Insolvency Second Amendment Act

1 Words in bold type existing enactments. in square brackets indicate omissions from Words underlined with a solid line indicate insertions existing enactments. in (English text signed by {he President.) (Assented to 30 December 2002.) ACT To amend the Insolvency Act, 1936, so as to require notice of a petition for the sequestration of a debtor’s estate to be given to employees of the debtor, registered trade unions representing such employees, the South African Revenue Service and the debtor; to provide for the service of sequestration orders on such employees, trade unions and the South African Revenue Service; to make further provision regarding a debtor’s rights to compensation; and corrections; to amend the Companies Act, application for the winding-up company, registered trade unions representing such employees, the South African Revenue Service and the company; to provide for the service on such employees, trade unions, the South African Revenue Service and the company: to make provision regarding a company’s rights to compensation; and to provide for matters incidental thereto. of an be given to employees of the so as to effect certain textual 1973, so as to require notice of winding-up orders of a company to B E IT ENACTED by the Parliament follows:- of the Republic of South Africa, as 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 39 of 1996

1. Section 4 of the Insolvency Act, 1936. is hereby amended by the substitution for 5 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 Gazetfe, 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 - she knows or can ascertain. ( b ) The petitioner must further, within the period referred to in paragraph ( a ) , furnish a copy of the notice- (i) by post to every registered trade union that. to the petitioner’s knowledge, (ii) represents any of the debtor’s employees; and to the employees themselves- (aa) by affixing a copy of the notice to any notice board employees have access inside the debtor’s premises: or to which the (bb) 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 10 15 20 iiii) by post to the South African Revenue Service.”. 4 No. 24285 GOVERNMENT Act No. 69,2002 INSOLVENCY S E C O h i AMENDMENT ACT, 2002 e GAZElTE\&? JANUARY 2003 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 Insolvency Act, 1936, is hereby amended by the insertion after subsection (4) of the following subsection: “(3A) ( a ) When a petition is presented to the court. the petitioner must 5 furnish a copy of the petition- (i) to every registered trade union that, as far as thqetitioner can reasonably ascertain, represents any of the debtor’s employees: and (ii) to the employees themselves- (aa) by affixing a copy of the petition to any notice board to which the 10 petitioner and the employees have access inside the debtor’s premises: or (bb) if there is no access to the premises by th&p’etitioner 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 at1 the time of the presentation of the petition: iiii) to the South ( i v ) to the debtor. unless the court, at its discretion. dispenses with the furnishing in the interest of the .4frican Revenue Service; and is satisfied that it would be of a copy where the court debtor or of the creditors to dispense with it. 15 20 (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 Insolvency Act, 25 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 &restate should not be sequestrated finally. 30 ( 2 ) If the debtor has been absent during a period of twenty-one days from his e usual place of residence and of his 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 outefdoor of the buildings where the court sits and published in the Garerre. or may direct some other mode of service. (?A) A cop!’ of the rule nisi must be served on- ( a ) any trade union referred to in subsection ( 3 ) : ( b ) the debtor’s employees by affixing a copy of the petition to any notice board to which the inside the debtor’s employees have access 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 to the front door of the premises from which the debtor conducted any business at the time of the presentation of the petition; and IC) 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‘ to the petitioning creditor. notice of such application has been given (4) For the purposes of serving the rule nisi in terms of subsection (2A), the sheriff must establish 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 the employees have access.”. 35 40 45 50 6 No. 24285 GOVERNMENT GAZETTE,@JANUARY 2003 Act No. 69,2002 INSOLVENCY SECOND AMENDMENT ACT. 2002 d Substitution of section 15 of Act 24 of 1936 $.

4. The following section is hereby substituted for section 15 of the Insolvency Act, 1936: “Compensation to debtor if petition is an abuse of court’s procedure or malicious or vexatious 5 \ .

15. 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 damage of the [provisional which he sequestration of his estate] presentation of the petition and award him 0’ 1 0 - her such compensation as it may deem fit.”. or she may have sustained by, qeason Amendment of section 49 of Act 24 of 1936, as‘amended by section 21 of Act 6 of 1963, section 12 of Act 99 of 1965 and section 1 of Act 49 of 1996 subsection: following

5. Section 49 of the Insolvency Act, the subsection (2) of 1936, is amended by the substitution for “ ( 2 ) Nothing in this section shall be construed as preventing the [Secretary for Inland Revenue] Commissioner for the South African Revenue Service from proving in the manner provided in partnership in respect of any sum referred or hundred one, and of a to in paragraph (b) of section one this Act a claim against the estate any interest due sum.”. such on Amendment of section 99 of .Act 24 of 1936, as substituted by section 5 of Act 6 of 1972 and amended by section 6 of Act 62 of 1973, section 9 of Act 29 of 1974, section 69 of Act 85 of 1974, section 50 of Act 103 of 1978, section 3 of Act 139 of 1992 and section 3 of Act 122 of 1998

6. Section 99 of the 1936, Insolvency Act, (a) by the substitution is amended- for the words following subparagraph (v) of subsection (1 )(b) of the following words: 15 20 25 “but did not pay to the [Secretary for Inland Revenue] Commissioner for the South African Revenue Service prior to the sequestration of the estate, and any interest payable under that Act in respect of such amount 30 in respect of any period prior to the date of sequestration of the estate;”: and (b) by the substitution for paragraph (e) of subsection (1) of the following paragraph: “(e) any amount which in terms of the Unemployment Insurance 35 Contributions Act, [1966 (Act No. 30 of 1966)] 2002 (Act No. 4 of ZOO?), was, immediately prior to the sequestration of the estate. due to the Unemployment Insurance in his capacitl- as an employer, in respect of any contribution, penalty or other payment; and”. Fund by the insolvent 40 Amendment of section 346 of Act 61 of 1973, as amended by section 11 of Act 70 of 1984

7. Section 346 of the Companies Act, 1973, is hereby amended by the insertion after subsection (4) of the following subsection: “(4A) ( a ) When an application is presented to the court in terms of this 45 section, the applicant must furnish a copy of the application- (i) to every registered trade union that, as far as the applicant can reasonably ascertain, represents any of the employees of the company; and (ii) to the employees themselves- (aa) by affixing a copy of the application to any notice board applicant and the employees company; or have access inside to which the the premises of the 50 (bb) 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, 8 No. 24285 GAZETTE,$,BJANUARY GOVERNMENT 2003 Act No. 69,2002 INSOLVENCY SECOND AMENDMENT ACT, %02 where applicable, failing which to the front door of the premises from of the which the. company conducted any business at the time application; to the South African Revenue Service; and (iii) (iv) to the company, unless the application is made by the company, or the court, at its discretion. dispenses with the furnishing of a copy where the court is satisfied that it would be in the interests of the company or of the creditors to dispense with it. x. 5 ( b ) The applicant must, before or during the hearin;, file an affidavit by the person who furnished a copy of the application which sets out the manner in which paragraph f a ) was complied with.”. 10 Insertion of section 346A in Act 61 of 19738 I . \

8. 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- , , everv trade union referred to in subsection ( 2 ) : the employees of the company 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 to the front door of the premises from which the debtor conducted any business at the time of the presentation of the application; the South African Revenue Service; and f d ) the company, unless the application was made by the company. ( 2 ) For the purposes of serving the winding-up order in terms of subsection ( l ) , the sheriff must establish 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 the employees have access.”. 15 20 25 30 Amendment of section 347 of Act 61 of 19739

9. 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 35 a company is an abuse of the court‘s procedure or is malicious or vexatious. the court mav allow the company forthwith to prove any damages which it may have sustained by reason of the application and award it such compensation as the court may deem fit.”. commencement and Short title 40

10. This Act is called the Insolvency Second Amendment Act, 2002, and shall come into operation on 1 January 2003 or such earlier date as the President may determine by proclamation in the Gazerre.