Article by listed Attorney: Nanika Prinsloo
Read Also: Business Rescue: How Does it Work?
When a Company has adopted a Resolution to place the Company under Business Rescue, the Company must appoint a Business Rescue Practitioner within five days after the Resolution was adopted.
The role of the Business Rescue Practitioner is to guide the Company through the process and this article will discuss this in more detail.
In terms of Section 138 of the Companies Act, Act 71 of 2008, a person may be appointed as the business rescue practitioner of a company only if the person -
(a) is a member in good standing of a legal, accounting or business management profession who is accredited by the Commission (this is the Companies and Intellectual Property Commission (CIPC);
(b) has been licensed as such by CIPC. An interesting fact is that there is no existing list of Business Rescue Practitioners. A Company can appoint any person to its liking who complies with the requirements of Section 138. Once appointed and once the Company has published the Resolution (read our article as stated at the beginning of the paragraph), then, if CIPC finds that the Practitioner is a suitable person, CIPC will issue a license to the Practitioner to proceed with the rescue process of that particular Company. For each Company that the Practitioner is appointed, he/she must be licensed separately by CIPC for that Company’s business rescue process. At this stage CIPC does not have a process where Business Rescue Practitioners can register in advance on a data basis or be permanently licensed. Therefore the Business Rescue Practitioner must be licensed each time any Company appoints him/her as Business Rescue Practitioner.
(c) is not subject to an order of probation in terms of section 162(7) of the Companies Act. A probation order can be given by a Court in terms of this Section if the person was a director and was present at a meeting and failed to vote against a resolution despite the inability of the company to satisfy the solvency and liquidity test, otherwise acted in a manner materially inconsistent with the duties of a director; or acted in, or supported a decision of the company to act in, a manner contemplated in section 163(1) of the Companies Act; or as per several other requirements of Section 162(7) which will not be discussed here.
(d) would not be disqualified from acting as a director of the company in terms of section 69(8) of the Companies Act. (In terms of Section 69(8) a person is disqualified to be a director of a company if a court has prohibited that person to be a director, or declared the person to be delinquent in terms of section 162, or in terms of section 47 of the Close Corporations Act, 1984 (Act No. 69 of 1984); or the person is an un-rehabilitated insolvent; or is prohibited in terms of any public regulation to be a director of the Company; has been removed from an office of trust, on the grounds of misconduct involving dishonesty; or has been convicted, in the Republic or elsewhere, and imprisoned without the option of a fine, or fined more than the prescribed amount, for theft, fraud, forgery, perjury or an offence involving fraud, misrepresentation or dishonesty; in connection with the promotion, formation or management of a Company, or in connection with any act contemplated in subsection (2) or (5) under the Companies Act, the Insolvency Act, 1936 (Act No. 24 of 1936) or under the Close Corporations Act, 1984, or under the Competition Act, or under the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001), or under the the Securities Services Act, 2004 (Act No. 36 of 2004), or under Chapter 2 of the Prevention and Combating of Corruption Activities Act, 2004 (Act No. 12 of 2004);
(e) does not have any other relationship with the Company such as would lead a reasonable and informed third party to conclude that the integrity, impartiality or objectivity of that person is compromised by that relationship; and
(f) is not related to a person who has a relationship contemplated in paragraph (d) (in other words a director of the Company who has been disqualified to act as a director of the Company.)
Read also: The Role of the Business Rescue Practitioner