Cape Town - Business rescue professionals would be required to register with their various professional bodies from October, according to new legislation.
Although relatively successful, business rescue received criticism over apparent flaws in the appointment process and quality of business rescue practitioners. As a result from October 1 changes to the legal framework and regulation of business rescue, particularly to registration of practitioners, would take effect.
In order to assure competence and efficiency, it has been widely agreed that the regulation of business rescue practitioners was important in the preservation and integrity of the business rescue procedure.
Currently, business rescue practitioners have been granted an individual licence by the Companies Intellectual Property Commission (CIPC).
A recent notice issued by the CIPC informed of a Notice of a Transitional Period of Conditional Licences, from October 1, practitioners will be required to register through their various professional bodies such as The Law Society of SA, the SA Restructuring and Insolvency Practitioners Association, the Chartered Institute of Management Accountants and the SA Institute of Chartered Accountants.
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This will require attorneys, accountants, liquidators and business management professionals who sought to practice as business rescue professionals to register through their SA Qualifications Authority (Saqa) approved governing bodies. These professional bodies would be required to apply for accreditation through CIPC, setting out that they complied with professional rules and disciplines in order to be able to accredit their own members.
Practitioners as well as aspiring practitioners were advised to belong to a legal, accounting or business management profession recognised by Saqa and professional bodies had until October 1 to comply, after which no person would be licensed as a business rescue practitioner unless he or she belonged to the registered and accredited profession.
PJ Veldhuizen, the chief executive of Gillan and Veldhuizen, who is completing a doctorate on regulation of business rescue, has been instrumental in the restructure and regulation of business rescue in South Africa.
Veldhuizen said in order to mitigate arbitrage or applicants opting for a less stringent accreditation process, standardisation of compliance was paramount.
He said that the CIPC board was finalising a continued professional development programme that would require practitioners to complete a prescribed number of verifiable hours training by accredited trainers annually.
“The responsibility of a business rescue practitioner is onerous. When appointed, they effectively take over the running of a stressed company and step into the shoes of the chief executive/board of directors. They are also officers of the court and, therefore, have the fiduciary duty of a director, this certainly requires oversight.”
Veldhuizen said the requirement that a company under business rescue needed to have a port of call in order to hold business rescue practitioners accountable.
“Up until now disgruntled parties were forced to turn to the courts for assistance, which can be a lengthy and expensive process. Business rescue practitioners will now be bound by a professional disciplinary code.”