Acceleration clauses are commonly found in loan agreements that require debtors to make repayment in instalments. A standard acceleration clause provides that if a debtor fails to pay an instalment, the creditor may elect to terminate the loan agreement and demand payment of the full amount owing under the agreement.

Tax authorities across the globe are working aggressively to collect taxes which they believe are collectable in their respective jurisdictions. States are entering into bilateral and multilateral agreements aimed at assisting each other in the collection of information and taxes. South Africa has actively taken part and in some respects been a regional leader in issues relating to the gathering of information and sharing thereof with other states to ensure that taxes are paid where they should rightfully be paid.

In recent years, the Companies and Intellectual Properties Commission (“CIPC”) (and its predecessor, the Companies and Intellectual Property Registration Office (“CIPRO")) has been carrying out mass de-registrations of companies and close corporations for failure to file their annual returns. This phenomenon, and its severe negative effects on third party creditors, has been the focus of much legal scholarship. However, a short while ago it came to our attention that CIPC’s de-registration campaign also extends to companies that have been placed in liquidation.

1. In our business rescue training workshops prior to the implementation of the Companies Act, No. 71 of 2008, clients were advised that where the debt of a debtor is compromised in terms of a business rescue plan, the debt of the surety and co-principal debtor may be extinguished because of the accessory nature of the suretyship debt to the principal debt.

A lot is written about structuring robust intellectual property licensing programs, whether from the perspective of licensors or licensees of intellectual property rights. This requires a careful consideration of legal, tax and regulatory issues that impact on the licensing arrangement.

The legal risks can’t always be managed adequately through the careful negotiation and drafting of a licence agreement. Some of these risks need to be managed independently of the drafting of any agreements.

It has a long been a principle of company law that the debts of a company are not the debts of its shareholders.  It may be a surprise to some that this principle does not apply to certain tax debts thanks to section 181 of the Tax Administration Act No.28 of 2011 (“section 181”). This section allows shareholders to be held jointly or individually liable for the tax debts of their company. At first glance it seems unfair to punish those who do not manage the day-to-day running of a company.

A service provider can rely on a debtor/creditor as security for its claim. This type of lien, conferred by virtue of an agreement between the creditor and the debtor, is a sub-species of a broader right to retain physical control of another’s property, whether movable or immovable, as a mechanism for securing payment of a claim, until the claim has been met. In other words, the service provider, who makes provision for such a lien in its contract, can refuse to release goods which are in its possession until it has received payment.

With the global recession still being felt, times are tough and many companies are struggling to collect debts from errant customers or clients. In these cases, a winding-up application is arguably the most effective way to collect substantial debt as the following example shows.

In terms of section 64B(5)(c) of the Act the following amounts will be exempt when distributed in the course of or in anticipation of the liquidation, winding up, deregistration or final termination of the corporate existence of a company or close corporation, provided that certain steps are taken within 18 months from the date of the liquidation distribution, namely;

In the 2011 budget speech, the Minister of Finance announced that the Government will consider exempting taxable capital gains or ordinary revenue imposed on an insolvent debtor if the debt owing by the debtor is cancelled or reduced.