Stronger Protection for Landlords After Changes to the Companies Act

On the 25th of July 2024, changes to the Companies Act, 71 of 2008, were made through the Companies Amendment Act, 16 of 2024. These changes took effect on the 27th of December 2024, and include updates to section 135, focusing on unpaid amounts owed to landlords during a tenant’s business rescue process.

With the updated section 135, any unpaid amounts owed by a tenant in business rescue to a landlord for public utility services (like water, electricity, and rates) that the landlord has already paid to a third party (e.g., the municipality) are now treated as post-commencement financing.

These utility-related claims, including charges for water, electricity, rates, sanitation, and sewerage, now have a higher priority than other post-commencement finance claims and unsecured concurrent claims. However, they still rank below payments owed to the business rescue practitioner and unpaid wages to employees during the business rescue period.

This change only applies to utility payments, and rental claims have not been given the same elevated priority.

Written by Telis Carides, Attorney & Notary