“The world is waiting for this crafted and amended company legislation. Indeed our own people, including captains of industry and small businesses need it. Do not fail them”.

Reported by the Parliamentary Monitoring Group, this was the rousing conclusion to the address by Ms Joanmariae Fubbs (ANC), Chairperson of the Portfolio Committee of Trade and Industry, appealing to the National Assembly to ratify the Companies Amendment Bill, which was today (Thursday) also passed by the National Council of Provinces.

The enactment of the Companies Amendment Act, which amends over 100 sections of the Companies Act, is without doubt an important milestone along the road leading amongst other things to the implementation of the long-awaited Business Rescue system, one of the innovations which the new act introduces. Business rescue, says Ms Fubbs, will finally offer companies in South Africa a “constructive option” and “not simply and only liquidation”. Criticism of the new alternative option has however not been uniform, and not all the role-players agree that that this will in fact be workable.

Adam Harris, a Director in the Insolvency and Business restructuring unit of Bowman Gilfillan, notes that “there has been some substantial panel-beating to the original business rescue concept, first mooted some time before the 2008 Act was signed into law on 8 April 2009. Some of the sections which have been hotly debated have either been amended or removed entirely, following strong protest by lobby groups. So, for example, the far-reaching “cherry-picking” clause which was initially intended to allow a business rescue practitioner to decide selectively which sections of a contract he would honour, and which he would cancel, has been ameliorated and the intervention of the High Court will be required before the business rescue practitioner can simply cancel a contract. The practitioner would also have to approach the court to cancel stock exchange contracts and securities”.

The regulations still need to be finalized, although enquiries from the DTI have met with the response suggesting that the draft published for comment many months ago would shortly be capable of implementation.

It seems to be on track for 1 April 2011. “It will be a huge mind-shift” says Harris, “but the legislation does have the potential to achieve what the law-makers have set out in great detail in the Act itself – such as the ‘efficient rescue and recovery of financially distressed companies, in a manner that balances the rights and interests of all relevant stakeholders’”. “One will however have to see to what extent the new option will be able to withstand potential abuse”.