LIABILITY OF MEMBERS AND DIRECTORS Liability under Companies Act Liability under Tax Administration
LIABILITY OF MEMBERS AND DIRECTORS
Liability under Companies Act
Liability under Tax Administration Act
The new Companies Act No. 71 of 2008 came into effect on May 1, 2011. Before the New Law came into effect, the Old Companies act placed no direct obligation on directors and members when a company / CC were in financial problems.
Section 129(7) of the New Act (As amended by Section 82 of Act 3 of 2011) provides that if the directors of a company has reasonable grounds to believe that the company is in financial distress, they must either:
place the company under “Business Rescue”, or;
Liquidate the company, or;
send a notice to all shareholders, creditors, employees and trade unions that the company is in financial problems and give reasons why the company is not liquidated or placed under Business Rescue.
If the above are not met, it is a criminal offense. Directors / Members may no longer “just wait and see”, they must do something about it.