If members of a Company transact on behalf of a Company, the Company will be deemed to close the transaction and not its respective members. Due to Company's separate legal personality, the liability of a Company's members is therefore limited.
Although a Company exists separately from its members, each Director, in terms of the Companies Act, 2008 (the “Act”), acting on behalf of the Company, has a fiduciary duty to exercise his / her powers in good faith and for a proper purpose, in the best interests of the Company.
Directors of a company can therefore be held personally liable if it fails to fulfil its fiduciary duties, as mentioned above.
The legislature went further and indicated that the legal personality of a company could be discarded if there was an abuse of corporate separateness.
The South African courts uses the term "the piercing of the corporate veil" in the sense that a court must determine, on a balance of probabilities, whether a Director is hiding behind the legal personality of a Company and, if so, as contemplated in Section 20 (9) of the Act, the separate legal personality will be disposed of and the Director will be held personally liable for claims from creditors.