they have been dismissed. In my research I found a few cases where courts have indeed reinstated executive directors. But the process is complicated because relationships have invariably turned sour.
The other useful lesson is what the
How the saga unfolded
In the middle of last year
A month later a judge ordered Moyo to be temporarily reinstated. But
Early this year a full bench of three judges held that Moyo had been properly dismissed.
The sorry saga isn't over yet. Moyo is insisting on his reinstatement and is appealing the judgment. He is also continuing with an application for contractual and reputational damages, a contempt of court application and an application to declare the entire
The lessons
The Moyo saga highlights the importance of a director's duty to disclose any conflicts of interests. The Companies Act sets out the rules relating to the disclosure of a director's personal financial interests in the company's business.
Directors stand in a fiduciary relationship to their company. This means that they must act with loyalty and in good faith. They must not put themselves in a position where their personal interests conflict with their duties to the company. If they have personal interests in a particular matter, they must disclose them to the board. And after disclosure they must not take part in board decisions relating to that matter.
Failure to comply could have serious consequences. For instance, it could render the entire transaction invalid.
Another lesson to be learned from the Moyo saga is that it's complicated to reinstate executive directors. I did find cases in my research where courts had indeed reinstated executive directors. But the close relationship between a board and an executive director makes it tricky.
The position of a chief executive of a company requires a special relationship of trust and confidence.
Because of the clear breakdown in trust and confidence, the court said that there was no realistic prospect of Moyo ever being reinstated.
In another case the
A court will not readily order the reinstatement of a director where the relationship with the board has broken down. If directors wish to be reinstated after leaving, they must demonstrate that their relationship with the company is still viable.
The dos and don'ts, even after leaving
The other reason
Negative publicity about a company can discredit it, and harm the directors' reputation. It can also affect the company's share price. The negative publicity suffered by
As fiduciaries, directors must act in good faith and in the best interests of the company.
As I found, even after a director leaves his company, he still owes certain fiduciary duties to the company, such as a duty of loyalty.
Directors should be careful not to breach their company's media policy - if there is one - even after they leave the company. They should exercise caution in the public statements they make about the company. Making negative statements can lead to the relationship breaking down even further, making their reinstatement impossible. It could also limit their chances of being appointed to other boards because of the fear that they may again harm the company's reputation.
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