Section 34 of the Insolvency Act applies to when a person (“seller”) decides to sell, transfer its business, its goodwill thereof (the reputation of the business), goods and/or assets which form part of the business to another person (“buyer”). A notice must be issued in the Government Gazette and two issues of an English and Afrikaans newspaper which circulates in the district of the business being sold.
The purpose of the Section 34 notice is to notify the creditors of the business about the impending sale of the business, thereby allowing the creditors the opportunity to claim debts from the company before the transfer takes place.
By proceeding with the Section 34 notice, the transaction is protected. Should the seller transfer his business without having complied with the Section 34 notice, the transaction could be declared invalid and the seller’s creditors can claim against the assets of the business even though they have been sold to the buyer. In other words, should the Section 34 notice not be complied with, the creditors of the company can declare the sale invalid and claim against the assets of the business in order to settle the amount owed to them.
Should you be in the process of, or inclined to sell your business and/or intend to buy a business, Tuckers Incorporated can assist with the drafting of the sale of business as well as ensure that all necessary statutory (legal) requirements are in order to ensure that the transaction proceeds as easily as possible.
Should you feel like you would want to discuss this further, or any matter in respect of your business, you are welcome to contact us for information on 011 897 1900, 076 777 1920 or email us on info@tuckers.co.za