Case Notes: The Meaning of ‘Solvent’ for Purposes of Liquidation in terms of the Companies Act 71 of 2008: Boschpoort Ondernemings (Pty) Ltd v Absa Bank Ltd

• Jurisdiction: South Africa
• Date: 25 May 2019
• Pages: 153-162
• Published date: 25 May 2019
• Author: Natania Locke

Case Notes

THE MEANING OF ‘SOLVENT’ FOR

PURPOSES OF LIQUIDATION IN TERMS OF

THE COMPANIES ACT 71 OF 2008:

BOSCHPOORT ONDERNEMINGS (PTY) LTD

v ABSA BANK LTD

NATANIA LOCKE

Professor, University of the Witwatersrand

I INTRODUCTION

The Companies Act 71 of 2008 (‘the new Act’) repealed most of the

Companies Act 61 of 1973 (‘the previous Act’). The notable exception is

chapter 14 of the previous Act, which continues to apply with respect to

the winding-up and liquidation of companies (item 9(1) of Schedule 5

of the new Act). However, ss 343, 344, 346 and 348–353 do not apply to

the winding-up of solvent companies, except to the extent necessary to

give full effect to the provisions of the new Act dealing with the

winding-up and deregistration of solvent companies (Part G of chapter

2 of the new Act; see item 9(2) of Schedule 5). As is evident from its

omission from this list, s 345 of the previous Act applies to the solvent

winding-up of companies.

Section 345 sets out the circumstances in which a company is deemed

to be unable to pay its debts. A court in terms of s 344(f) of the previous

Act may wind up a company that is unable to pay its debts as described in

s 345.

A similar situation applies to the winding-up of close corporations.

The new Act has made the provisions applicable to the winding-up of

insolvent companies in chapter 14 of the previous Act equally applicable

to the insolvent winding-up of close corporations (item 9, Schedule 5,

read with s 66 of the Close Corporations Act 69 of 1984, as amended by

the new Act in Schedule 3). The new Act repealed s 68 of the Close

Corporations Act, which sets out the grounds for liquidation of a close

corporation (see Schedule 3). However, s 69, which sets out the circum-

stances in which a close corporation will be deemed not to be able to pay

its debts, was not repealed.

153

(2015) 27 SA Merc LJ 153

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