CIPC Guidelines: Why Director Duties Are a Serious Matter
The CIPC has made it clear that directors must take their responsibilities seriously. Its first guideline for 2025 was issued to remind directors of the consequences of failing to comply with their duties under the Companies Act.
CIPC and the Duties of Company Directors
Directors must act in good faith, for proper purpose, and always in the best interest of the company. They are expected to exercise care, skill and diligence while avoiding conflicts of interest. Sections 75 to 215 of the Companies Act outline critical responsibilities, covering conduct, liability, insurance, false statements and reckless behaviour. The CIPC stresses that understanding these duties is essential for sound governance.
Recent Amendments Increase Accountability
Amendments to the Companies Act have raised the bar for directors. Stricter fiduciary duties, greater transparency in appointments, and new disqualification criteria mean directors face higher levels of scrutiny. The CIPC has aligned these changes with global governance standards, ensuring that accountability remains front and centre.
Civil Liability for Non-Compliance
Directors may be held personally liable for losses caused by reckless trading, unauthorised actions, misleading financial statements or fraudulent conduct. Courts have already declared directors delinquent in high-profile cases, with bans imposed and compensation ordered. The CIPC highlights these rulings as warnings for all company leaders.
Criminal Liability Adds Further Risk
Breaches of confidentiality, falsification of records, reckless trading and providing false information can lead to fines or imprisonment of up to 10 years. The CIPC reinforces that these penalties are not theoretical-they are actively enforced when misconduct occurs.
Insurance Won’t Always Protect You
Directors and Officers Liability insurance has strict exclusions, including dishonesty, fraud and wilful misconduct. The CIPC warns that reliance on insurance without understanding indemnification rules under Section 78 of the Act can leave directors dangerously exposed.
