oa De Rebus - Companies - in what circumstances will they be required to furnish security for costs? : case note
Prior to the advent of the Companies Act 71 of 2008, a defendant, confronted with a claim brought by a company of dubious financial standing, was able to invoke the provisions of s 13 of the previous Companies Act 61 of 1973 and bring an application requesting the court to order provision for the security for the costs of the pending action. Section 13 stated: 'Where a company or other body corporate is plaintiff or applicant in any legal proceedings, the court may at any stage, if it appears by credible testimony that there is reason to believe that the company or body corporate or, if it is being wound up, the liquidator thereof, will be unable to pay the costs of the defendant or respondent if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings till the security is given'.
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