Essay Example on South African Companies

South African Companies Act 1st part As what has been clearly define in the above judicial management is a process that essentially can give an alternative way to rescue the companies that are in situation of financial straits In normal circumstances the only resolution for the company is wound up if they were unable to pay its debts that owe to the creditors However the presence of judicial management aims at rehabilitating the financial distressed company Judicial management acts as a statutory corporate rescue procedure for companies to adopt before the company have to be bring to an end for liquidation In other words the judicial management process give a guarantee for the continuation of operation through the formulation and implementation of the rescue model It must be noted that every province in South Africa has its own Companies Act and there s an absence of consolidated Companies Act to govern the regulation and management of the company In 1922 they did have their first consolidated Companies Bill introduced into the Parliament and a second reading concerning the matter of selecting committee is conducted and taken by the bill 

Unfortunately this issue was being aside the next year Then in 1926 the concept of Judicial management was implemented and enacted under Sections 195 to 198 of the Bill as part of the South African companies legislation It can be said this is one of its great achievement unlocked in their Company law Under the concept of judicial management the rights have been given to the court that a winding up order is allowed to be applied for in order to make an order for the appointment of a judicial manager I don t understand what you trying to say The appointed judicial manager has the duty and responsibility for the administration of the company and to pay off the company's debts when there's availability of spare money In the second reading speech of Sir Drummond Chaplin who said I am informed that this is an entirely new procedure in this country and it is supposed to be taken from American practice The reason that judicial management was incorporated in the Companies Act of South Africa 1926 is to reduce the probability that a corporation will wind up due to the financial difficulty With the implementation of the new regime of judicial management the risk of insolvency of a corporation will be decreased as it has provides a system of rescuing the company by restructuring its affairs business property debt and other liabilities Judicial management was to be implemented as it plays the inevitable role as to prevent creditors from bringing a court action to have the company declared bankrupt and subsequently liquidated 

Although many companies that initially would be insolvency can be saved by the scheme of judicial management but the government of South Africa has failed to utilise this rescue scheme In short the pro creditor scheme that has been introduce as part of the Companies Act 1926 can be said as an unsuccessful corporate rescue Consequently the new development of rescue scheme pro debtor was introduced in the Chapter 6 of Companies Act 2008 Companies Act 2008 has replaced the Companies Act 1973 with the new business rescue procedure The old scheme of judicial management has been abolished while the provisions dealing the winding up of corporations has been amended In fact in the early 2000s the government of South Africa have started to shift their step from pro creditor to pro debtor but the creation of new regime was only enforced until the year of 2008 In the late 1970s the pro debtor principle began to take root as the main purpose of the traditional pro creditor system has been found to protect the creditors and not assisting the struggling debtor The government has realised the importance of reconstituting the new Companies Act in 2007 which lead to the drafting of the initial bill of scheme of pro debtor