While a debt owed to the state only prescribes after 15 years, a debt owed to a state owned enterprise prescribes after 3 years.
In the Isibaya Fund v Visser and another case, the Fund sought an order under section 424 of the Companies Act 1973 declaring two respondents, who had been directors of a failed company funded by the Isibaya Fund, a fund governed by the Public Investment Corporation, liable for dereliction of their fiduciary duties to the Fund. The Fund claimed R80 million from each respondent.
The Supreme Court of Appeal concluded that the Fund’s claim had prescribed. Even though the Fund is governed in accordance with the Public Investment Corporation Act, the Fund is a juristic person, falling outside of the public service and is controlled by a board. Despite the board being appointed by the Minister of Finance, the court held that the Fund does not qualify as the State for the purposes of section 11(b) of the Prescription Act and the 15 year period of prescription is not applicable to the Fund.
The Supreme Court of Appeal reached a similar conclusion in Holeni’s case.