Are you a director of a company? Make sure you're aware of your duties when your company is financially distressed
The Companies and Intellectual Property Commission (CIPC) says a director or a member of a CC has a duty to pass a resolution for a company's business rescue or alternatively resolve to wind up or liquidate in these two instances:
What is financial distress?
The Commission says financial distress when it comes to a company means that:
Is your business battling to keep its head above water?
Take this quick quiz to find out how to save your business from liquidation.
What happens if a company is financially distressed and directors decide NOT to place it into business rescue?
In this case, the Commission explains that directors will have to deliver a written notice to each affected person, confirming that:
Remember that 'the point of business rescue is to prevent the large number of liquidations that we are seeing in South Africa. It's hoped that this process will allow companies to survive and grow,' says the experts at FSP Business.
So if your company is in financial distress, its best you pass a resolution for the company to go under business rescue. Make sure you do this now that you're aware of your responsibilities.