Business Rescue Practice Regulatory Board

In terms of the draft Company Regulations, 2010, business rescue in terms of Chapter 6 of the Companies Act No. 71 of 2008 is regulated by a statutory regulator called the Rescue Practice Regulatory Board.

The establishment, composition, meetings, and functions of the Business Rescue Practice Regulatory Board are contained in Regulations 129 to 132 of the draft Company Regulations, 2010 and can be accessed at business rescue regulations.

The Business Rescue Practice Regulatory Board need to be formed and be operational before the implementation of the Companies Act No. 71 of 2008, which is expected to be in the 4^th quarter of 2010.

In Section 83 of the Companies Amendment Bill, 2010 (see Section 138: Qualifications of practitioners), it seems that the originally proposed regulator of business rescue practitioners is now replaced by the Companies and Intellectual Property Commission.

Establishment of the Business Rescue Practice Regulatory Board

Regulation 129: Establishment of Business Rescue Practice Regulatory Board deals with board establishment issues.

Composition of the Business Rescue Practice Regulatory Board

According to Regulation 130: Composition of Board, the board comprises of 10 members appointed by the minister for 3 years, and 8 by industry.

The minister appoints a Chairperson, Deputy Chairperson, two business rescue practitioners, two small/medium enterprise owners/managers, two company law experts and two commercial accounting experts.

Members designated by industry are two each by the Turnaround Management Association - Southern Africa and the The Law Society of South Africa, and one each by the Banking Association of South Africa, Business Unity South Africa; South Africa Institute of Chartered Accountants; and South Africa Institute of Professional Accountants.

The question can be asked why two stakeholder groups have been omitted. These are employees/trade unions, and the Institute of Directors (IoD).

Meetings of the Business Rescue Practice Regulatory Board

Regulation 131: Meetings of the Board deals with meeting procedures.

Functions of the Business Rescue Practice Regulatory Board

Regulation 132: Functions of the Business Rescue Practice Regulatory Board stipulates that the board must advise the minister on the qualifications for admission of persons to the practice of business rescue practitioner, handle the accreditation and registration process of business rescue practitioners, establishing standards and codes of good practice for the conduct of business rescue proceedings, and receive and resolve complaints concerning the conduct of business rescue practitioners.

The interim qualifications for business rescue practitioners are addressed in Regulation 133: Qualifications for person to be appointed as practitioner.

The Business Rescue Practice Regulatory Board must recommend to the Minister within 2 years of implementation of the Companies Act No. 71 of 2008 the minimum qualifications for accreditation of persons as business rescue practitioners.

The interim qualifications are controversial since it allows for persons without any turnaround experience to be business rescue practitioners, whilst excluding seasoned turnaround veterans if they don't have 10 years of turnaround experience.