ARTICLES

Some thoughts on state regulation of South African insolvency law

Enkele gedagtes oor staatsregulering van die Suid Afrikaanse insolvensiereg

Juanitta Calitz

Blur LLB LLM LLD Senior Lecturer, Department of Mercantile Law, University of Johannesburg

OPSOMMING

Die grondslag van konstitusionalisme is dat die mag van die staat omskryf en ingeperk moet word om die belange van die gemeenskap te beskerm en daarom moet die doel van enige staatsregulering in Suid-Afrika wees om die onderliggende waardes van die Grondwet te ondersteun en te beskerm. Die belang van 'n moderne insolvensieregstelsel as belangrike hoeksteen van volhoubare ekonomiese ontwikkeling is ook wyd erken en deur internasionale instellings soos die Wêreldbank gedokumenteer. Terwyl die fokus van die regshervormingsproses van die insolvensiereg dus moet wees om die belange van die gemeenskap te beskerm sal dit onrealisties wees om die breëre internasionale konteks te ignoreer.
Die artikel bespreek die geskiedenis, rol en funksie van die Meester van die Hooggeregshof en lig sekere probleme ten opsigte van die Meester se toesighoudende funksie oor die insolvensiereg uit. Die aanbeveling word gemaak dat ten einde aan die internasionale standaarde te voldoen asook die vertroue van die plaaslike gemeenskap te herwin, is dit nodig om 'n onafhanklike reguleerder as deel van 'n reguleringsraamwerk in die Suid-Afrikaanse insolvensiereg in te stel. Na aanleiding van die grondwetlike aspekte van die reguleringsfunksie asook die internasionale maatstawwe wat ge'identifiseer word, word daar dus aanbeveel dat die Suid Afrikaanse regs- en beleidmakers terugkeer na die regshervormingsproses en opnuut die konsep van staatregulering in die insolvensiereg oorweeg.

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* This article is partially based on Calitz A Reformatory Approach to State Regulation of Insolvency Law in South Africa (LLD thesis 2009 UP). I am grateful to Mr Tienie Cronje for his input and comments. The views expressed in this article remain my own.
1 Johnson "Toward International Standards on Insolvency: The Catalytic Role of the World Bank" 2000 Law in Transition 71.         [ Links ]
2 Inter alia insolvency law, corporate law, tax law and labour law.
3 With regard to the institutional framework of South African insolvency law, South Africa does not at present have specialised insolvency courts. The High Courts in general deal with insolvency matters, and play their part both in applying and developing the law through case law. During the late 1990s a high-level Commission of Inquiry, the Hoexter Commission, rejected proposals for specialised insolvency courts in South Africa. See the third and final report of the Commission of Inquiry into the Rationalization of the Provincial and Local Divisions of the Supreme Court vol 1 Book 2 Part 3 (1997) Report number RP 201/9.
4 Uttamchandani "The Case for a Strong Regulatory Framework: The World Bank Principles in Asia" (2006) unpublished paper presented at the Forum on Asian Insolvency Reform V, China. On file with the author.
5 Constitution of the Republic of South Africa, 1996.
6 Hoexter "'Administrative Action' in the Courts" 2006 Acta Juridica 303.         [ Links ]
7 1996 6 BCLR 836 (W) 836J.
8 Botha "Administrative justice and interpretation of statutes: a practical guide" in The Right to Know (ed Lange )(2004) 14.         [ Links ]
9 Burns Administrative Law under the 1996 Constitution (2003) 28.         [ Links ]
10 See World Bank Principles for Effective Insolvency and Creditor Rights System (2001) (also referred to as Principles for Effective Insolvency and Creditor Rights System) at http://www.worldbank.org/ifa/ipg_eng.pdfl (accessed 2011-07-31);World Bank Revised Principles for Effective Insolvency and Creditor Rights Systems(2005) (also referred to as Revised Principles for Effective Insolvency and Creditor Rights Systems) at http://siteresources.worldbank.org/GILD/Resources/FINAL-ICRPrinciples-March2009.pdf (accessed 2011-07-31); the revised and updated version Principles for effective insolvency and creditor/debtor regimes(2011) (also referred to as Principles for effective insolvency and creditor/debtor regimes at http://siteresources.worldbank.org/INTGILD/Resources/ICRPrinciples_Jan2011.pdf (accessed 2011-07-31).
11 See UNCITRAL Legislative Guide on Insolvency Law (2005) at http://www.uncitral.org/pdf/english/texts/insolven/05-80722_Ebook.pdf (accessed 2011-07-31). See further Wessels Cross-Border Insolvency Law -International Instruments and Commentary (2007) for a collection of international and regional legal instruments relating to insolvency of companies, financial institutions, and consumers, as well as to corporate rescue law.
12 Pistor "The standardization of law and its effect on developing economies" The American Journal of Comparative Law 2002 97. See also Joyce "The Role of Insolvency Regulators in the Past and in the Future" (2003) 4 unpublished paper presented at the International Insolvency Conference, Singapore. On file with the author.
13 Wessels "Insolvency Law" 305 in Elgar Encyclopedia of Comparative Law (ed Smits)(2006).         [ Links ]
14 Wessels 2.
15 Supra (n 10).
16 Ibid.
17 Principles for effective insolvency and creditor/debtor regimes 5.
18 Idem 20-22.
19 South Africa has 'inherited' most of its insolvency legislation from England. See Burdette Framework for Corporate Insolvency law reform in South Africa (LLD thesis UP 2002) Part 2 77.
20 See Tabb "The History of the Bankruptcy Laws in the United States" 1995 American Bankruptcy Institute LR 5; Martin "Common- Law Bankruptcy Systems: Similarities and Differences" 2003 American Bankruptcy Institute LR 367.
21 The UK consists of three separate jurisdictions or law districts: (i) England and Wales; (ii) Scotland; and (iii) Northern Ireland. The term UK in this chapter is used generically to refer to the jurisdiction of England and Wales. From a formal perspective the main source of the English bankruptcy law is to be found in the Insolvency Act of 1986.
22 See also Evans A Critical Analysis of Problem Areas in respect of Assets of Insolvent Estates of Individuals (LLD thesis 2009 UP) 2; see also Calitz thesis part III on the various regulatory models adopted in the US and UK bankruptcy systems. Fletcher The Law of Insolvency (2009) 6-7; Levinthal "The Early History of English Bankruptcy" 1934 University of Pennsylvania LR 104; Milman Corporate Insolvency Law and Practice (1999) 2.
23 See Ramsay "Bankruptcy in Transition: The Case of England and Wales - the Neo-liberal Cuckoo in the European Nest?" in ConsumerBankruptcy in Global Perspective (ed Niemi-Kiesiläinen)(2003) 225.
24 Martin 2003 American Bankruptcy Institute LR 367.
25 See Calitz "Developments in the United States' consumer bankruptcy law: a South African perspective" 2007 Obiter 397.         [ Links ]
26 Sealy Annotated Guide to the Insolvency Legislation (2004) 1.
27 Report of the Review Committee: Insolvency Law and Practice, Report of the Review Committee (Cmnd 8558) Chairman Sir Kenneth Cork GBE (1982) (Hereinafter referred to as Cork Report .
28 For a detailed discussion of the recommendations included in the Cork Report see Fletcher 18- 21; see also Ramsay "Functionalism and Political Economy in the Comparative Study of Consumer Insolvency: An Unfinished Story from England and Wales" 2006 Theoretical Inquiries in Law 625.
29 The Insolvency Service, an executive agency of the Department for Business, Innovation and Skills, mainly acts as the interface between government and the various stakeholders in insolvency law, and although the ultimate responsibility rests with the Secretary of State for the Department for Business, Innovation and Skills, the day-to-day responsibility of supervision and control of the insolvency system is delegated to the Insolvency Service.
30 See also http://www.insolvency.gov.uk (accessed 2011-07-31) for the official homepage of the Insolvency Service.
31 Ss 399-401 Insolvency Act 1986 and Pt 10 Insolvency Rules 1986.
32 See Martin 2003 American Bankruptcy Institute LR 367.
33 Cf Mistelis "Regulatory aspects: globalization, harmonization, legal transplants and law reform - some fundamental observations" 2000 The International Lawyer 1055. See further Joyce "The role of insolvency regulators in the past and in the future" (2003) unpublished paper presented at the International Insolvency Conference, Singapore. On file with the author. See Principles for Effective Insolvency and Creditor Rights System 5-8.
34 Mistelis 2000 The International Lawyer 1069.
35 Hereinafter referred to as the Master or the Master's office.
36 See Calitz thesis part III on the legal, regulatory and institutional frameworks within the South African insolvency law system.
37 Act 66 of 1965. The office of the Master is staffed by civil servants in the employ of the Department of Justice and Constitutional Development (Hereinafter referred to as the Department of Justice). Only persons with prescribed legal qualifications can be appointed as Master, Deputy Master or Assistant Master. The Administration of Estates Act 65 of 1966 (Administration of Estates Act) also makes provision for the appointment of a Chief Master who shall act as the executive officer of the Master's offices and exercises supervision over all the Masters as may be necessary to bring about uniformity in their practice and procedure. See Ss 2(1)(b); (2)(2) and 3(1) Administration of Estates Act. S (1) was substituted by s 14 Judicial Matters Amendment Act 16 of 2003 and by s 3 Judicial Matters Amendment Act 22 of 2005.
38 See definition of "Master" substituted by s 1(d) Administration of Estates Laws Interim Rationalisation Act 20 of 2001 and by s 2 Judicial Matters Amendment Act 22 of 2005. Notwithstanding the suggestion in the Master's title that there is an association with the courts, the Master is not part of the formal court structure and as such not appointed as an officer of the High Court. S 34(1)(a) Supreme Court Act 59 of 1959 provides for the appointment of officers of the Supreme Court (now High Court) but does not refer to the Master. See Bertelsmann et al Mars: The Law of Insolvency in South Africa (2008) 29.
39 Wessels History of the Roman-Dutch Law(1908) 667. See also Sharrock et al Hockly's Insolvency Law (2006) 11.
40 Ordinance 1777 (Amsterdam) Nederlandsche Jaarboeken291.
41 See generally: Wessels 661; Smith Insolvency Law(1988) 5; Bertelsmann 1-2; Sharrock 11; Stander Die Invloed van Sekwestrasie op Onuitgevoerde Kontrakte (LLD thesis 1994 Potchefstroom University for Christian Higher Education) 8-16;         [ Links ] Dalhuisen Dalhuisen on International Insolvency and Bankruptcy vol 1 (1986) 1-1-1-17; Visser "Romeinsregtelike Aanknopings-punte van die Sekwestrasieproses in die Suid-Afrikaanse Insolvensiereg" 1980 De Jure42; Stander "Geskiedenis van die Insolvensiereg" 1996 TSAR 371; Levinthal "The Early History of Bankruptcy Law" 1918 University of Pennsylvania LR 223-250; Burdette (LLD thesis 2002 UP); Roestoff 'n
42 The first Charter of Justice came into operation on 1828-01-01, spurred by the Proclamation of 1822-07-05, which made January 1827 the effective date for the use of English in the courts. The first Charter was subsequently followed by a second Charter, constituted by letter patent of 1832-05-04, and coming into operation on 1834-02-13, which superseded and modified it in certain aspects. See Theal Records of the Cape Colony (1 898); Van der Walt Geskiedenis van Suid-Afrika (1961) 167. See further Kahn A Review of the Recess System in the High Court (2003) report prepared for the Department of Justice, Pretoria.         [ Links ] On file with the author.
43 Ordinance of 1828. See Stander 1996 TSAR 376.
44 Cf Bertelsmann 29. Die Meester v Protea Assuransiemaatskappy Bpk 1981 2 SA 685 (T) 690; De Lange v Smuts1998 3 SA 785 (CC) 853; The Master v Talmud 1960 1 SA 236 (C) 238.
45 S 60(a)-(e) Insolvency Act 24 of 1936 (Insolvency Act). S 379 Companies Act 65 of 1973 regulates the removal of a liquidator; Sharrock 116. See further Rudolph Student Manual: Applying the Promotion of Administrative Justice Act in Practice (2009) 67.
46 See Administration of Estates Act and Wills Act 7 of 1953 on the various statutory powers and duties of the Master.
47 Trust Property Control Act 57 of 1988.
48 See ss 76 (1) (b) and 86-93 Administration of Estates Act and Mental Health Care Act 17 of 2002. In terms of the Prevention of Organised Crime Act 121 of 1998, where the court has authorised the attachment of such assets by the Asset Forfeiture Unit, it appoints a curator to administer the assets. The appointed curator, however, has no authority to act as such until duly authorised by the Master.
49 Loubser "An international perspective on the regulation of insolvency practitioners" 2007 SA Merc LJ123; Calitz "The appointment of insolvency practitioners in South Africa: time for change?" 2006 TSAR 721. See Burdette "Reform, regulation and transformation: the problems and challenges facing South African insolvency industry" (2005) unpublished paper presented at the Commonwealth Law Conference, London. On file with the author.
50 See Calitz thesis part V on the legal, regulatory and institutional frameworks within the South African insolvency law system as well as a detailed discussion of the powers and duties of the Master.
51 See Calitz thesis part VI for a discussion of the public interest aspect of insolvency law.
52 See Skills Development Act 97 of 1998.
53 Basset "His master's voice: a message from the regulator" (2009) unpublished paper presented at the AIPSA Conference, Johannesburg. On file with the author.
54 See President of RSA v SARFU 2000 1 SA 1 (CC) at par 133. See further Hoexter Administrative Law in South Africa (2006) 14.
55 2001 2 SA 18 (CC). The case dealt with the constitutionality of certain provisions of the Black Administration Act 38 of 1927.
56 Moseneke v The Master supra par 14.
57 In the UK the Insolvency Service's Companies Investigation Branch ("CIB") investigates serious corporate abuse using compulsory powers under the Companies Act 1985. See also ss 235 and 236 Insolvency Act 1986 (Hereinafter referred to as the Insolvency Act 1986 or the Insolvency Act of 1986). Although it received the Royal Assent and became law on 1985-1030, the government decided to delay implementation of all but a few of its provisions and to draw up a new Act, consolidating its provisions with those parts of the Companies Act 1985 dealing with receivership and winding-up. This became the Insolvency Act 1986. The Act received Royal Assent on 1986-07-25 and was brought into force on 1986-12-29.
58 Within South African insolvency law there are different types of interrogations which can as a rule be divided into public and private enquiries. The Insolvency Act provides for three different types of interrogations: the provision primarily aimed at investigating the validity of claims lodged for proof at a meeting of creditors (s 42 Insolvency Act) a creditor's enquiry in order to investigate the affairs of the insolvent (ss 64, 65 and 66 Insolvency Act) and a private Master's enquiry in terms of the provisions of s 152. Corresponding provisions contained in the Companies Act also provide for public enquiries by creditors, (ss 415 and 416 Companies Act) and provisions relating to private enquiries before the Master or a Commissioner appointed by the Master or the Court (ss 417 and 418 Companies Act). See Bertelsmann 418.
59 The UK's Cork Committee was a strong advocate of having a robust investigation procedure, linking the idea to maintaining public confidence in the ability of the bankruptcy system to weed out abuse. The investigatory function rests with the official receiver, who investigates an individual debtor as well as officers and directors of companies. If at any time the Master is of the opinion that the insolvent or the trustee of that estate or any other person is able to give any information which the Master considers desirable to obtain, concerning the insolvent, or concerning his estate or the administration of the estate or concerning any claim or demand made against the estate, he may by notice in writing delivered to the insolvent or the trustee or such other person summon him to appear before the Master or before a magistrate or an officer in the public service mentioned in such notice to deliver all the information within his knowledge concerning the insolvent or concerning the insolvent's estate or the administration of the estate. S 152(1) Insolvency Act; s 381 Companies Act. Section 381(2) Companies Act provides that the Master may at any time in relation to any winding-up examine the liquidator or any other person on oath concerning the winding-up. See Calitz thesis part V par 327.
60 S 18 Insolvency Act.
61 Act 42 of 1916 (Hereinafter referred to as the Insolvency Act of 1916 or the 1916 Insolvency Act).
62 S 57 1916 Insolvency Act.
63 It is important to note that however complete the Insolvency Act may be, it did not totally repeal the common law in respect of South African insolvency law, and that English law played an important role in the development of our insolvency law.
64 S 18(1) Insolvency Act. See Calitz 2006 TSAR 721. See further Cronje et al Study Notes: Diploma in Insolvency Law and Practice ( 2011) ch 19.
65 S 55 Insolvency Act.
66 In Krumm v The Master 1989 3 SA 944 (D) reference was made to a Master's Instruction which stated that because of possible bias a wide range of candidates may not be considered for appointment. The court stated that the exercise of a discretion by the Master to appoint a provisional liquidator could only be attacked on review on the basis that the Master failed to exercise his discretion at all, that he acted mala fide, or was motivated by improper considerations. The court held that it was not grossly unreasonable for the Master to issue and apply a directive such as the one which he did in the matter. The court concluded with the following (952F-G): "His (the Master's) approach may be said to be over-cautious, but is it not better that, if he should err, he should do so on the side of caution?" It is submitted that this decision may be influenced by s 33 of the Constitution, which provides that administrative action should be justifiable in relation to the reasons given for it. A court may order the Master to exercise his discretion properly, but will only in exceptional circumstances substitute its own decision for that of the Master. Cf UWC v MEC for Health and Social Services 1998 3 SA 124 (C) at 130F. See also Cronje 129.
67 See s 55 Insolvency Act for a list of these disqualifications.
68 Over time this became known as the "Master's panel". In order for one's name to be added to the register, or in order to be placed on the "Master's panel", prospective trustees have to make application to the relevant Master's office. Although each Master's office has a different modus operandiwhen it comes to the placement of prospective trustees on the panel, the procedure usually consists of the submission of certain documentation to the Master, and a subsequent interview of the candidate by a panel consisting of personnel from the Master's office, and one or more practising practitioners who represent either the Association of Insolvency Practitioners of Southern Africa (AIPSA) or the Association for the Advancement of Black Insolvency Practitioners (AABIP) (or both).
69 Burdette "Reform, Regulation and Transformation" 8.
70 Act 16 of 2003. In Beinash & Co v Nathan (Standard Bank of SA Ltd Intervening)1998 3 SA 540 (W), Flemming DJP confirmed the view that some liquidators acted dishonestly when he stated that liquidators and trustees were regarded by many as ineffective and "even sometimes disrespected in regard to integrity" at 545D. See Loubser 2007 SA Merc LJ 123.
71 Hereinafter referred to as the Minister or the Minister of Justice.
72 The relevant power was inserted into s 158(2)-(3) Insolvency Act, s 15(1A) Companies Act and s 10 Close Corporations Act, respectively. The stated aim of the legislation was first to create uniform procedures in all Masters' offices for the appointment of these functionaries and thus to promote the image of the insolvency practitioners and of the Master's division, and secondly to promote consistency, fairness, transparency and the achievement of equality in these appointments by the various Masters. See Memorandum on the Objects of the Judicial Matters Amendments Bill (2003) at par 2.2. See Loubser 2007 SA Merc LJ 125.
73 It is not clear when the policy document was implemented for the first time. The original policy document is termed Policy: Strategy on/procedures for appointment of liquidators and trustees. The document would appear to have been implemented in 1998 or 1999. The document deals not only with the appointment of trustees and liquidators, but also inter alia with topics such as the training and the lodging of requisitions. On file with the author. One concern is that the legislative amendments provide for the application of a policy document that has been accepted and approved of by Parliament. To date this has not been done. Other attempts to finalise the Minister's policy document include certain "draft documents" which from time to time had been made available to certain role-players in the industry and include: Department of Justice and Constitutional Development Division: Master of the Court Policy: Strategy on/procedures for the Appointment of Liquidators and Trustees (June 2001); Chief Masters Directive - The appointment of Liquidators (2007); Minister's Policy Guideline on the Appointment of Liquidators, Curator Bonis, Trustees and Judicial Managers(2007). On file with the author. See also Calitz 2006 TSAR 721.
74 The Department of Justice is apparently in the process of finalising the policy document as referred to in s 158 Insolvency Act.
75 Keynote address by Deputy Minister of Justice and Constitutional Development, Mr Andries Nel, MP, at the International Association of Insolvency Regulators (IAIR) annual general meeting and conference, Sandton, 2009.
76 Mensah et alAfrican Emerging Markets: Contemporary issues (2001) on economic regulatory frameworks.
77 It is the view of various academic scholars in South Africa that the present regulatory regime is inadequate and in desperate need of reform. Loubser 2007 SA Merc LJ 126 comments that: "The situation at the moment is that no qualifications, whether academic or practical, no experience and no professional affiliation are required by law. As a result, there is virtually no control over or disciplinary action against negligent, dishonest or incompetent insolvency practitioners". In Beinash & Co v Nathan (Standard Bank of SA Ltd intervening) 1998 3 SA 540 (W) 545D, Flemming DJP confirmed this view when he stated that the liquidators and trustees were regarded by many as ineffective and "even sometimes disrespected with regard to integrity". The many media reports concerning allegations of corruption and fraud against practitioners as well as the Master's personnel have certainly done nothing to change this widely held view. See eg, Sunday Times Business Times (2004-03-24) 1; Sake Beeld (2004-03-24) 14; Business Day (2004-04-22) 1; "Liquidation industry rife with corruption" Independent online (2003-10-12). See also Loubser 2007 SA Merc LJ 126.
78 See Calitz "The role of the Master of the High Court as regulator in a changing liquidation environment: a South African perspective" 2005 TSAR 728.
79 See supra (n 10).
80 See Calitz thesis part III for a detailed discussion of state regulation of insolvency law from an international perspective.
81 In 1999 the South African Law Commission published its second draft Insolvency Bill and explanatory memorandum. This explanatory memorandum and draft Bill were however officially published in 2000. The previous draft Bill was published for comment in 1996 as the Review of the Law of Insolvency. See Draft Insolvency Bill and Explanatory Memorandum Working Paper 66; Project 63 (1996) (Hereinafter referred to as 1996 draft Bill and explanatory memorandum). See South African Law Commission, Project 63, Commission Paper 582 Review of the Law of Insolvency (2000) vol I & II (hereinafter referred to as Commission Paper).
82 The name awarded to the draft Bill when it was envisaged that the Business Rescue provisions for corporate entities would form part of the Insolvency Act.
83 See Burdette "Reform, Regulation and Transformation" 10. The final draft Unified Bill has not yet been officially published by the Law Reform Commission and as such the original draft Bill included in the 2000 South African Law Commission Report remains the only official version reflecting the changes proposed by the Law Reform Commission. Consequently this study will henceforth refer to the 2000 version of the Bill.
84 71 of 2008.
85 See ch 6 Companies Act 71 of 2008.
86 At the date of this publication the draft report has not been made public.
87 Supra.
88 See Burdette A Framework for Corporate Insolvency Law Reform in South Africa (LLD thesis 2009 UP) 656. See also Boraine "Fresh Start Procedures for Consumer Debtors in South African Bankruptcy Law" 2002 International Insolvency Review 1.
89 Explanatory Memorandum 14.
90 Idem 12.
91 Idem 101.
92 Idem 101.
93 Cl 58(2) draft Bill.
94 Cronje "Country Report for South Africa" unpublished paper presented at the World Bank Global Judges Forum, (2003) at http://siteresources.worldbank.org/GILD/ConferenceMaterial/20157439/South %20Africa%20CR%20-%20Final%20Version%20%20(Per%20LK%204-8).pdf (accessed 2011-07-31).
95 This clause is partially based on the UK's model of regulation. See Calitz "System of regulation of South African insolvency law: lessons from the United Kingdom" 2008 Obiter 352.         [ Links ]
96 Cl 41(3) draft Bill.
97 See also paper by Commonwealth Secretariat on "Law Reform Agencies: Their Role and Effectiveness" (2005) Accra Ghana at http://www.calras.org/Other/secretariat_paper.pdf (accessed 2011-07-31).
98 Hopkins "The Influence of the Bill of Rights on the Enforcement of Contracts" August 2003 De Rebus 22.
99 Act 71 of 2008. The new Companies Act was signed by the President on the 2009-04-08 and gazetted in Gazette No. 32121 (Notice No. 421). The effective date of the Companies Act, 2008, was gazetted in GG No 34239 of 2011-05-01.
100 See ch 6 Companies Act 71 of 2008.
101 See Rushworth "A critical analysis of the business rescue regime in the Companies Act 71 of 2008" in Modern Company Law for a Competitive South African Economy (ed Mongale)(2009) 375.
102 Companies Amendment Act 3 of 2011.
103 The English text of s 138(1)(a) as amended by s 88 Companies Amendment Act 3 of 2011 is in conflict with the Afrikaans text as well as with the Companies Regulations 2011, as to who qualifies as business rescue practitioners. In terms of the Afrikaans version of the Act in order to be appointed as a business rescue practitioner a person has to be a member of an accredited profession "or" be licensed as such by the CIPC. The President signed the incorrect English version of the Companies Amendment Act referring to "(i) a member of one of the accredited professions, and (ii) licensed by the Commission". Reg 126(1 )(b) Companies Regulations 2011 clearly provides that if a person is a member of an accredited profession such person does not have to apply for a licence. See "Corporate Renewal Solutions on the new Business Rescue provisions" at http://www.business-rescue.co.za/index.php (accessed 2011-07-31).
104 Reg 126 Companies Regulations 2011 describes the application process to be licensed.
105 Bradsheet "The Leak in the Chapter 6 Lifeboat: Inadequate Regulation of Business Rescue Practitioners May Adversely Affect Lenders' Willingness and the Growth of the Economy" 2010 SA Merc LJ 195.
106 See Calitz thesis part III ch 5 for a detailed discussion.
107 See Calitz thesis part V; part VII ch 3 for a detailed discussion.
108 Ball Security Sector Governance in Africa: A Handbook (2004) Centre for Democracy and Development, London par 4.6.1. at http://www.ssronline.org/ssg_a/index.cfm?id=41&p=41 (accessed 2011-07-31).
109 Halliday 17.
110 Ngok "Law-making and China's Market Transition Legislative Activism at the Eight National People's Congress" in Problems of Post-Communism (ed Pistor)(2002).
111 Halliday 17.
112 See Vestal "Business Law Reform in South Africa: The Right Path, The Right Reason" 2002 Kentucky LJ 829.
113 Halliday 41.
114 The Cork Report par 1734 concluded that: "Insolvency proceedings have never been treated in English law as an exclusive private law matter between the debtor and his creditors; the community itself has always been recognised as having an important interest in them."
115 See Loubser 2007 SA Merc LJ 123.
116 Also referred to as the "Weesheer".
117 See Calitz thesis part VII for a detailed recommendation and proposal on a regulatory framework for the South African insolvency law.
118 See Calitz thesis part VII for a detailed discussion on the constitutional and administrative law aspects of state regulation of South African insolvency law.
119 The key provisions are to be found in ss 399-401 Insolvency Act 1986 and Part 10 of the Insolvency Rules 1986.
120 See Calitz 2008 Obiter 352 for a illustration of how South African and English laws to a great extent reflect similar legal philosophies and principles.
121 Insolvency Act of 1986.
122 "Insolvency Law Reform: Promoting Trust and Confidence" New Zealand Law Commission Study Paper 11 (2001) 33-35 (hereinafter referred to as New Zealand Law Commission Study Paper.
123 Principles for effective insolvency and creditor/debtor regimes - Revised Principle D7.
124 The so called "last resort" functions.
125 See Calitz thesis for a detailed discussion of the regulatory frameworks of the UK, US and the Netherlands.
126 See s 289 Insolvency Act 1986 - Investigatory duties of Official Receiver: "(1) Subject to subsection (5) below, it is the duty of the official receiver to investigate the conduct and affairs of every bankrupt and to make such a report (if any) to the court as he thinks fit.
127 Zhang "Developing a Regulatory Framework for Outsourcing of Insolvency Work in Hong Kong China" 193 in OECD Asian Insolvency Systems - Closing the Implementation Gap (2007). (2) Where an application is made by the bankrupt under section 280 for his discharge from bankruptcy, it is the duty of the official receiver to make a report to the court with respect to the prescribed matters ; and the court shall consider that report before determining what order (if any) to make under that section. (3) A report by the official receiver under this section shall, in any proceedings, be prima facie evidence of the facts stated in it. (4) In subsection (1) the reference to the conduct and affairs of a bankrupt includes his conduct and affairs before the making of the order by which he was adjudged bankrupt. (5) Where a certificate for the summary administration of the bankrupt's estate is for the time being in force, the official receiver shall carry out an investigation under subsection (1) only if he thinks fit."
128 As a division of the English Insolvency Service, the Companies Investigation Branch (CIB) investigates serious corporate abuse using compulsory powers under the Companies Act 1985.
129 In the UK the particular civil servants referred to as Official Receiver's role was brought into existence by the Bankruptcy Act 1883. Today they are civil servants who have their own legal status and act as officers of the courts to which they are appointed.
130 Regulatory Working Group "Insolvency Law and the Regulatory Framework" 2000 at http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/LAWANDJUSTICE/GILD/0 ,,contentMDK:20154425 ~menuPK:146222~pagePK:64065425~piPK:162156~theSitePK:215006,00.html#9 (accessed 2011-07-31).
131 Idem 6.
132 Also referred to as RPB or Recognised Professional Body.
133 Both Australia and the UK have licensing systems for insolvency practitioners.
134 The Insolvency Act 1986 in the UK created an insolvency practitioner profession though the medium of delegated regulation. Two methods are provided: membership of and authorisation by a professional body recognised by the Secretary of State (s 391), or direct authorisation by a "competent authority" - for the time being the Secretary of State.
135 See discussion of concept of "officer of the court" in Calitz thesis part VI. See also s 400 Insolvency Act 1986 - functions and status of official receivers: "(1) In addition to any functions conferred on him by this Act, a person holding the office of official receiver shall carry out such other functions as may from time to time be conferred on him by the Secretary of State. (2) In the exercise of the functions of his office a person holding the office of official receiver shall act under the general directions of the Secretary of State and shall also be an officer of the court in relation to which he exercises those functions. (3) Any property vested in his official capacity in a person holding the office of official receiver shall, on his dying, ceasing to hold office or being otherwise succeeded in relation to the bankruptcy or winding up in question by another official receiver, vest in his successor without any conveyance, assignment or transfer."
136 See s 287 Insolvency Act 1986 - Action of Tribunal on reference:"(1) On a reference under section 396 the Tribunal shall - (a) investigate the case, and, (b) make a report to the competent authority stating what would in their opinion be the appropriate decision in the matter and the reasons for that opinion, and it is the duty of the competent authority to decide the matter accordingly. (2) The Tribunal shall send a copy of the report to the applicant or, as the case may be, the holder of the authorisation; and the competent authority shall serve him with a written notice of the decision made by it in accordance with the report. (3) The competent authority may, if he thinks fit, publish the report of the Tribunal."
137 See s 195 Companies Act, 2008. "The Companies Tribunal or a member of the Tribunal acting alone in accordance with this Act, may - (a) adjudicate in relation to any application that may be made to it in terms of this Act, and make any order provided for in this Act in respect of such an application; (b) assist in the resolution of disputes as contemplated in part C of chapter 7; and (c) perform any other function assigned to it by or in terms of this Act, or any law mentioned in Schedule 4."
138 See s 6 Promotion of Administrative Justice Act 3 of 2000 (PAJA). Before someone can ask a court to review an administrative action, there is an important rule in the PAJA that must be complied with - the rule of exhaustion of internal remedies. This means that, where the law sets out procedures allowing someone to review or appeal a decision of the administration, these must be pursued before an affected person can approach a court. A person can therefore only ask for judicial review as a last resort. This is dealt with in s 7(2) PAJA. Internal remedies are ways of correcting, reviewing or appealing administrative decisions using the administration itself. The difference between internal remedies and the remedy of judicial review is that the judicial review is review by a court, which is independent from the administration. See Calitz thesis part IV for a detailed discussion of the administrative law aspects of state regulation in South African insolvency law.
139 See Calitz thesis part VII for further recommendations.
140 Halliday 34.
141 Ziegel "Bill-55 and Canada's Insolvency law Reform Process" 2006 Canadian Business LJ 76.
142 See Falke Insolvency Law Reform in Transition Economies (LLD thesis 2005 Humboldt University) 27.
143 Cf Mistelis 1057.