Section 44 of the Companies Act 71 of 2008 governs the instances when a company may provide financial assistance for the purchase of the company's securities. (It is important to note that section 44(1) carves out the application of the entire section 44 for financial assistance given in the ordinary course of business by a company whose primary business is lending money.)

The ‘dual jurisdiction’ regime has long been entrenched in South Africa’s corporate insolvency law. This principal arises from the provisions of the Companies Act, No 61 of 1973 (Old Act), which provides that jurisdiction over a company is determined by the location of both its registered address and its principal place of business with the creditor having the choice of jurisdiction.

With the enactment of the Companies Act, No 71 of 2008 (New Act), the question that then follows is: Does this principle of jurisdiction continue to apply under the New Act?

Can an application for business rescue be brought even after a company has been placed in final liquidation?  The short answer, thanks to a recent Supreme Court of Appeal ("SCA") decision, is yes.

In Richter v Absa Bank Limited 2015, an interpretation of 'liquidation proceedings' within the context ofsection 131(6) of the Companies Act, 71 of 2008 ("the Act"), was central to the issue before the SCA.  

Section 131(6) of the Act reads as follows:

There have been a myriad of decisions on business rescue proceedings since the inception of the new Companies Act 71 of 2008 (“the Act”).  More recently, our courts have considered section 153(1)(b)(ii) of the Act which introduces the concept of a ‘binding offer’.

INTRODUCTION

This section allows one affected person to make an offer to purchase at liquidation value, the voting interests of those persons who opposed the adoption of the business rescue plan.

On 12 October 2015, the Deputy Minister of Justice and Constitutional Development, the Honourable John Jeffrey indicated that we are shortly to receive a revised and consolidated unified Insolvency Bill (“Bill”).

Insolvency Law, as we know it presently is, in addition to substantial case law precedent, governed by –

The Policy Framework Behind Section 34 of the Insolvency Act 2 Of 1936 ("the Act")

The policy of this section of the Act is to afford protection to a trader's creditors against his dispossessing himself of his property without paying his debt before the disposition or from the proceeds thereof.  This framework policy is well set out in the case of Paterson vs Kelvin Park Properties CC 1998:

ISSUE

Whether employees who have lodged a claim in the Labour Court against an employer that has gone into liquidation may proceed with their claim if they have not provided the liquidator with the requisite notice as required by South Africa’s company laws?

SUMMARY

The South African Revenue Service (SARS) released Binding Private Ruling 210 (Ruling) on 11 November 2015. The Ruling sets out the tax consequences of a ‘liquidation distribution’, as defined in s47(1)(a) of the Income Tax Act, No 58 of 1962 (Act), followed by an ‘amalgamation transaction’ as contemplated in s44(1)(a) of the Act.

Use of cookies on this website We use cookies to deliver our online services. Details of the cookies we use and instructions on how to disable them are set out in our Cookies Policy. By using this website you agree to our use of cookies. To close this message click close. December 15, 2015 Since the promulgation of the Companies Act 2008 (the Act), there has been a lack of clarity regarding the effect of the reinstatement of a deregistered company in terms of the Act.

Bond restructurings Implementation mechanisms: schemes vs. exchange offers December 2015 ■ a principal haircut; ■ extended maturity; and / or ■ a change in coupon (rate and/or whether the coupon is cash-pay or PIK). Exchange offers are based entirely on voluntary participation. They can only succeed if a critical mass of bondholders agrees to participate. A “carrot and stick” approach is used to incentivise participation and penalise holdouts. For background on the use of schemes of arrangement as restructuring tools, see here.