Acts Online
GT Shield

Companies Act, 2008 (Act No. 71 of 2008)

Chapter 6 : Business Rescue and Compromise with Creditors

Part A : Business rescue proceedings

129. Company resolution to begin business rescue proceedings

 

 

1) Subject to subsection (2)(a), the board of a company may resolve that the company voluntarily begin business rescue proceedings and place the company under supervision, if the board has reasonable grounds to believe that—
a) the company is financially distressed; and
b) there appears to be a reasonable prospect of rescuing the company.

 

2) A resolution contemplated in subsection (1)—
a) may not be adopted if liquidation proceedings have been initiated by or against the company; and
b) has no force or effect until it has been filed.

 

3) Within five business days after a company has adopted and filed a resolution, as contemplated in subsection (1), or such longer time as the Commission, on application by the company, may allow, the company must—
a) publish a notice of the resolution, and its effective date, in the prescribed manner to every affected person, including with the notice a sworn statement of the facts relevant to the grounds on which the board resolution was founded; and
b) appoint a business rescue practitioner who satisfies the requirements of section 138, and who has consented in writing to accept the appointment.

 

4) After appointing a practitioner as required by subsection (3)(b), a company must—
a) file a notice of the appointment of a practitioner within two business days after making the appointment; and
b) publish a copy of the notice of appointment to each affected person within five business days after the notice was filed.

 

5) If a company fails to comply with any provision of subsection (3) or (4)—
a) its resolution to begin business rescue proceedings and place the company under supervision lapses and is a nullity; and
b) the company may not file a further resolution contemplated in subsection (1) for a period of three months after the date on which the lapsed resolution was adopted, unless a court, on good cause shown on an ex parte application, approves the company filing a further resolution.

 

6) A company that has adopted a resolution contemplated in this section may not adopt a resolution to begin liquidation proceedings, unless the resolution has lapsed in terms of subsection (5), or until the business rescue proceedings have ended as determined in accordance with section 132(2).

 

7) If the board of a company has reasonable grounds to believe that the company is financially distressed, but the board has not adopted a resolution contemplated in this section, the board must deliver a written notice to each affected person, setting out the criteria referred to in section 128(1)(f) that are applicable to the company, and its reasons for not adopting a resolution contemplated in this section.