Companies Act, 2008 (Act No. 71 of 2008)Chapter 6 : Business Rescue and Compromise with CreditorsPart A : Business rescue proceedings129. 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. |