The Business Rescue Task Force (BRTF) has recommended policy reforms and legislative changes to help businesses in financial distress. This will allow for the establishment of a business rescue environment in Namibia.
These details are contained in the final report of the Namibian business rescue strategy presented to President Hage Geingob last Thursday.
BRTF was established on July 1, 2013, to conduct a specific research project and hold stakeholder engagements, as well as consult with the president.
The task force, consisting of 11 members, was established to examine current insolvency and business laws and recommend changes to laws, regulations, and policies that will enable businesses to rescue themselves from financial difficulties.
“This is in accord with the economic advancement pillar Harambee Prosperity Plan II,” stated BRTF in a press release.
A business rescue is a process to help a financially distressed company restructure and reorganize its assets, liabilities, debts, equity, and property.
While the primary purpose of the task force was to provide long-term support to businesses by implementing the relevant legislation, BRTF also engaged key parties on relief measures that would benefit the economy, particularly small and medium enterprises, in the short term.
“The primary purpose of a business rescue is to save the company and save as many people as possible. Where this is not feasible, the second objective is to ensure better returns for creditors and shareholders/investors than what would have been likely should the company be immediately liquidated,” said the statement.
The main recommendations are to amend all applicable business laws to include or align to business rescue legislation and procedures both for individuals and entities (including the Close Corporations Act.
The task force stated that “Given the importance a business rescue legislative framework,” it was imperative to expedite the finalization of all amended laws and their promulgation.
The task force recommended that equity and solidarity funds be created for funding post-commencement to support business recovery.
The task force stated that a collateral registry should be created to allow the registration of movable assets. It also recommended that public-private partnerships and joint ventures be established quickly to monetize commercial assets, which could be used to fund equity funds.
BRTF recommended that the Business and Intellectual Property Authority be responsible for regulating business rescue and be resourced appropriately.
“Existing Covid Relief funding should be reviewed and enhanced, with relevant players’ subsequent effective and urgent rolling-out. Government agencies and private sector financial institutions must suspend penalties or interest where economic distress caused issues.
The task force recommended that certificates of good standing be granted to those who are clearly in distress due to economic problems. They also suggested that the deadline for tax amnesty be extended.
