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Reckless trading during the COVID-19 Pandemic

Reckless trading during the COVID-19 Pandemic

The Covid-19 pandemic and the lockdown imposed by the South African government, in order to slow down the spread of the virus, have accumulatively placed unprecedented financial strain on companies.

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reckless trading

The Covid-19 pandemic and the lockdown imposed by the South African government, in order to slow down the spread of the virus, have accumulatively placed unprecedented financial strain on companies. Some companies may find themselves in a temporary insolvent position which affects their ability to pay their creditors such as banks or suppliers.

With the inability to pay debts comes an increased risk of liability for reckless trading, not only for companies but also their directors. Section 22 of the Companies Act, 2008 contains provisions pertaining to reckless trading and spells out the powers and responsibilities of the CIPC to deal with companies who engage in this type of behaviour.

 

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© 2021 KPMG Services Proprietary Limited, a South African company with registration number 1999/012876/07 and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.


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