CRS Business Rescue
In-depth analysis of the business rescue provisions contained in Chapter 6 of the Companies Act No. 71 of 2008 and the Companies Amendment Act No. 3 of 2011
<h1> Sections 35A and 35B of the Insolvency Act No. 24 of 1935</h1>

Download the complete Insolvency Act in the column on the right.

35A. Transactions on an exchange

(1) In this section—

exchange” means an exchange as defined in section 1 and licensed under section 10 of the Securities Services Act, 2004, and for the purposes of this section includes a central securities depository as defined in section 1 of that Act and which is also licensed as a clearing house under section 66 of that Act, or a clearing house as defined in section 1 of that Act;

exchange rules” means the exchange rules and depository rules as defined in section 1 of the Securities Services Act, 2004;

market participant” means an authorised user, a participant, a client or a settling party as defined in section 1 of the Securities Services Act, 2004, or any other party to a transaction;

rules of an exchange” means rules made pursuant to either section 12 of the Stock Exchanges Control Act, 1985, or section 17 of the Financial Markets Control Act, 1989;

transaction” means any transaction to which the rules of an exchange apply.

(2) If upon the sequestration of the estate of a market participant the obligations of such market participant in respect of any transaction entered into prior to sequestration have not been fulfilled, the exchange in question in respect of any obligation owed to it, or any other market participant in respect of obligations owed to such market participant, shall in accordance with the rules of that exchange applicable to any such transaction be entitled to terminate all such transactions and the trustee of the insolvent estate of the market participant shall be bound by such termination.

(3) No claim as a result of the termination of any transaction as contemplated in subsection (2) shall exceed the amount due upon termination in terms of the rules of the exchange in question.

(4) Any rules of an exchange and the practices thereunder which provide for the netting of a market participant’s position or for set-off in respect of transactions concluded by the market participant or for the opening or closing of a market participant’s position shall upon sequestration of the estate of the market participant be binding on the trustee in respect of any transaction or contract concluded by the market participant prior to such sequestration, but which is, in terms of such rules and practices, to be settled on a date occurring after the sequestration, or settlement of which was overdue on the date of sequestration.

(5) Section 341 (2) of the Companies Act, 1973 (Act No. 61 of 1973), and sections 26, 29 and 30 of this Act shall not apply to property disposed of in accordance with the rules of an exchange.

35B. Agreements providing for termination and netting

(1) Notwithstanding any rule of the common law to the contrary, all unperformed obligations arising out of one or more master agreements between the parties, or obligations arising from such agreement or agreements in respect of assets in which ownership has been transferred as collateral security, shall, upon the sequestration of the estate of a party to such master agreement, terminate automatically at the date of sequestration, the values of those obligations shall be calculated at market value as at that date, the values so calculated shall be netted and the net amount shall be payable.

(2) For purposes of this section “master agreement” means—

(a) an agreement in accordance with standard terms published by the International Swaps and Derivatives Association, the International Securities Lenders Association, the Bond Market Association or the International Securities Market Association, or any similar agreement, which provides that, upon the sequestration of one of the parties—

(i) all unperformed obligations of the parties in terms of the agreement—

(aa) terminate or may be terminated; or

(bb) become or may become due immediately; and

(ii) the values of the unperformed obligations are determined or may be determined; and

(iii) the values are netted or may be netted, so that only a net amount (whether in the currency of the Republic or any other currency) is payable to or by a party, and which may further provide that the values of assets which have been transferred as collateral security for obligations under that agreement shall be included in the calculation of the net amount payable upon sequestration; or

(b) any agreement declared by the Minister, after consultation with the Minister of Finance, by notice in the Gazette to be a master agreement for the purposes of this section.

(3) The provisions of this section shall not apply to—

(a) a transaction contemplated in section 35A; or

(b) a netting arrangement contemplated in the National Payment System Act, 1998 (Act No. 78 of 1998). (4) Section 341 (2) of the Companies Act, 1973 (Act No. 61 of 1973), and sections 26, 29 and 30 of this Act shall not apply to dispositions in terms of a master agreement.


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Insolvency Act

Insolvency Act No. 24 of 1935 pdf (629k).