Business
Companies Act 71 of 2008, business rescue, and B-BBEE as a commercial reality
Company law is codified in the Companies Act 71 of 2008, administered by the CIPC. The Act introduced a modern solvency-and-liquidity test in place of capital maintenance, partially codified directors' duties, and replaced judicial management with business rescue. Separately, broad-based black economic empowerment is not a formality: a company's B-BBEE level materially affects its ability to win public and large private contracts.
Key rules
- Jurisdiction — The CIPC registers companies and enforces compliance; the Companies Tribunal adjudicates specified administrative matters; the High Court hears company litigation, and the Competition Tribunal and Competition Appeal Court handle merger and conduct cases.
- Deadline — Annual return to the CIPC: within 30 business days of the anniversary of incorporation
- Deadline — Business rescue plan: published within 25 business days of the practitioner's appointment, extendable by consent or the court
- Deadline — Large merger: no implementation before Competition Commission and Tribunal approval
Governing law
- Companies Act 71 of 2008 — s 4 solvency and liquidity, s 76 directors' standard of conduct, ch 6 business rescue
- Competition Act 89 of 1998 — merger control and prohibited practices, with a public-interest limb
- Broad-Based Black Economic Empowerment Act 53 of 2003 and the Codes of Good Practice
- Consumer Protection Act 68 of 2008
- Financial Intelligence Centre Act 38 of 2001 — beneficial ownership and reporting duties
In practice
Business rescue under Chapter 6 is the most commercially significant innovation of the 2008 Act. Filing a resolution places the company under a moratorium against legal proceedings, which has made rescue a routine defensive step as well as a genuine turnaround mechanism, and the courts have developed a substantial jurisprudence on abuse of that moratorium. Directors are exposed personally under s 218(2) and s 77 for reckless or fraudulent conduct of business, so solvency-and-liquidity testing before distributions and financial assistance is a standing board discipline.