By Elani Vogel, Candidate Attorney and Dominique Lloyd, Senior Associate
Once a company has been placed into business rescue, it is vitally important for the respective processes to be properly followed. Chapter 6 of the Companies Act 71 of 2008 (“the Act”) stipulates that the respective Notices, required to place a company into business rescue and in the course of the business rescue proceedings, be published in the prescribed manner. This article provides a summary of the prescribed manner in which the respective Notices for voluntary business rescue, which is by way of passing a resolution, are to be published, as set out in the Act and regulations 123 to 125 of the Companies Regulations of 2011 (“the Regulations”).
The Notices and Related Documents
1. Notice of Commencement of Business Rescue Proceedings (Form CoR 123.1)
After filing the Notice with the Companies and Intellectual Property Commission (“CIPC”), the company must publish the Notice by:
1.1 delivering a copy of the Notice and resolution to every shareholder and creditor of the company, trade union representing employees of the company and to employees not represented by a trade union (“affected persons”) in accordance with regulation 7 (see paragraph 6 below); and
1.2 displaying a copy of the Notice at the registered office of the company, the principal places of conducting the business activities of the company and any workplace where the employees of the company are employed, as well as on the company’s website (if it is a listed company, on any electronic system maintained by the relevant exchange for the communication and inter-change of information by and among companies listed on that exchange).
2. Notice of Appointment of a Business Rescue Practitioner (Form CoR 123.2), Notice of Decision Not to Begin Business Rescue (Form CoR 123.3) and Notice Concerning the Status of Business Rescue Proceedings (Form CoR 125.1)
After filing the Notice with CIPC, the company must publish the Notice by:
2.1 delivering a copy of the Notice to each affected person in accordance with regulation 7; or
2.2 informing each affected person of the availability of a copy of the Notice, in the manner contemplated in regulation 6 (see paragraph 5 below).
3. The Business Rescue Plan
The BRP must publish the plan as follows:
3.1 in accordance with section 6(11)(b)(ii) of the Act and regulation 6 (addressed later in this article);
3.2 by displaying a notice of the availability of the plan as per paragraph 1.2 above; and
3.3 by providing a free copy of the plan to any affected person who requests such a copy.
4. Notice of Termination of Business Rescue Proceedings (Form CoR 125.2) and Notice of Substantial Implementation of a Business rescue Plan (Form CoR 125.3)
The BRP must publish the Notices by:
4.1 displaying a copy of the Notice as per paragraph 1.2 above; and
4.2 delivering a copy of the Notice to each affected person in accordance with regulation 7; or
4.3 inform each affected person of the availability of a copy of that Notice, in the manner contemplated in section 6(11)(b)(ii) and regulation 6 (addressed later in this article).
Other Regulations to Consider
5. Regulation 6
A notice announcing the availability of a document must be in writing and delivered to each intended recipient of the document in paper/electronic format at his last known delivery address/email address and must include:
5.1 the title of the document;
5.2 the extent of the period during which the document will remain available;
5.3 the means by which the document may be acquired by a recipient of the notice; and
5.4 a statement that succinctly summarizes the purpose of the document.
6. Regulation 7
This regulation sets out general guidelines for the delivery of documents required in terms of the Act. Depending on the nature of the person to whom the document is delivered, a certain method and time for delivery is prescribed in Table CR 3 contained in Annexure 3 of the Regulations.
Non-compliance with the publication requirements can, in certain circumstances, result in the termination of the business rescue proceedings and it is therefore crucial that the BRP ensures proper compliance with these requirements.