A legal analysis of laws regulating the viability of business rescue in South Africa

Abstract

One of the fundamental objectives of the new Companies Act 71 of 2008 is to provide for efficient rescue of financially distressed companies. It is almost four years since the Act introduced the regime of business rescue, therefor details about its success or lack thereof must be examined so as to consider its viability in South Africa. With a very higher degree of certainty, the regime has so far shown some inherent shortcomings embodied in its application. Business rescue has had implications on corporate governance and taxation in South Africa. Against this new corporate scene, mini-dissertation analyses the most controversial aspects and the most telling implications of the business rescue regime since its inception in South African company law. Furthermore, this minidissertation analyses the call for further modification of the business rescue regime. Most importantly it spells out several recommendations which if considered pragmatically will constructively contribute to the viability of the business rescue regime in South Africa. It finds that the business rescue regime in South Africa is almost likely to be viable. KEY WORDS: business rescue, financially distressed and affected persons.