It is trite that a company is a separate juristic entity from its directors and shareholders, with its own rights and legal duties. The debts of a company cannot be regarded as debts of its shareholders or directors. However, if it comes to light that a natural person such as a director or shareholder has misused the company’s separate legal personality to engage in a wrongful act, our courts may, in exceptional circumstances, hold such a person personally liable. This is called ‘piercing the corporate veil’.


Section 20(9) of the Companies Act provides our courts with a statutory discretion to pierce the corporate veil. It states as follows:

“If, on application by an interested person or in any proceedings in which a company is involved, a court finds that the incorporation of the company, any use of the company, or any act by or on behalf of the company, constitutes an unconscionable abuse of the juristic personality of the company as a separate entity, the court may –

(a)        declare that the company is to be deemed not to be a juristic person in respect of any right, obligation or liability of the company or of a shareholder of the company or, in the case of a non-profit company, a member of the company, or of another person specified in the declaration; and

(b)        make any further order the court considers appropriate to give effect to a declaration contemplated in paragraph (a)”.


The recent decision of Kolisang v Alegrand General Dealers and Auctioneers and Another (31301 /2020) [2022] ZAGPJHC 431 demonstrates exactly how a court may apply section 20(9) to ensure that a wrongdoer does not hide behind a company in order to avoid being brought to book.

In 2016 Ms Kolisang attended an auction arranged by Alegrand. Here, she purchased a vehicle described as a 2012 Golf GTI for R177 560. It later transpired that the vehicle was in fact a 2010 model. Ms Kolisang subsequently returned the vehicle and requested a refund from Alegrand. Although Alegrand confirmed the cancellation of the sale agreement, it failed to refund Ms Kolisang.

After obtaining default judgment against Alegrand, Ms Kolisang was unable to execute the judgment as the sole director of the company, Mr Jassat, resigned from this position and sold the company. The company had ceased trading and was awaiting deregistration. In these circumstances, the relief sought by Ms Kolisang was for the Court to deem Mr Jassat personally liable for the debts of the company.

The Court first had to determine whether Mr Jassat had misrepresented to Ms Kolisang that the vehicle was a newer model, and that this misrepresentation induced her to make the purchase. Secondly, it had to determine whether the misrepresentation amounted to ‘unconscionable’ conduct as conceived of in section 20(9).

The Court highlighted section 76(3) of the Companies Act, which lays out the fiduciary obligations of every director. It states as follows:


“… a director of a company, when acting in that capacity, must exercise the powers and perform the functions of director-

(a)        in good faith and for a proper purpose;  

(b)        in the best interests of the company; and

(c)        with the degree of care, skill and diligence that may reasonably be expected of a person-

(i)         carrying out the same functions in relation to the company as those carried out by that director; and

(ii)        having the general knowledge, skill and experience of that director”


It was held that Mr Jassat breached his fiduciary obligations by deliberately misrepresenting the specifications of the vehicle in order to induce Ms Kolisang to purchase it. His conduct was deemed fraudulent, dishonest and improper. The Court stated that in addition to committing fraud, Mr Jassat disregarded his duty to act in the company’s best interests, stating:

“Additionally, as the director and owner, he acted with cavalier disregard for the interests of the company … Such conduct is manifestly not in the best interest of the company and may be considered reckless and dishonest. This conduct was indubitably with callous disregard for its effect on the company as a separate legal entity and at a time when he describes its financial situation as being parlous. Therefore, whilst a director is entitled to resign at any time, his resignation cannot be used as a means of evading his fiduciary duties as a director.”   

The Court was therefore satisfied that Mr Jassat’s conduct constitutes an unconscionable abuse of the company’s juristic personality as conceived of in section 20(9). The corporate veil was subsequently pierced and Mr Jassat was held personally liable for the full amount.

It is important to note that the Court rejected Mr Jassat’s contention that Ms Kolisang was obliged to exhaust her remedies against the company before proceeding against him personally. The Court stressed that the remedy provided by section 20(9) may be granted at any time as long as the facts justify such relief.

Based on the approach taken in the above matter, section 20(9) proves to be a highly effective and attainable measure by anyone seeking to nip the misuse of a company’s separate legal personality in the bud and hold directors personally liable for company debts.

Contact us today for more information on directors’ rights and duties.

About the author

We use cookies to analyse website usage and other technical information to improve the functionality of our website   View more
Cookies settings
Privacy & Cookie policy
Privacy & Cookies policy
Cookie name Active
This policy informs you how we will use your personal information, by using our services and/or website you consent to our use of your personal information for the purposes described herein.
    • Personal Information means information relating to an identifiable, living, natural person, and where it is applicable, an identifiable, existing juristic person, including, but not limited to, name and surname; identification number; physical address; contact information such as an email address and telephone number.
    • Data Subject means the person to whom personal information relates.
    • Responsible Party means a public or private body or any other person which, alone or in conjunction with others, determines the purpose of and means for processing personal information.
    • Identification Information means information that can be used to identify the data subject.
    • Compliance Information means information that is needed by Dunsters Attorneys for us to be compliant with relevant laws including the Financial Intelligence Centre Act “FICA” and regulatory standards and government orders such as Anti-Money Laundering (AML), Know-Your-Client (KYC) and Counter-Terrorist Financing (CTF).
    • Communication Information includes all correspondence such as emails and messages.
    • Financial information means any information relating to payment of invoices, including but not limited to banking information and account details
  • We may collect website usage and other technical information such as details of your visits to our website through cookies and other tracking technologies. Cookies are small data files stored by your computer to help improve functionality or tailor information to provide visitors with more relevant pages.
  • The information we collect may include information provided to us through your initial correspondence, possibly including:
    • Name and Surname
    • Email address
    • Contact numbers; and/or
  • This may also include information that we may have requested, and you subsequently provided, including, but not limited to:
    • Compliance Information
    • Identification Information
    • Communication Information
    • Financial Information
    • Other Personal Information
  • Reasons for collection of your personal information will be explained to you when we collect/request the information. We may request certain personal information to comply with global industry regulatory standards, local regulatory standards or government orders.
  • You, the data subject, consent to our use of your information in line with this privacy policy and/or any terms of engagement you may sign with us. If you wish to revoke your consent, please email .
  • We acquire information from you directly, save where accessible from publicly available sources.
  • Information may be collected through various platforms, including:
    • Our onboarding process with you
    • Email engagement
    • Telephonic engagement
    • In-person engagement
    • Cookies
    • Your personal information may be collected and saved on our system for the following purposes:
      • To enable us to provide legal services.
      • To send news, updates and marketing information.
      • To review job applications.
      • To comply with legal requirements
    • Your personal information will not be used for the following purposes:
      • We will never use your personal information for direct marketing purposes without your consent (you may opt-out of our newsletter at any time)
      • We will never disclose your personal information to another third party without permission from yourself, unless it is required for fulfilment of our legal services or as mandated by law.
  • Right of the data subject under the POPI Act include, but are not limited to:
    • Having access to their recorded personal information
    • Requesting correction or amendment to their personal information and to have information corrected or amended
    • Requesting deletion or destruction of personal information from the responsible party’s system
    • Objecting to the processing of personal information
    • Submitting a complaint to the Regulator regarding the alleged interference with the protection of the personal information of any data subject or submitting a complaint to the Regulator (
    • Instituting civil proceedings regarding the alleged interference with the protection of their personal information.
  • We will retain your information for the period required by law.
  • Where we retain your contact information for any period other than may be prescribed by law, we retain this information to keep you updated of our various offerings and news. By not unsubscribing from newsletter, you consent to us retaining your personal information on our records indefinitely, for the purposes explained above, including, to keep you informed about news and updates pertaining to Dunsters Attorneys Inc.
  • We take reasonable technical and organisational measures to secure the integrity of your personal information and use accepted technological standards to prevent unauthorised access to or disclosure of your personal information, and protect your personal information from misuse, loss, alteration and destruction.
  • The measures that are taken in order to protect your personal information include:
    • Physical measures: access to physical copies of your information is controlled using strict protocol.
    • Electronic measures: firewalls and password protection
  • While we will take all reasonable steps to ensure the security of your data and personal information according to industry standards, it is not possible to guarantee the complete security of all information provided at all times.
  • We will notify you as soon as reasonably practicable of any breach of security, loss of or damage to your personal information.
  • Data subjects are responsible for taking reasonable precautions to safeguard their personal information.
  • Although we endeavour to ensure your information is as correct as possible, you are responsible for notifying us of any changes to your data or personal information in respect of the services provided and/or your account with us.
  • We will not be held liable for losses of any nature which are due to incorrect data or personal information provided by users in respect of the service provided.
  • We will not be held liable for any loss or damage arising from a security breach or disclosure of your personal information or data, to the maximum extent permitted by law.
  • We shall not be liable for any damage or interruptions caused by any computer viruses or other malicious code that may affect your computer or other equipment, or any phishing, spoofing or other attack.
  • If you suspect that your personal information has been compromised, or that there has been unauthorised use of your email address by any person, or any other violations to the security of the website, please contact us.
Save settings
Cookies settings