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The company is required to provide information to the Commission within 20 business
days of having received the notice.
If the company fails to satisfy the Commission that it is not engaging in prohibited
conduct or that it is able to pay its debts as they become due and payable in the normal
course of business, the Commission may issue a compliance notice to the company
requiring it to cease carrying on its business or trading.
The Commission could also accept the information and confirm the company’s right to
continue carrying on business.
If a person to whom a compliance notice has been issued fails to comply with the notice,
the Commission or the Executive Director (in the case of the Take-over Regulation Panel),
as the case may be, may either:
■ Apply to a court for the imposition of an administrative fine, or
■ Refer the matter to the National Prosecuting Authority for prosecution as an offence
in terms of Section 214(3), but may not do both in respect of any particular
compliance notice
■ A director could still be subject to significant civil liabilities for any loss, damage or
cost suffered by the company as a result of a contravention of Section 22
■ Directors have a duty to initiate voluntarily Business Rescue Proceedings where it
seems the company will become insolvent, so as to avoid the serious consequences
contemplated in this Section.

PROBATION AND DELINQUENCY

Directors must understand the serious impact of Section 162 of the Act (declaration
of delinquent directors) which states that a director may be declared delinquent, or
placed on probation, if that person is, or was, a director within five years of the court
application. (This was previously two years, however the Zondo Commission of Enquiry
into State Capture made a recommendation to extend this time bar to five years, and this
has been incorporated into the Amendment Act).
The Act introduces a remedy to shareholders and other stakeholders (namely the
company, a shareholder, director, company secretary, prescribed officer, a registered
trade union that represents employees of the company or other representative of the
employees) to hold directors accountable by an application to Court, to declare a person
delinquent (and thus prohibited from being a director) or under probation (and restricted
from serving as a director in terms of the conditions of the probation).

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