"The function of regulations is to amplify certain aspects of the policy and law as enunciated in the Act, addressing matters of procedure, detail or technicality to the extent that Parliament has, through the Act, delegated authority to the Minister to do so.  It follows that any proposed regulation must be consistent with the overall policy of the Act, as well as with its specific provisions, and must rest on a foundation of clearly delegated authority."

The Turnaround Management Association - Southern Africa (TMA-SA) has applied to the dti to be the designated as the authority to regulate the profession of business rescue practitioners, and provided a point of view on conditions of regulation, and minimum qualifications for and a tariff of practitioners' fees, as per Part A below.  TMA-SA has not provided a point of view on issues in Parts B and C below.

The application can be downloaded at business rescue practitioner regulator application.

Any TMA-SA member that wish to comment on the application is welcome to do so by emailing Jan van der Walt at

Chapter 9 Business Rescue Regulations

Part A – Regulation of Business Rescue Practitioners

9.1 Designation of authority to regulate the profession of business rescue practitioners. [s. 138 (2)].

9.2 Conditions of regulation, and procedures to be followed by designated authority. [s. 138 (3)].

9.3 Minimum qualifications for admission of persons to profession of BR practitioner. [s. 138 (3)].

9.4 Tariff of practitioners’ fees. [s. 143 (6)].

Part B – Commencement and completion of Business Rescue

9.5 Manner and form for company publishing -

(a) notice of company resolution [s. 129 (3]);

(b) notice of appointment of practitioner. [s. 129 (4)];

(c) notice of no resolution, as contemplated in s. 129 (7);

(d) notice of a court order, as contemplated in s. 131 (8).

9.6 Manner and form for applicant to court publishing notice to affected persons in terms of -

(a) s. 130 (3)(b);

(b) s. 131(2)(b).

9.7 Manner and form for filing –

(a) company resolution [s. 129];

(b) practitioner notice of termination of proceedings [s. 132];

(c) practitioner notice of substantial implementation of BR plan. [s.132 and 152 (8)].

Part C – Communication and consultation during business rescue

9.8 Manner and form for practitioner to give notice to affected persons [s. 141 (2)(b)].

9.9 Manner and form for -

(a) notifying employees at workplace [s. 144 (3)];

(b) notifying creditors [s. 145(1)];

(c) notifying security holders [s. 146 (a)];

(d) publishing proposed BR plan [s. 150 (5)];

(e) delivering notice of meeting to consider plan. [s. 151(2)];

9.10 Possible generally applicable procedures for creditors’ and employee committees in terms of s 144 and 145.

Timelines:

• 21 August 2009 Completion of initial consultations.
• 30 September 2009 Distribution of preliminary draft to stakeholders.
• 15 October 2009 Final date for stakeholder responses.
• 1 November 2009 Completion of Draft for Public Comment.
• 15 November 2009 Publication in Gazette.
• 15 February 2010 Final Date for Public Comment.
• 31 March 2010 Submission of Final Regulations for Promulgation.

Turnaround Experts See Light in 2010

CHICAGO - August 14, 2009 - About 80 percent of turnaround professionals surveyed in the latest Turnaround Management Association poll set a 2010 date for an economic upswing even as sporadic signs of a rebound have appeared.

Nearly a third of respondents see recovery sometime in the latter half of 2010 and just over 20 percent expect a turnaround sometime in the first six months. About 20 percent expect recovery delayed until 2011. Of those that expect it to take place in the first half of 2010, opinion was equally split at 14 percent each as to whether the recovery would start in the first or second quarter.

Even in 2010, respondents forecast trouble for businesses that loaded up on debt and now find credit coffers shut tight, with 65 percent expecting corporate default rates and workouts to peak then.

"Most of the companies we are seeing have made dramatic expense reductions but still have not been able to cut enough to meet sharply lower sales levels," said Margaret Good, CTP, and president of the Meridian Group in Pittsburgh. "The result is negative earnings and EBITDA, putting into question the long-term viability of many companies thought to be healthy a year ago."

Respondents were split on whether a recent surge of almost 40 percent in the Dow Jones Industrial Average from its springtime lows influenced a bump in economic indicators such as housing and easier financing for healthy companies. Nearly 50 percent saw a correlation and an equal proportion did not.

"You can't buy your way out of an economic downturn," said Robert Blumenfeld, managing director of Buccino & Associates Inc. in New York. "You need to earn your way out. What we have seen so far are short-term Hail Mary fixes for a long-term problem."

Only 13 percent think business is recovering, but less than five percent observe sales returning to normal. Roughly 10 percent think lending is easing for troubled companies.

"The new bankruptcy law has made it harder to reorganize mid-market companies in this period of tight credit. More companies are likely to be liquidated than reorganized than ever before,'' said William Hass, CTP, chairman and CEO of Teamwork Technologies in Northbrook, Illinois.

The Chicago-based Turnaround Management Association has nearly 9,000 members in 45 regional chapters who comprise a professional community of turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, executive recruiters and consultants.

Business rescue legislation is contained in Chapter 6 of the Companies Act No. 71, 2008.

The Companies Act 2008 was signed by the president on the April 8 2009 and gazetted Thursday, April 9 2009, in Gazette No. 32121 (Notice No. 421). 

The Companies Act 2008 comes into operation on a date fixed by the president by proclamation in the Gazette, which may not be earlier than one year following the date on which the president assented to this Act.  The unconfirmed earmarked implementation date is 1 July 2010.

The Certified Turnaround Professional (CTP) credential was designed in the USA to encourage professional excellence, provide an objective measure and recognition of expertise, and provide evidence of an individual’s commitment to the turnaround and corporate renewal industry.   To this end, the Turnaround Management Association - Southern Africa has commenced with activities to launch the Certified Turnaround Professional programme in South Africa under license from TMA, and in partnership with Services SETA.

Additional designations will be offered at entry level, as well as to provide for a sufficiently large number of Business Rescue Professionals when new business rescue legislation is implemented.

The Certification Governance Board (CGB), chaired by Professor Mervyn King, will from 2010 will be independent from the Board of Directors of TMA-SA.  The CGB consists of an Academic Subcommittee, responsible for the body of knowledge and exams, and a Standards Subcommittee, responsible for admitting individuals based on having passed the exam, and possessing certain prescribed education and experience. 

Click to open the turnaround certification implementation timeline.

While the timeline is very tentative at this stage, our goal is to make coursework available by June 2010, have the first exams written in September 2010, and with the first CTP and ATP designations awarded in January 2011. 

The first certification will therefore unfortunately be only after implementation of new business rescue legislation, expected to by 1 July 2010.  For this reason, the Registered Turnaround Professional (RTP) designation, which does not require exams for the first two years after promulgation of the Companies Act No. 71 of 2009, has been added to set of designations.

See Implementation timeline for an up-to-date status report on the programme.