REPUBLIC OF SOUTH AFRICA

 

 

INSOLVENCY SECOND AMENDMENT BILL

 

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(As introduced in the National Assembly as a section 75-Bill; explanatory summary of Bill published in Government Gazette No. ofamended by the Portfolio Committee on Justice and Constitutional Development (National Assembly)) )

(The English text is the official text of the Bill)

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(MINISTER FOR JUSTICE AND CONSTITUTIONAL DEVELOPMENT)

[B B53B- 2002]

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010902SE

GENERAL EXPLANATORY NOTE:

[ ] Words in bold type in square brackets indicate omissions from existing enactments.

___________ Words underlined with a solid line indicate insertions in existing enactments.

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B I L L

To amend the Insolvency Act, 1936, so as to require provide for notice of a petition for the sequestration of a debtor's estate to be given to employees of the debtor, and registered trade unions representing such employees, and to the South African Revenue Service and to the debtor; to provide for the service of sequestration orders on such employees, trade unions and the South African Revenue Service; and to make further provision regarding a debtor’s or a company’s rights to compensation; to amend the Companies Act, 1973, so as to require provide for notice of an application for the winding-up of a company to be given to employees of the company, and registered trade unions representing such employees and, to the South African Revenue Service and to the company; and, to provide for the service of winding-up orders on such employees, and trade unions ,and on the South African Revenue Service and on the company; and to make provision regarding a company’s rights to compensation; and to provide for a penalty; and to provide for matters incidental thereto.

BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:—

 

 

Amendment of section 4 of Act 24 of 1936, as amended by section 3 of Act 16 of 1943, section 19 of Act 62 of 1995 and section 1 of Act 49 of 1996

1. Section 4 of the Insolvency Act, 1936 , (hereafter referred to as the principal Act), is hereby amended by the substitution for subsection (2) of the following subsection:

"(2) (a) Within a period of seven days as from the date of publication of the said notice in the Gazette, the petitioner [shall] must deliver or post a copy of the said notice to every one of the creditors of the debtor in question whose address he or she knows or can ascertain.

(b) The petitioner must further, within the period referred to in paragraph (a), furnish a copy of the notice —to—

(i) by post to every any registered trade union that, to the petitioner's knowledge, represents any of the debtor's employees; and

(ii) to the employees themselves –

    1. by affixing a copy of the the notice to notice to any notice board to which the employees have access inside the debtor's premises used for that purpose; or

(iiibb) if there is no access to the premises by the employees, by affixing a copy of the notice to the front gate of the premises, where applicable, failing which to the front door of the premises from which the debtor conducted any business immediately prior to the surrender; and

(ivii) by post to the South African Revenue Service.".

 

Amendment of section 9 of Act 24 of 1936, as amended by section 6 of Act 16 of 1943, section 2 of Act 99 of 1965 and section 1 of Act 122 of 1993

2. Section 9 of the Insolvencyprincipal Act, 1936, is hereby amended by the insertion after subsection (4) of the following subsection: after subsection (4):

"(4A) (a) A debtor in respect of whom a petition is presented to court in terms of this section When a petition is presented to the court the petitioner must, within two days after of receiving notice of the petition furnish a copy thereof the petition —to—

(i) to anyevery registered trade union that, to the debtor'spetitioner's knowledgeas far as the petitioner can reasonably ascertain, represents any of the debtor's employees; and

(ii) to the employees themselves –

(aa) by affixing a copy of the petition notice to any notice board to which the petitioner and the employees have access inside the debtor's premises used for that purpose; or

(iiibb) if there is no access to the premises, by the petitioner and the employees, by affixing a copy of the petition to the front gate of the premises, where applicable, failing which to the front door of the premises from which the debtor conducted any business immediately prior to at the time of the presentation of the petition; and

(ivii) to the South African Revenue Service; and

(iv) to the debtor, unless the court , at its discretion, dispenses with the furnishing of a copy where the court is satisfied that it would be in the interest of the debtor or of the creditors not to do soispense with it. orders that such notice may be dispensed with.

(b) A debtor who brings an application that a petition for the sequestration of the debtor's estate is an abuse of the court's procedures, or is malicious or vexatious need is not required to comply with the provisions of paragraph (a) until such time as that application has been determined.

(c) If a debtor's application referred to in paragraph (b) is unsuccessful, the debtor must comply with the provisions of paragraph (a) within two days afterof the date of the order dismissing the application." (b) The petitioner must, before or during the hearing, file an affidavit by the person who furnished a copy of the petition which sets out the manner in which paragraph (a) was complied with.".

 

Substitution of section 11 of Act 24 of 1936

3. The following section is hereby substituted for section 11 of the Insolvencyprincipal Act, 1936: :

 

 

"Service of rule nisi [upon the debtor]

11. (1) If the court sequestrates the estate of a debtor provisionally it [shall] must simultaneously grant a rule nisi calling upon the debtor upon a day mentioned in the rule to appear and to show cause why his or her estate should not be sequestrated finally.

(2) If the debtor has been absent during a period of twenty-one days from his or her usual place of residence and of his or her business (if any) within the Republic, the court may direct that it [shall be] is sufficient service of that rule if a copy thereof is affixed to or near the outer door of the buildings where the court sits and published in the Gazette, or may direct some other mode ofor service.

(2A) A copy of the rule nisi must be served on —

(a) on ananyy trade union contemplatedreferred to in subsection 4(2) or 9(4A)(4);

(b) on the debtor's employees , by affixing a copy of the petition to any notice board to which the employees have access inside the debtor's premises, or if there is no access to the premises by the employees, by affixing a copy to the front gate, where applicable, failing which the front door of the premises from which the debtor conducted any business at the time of the presentation of the petition in the manner contemplated in section 4(2); and

(c) on the South African Revenue Service.

(3) Upon the application of the debtor the court may anticipate the return day for the purpose of discharging the order of provisional sequestration if twenty-four hours' notice of such application has been given to the petitioning creditor.

(4) For the purposes of serving the rule nisi referred to in terms of subsection (2A), the sheriff must establish from the debtor whether the employees are represented by a registered trade union and determine whether there is a notice board inside the employer's premises to which thefor notice to employees have access.".

Substitution of section 15 of Act 24 of 1936

4. The following section is hereby substituted for section 15 of the Insolvencyprincipal Act, 1936:

"Compensation to debtor if petition is an abuse of court's procedure or malicious or vexatious

145. Whenever the court is satisfied that a petition for the sequestration of a debtor's estate is an abuse of the court's procedure or is malicious or vexatious, the court may allow the debtor forthwith to prove any damagess which he or she may have sustained by reason of the presentation of the petitionprovisional sequestration of his or her estate and award him or her such compensation as it may deem fit.".

 

Amendment of section 136 of Act 24 of 1936

5. Section 136 of the Insolvencyprincipal Act, 1936, is hereby amended by the addition after paragraph (c) of the following paragraph:

"(d) if he or she fails to comply with the provisions of section 9(4A).".

Amendment of section 346 of Act 61 of 1973 as amended by section 11 of Act 70 of 1984

65. Section 346 of the Companies Act, 1973, is hereby amended by the insertion after subsection (4) of the following subsection :after subsection (4):

"(4A) (a) The directors of a company in respect of which When an application is presented to court in terms of this section the applicant must, before the company makes the application or within two days after of receiving notice of the application, furnish a copy thereofof the application —

(i) to anevery registered trade union that, to the knowledge of the directorsas far as the applicant can reasonably ascertain, represents any of the employees of the company; and

(ii) to the employees themselves– by

(aa) by affixing a copy of the application notice to any notice board to which the applicant and the employees have access used for that purpose inside the premises of the company; or

(iiibb) if there is no access to the premises by the applicant and the employees, by affixing a copy of the application to the front gate of the premises, where applicable, failing which to the front door of the premises from which the company conducted any business immediately prior to at the time of the application; and

(ivii) to the South African Revenue Service; and

(iv) to the company, unless the application is made by the company, or the court orders that nat its discretion, dispenses with the furnishing of a copy where the court is satisfied that it would be in the interest s of the company or of the creditors not to do sodispense with it.otice to the company may be dispensed with.

(b) If a company brings an application that an application for the winding up of the company is an abuse of the court's procedures, or is malicious or vexatious, the directors of the company needare not required to comply with the provisions of paragraph (a) until such time as that application has been determined.

(c) If an application by a company referred to in paragraph (b) is unsuccessful, the directors of the company must comply with the provisions of paragraph (a) within two days afterof the date of the order dismissing the application.

(d) Any person who fails to comply with any requirements of this subsection, isshall be guilty of an offence. (b) The applicant must, before or during the hearing, file an affidavit by the person who furnished a copy of the application which sets out the manner in which paragraph (a) was complied with.".

Insertion of section 346A in Act 61 of 1973

76. The following section is hereby inserted after section 346 of the Companies Act, 1973:

"Service of winding-up order

346A. (1) A copy of a winding-up order must be served on —

(a) on anyevery trade union contemplatedreferred to in subsection 346(4A)(2);

(b) on the employees of the company, company in the manner contemplated in section 346(4A)by affixing a copy of the application to any notice board to which the employees have access inside the debtor's premises, or if there is no access to the premises by the employees, by affixing a copy to the front gate, where applicable, failing which the front door of the premises from which the debtor conducted any business at the time of the presentation of the application; and

(c) on the South African Revenue Service; and

(d) on the company, unless the application was made by the company.

(2) For the purposes of serving the winding-up order referred to in terms of subsection (1), the sheriff must establish from the person upon whom the order is served whether the employees of the company are represented by a registered trade union and determine whether there is a notice board inside the premises of the company to which thefor notice to employees have access.".

Amendment of section 347 of Act 61 of 1973

  1. Section 347 of the Companies Act, 1973, is hereby amended by the insertion after subsection (1) of the following subsection:

" "(1A) Whenever the court is satisfied that an application for the winding-up of a company is an abuse of the court’s procedure or is malicious or vexatious, the court may allow the company forthwith to prove any damagess which it may have sustained by reason of the application and award it such compensation as the court may deem fit.".

Amendment of section 441 of Act 61 of 1973m as amended by section 30 of Act 111 of 1976, section 29 of Act 64 of 1977, section 27 of Act 59 of 1978, section 16 of Act 84 of 1980, section 30 of Act 83 of 1981, section 11 of Act 29 of 1985, section 15 of Act 31 of 1986, section 5 of Act 78 of 1989, section 7 of Act 69 of 1990, section 19 of Act 35 of 1998, section 21 of Act 37 of 1999 and section 27 of Act 35 of 2001

 

8. Section 441 of the Companies Act, 1973, is hereby amended by the substitution in subsection (1) for paragraph (d) of subsection (1) of the following paragraph:

"(d) in section 37, 140A, 143, 145, 145A, 146, 146A, 147(2)(a), 148, 149, 153(4), 156, 162, 169, 218, 219, 255, 256(5), 260, 284, 346, 424 or 440D(3) or (4), to a fine or to imprisonment for a period not exceeding two years or to both a such fine and such imprisonment;".

 

 

Short title and commencement

 

98. (1) This Act isshall be called the Insolvency Second Amendment Act, 2002, and shall come into operation on a1 January 2003 or such earlier date determined byas the President 1 January 2003 or such earlier date as the President may determinemay determine by proclamation in the Gazette.

(2) This Act applies in respect of estates which are sequestrated or provisionally sequestrated or companies which are liquidated or provisionally liquidated on or after the date of commencement of this Act.