Dissolution Memorandum by zdn62509

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									 Framework for the Closure Process
           in respect of
      Thubelisha Homes and
Servcon Housing Solutions (PTY) Ltd
                Presentation to:
       Portfolio Committee on Housing
                20 May 2008
                       Outline
• Background
• “Closure” in context
• Closure Plan
• Closure Implementation
   – HR Workstream
   – Assets Disposal Workstream
   – Facilities and Infrastructure Workstream
   – Liabilities and Accounting
• Project Management
• Dissolution and Deregistration
• Closure Report
                Background
• The NDoH is in the process of establishing
  the Housing Development Agency (HDA) to
  acquire, develop and release suitable land
  for housing development
• Rationalisation of Institutions also led to a
  decision to close Thubelisha and Servcon –
  whose original mandates have matured
• Support of specialist services is available
                 Background cont.
• The closure requirements necessitates that both entities:
   –   Will cease business operations at some point
   –   The power of directors will also cease
   –   Deregistered and,
   –   A report be provided on the winding up process including a final
       Audit report from the company’s Auditors
• The closure process will deal with :
   –   Disposal of assets and liabilities
   –   Staff matters
   –   Closure of bank accounts
   –   Final Audit
   –   CIPRO dissolution
                “Closure” in context
• Any company can be closed voluntarily by its shareholder(s)/
  directors or in terms of its Articles and Memorandum –
  assuming it will settle its liabilities
• If there is a shortfall between assets and liabilities then the
  company would face forced liquidation unless alternative
  funding is available
• The closure of these companies (Thubelisha and Servcon)
  would be on a voluntary winding up basis.
• Voluntary closure can be accomplished by ceasing to trade/
  operate, disposal of assets, settling liabilities and terminating all
  commitments including obligations to staff
• In a situation of a section 21 Company (Thubelisha), any
  surplus remaining after the closure will be processed in terms of
  the company’s statutes,
                  Closure Process
• The Closure process requires 3 main steps and a final report
• Step 1 – Detailed Closure Plan
  • Full details of assets, liabilities, affected staff and the detailed
     implementation steps required to close the company

• Step 2 – Closure Implementation
  • Implementation of the plan
  • Disposal of assets and settlement of liabilities
  • Redeployment of required staff and termination of others if required

• Step 3 – Final dissolution of the company
  – Deregistration of the company once all assets, liabilities and
     commitments have been settled
• Step 4 – Closure report
                Closure Framework
Decision
to Close

    2 Months         3 to 6 months          1 month            1 month

      Closure               Closure           Company            Closure
       Plan             Implementation        Deregistration     Report




       Approval of          All assets,       Final Audit
          Plan            liabilities and      and legal
                          commitments        deregistration
                           disposed of
                           Step 1:
                    Detailed Closure Plan

• Identification of all assets and liabilities and determination of
  how they are to be disposed of
• Collection of staff data and assessment of redeployment
  requirement, including definition of termination process
• Definition of all facilities, contracts, sundry assets and
  commitments that need to be dealt with
• Plan for the final accounting and auditing of the company,
  including all compliance processes required (Tax, VAT etc)
• Plan for final dissolution of the Company including the
  deregistration at CIPRO
                          Step 1:
                   Detailed Closure Plan
• Key requirement for this phase include :
   – Clear and definitive mandate to close the company
   – Access to management and staff in head office & regions
   – Access to company auditors and financial record
• This Phase will produce
   – Detailed Plan with tasks, responsibilities and time frames
   – Risk assessment
   – Closure Budget including both closure costs and initial
     assessment of any unmet liabilities
• This phase can be completed in 2 months
                Step 2:
        Closure Implementation

• The Closure Plan will be implemented
  through 4 workstreams
  – Human Resources Workstream
  – Assets Disposal Workstream
  – Facilities and Infrastructure Workstream
  – Liabilities and Accounting (includes legal)
• The four streams will be co-ordinated by
  intensive project management
                    HR Workstream
• The HR workstream will co-ordinate and facilitate the
  following :
   – Notification of impact of closure (Voluntary liquidation) in
      terms of Section 189(3) of the Labour Relations Act
   – Definition of requirements for staff to be redeployed
      elsewhere
   – Specification of selection criteria and competence
      assessments as required
   – Final selection of redeployments and terminations
   – Calculation of retrenchment costs (where applicable)
   – Payout out of packages (where applicable)
   – Redeployment of selected staff
                    Assets Disposal
                     Workstream
• The Closure plan will identify all assets of the company
   – What is to happen to each asset
   – Estimated value to be gained from disposal net of any
     liabilities
• Acceptance of the plan will constitute authority to dispose of
  assets according to the plan
• Transfer of the assets according to the plan by way of:
   – Transfer to other similar state entities or
   – Sale to the market by auction or tender
• Any liabilities over the assets will need to be dealt with at the
  same time. The Finance Workstream will be involved in this
  aspect
                Facilities and Infrastructure
                         Workstream
• The existing offices and facilities of the company will need to
  be closed
   – Some facilities may be taken over (by the HAD or similar)
   – Others will be closed permanently and contracts / leases
     will need to be terminated
   – Other contracts may also need to be terminated
      • Telephones, data lines, internet etc
      • Copier and printer rentals
      • Cleaning, Security etc
• Sundry assets such as furniture and other equipment may
  need to be disposed of
                Liabilities and Accounting
• The financial record of the company will be the starting point
   – Last audited financial statements
   – Management accounts and trail balance
• Advertisements in terms of the Liquidations Act will be
  placed to ensure that all liabilities and claims are identified
• Liabilities relating to specific assets will need to be settled
  on disposal of the assets
• All other liabilities will be settled as per the closure plan
• The Finance team of the company will need to continue the
  banking and accounting process right to the final dissolution
• The companies auditors will be responsible for auditing
  closure process and the final balances
              Project Management

• The entire project needs to be co-ordinated with intensive
  project management and periodic reporting (2 weekly basis)

• A steering committee will be put in place to facilitate the
  decision making required to effect the closure
   – The steering committee: need to meet at least 2 weekly
   – Mandated to implement the approved closure plan
   – Steering Committee will be accountable through the
     Board to the Department
                  Step 3 – Dissolution and
                       Deregistration

• Only once the company’s activities have ceased and all
  assets, liabilities and commitments have been dealt with can
  final liquidation and deregistration be considered

• The final balances in the company would be audited and
  any surplus applied in terms of the company’s statute

• Final deregistration is a legal process to be undertaking
  by lawyers appointed for this purpose
                Step 4 – Closure Report

• The closure report will contain all relevant details on the
  closure process
   – Closure plan
   – Final out come
   – Relevant documents and minutes of key meetings

• The report will present all cost incurred in the closure
  process and account for the disposal of all assets and
  settlement of all liabilities

• Any final actions or issues for the attention of the
  Department will also be highlighted
              Final Considerations
• These are voluntary closure - the closure team will not have
  the executive authority of a liquidator. The mandate and
  executive support of the directors remains essential

• Early decisions on what is to be transferred where will be
  necessary. This includes clarity on what staff will be
  transferred/ retired

• The closure plan will calculate any shortfall that may need to
  be funded. Without commitment to funding this shortfall, a
  voluntary closure is impossible

• The timeframe is estimated to be a maximum of 6 months
  depending on complexity of asset disposal and availability of
  accurate information on assets and liabilities
Dissolution/ Delisting of Public Entities –
  Treasury Requirements & Checklist
1.    Need Analysis (i.e. why is this necessary)
2.    Legislative regime for dissolution
3.    Risk analysis & matrices of dissolution
4.    Transfer of Functions or function ceases?
5.    Human Resource management
6.    CEO/ COO/ Top Management Severance packages or
      expiry of contracts
7.    Financial plan (closure of budget line, bank account etc)
8.    Asset transfer plan (future location of assets)
9.    Transfer of liabilities
10.   Implementation plan for dissolution…
11.   Final Ministerial sign off for dissolution
12.   Documentation to NT for delisting (gazetting…?)
THANK YOU

								
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