When bedfellows potentially conflict : the extent of a business-rescue practitioner’s duty and potential liability in terms of the companies and tax administration acts

• Jurisdiction: South Africa
• Author: Zolani Buba
• DOI: 10.10520/EJC-a06a4ba1e
• Published date: 12 October 2017
• Date: 12 October 2017
• Record Number: btclq_v8_n3_a6
• Pages: 31-35
• Published By: Siber Ink

31

© SIBER INK

When Bedfellows Potentially

Conflict:

THE EXTENT OF A BUSINESS-RESCUE

PRACTITIONER’S DUTY AND POTENTIAL

LIABILITY IN TERMS OF THE COMPANIES AND

TAX ADMINISTRATION ACTS

ZOLANI BUBA*

ABSTRACT

The article briefly explores the liability framework for appointed business-

rescue practitioners in terms of the Companies and Tax Administration Acts.

Observing the potentially conflicting thresholds for practitioner liability in

terms of both pieces of legislation, it encourages appointed practitioners to

pay close attention to the tax status of a company in business rescue, both

prior to and once formal appointment commences.

The new business-rescue regime, housed within Chapter 6 of the Companies

Act evidences a significant shift from its predecessor, judicial management.

While setting out to achieve the revival of a legal entity or its business, the

new regime has incorporated flexible legal mechanisms through which this

may be achieved.1 Central to this process is the appointed business rescue

practitioner, whose responsibility it is to perform a number of tasks. This

article briefly considers the content of an appointed practitioner’s duties. It

explores the interplay of these duties within the context of tax administra-

tion legislation — emanating from a practitioner’s legal relationship with

the company in business rescue. The article juxtaposes the liability frame-

work in terms of the Tax Administration Act 28 of 2011 (‘the Tax Adminis-

tration Act’) with a similar framework in terms of the Companies Act 71 of

2008 (‘the Companies Act’).

1

* Attorney of the High Court.

See s 128 of the Companies Act of 2008. The courts have commented on the

purpose of business rescue, see Redpath Mining South Africa (Pty) Ltd v Piers Marsden

NO and others (North Gauteng High Court) case no. 18486/2013 of 14 June 2014;

Merchant West Working Capital Solutions (Pty) Ltd v Advanced Technologies and

Engineering Company (Pty) Ltd and others case no. 18486/2013 of 10 May 2013.

The public-interest element of business rescue has received articulation in Koen

and another v Wedgewood Golf and Country Estate (Pty) Ltd & others 2012 (2) SA 378

(WCC) at paras 14–15; Van Niekerk v Seriso 321 CC Case no 952/11 and 23929/11

[2012] ZAWCHC 63 (20 March 2012) (WCC).