Legal Templates
Director Settlement Agreement

Director Settlement Agreement for South Africa

Director Settlement Agreement Template for South Africa

A comprehensive legal agreement governed by South African law that formalizes the terms and conditions of a director's departure from a company's board and/or executive position. This document addresses various aspects including financial settlements, ongoing obligations, confidentiality requirements, and mutual releases, while ensuring compliance with the Companies Act 71 of 2008, Labour Relations Act, and other relevant South African legislation. It serves as a risk management tool by clearly defining the separation terms and protecting both parties' interests through detailed provisions for post-termination obligations and dispute resolution.

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What is a Director Settlement Agreement?

A Director Settlement Agreement is a crucial document used when a director exits a company in South Africa, whether through mutual agreement, resignation, or negotiated departure. This agreement is essential for managing legal risks and ensuring a smooth transition in leadership while protecting both the company's and director's interests. It must comply with South African corporate law, particularly the Companies Act 71 of 2008, and often intersects with employment law when the director also holds an executive position. The document typically includes comprehensive provisions for financial settlements, confidentiality obligations, non-compete clauses, and the treatment of share options or other benefits. It's particularly important for listed companies that must comply with JSE requirements and for organizations where director changes might have significant stakeholder impact.

What sections should be included in a Director Settlement Agreement?

1. Parties: Identification of the company and the director entering into the agreement

2. Background: Context of the director's appointment, current position, and circumstances leading to the settlement

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Effective Date and Termination Date: Specifies when the agreement takes effect and the official termination date of directorship

5. Settlement Terms: Core financial and non-financial terms of the settlement

6. Release and Waiver: Mutual release of claims and waiver of rights

7. Confidentiality: Obligations regarding confidential information and trade secrets

8. Company Property: Requirements for return of company property and documents

9. Post-Termination Obligations: Ongoing duties and restrictions after termination

10. Tax Indemnity: Provisions regarding tax treatment of settlement payments

11. General Provisions: Standard legal provisions including governing law, entire agreement, and amendments

What sections are optional to include in a Director Settlement Agreement?

1. Resignation from Subsidiaries: Required if director holds positions in group companies

2. Share Options and Securities: Needed if director holds company shares or share options

3. Non-Competition and Non-Solicitation: Include if restraint of trade is required

4. Legal Fees: Include if company will contribute to director's legal costs

5. References and Announcements: Include for listed companies or where public statements are needed

6. Continued Benefits: Include if certain benefits will continue post-termination

7. Transition Assistance: Include if director will assist with handover period

8. Dispute Resolution: Optional detailed dispute resolution procedures

What schedules should be included in a Director Settlement Agreement?

1. Schedule 1: Settlement Payment Details: Detailed breakdown of all financial settlements and payment terms

2. Schedule 2: Company Property Register: List of all company property to be returned

3. Schedule 3: Share Option Details: Details of share options and their treatment

4. Schedule 4: Resignation Letters: Pro forma resignation letters for all relevant positions

5. Schedule 5: Public Announcement: Draft of any public announcements regarding the departure

6. Appendix A: Statutory Declarations: Required statutory forms and declarations

7. Appendix B: Handover Plan: Detailed plan for transition of responsibilities

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Jurisdiction

South Africa

Publisher

Genie AI

Document Type

Settlement Agreement

Sector

Employment

Cost

Free to use
Relevant legal definitions
Agreement
Applicable Laws
Board
Company
Companies Act
Confidential Information
Director
Effective Date
Group
Group Company
Holding Company
Intellectual Property Rights
JSE
King IV Code
Material Adverse Effect
Parties
Resignation Date
Settlement Payment
Share Options
Share Scheme
Subsidiaries
Termination Date
Trade Secrets
Restraint Period
Restraint Area
Company Property
Surviving Provisions
Claims
Losses
Material Breach
Notice
Personal Information
Professional Advisers
Related Persons
Remuneration
Settlement Sum
Signature Date
Tax
VAT
Business Day
Competing Business
Dispute
Encumbrance
Financial Year
Good Faith
Governing Law
Rand
Representatives
Transaction Documents
Clauses
Definitions
Interpretation
Appointment Termination
Resignation
Settlement Payments
Tax Provisions
Confidentiality
Non-Disclosure
Non-Competition
Non-Solicitation
Share Options
Company Property
Intellectual Property
Data Protection
Representations and Warranties
Release and Waiver
Public Announcements
References
Legal Compliance
Board Resignation
Subsidiary Resignations
Continuing Obligations
Handover
Third Party Rights
Legal Costs
Dispute Resolution
Governing Law
Jurisdiction
Severability
Whole Agreement
Variation
Assignment
Notices
Force Majeure
Good Faith
Counterparts
Amendment
Waiver
Indemnification
Further Assurance
Relevant Industries

Financial Services

Mining and Resources

Manufacturing

Retail

Technology

Healthcare

Professional Services

Construction

Agriculture

Telecommunications

Energy

Transport and Logistics

Education

Real Estate

Media and Entertainment

Relevant Teams

Legal

Human Resources

Company Secretariat

Board of Directors

Executive Committee

Corporate Governance

Compliance

Risk Management

Finance

Corporate Communications

Relevant Roles

Chief Executive Officer

Executive Director

Non-Executive Director

Managing Director

Chief Financial Officer

Board Chairman

Company Secretary

Chief Operating Officer

Executive Committee Member

Divisional Director

Regional Director

Independent Director

Alternate Director

Industries
Companies Act 71 of 2008: Primary legislation governing company operations, director duties, responsibilities, and liabilities in South Africa. Key for director removal procedures and fiduciary duties.
Labour Relations Act 66 of 1995: Governs employment relationships and termination procedures, relevant if the director also has an employment relationship with the company.
Income Tax Act 58 of 1962: Relevant for tax implications of settlement payments and benefits provided as part of the agreement.
King IV Code on Corporate Governance: Though not legislation, provides important guidelines on corporate governance and director conduct that should be considered in settlement terms.
Protection of Personal Information Act 4 of 2013 (POPIA): Governs the handling of personal information in the agreement and any confidentiality provisions.
JSE Listing Requirements: If the company is listed, these requirements must be considered regarding director changes and public announcements.
Broad-Based Black Economic Empowerment Act 53 of 2003: May be relevant if the settlement affects the company's B-BBEE status or involves B-BBEE shareholding arrangements.
Financial Advisory and Intermediary Services Act 37 of 2002: Relevant if the settlement involves financial services or products, particularly in financial sector companies.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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