Significantly fewer companies closed down in May compared to the same month a year ago due to the introduction of the new Companies Act, Statistics SA said on Monday.
“The year-on-year decline in the number of liquidations for May 2011 was due to a 78.2 percent decrease reported for voluntary liquidations (from 354 to 77),” the agency reported.
“The relatively low number of liquidations in May 2011 can be attributed to the new Companies Act of 2008, which came into effect on 1 May 2011 and which introduces provisions for business rescue and compromise with creditors,” Stats SA said.
The biggest contributors to the decrease were reported in the financing, insurance, real estate and business services industry and the wholesale and retail trade, catering and accommodation industry.
The number of liquidations in the first five months of 2011 were down by 15 percent - from 1686 to 1436 - compared to the first five months of 2010.
Statistics SA said liquidations took place when the affairs of a company or close corporation were wound up because the liabilities exceeded assets, and the matter was resolved either voluntarily or by a court order.
Insolvencies - where an individual or partnership is unable to pay its debt and is placed under final sequestration - also dropped.
“A year-on-year decrease of 40 percent (from 325 to 195) was estimated for April 2011,” the agency said.
The total number of insolvencies for the first four months of 2011 decreased by 33 percent compared to the same period last year. - Sapa