LESSON 10:

Directors and board committees

1 Introduction
You have already been introduced to one of the organs of a company: the general meeting of
shareholders. The shareholders of a company exercise their rights and functions entrusted to them in
the Companies Act and the Memorandum of Incorporation by adopting resolutions at a meeting of
shareholders. We now introduce the other main organ of a company: the board of directors. We also
introduce you to one of the office bearers of the company, namely the director.

You will show your understanding of this lesson by answering the following key questions:
• What are the different types of directors recognised in the Companies Act and the King IV?
• What is the difference between a director and a manager?
• Who are ineligible to become a director?
• Who are disqualified from becoming directors?
• How are directors appointed and removed?
• What are the duties of directors under the Companies Act?
• What does the business judgment rule entail?

2 Meaning of the word ‘director’

Prescribed study material

Textbook: chapter 7 para 1
o Companies Act: sections 1, 66(4)(a)(i)–(iii), 66(4)(b) and 68

Important terms Meaning

Ex officio director A director who holds office as a director of a company because of him
or her holding another office or title or status.
An individual who becomes a director because of his/her holding
another position. Their directorship is tied to their position, and they do
not need a separate election or appointment process to assume the
role.
Alternate director A person appointed to the board of directors of a company in
substitution for a particular elected director of that company.
Executive director A director who participates in the day-to-day management functions
within a company. (Usually, such a director is also an employee of the
company.)
Independent director A director appointed to the board of directors from outside, who is
independent and unrelated to the company and its subsidiaries.
King IV King Report on Corporate Governance, 2009, or King III; the reports
on corporate governance principles for South African companies.
Non-executive director A director who does not participate in the day-to-day management of a
company. (These directors are usually not recognised as employees of
the company in terms of labour law principles.)
Ineligible The term for a person who is absolutely prohibited from becoming a
director of a company.
Disqualified The term for a person who is prohibited from being a director unless a
court gives him or her permission.
Board of directors The group of directors responsible for the management of the business
and affairs of a company.
Codification A systematic and comprehensive compilation of the entire body of law.
 Business judgment rule The principle that a director is not in breach of his or her statutory duties
if he or she took reasonably diligent steps to inform himself or herself of
the matter in question, had no personal interest, and had a rational basis
for believing that his or her decision was in the best interests of the
company.

A director is a member of the board of a company and includes any person occupying the position
of a director or alternate director. A person becomes a director only:
• when that person has given his or her written consent to serve as director
• after having been appointed or elected to hold office in accordance with the provisions of
section 66 of the Companies Act.

2.1 Types of director

Different types of director have been recognised by both King IV and the Companies Act.
Remember that the King Codes are soft-law principles. They are not enforceable, except for provisions
that have been included in legislation or have been made compulsory in another way, for
example by being included in the listing requirements of the JSE Ltd for companies that
wish to list on the Stock Exchange. They are guidelines to indicate the principles that a company
should adhere to for purposes of good governance.
The King IV report differentiates between the following three types of director:
• executive directors
• non-executive directors
• independent directors
However, the court in Howard v Herrigel, held that it is unhelpful or even misleading to classify
company directors as “executive” or “non-executive” for purposes of determining their duties to the
company or when any specific or affirmative action is required of them. Once a person accepts an
appointment as director, he or she is obliged to display the utmost good faith towards the company,
irrespective of whether such a person is an “executive” or “non-executive” director.
The Companies Act recognises the following types of director:

• an ex officio director
• a director appointed in terms of the Memorandum of Incorporation
• an alternate director
• an elected director
• a temporary director who is appointed to fill a vacancy
The following explanation may be helpful in deciding which type of director a person would qualify as:
• Shareholders must elect at least 50% of the directors of a profit company. These directors will be
classified as elected directors.
• A director can hold the office of director because she or he holds another office. For example,
the Memorandum of Incorporation may provide that any person who is appointed as legal adviser
of the company will also be a director of the company. In such a case, a person appointed as
legal adviser will automatically be a director – an ex officio director.
• A director can hold the office of director because she or he was appointed by name in the
Memorandum of Incorporation, or because she or he was appointed by someone who was given
the authority in the Memorandum of Incorporation to appoint a director – a Memorandum of
Incorporation-appointed director.
• A director can hold the office of director because she or he is an alternate director. Depending
on the Memorandum of Incorporation, these directors may either be appointed by the board or
elected by the shareholders, but at least 50% of the alternate directors must be elected by the
shareholders.
• A director can hold the office of director because she or he is a temporary director. Depending on
the Memorandum of Incorporation, the board of directors may appoint these directors.
3 Number of directors and consent

Prescribed study material

Textbook: chapter 7 para 1

The different types of company should each have a specified minimum number of directors in terms
of the Companies Act:
Type of company Number of directors
Private company 1
Personal liability company 1
Public company 3
Non-profit company 3

� NOTE: Where a company does not have the prescribed number of directors, any act performed by the
board of directors or the company will nevertheless remain valid.

A person becomes a director of a company when that person:

• has been appointed or elected as a director in terms of the Companies Act or Memorandum of
Incorporation, or
• holds an office, title, designation, or similar status entitling that person to be an ex officio director of
the company.
A person will only become a director once he or she has delivered written consent accepting such a
position.

4 Directors: The Companies Act and a company’s Memorandum of Incorporation

Prescribed study material

o Companies Act: sections 66(2)(a) and (b), 66(4)(a)(ii) and (iii), 66(10) and 66(11)

Certain provisions of the Companies Act, including some related to directors, may be changed by the
provisions of a company’s Memorandum of Incorporation, while others may not. (Also refer to the
discussion on alterable and unalterable provisions in the Memorandum of Incorporation.)
A public company may, in terms of its Memorandum of Incorporation, specify a higher number than
the minimum number of directors required in terms of the Companies Act. Section 66(4) of the
Companies Act provides that the Memorandum of Incorporation of a profit company must provide that
the shareholders will be entitled to elect at least 50% of any alternate directors. A company’s
Memorandum of Incorporation may provide for the payment of remuneration to its directors and for
the term of office.
5 Ineligible and disqualified persons

Prescribed study material

Textbook: chapter 7 paras 2–3
o Companies Act: sections 69(7)(a) to (c), 69(8)(a) and (b)(i)–(iv)
Prescribed case law
You only need to know the following case as discussed herein:

• Ex Parte Barron 1977 (3) SA 1099 (C)

Certain people are ineligible to be appointed as a director of a company, whilst certain people are
disqualified.
� NOTE: If a person is ineligible to be appointed as a director, this means that such a person is absolutely
prohibited from becoming a director, without any exceptions.

If a person is disqualified from being appointed as a director, this means that, apart from a person
who has been prohibited from being a director by a court of law, a person may still be appointed as a
director of a company with the permission of the court. Therefore, the other disqualifications are not
absolute. The court has a discretion on application to allow such disqualified persons to be appointed
as directors.
In Ex Parte Barron, the court held that it could be more lenient in a case where a private company is
affected than where a public company is affected. This is because a director of a public company
deals with funds in which a vast number of people are involved. Such a director should obviously be
under more scrutiny than a director of a private company.
Ineligible: (May never be) A person who is ineligible to be a director is absolutely prohibited from
becoming a director.
There are no exceptions to the prohibition. The following are absolutely prohibited from becoming a
director:
► a juristic person
► an unemancipated minor/a person under legal disability
► a person who is ineligible in terms of the provisions of the Memorandum of Incorporation
Disqualified: A disqualification from being a director is not absolute.
A court has a discretion to permit a disqualified person to accept appointment as a director.
The following persons are disqualified from being a director:
■ a declared delinquent
■ an unrehabilitated insolvent
■ a person prohibited from being director in terms of a public regulation
■ a person removed from an office of trust for misconduct/dishonesty
■ a person convicted of fraud, dishonesty, theft, or a related offence
■ a person disqualified in terms of the provisions of the Memorandum of Incorporation
 6 Application to declare a person delinquent or under probation

Prescribed study material

Textbook: chapter 7 paras 3.2 and 3.3
o Companies Act: section 162

The power given to a court to declare a director either delinquent or under probation has been
introduced into South African company law for the first time by the Companies Act. Note that this
provision can also be applied to members of close corporations.
Depending on the grounds on which a person has been declared to be a delinquent, he or she will
subsequently be either unconditionally disqualified from being a director for the rest of his or her life
or disqualified for a period of at least seven years and subject to any conditions that the court
considers appropriate. An order of probation, on the other hand, may not exceed a period of five years
and may be made subject to any conditions the court considers appropriate, such as a designated
remedial programme.
A director may be declared delinquent or under probation in terms of section 162 of the Companies
Act.
The Commission must keep a public registry of persons who are subject to an order of the court in
terms of this section.

6.1 Delinquency
Any one of the following may apply for a delinquency order:
• a company
• a shareholder
• a director
• a company secretary or prescribed officer
• a registered trade union/other employee representative
The Commission or Takeover Regulation Panel or a state organ may also in certain
circumstances apply to declare a director delinquent.
Grounds for the order:
The person
• served as a director while disqualified, or
• acted as a director while under probation in a manner that contravened the order of probation
• grossly abused the position of director
• took personal advantage of information/an opportunity
• intentionally/because of gross negligence inflicted harm on the company/subsidiary
• acted in a manner that amounts to gross negligence, willful misconduct or breach of
trust.
The court may, in a declaration of delinquency, order that the person:
• undergo remedial education
• carry out a designated programme of community service and/or
• pay compensation.

6.2 Probation
Applicants:
• a company
• a shareholder
• a director
• a company secretary or prescribed officer
• a registered trade union/other employee representative
The Commission or Takeover Regulation Panel may also in certain circumstances bring an
application.
A person may be placed under probation on the same grounds as for delinquency, and, in
addition, on the following grounds:
• While serving as a director, the person was present at a meeting and failed to vote against
a resolution despite the inability of the company to satisfy the solvency and liquidity tests.
• While serving as a director, the person acted in a manner materially inconsistent with the
duties of a director.
• While serving as a director, the person acted in a way that had a result that was oppressive or
unfairly prejudicial to a shareholder or another director, or that unfairly disregarded the interests
of a shareholder or another director.
• While serving as a director, the person acted in a way that had a result that the business of the
company, or a related person, was being or had been carried on or conducted in a manner that
was oppressive or unfairly prejudicial to a shareholder or another director, or that unfairly
disregarded the interests of a shareholder or another director.
• While serving as a director, the person exercised his or her powers in a manner that was
oppressive or unfairly prejudicial to a shareholder or another director, or that unfairly disregarded
the interests of a shareholder or another director.
• Within any period of ten years after the effective date, the person has been a director of more
than one company, or a managing member of more than one close corporation, irrespective of
whether concurrently, sequentially or at unrelated times; and during this time two or more of
those companies or close corporations each failed to fully pay all their creditors or meet all of
their obligations, except in terms of a business rescue plan.
The court may, in a declaration of probation, order that the person
• undergo remedial education
• carry out a designated programme of community service
• pay compensation
• be supervised by a mentor/be limited to serving as a director of a private company or company
of which he or she is the only shareholder.

6.3 Application to court to suspend or set aside a delinquency order

Note that this application may be made only in those cases where the declaration was not made
unconditional and for the lifetime of the person declared delinquent. Also note that the applicant first
must apply for a suspension of the order and then, after a further two years, may apply for it to be set
aside.

7 First directors of a company

Prescribed study material

Textbook: chapter 7 paras 1 and 2
o Companies Act: section 67

Upon incorporation of a new company, every incorporator is deemed to be a director of such company
until sufficient directors have been appointed to meet the required minimum number of directors.
 If, after its incorporation, the number of directors of that company is lower than the minimum number
of directors required for that company, the board of directors must call a meeting within 40 business
days after the date of incorporation for the purpose of electing sufficient directors to fill all vacancies.

8 Vacancies on the board

Prescribed study material

Textbook: chapter 7 para 4
o Companies Act: section 70
Prescribed case law
You only need to know the following case as discussed herein:
• Rosebank Television & Appliance Co (Pty) Ltd v Orbit Sales Corporation (Pty) Ltd
1969 (1) SA 300 (T)

A vacancy will arise on the board of a company if, for example, a director resigns, dies or is unable
to perform his or her duties as director.
In Rosebank Television & Appliance Co (Pty) Ltd v Orbit Sales Corporation (Pty) Ltd, the court
confirmed that a resignation becomes effective once it has been communicated to a company,
irrespective of whether it was only later accepted.
If a vacancy arises on the board, other than because of an ex officio director ceasing to hold that
office, it must be filled by a new appointment or by a new election as prescribed by the Companies
Act.

9 Removal of directors

Prescribed study material

Textbook: chapter 7, para 2
o Companies Act: section 71

A director can be removed by shareholders and, in some circumstances, by the board of directors.
Despite any provision contained in the company’s Memorandum of Incorporation or any agreement
between the company and the director, removal may be affected by an ordinary resolution. The
director must receive notice of the contemplated removal and be afforded the opportunity to make
representations before the resolution to remove him/her is put to the vote.
A director who has been removed from office may apply to a court to review the determination of the
board. This application must be brought within twenty (20) business days from the date of a decision
taken by the board. The court has a discretion whether to confirm the determination of the board.
A removal in terms of section 71 does not detract from any right that the director so removed to claim
compensation or damages resulting from the loss of his/her office.
 As not all directors are recognised as employees in terms of the Labour Relations Act 66 of 1995, the
procedure prescribed for the valid removal is a welcome addition. The court has found that a directorship
does not in itself render someone an employee. Non-executive employees are not recognised as employees
of the company, whereas executive directors usually are. You may wonder what the interaction would be
between the principles laid down in terms of the Labour Relations Act 66 of 1995. Section 210 of the
Companies Act provides that the labour law principles should still be applied if someone is recognised as an
employee.

10 Board committees

Prescribed study material

Textbook: chapter 7 para 5.2
o Companies Act: section 72 and 94

The board of directors may, except to the extent that the Memorandum of Incorporation provides
otherwise, appoint committees, and may delegate any of the authority of the board to such
committees. You should, however, note that a director will remain liable for the proper performance of
his or her duties despite the delegation of a duty to a committee.
The Minister of Trade and Industry may, in terms of the Companies Act, prescribe that a company, or
a certain category of company, must have a social and ethics committee. In terms of section 94(2),
every public or state-owned company must appoint an audit committee of at least three members.
The King IV report also proposes that board committees should be established to assist the directors
by giving detailed attention to important areas. Examples of such committees include an audit
committee and a remuneration committee.
In terms of the King IV report, a public listed company should at least have both an audit committee
and a remuneration committee. The establishment of a nomination committee is also recommended.
The respective committees make certain recommendations and assist the board of directors about a
specific area of expertise.

11 Board meetings

Prescribed study material

Textbook: chapter 7 para 5.1
o Companies Act: section 73

Board meetings may be called by directors who are authorised. The necessary notice must be given
to all directors before any meeting is held. A majority of the directors of the board must be present at
a meeting before a vote may be called. Every director has one vote per meeting, while the chairperson
has a deciding vote in the event of a tie. Minutes of all decisions as well as any resolution taken by
the board at a meeting must be kept.
12 Duties of directors

12.1 Sources of duties

Prescribed study material

Textbook: chapter 7 paras 6.1 and 6.2 (See, also, the scheme at the end of chapter 7)
o Companies Act: sections 66(1) and 75–78

There are four sources from which the duties of directors arise: their employment contracts with the
company (if any), the company’s constitution (Memorandum of Incorporation), the Companies Act,
and the common law. The rights and duties created by contract are determined by reference to the
specific contract. The duties imposed by the Companies Act, as well as by the common law, are now
discussed.
Apart from the specific duties and limitations placed on directors by the Companies Act of 1973, such
as the duty to disclose to the board any interest in contracts of the company, most of the duties of
directors were determined by common law. At common law, directors are subject to fiduciary duties
to exercise their powers bona fide (in good faith) and for the benefit of the company, and to the duty
to exercise their powers with care and skill.

12.2 Partially codified directors’ duties

The Companies Act of 2008 introduced a partially codified regime of directors’ duties, which includes
the common law fiduciary duties and the duty to perform their functions with reasonable care and skill.
The common law is not excluded by the statutory provisions and will continue to apply, except as far
as it is specifically amended by the Companies Act or is in conflict with its provisions.

� Note that, for purposes of these codified duties, “director” includes an alternate director and a member of a
committee of the board who is not a director.

Briefly summarised, the partly codified (statutory) duties of directors in the Companies Act entail
the following:
• For the first time, the Companies Act places a specific duty on the board of directors to
manage the company (section 66(1)).
• To disclose to the board any personal financial interest in matters of the company (section
75).
• Not to use the position of director or information obtained as director to gain an advantage for
himself/herself or another person, or to cause harm to the company or a subsidiary (section
76(2)(a)).
• To disclose to the board of directors any material information (section 76(2)(b)).
• To act in good faith and for a proper purpose (section 76(3)(a)).
• To act in the best interests of the company (section 76(3)(b)).
• To act with reasonable care, skill, and diligence (section 76(3)(c)).

The provisions in the Companies Act are subject to, and not in substitution of, any of the duties of
directors under the common law. The courts must still have regard to the common law, including past
case law, when interpreting the provisions of the Companies Act. Therefore, the prescribed case law
remains of great value and should be taken into account when studying the Companies Act. It should
also be kept in mind that the provisions in the Companies Act relating to directors’ duties are a
partial codification (adopting the general principles while allowing room for the development of the
common law) of company law. These statutory duties are elaborated on below with reference to some
of the common law standards (laid down in cases) that influenced them.
12.2.1 Directors must not abuse their position or information (section 76(2)) and must act in a certain
way when there is a personal financial interest (section 75)

Prescribed study material

Textbook: chapter 7 para 6.2
o Companies Act: sections 75 and 76(2)
Prescribed case law
You only need to know the following cases as discussed herein:
• Regal Hastings Ltd v Gulliver [1942] 1 All ER 378 (HL)
• Robinson v Randfontein Estate Gold Mining Co Ltd 1921 AD 168
• CyberScene Ltd and others v i-Kiosk Internet and Information (Pty) Ltd 2000 (3) SA
806 (C)
• Ghersi and others v Timber Developments (Pty) Ltd and others 2007 (4) SA 536 (SCA)
• Sibex Construction SA (Pty) Ltd v Injectaseal CC 1988 (2) SA 54 (T)

The ubuntu principle of transparency is imbued in the requirement that directors must disclose any
financial interest that they have in any transaction affecting the company that they serve is part of the
common law and statutory duties of directors.
Firstly, section 75 of the Companies Act prescribes how a director should act when his or her personal
financial interests conflict with those of the company. Two different situations are regulated in this
provision. If a director is the only director, but not the only shareholder of the company, he or she must
disclose any personal interest in an agreement or other matter of the company to the shareholders
and obtain their prior approval by an ordinary resolution before he or she enters into this agreement
or deals with the matter. In all other cases, disclosure must be made to the board of directors of any
personal financial interest of the director in a matter to be considered at a board meeting, and such
director may not be present or take part in the discussion. A director may also make an advance
general disclosure of his or her personal financial interests to the shareholders or board, as the case
may be.
Secondly, in terms of section 76(2)(a) of the Companies Act, a director may not abuse his or her
position as director, or information obtained while acting as a director, to gain an advantage for
himself/herself or for another person other than the company or a wholly owned subsidiary of the
company, or to knowingly cause harm to the company or a subsidiary of the company.
The third duty is the duty of a director to disclose any information that comes to his or her attention,
subject to stated exceptions.
In Regal Hastings Ltd v Gulliver, the court held that directors should avoid placing themselves in a
position where their duty to the company conflicts with their own interests. In this case, a director who
had since resigned was held liable for personal profits made in the course of his performance of his
duties in the company. The court held that it makes no difference if the profit is made in good faith with
full disclosure and whether the company suffered any loss as a result of the director’s actions. This
was also the stance of the court in the case of Robinson v Randfontein Estate Gold Mining Co Ltd,
where the court held as follows:
Where one man stands to another in a position of confidence involving a duty to protect the interest
of that other, he is not allowed to make a secret profit at the other’s expense or place himself in a
position where his personal interest conflicts with his duty.
Also note the case of CyberScene Ltd and others v i-Kiosk Internet and Information (Pty) Ltd in which
it was confirmed that the duty applies to a non-executive director too. There are, however, limits to
the duties that a director owes to his or her company. The court held, in Ghersi and others v Timber
Developments (Pty) Ltd and others, that the facts of each case are important in determining whether
a person has acted in breach of the fiduciary duty owed to his or her company.

12.2.2 Acting in good faith and with a certain degree of care, skill, and diligence

Prescribed study material

Textbook: chapter 7 para 6.2.4.1
Prescribed case law
You only need to know the following case as discussed herein:
• Philotex (Pty) Ltd v Snyman and others; Braitex (Pty) Ltd and others v Snyman and
others 1998 (2) SA 138 (SCA)

The duties to act in good faith and for a proper purpose, and in the best interests of the company, are
equally important. Whereas the duty to act in the best interests of the company speaks for itself, the
duty to act for a proper purpose perhaps needs explanation. This is one of the fiduciary duties
recognised in terms of our common law as well and requires that directors should use their powers for
the real or true purpose for which these powers were given. One example of a breach of this duty that
has often occurred in practice is where boards issued shares to dilute the voting rights of other
shareholders or obtain more votes for themselves in order to ensure their continued control over the
company, instead of using this power for its real purpose: to obtain more capital for the company.
Regarding the duty to act with care and skill, the court, in Philotex (Pty) Ltd v Snyman and others;
Braitex (Pty) Ltd and others v Snyman and others, held that, although the test is an objective one, it
contains subjective elements in that the general knowledge, skill and experience of the particular
director in question are taken into account. A director who is a chartered accountant, therefore, needs
to be more skillful when it comes to the company’s financial affairs, than a director who is an electrician
by trade.

13 The business judgment rule

Prescribed study material

Textbook: chapter 7 para 6.2.4.2
o Companies Act: section 76(4)
Prescribed case law
You only need to know the following case as discussed herein:
• Fisheries Development Corporation of SA v Jorgenson 1980 (4) SA 156 (W)

The Companies Act introduced what is called the business judgment rule. Section 76(4) states that
a director will be regarded as having acted in the best interests of the company and with the required
degree of care, skill, and diligence if the director:
• took reasonable steps to become informed about the matter,
• had no material personal financial interest in the subject matter of the decision or knew of
anybody else having a financial interest in the matter, or disclosed his/her interests, and
• made or supported a decision in the belief that it was in the best interests of the company.
A director is also entitled to rely on information provided by certain persons specified in the Companies
 Act.
In any proceedings against a director, other than for willful misconduct or willful breach of trust, a court
may relieve the director of liability if it appears to the court that the director acted honestly and
reasonably, or it would be fair to excuse the director.
A director will also escape liability where he or she had a rational basis for believing, and actually
believed, that the decision was in the best interests of the company.

14 Liability of directors and prescribed officers

Prescribed study material

Textbook: chapter 7 para 6.3
o Companies Act: section 77

Directors may be held liable for certain losses or harm sustained by the company due to their actions.
These actions may include acting without the necessary authority, fraudulently or in contravention of
the provisions of the Companies Act or the company’s Memorandum of Incorporation. The first item
in this list refers to the liability of a director for breaching the newly codified common law duties
described above. The remaining influence of the common law is clear when considering this liability,
because the Companies Act states that, for a breach of the first five duties in the list, a director will be
held liable in accordance with the common law principles relating to breach of a fiduciary duty, while,
for a breach of the duty of care, skill and diligence, liability will be on the basis of the common law
principles of delict.
A director will be jointly and severally liable with any other person who is, or may be, held liable for
the same act. The court may, however, relieve a director of liability, other than for willful misconduct
or willful breach of trust, if it appears to the court that the director acted honestly and reasonably.

15 Indemnification and director’s insurance

Prescribed study material

Textbook: chapter 7 para 6.3.5
o Companies Act: section 78

A company may not indemnify a director in respect of liability arising out of certain circumstances,
such as a breach of his or her fiduciary duties. In certain circumstances, a company may not indemnify
a director. Indemnity insurance may also not be taken out for such circumstances.
A company is, however, entitled to take out indemnity insurance to protect a director against any
liability or expenses for which the company is permitted to indemnify a director. The company may
also take out insurance to insure itself against expenses that the company is permitted to advance to
a director to defend litigation.
The Companies Act makes it impossible to indemnify directors for personal liability arising out of
negligence, an omission, failure to carry out their duties, or a breach of trust. The Memorandum of
Incorporation may also not conflict with any statutory provisions.
➔ Reflection

The ownership of a company is vested in the general meeting of shareholders/members, and control
of the company is vested in the board of directors. Do you think it is a sound principle to separate
ownership and control, or should the members of the company also manage it? It is here that the
principle of the separate legal personality of the company comes into play again. It is the company
that owns its assets and that is responsible for its liabilities, not the shareholders. The shareholders
only hold a right to share in those assets should the company be wound up.