The legal framework for business rescue

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[ADVISOR VIEW] The Companies Act in South Africa provides the legal framework for business rescue, which is a process that aims to rehabilitate a company that is experiencing financial distress: Tiaan Herbst - The SAAC. Moneyweb BusinessRescue

The Companies Act in South Africa provides the legal framework for business rescue, which is a process that aims to rehabilitate a company that is experiencing financial distress.

To initiate the business rescue process, the company’s directors must make a resolution to this effect and file a notice of business rescue with the Companies and Intellectual Property Commission . The notice must include a statement of the company’s financial position and a proposed business rescue plan.

The business rescue plan must be approved by the company’s creditors and shareholders. If the plan is approved, it becomes binding on the company and its creditors. The practitioner is then responsible for implementing the plan and monitoring the company’s progress. Overall, the Companies Act provides a legal framework for business rescue in South Africa, outlining the steps that must be taken to initiate the process, the role of the business rescue practitioner, and the requirements for developing and implementing a business rescue plan.

 

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