Data, property, finance and security instruments · 05
Sale of a business or of assets
Transfers a going concern — and, by operation of law, the people who work in it.
Transfers a going concern — and, by operation of law, the people who work in it.
What is sold and what is expressly excluded; the purchase price, payment mechanism and any earn-out; warranties and their limitation; the effective date and the passing of risk; employees; contracts to be ceded and the consents required; restraint; and the conditions precedent.
Section 197 of the Labour Relations Act transfers the employees automatically on the transfer of a business as a going concern, with their terms and their service intact, whatever the sale agreement says — the parties can allocate the cost between themselves but cannot displace the transfer. And section 34 of the Insolvency Act requires published notice of the transfer, failing which it is void against creditors for six months. Both are routinely missed in small-business sales.
The law it sits under
What governs this instrument.
Section 197 of the Labour Relations Act 66 of 1995 transfers employees automatically on the transfer of a business as a going concern, on the same or not less favourable terms, whatever the sale agreement says. Section 34 of the Insolvency Act 24 of 1936 governs notice of the transfer of a business, and a transfer without that notice is void against creditors for six months. Both are routinely missed.
Related pages, tools and documents
Where this instrument sits in the wider set, and the engagement that produces it.
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