Business rescue legislation
South Africa's new business rescue legislation is contained in Chapter 6 of the Companies Act No. 71 of 2008 and Chapter 6 of the Companies Amendment Bill, 2010.
Business rescue provisions in Chapter 6 of the Companies Act, 2008
Sections 128 to 155 of Chapter 6 of the Companies Act, 2008 are listed in the menu on the left under the following headings:
- Part A: Business rescue proceedings.
- Part B: Practitioner’s functions and terms of appointment.
- Part C: Rights of affected persons during business rescue proceedings.
- Part D: Development and approval of business rescue plan.
- Part E: Compromise with creditors.
- Legal references cited by Chapter 6.
The purpose of this section is to:
- List each section of the new business rescue legislation - first the Act and then the Amendment Bill.
- Provide information on the interpretation of each section - to be populated soon..
- Provide an interactive forum, per section, for discussion and debate to enable a wider understanding of legal and practical aspects of business rescue.
Summary of Companies Amendment Bill changes to Chapter 6 business rescue provisions
Most changes deals with language, grammatical errors and typos. Changes affecting the meaning of the Companies Act, 2008 are:
- Section 136: Effect of business rescue on employees and contracts: Banks were worried that the rescue practitioners would have the right to choose which agreements would be honoured, suspended and cancelled. Under the new provisions the practitioners will have to apply to court for the cancellation of agreements (“Bill puts minority shareholders at greater risk - claim,” 2010).
- Section 138: Qualifications of practitioners: First, the originally proposed regulator of business rescue practitioners is now replaced by the Commission. Second, a business rescue practitioner must be either a member in good standing of a legal, accounting or business management profession that is subject to regulation by a regulatory authority, or has been licensed as such by the Companies and Intellectual Property Commission. This means that apart from accountants and attorneys, turnaround professionals with other degrees may also practise as business rescue practitioners - an amendment that has been vigorously lobbied for by the Turnaround Management Association - Southern Africa and its submissions and discussions with the authors of the legislation. The exact admission criteria are expected to be outlined in the next draft company regulations.
- Section 153: Failure to adopt business rescue plan: The amendment expands on reasons why the court may set aside a vote on the business rescue plan.
References
Media articles
Bill puts minority shareholders at greater risk - claim. (2010, August 5). Legalbrief
Acts, bills, codes and lawmaking documents
Chapter 6 of the Companies Act No. 71 of 2008. (2009, April 9). Government Gazette.
Chapter 6 of the Final Companies Amendment Bill, 2010. (2010, July 28). Department of Trade and Industry.
Companies Act No. 71 of 2008. (2009, April 9). Government Gazette.
Final Companies Amendment Bill 2010. (2010, July 28). Department of Trade and Industry.
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