The struggling South African economy may lead to a higher number of companies falling into financial distress and having to apply for business rescue, a daunting outlook given the fact that in South Africa it can take up to three months before the matter comes before a court.
 
Calls for specialist courts with the necessary knowledge and experience to deal with the matters within the prescribed timeframe have increased in recent times.
 
No speedy remedy
The concept of business rescue was introduced through the Companies Act in 2011. The process requires that a business rescue plan is implemented within 90 days from the time the company has filed its notice to commence with business rescue.
 
Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA), says this is for all practical purposes impossible to achieve given the current delays. “The urgency to have specialist courts that can deal with the matters efficiently and quickly has never been so great,” she adds.
 
The main aim with the process is to reduce the number of companies which goes into final liquidation. Business rescue can be initiated by an application to court when the business is financially distressed.
 
However, in many instances the application is only heard three months after the notice was filed. Business rescue cases are not prioritised by the courts.
 
Ngwenya says statistics provided by the Companies and Intellectual Property Commission (CIPC) demonstrate that in 78% of the cases it took more than six months for the “substantial implementation” of proceedings.
 
She says during a business rescue process the business is protected from any action that can be taken by the creditors and the company is allowed to operate under the supervision of a business rescue practitioner. However, lengthy delays in the process increase the risk of additional liabilities for the company and the potential of greater financial losses for creditors.
 
Biggest bleeders
According to CIPC statistics the industries with the greatest number of business rescue proceedings include retail (vehicle repairs), information and communication, and construction.
 
Ngwenya says courts needs specialist skills to deal with the complexities of the Companies Act and the business rescue process.
 
“Business rescue is fairly new in South Africa, and although one can argue that a judge or a magistrate will use his professional judgement to take the correct decision, one has to acknowledge that these are not cases they deal with on a daily basis.”
 
The Department of Trade and Industry is the custodian of the Companies Act and CIPC is the implementer of the act.
 
“There needs to be an agreement between the Department of Trade and Industry and the Department of Justice that this (the establishment of specialist courts) need the priority it deserves.”
 
CIPC has accredited SAIPA to regulate its members that are eligible to be business rescue practitioners in October last year.
 
The move to hand over the administration and monitoring of business rescue practitioners to professional bodies like SAIPA will clearly lift CIPC’s burden, says Ngwenya. It may even open the debate on the need to increase efficiency in the process by introducing courts that can exclusively deal with business rescue.
​
ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za  
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountant

The South African Institute of Professional Accountants (SAIPA) has expressed its grave concern about the proposed amendment to repeal the compulsory offering of accounting with mathematics.
 
The Department of Basic Education published a notice on 21 July in the Government Gazette, inviting input from stakeholders on its proposal to repeal mathematics as a requirement for accounting.
 
SAIPA says in its submission to the Ministry of Basic Education mathematics builds skills in concrete reasoning, spatial reasoning, and logical reasoning. It sharpens the mind and helps eliminate fuzzy thinking, equipping children with tools to defend their worldview and make smart choices.
 
Faith Ngwenya, technical executive at SAIPA, says doing away with the compulsory taking of mathematics will not solve the problem with South Africa’s appalling math results.
“You can never be an accountant if you do not understand maths,” she warns.
 
South Africa already has a shortage of accountants, and making it more difficult to obtain the qualification in the required time, will only exacerbates the problem. Ngwenya says without mathematics aspirant accountants will struggle. They are already struggling, even with mathematics being compulsory.
 
She feels that it is quite critical for learners to have exposure to mathematics, adding that one of the stumbling blocks in the way of improved mathematic results is the lack of skilled mathematics teachers.
 
Ngwenya adds that there are ways to increase the skill levels at schools. Government can identify schools with a shortage of skilled teachers, and incentivise those with skills to teach at those schools.
 
“Rather than eliminating the subject because of bad results, the government should look at the way teachers are remunerated. We need good quality educators.”
 
SAIPA says in its submission the progress of our civilisation has been mainly due to the progress of various occupations such as agriculture, engineering, industry, medicine, and navigation.
 
Mathematics makes a direct or indirect contribution to the development of all occupations. SAIPA quotes the British scientist and author of Mathematics for the Million, Lancelot Hogben who said "Mathematics is the mirror of civilisation".
 
Ngwenya puts forward that mathematics helps people daily with problem solving, time management, calculating tips and tax, memorising phone numbers and locker combinations, estimating distances or weight, and budgeting their own affairs.
 
“We are living in a world of measurements. We have to measure lengths, areas, volumes and weights. We have to fix timings, prices, wages, rates, percentages, targets and exchanges,” SAIPA reiterates in its submission.
 
ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za  
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants