Draft company business rescue legislation was published on 12 February 2007 as Chapter 6 of the Companies Bill, 2007.
Chapter 6 consists of 4 parts:
- Part A - Business rescue proceedings.
- Part B - Supervisor's functions and terms of appointment.
- Part C - Rights of affected persons during business rescue.
- Part D - Development and approval of the business rescue plan.
Business rescue will be largely self-administered by a company under independent supervision within constraints, but subject to intervention by a court at any time on application by a stakeholder.
Main features of the new business rescue legislation
In accordance with the reform objectives and specific goals, Chapter 6 proposes replacing the existing regime of judicial administration of failing companies with a modern business rescue regime:
- Largely self-administered by the company.
- Management of the affairs, business and property of the company is under independent supervision, within constraints set out in the chapter.
- Subject to court intervention at any time on application by any of the stakeholders.
In particular, the Chapter recognises the interests of shareholders, creditors and employees, and provides for their respective participation in the development and approval of a business rescue plan.
Notably, the chapter protects the interests of workers by:
- Recognising them as creditors of the company with a voting interest to the extent of any unpaid remuneration,
- Requiring consultation with them in the development of the business rescue plan,
- Permitting them an opportunity to address creditors before a vote on the plan, and
- According them, as a group, the right to buy out any dissenting creditor who has voted against approving a rescue plan.
Persons wishing to comment on the proposed Bill may do so by addressing initial comments in writing no later than 19 March 2007, to:
Ms. Linda Van Dieman
CCRD, the dti
Fax No: (012) 394 2536
Want to learn more about business rescue?
Click on the thumbnail below for a popup enlarged view of the timeline of financial distress diagram.
Click on Timeline of financial distress table for a popup table explaining the four stages.
Go to Key success factors for business rescue in South Africa for an overview of what is required to make new business rescue legislation work in South Africa.
Download Business rescue - Chapter 6 of the Companies Bill, 2007 (113k)
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