- Published on Tuesday, 31 July 2012 01:55
- Written by PIUS RUGONZIBWA
- Hits: 754
THE government plans to table in Parliament a new law to regulate insolvency and bankruptcy issues in the country.
Enactment of the new law, which is expected to be tabled before June next year, will among other things bring in clear and specific legal framework to address insolvency issues. Presenting the draft report on the proposed law, Mr Adam Mambi said in Dar es Salaam that the law will replace Companies Act of 2002 and Bankruptcy Act of 1930 to suit new demands in line with the country's economic reforms.
"The proposed changes recommend for the need to establish a regulatory body of insolvency practitioners to cater for their conduct, discipline and licensing as well as establishment of an agency to deal with insolvency and bankruptcy issues in the country," he said.
He mentioned other benefits as assurance of rights of employees during liquidation of their employers which are not protected under current laws. During liquidation, he said, employees are normally the least protected individuals despite investing all their life in the company before they are made redundant.
Speaking at the event, the Deputy Minister for Constitutional and Legal Affairs, Ms Angela Kairuki, said the new law will be expected to respond to the current economic challenges local companies are facing. The deputy minister was also of the view that all other outdated insolvency laws are streamlined to ensure workers' rights are taken care of before insolvency and receivership processes.
"We have a number of people working with non-operational companies like Independent Power Tanzania Ltd (IPTL) who are still suffering to secure their rights. The new law is to make sure such situations remain history," she said. Earlier, the Registration, Insolvency and Trusteeship Agency (RITA) Director General, Mr Philip Saliboko, said that Kenya and Uganda have already enacted laws and regulations on insolvency practices and called for stakeholders to air their views towards establishment of the new act.
The challenges pertaining to insolvency issues, he said, were also raised in the Cost of Doing Business Report released by the World Bank for 2010 adding it is high time they were now addressed once and for all. Insolvency is a condition of having more debts than total available assets can cover even when mortgaged or sold while bankruptcy is the inability of a debtor to pay debts as and when they fall due.
Presently insolvency and bankruptcy issues are regulated by scattered laws and the proposed law contains 19 parts and 424 provisions.