Sections 417 and 418 of the Companies Act No. 61 of 1973 (hereinafter referred to as “the Old Act”) deal with the summoning and examination of persons to investigate the affairs of an insolvent company. This is important as it provides protection for company’s creditors, by not leaving the entity a shell without any means to pay its creditors.
Although there is a new Companies Act (hereinafter referred to as “the New Act”) applicable; the above Sections remain in force as there are no provisions in the New Act in relation to the winding-up of an insolvent company. This is however, only a temporary solution until a new and comprehensive Insolvency Act 24 of 1936 is drafted and incorporated into South African Law.
In terms of Section 417(1) makes provision that when a person is summoned to appear before Court or the Master, the person in question may choose to be represented with or without counsel. When the Master or the Court examines any person whom was summoned, it is under oath or affirmation. The person under interrogation may be examined orally or in writing and reduce his/her answer orally or in writing and sign same.
Section 418 of the Old Act makes provision that the Master of the Court may appoint a magistrate or other person to be a commissioner for the purpose of taking evidence or holding any enquiry in the winding-up of any company. Examinations and enquiries under Sections 417 and 418 together with any application therefor shall be private and confidential. Unless the Master or the Court directs otherwise.