Category: Sunday Standard

Sefalana Holding Company reported its sharpest profit decline in almost a decade after rising operating costs, weak consumer demand and disruptions to government supply contracts outweighed record sales, underscoring the pressures facing Botswana’s largest listed retailer.

The retailer posted revenue of P12.1 billion for the 52 weeks ended April 26, 2026, up 9 percent from the previous year, the highest in the group’s 52-year history. However, profit before tax fell 40 percent to P331 million, while basic earnings per share dropped to 93 thebe from 169 thebe. The board declared a final dividend of 20 thebe per share.

Sefalana said underlying profit before tax declined 19 percent after excluding one-off gains recorded a year earlier. Botswana operations absorbed most of the pressure as a seven-month gap in government milling tenders cut manufacturing profit by P72 million, while higher electricity tariffs increased costs by P25 million. Above-average wage increases for lower-paid employees added another P14 million to operating expenses.

The company said weak economic conditions continued to reshape consumer behaviour, with shoppers focusing on essential goods, value packs and private-label products rather than higher-margin discretionary items, squeezing profitability despite higher turnover.

Regional operations provided an important buffer. Namibia contributed 39 percent of group profit before tax after revenue rose 16 percent, while Lesotho remained profitable despite weaker consumer spending. Sefalana also expects its recently acquired South African investment to contribute about 10 percent of group profit over the medium term.

Despite the earnings setback, the retailer maintained a cautious outlook, pointing to new store openings, manufacturing expansion and regional diversification as key drivers of long-term growth while preserving cash to limit expensive borrowing during Botswana’s economic slowdown.

A probe by the Public Accounts Committee (PAC) on circumstances surrounding the appointment of Oteng Keabetswe as Managing Director suggest the previous board was dissolved to pave way for his direct appointment.

Members of the PAC this week scrutinized the timing and process behind the managing director’s ascent to the top job at the state-owned development finance institution.

The previous board was dissolved around August 2025. The dissolution was framed as part of the government’s restructuring of boards across several state-owned entities.

Proceedings from the PAC suggest the timing of the dissolving of the then board was too convenient. Keabetswe was appointed as caretaker managing director effective August 1, 2025, following the board’s departure. He later transitioned to the permanent role of substantive managing director on February 1, 2026, following a six-month caretaker period, with the new board appointed on October 13, 2025, confirming him.

The role of the next board, it would seem, would only be to rubber stamp the appointment of Keabetswe.

According to a member of the previous board, they had been told during their recruitment exercise that they were ‘wasting’ their time because there was already an ordained candidate for the job. He would not disclose who said that. The then board had advanced in their interviews for a suitable candidate. ‘We were conducting psychometric tests on selected candidates,’ the member said.

The PAC questioned the process behind his appointment of Keabetswe. Committee member and Nkange MP Motlhaleemang Moalosi asked Permanent Secretary at the Ministry of Trade, Joel Ramaphoi, how Keabetswe was identified and if there was an advertisement for the job and if other Batswana were given the chance to apply. The response was in the negative. Ramaphoi said Keabetswe was appointed directly by the Mnister because there was no board.

Moalosi also pointed to a forensic audit at BDC in which he alleged Keabetswe may have been implicated. He said the report pointed to alleged unethical behavior by the then investment officer Keabetswe. Sunday Standard is informed that some of the allegations in the report pointed to insider trading. Keabetswe left BDC then to work for a company in Mauritius before his return to BDC as caretaker MD in 2025 before being confirmed as substantive early this year.

Moalosi also raised questions about Keabetswe’s salary which he said was almost three times that of his predecessor. He said Keabetswe’s salary was P400,000 while his predecessor earned P150,000. He questioned why the disparity. Ramaphoi asked for time to get answers on both questions on recruitment process and the salary.

Following the dissolution and suspension of the board structure in August 2025, Keabetswe stepped in as caretaker managing director before being appointed as substantive managing director effective February 1, 2026.

The government is preparing to review the 15 percent committed allowance paid to senior public service executives as it intensifies efforts to rein in recurrent expenditure amid mounting fiscal pressure from declining diamond revenues.

Permanent Secretary in the Ministry of Finance Dr Tshokologo Kganetsano said the allowance costs government close to P100 million annually and has become a priority as authorities seek to contain spending while preserving essential public services.

Speaking on government’s expenditure reduction programme, Kganetsano said ministries had already cut operational costs, but reviewing personnel-related allowances had become unavoidable.

‘We have managed to cut expenditure in several areas, but there is still a need to revisit committed allowances because they consume close to P100 million from government coffers,’ he said.

Kganetsano questioned whether the allowance continues to fulfil its intended purpose, revealing that some beneficiaries still receive the payment despite not performing official duties outside normal working hours. He also acknowledged growing dissatisfaction within the public service, with junior officers arguing they often work beyond normal hours without receiving comparable benefits.

The Ministry of Finance is considering a wider review of public sector allowances and will engage the Directorate of Public Service Management before implementing any changes.

The proposal forms part of Botswana’s broader fiscal consolidation programme as weak global diamond demand continues to erode mineral revenues, the country’s largest source of government income. Authorities have already introduced tighter controls on travel, procurement and operational expenditure, with personnel costs now emerging as the next focus of spending reforms.

The World Bank and the International Monetary Fund have repeatedly urged Botswana to curb growth in its public sector wage bill while improving productivity and domestic revenue mobilisation.

Botswana’s newly secured duty-free access to the United States offers a competitive advantage over India’s diamond exports, which now face a 10% U.S. tariff, but a top economist says the shift is unlikely to dramatically alter the global diamond trade.

While the tariff differential could encourage some high-value diamond processing to move to Botswana, the country’s higher production costs and structural bottlenecks mean India is expected to retain its dominant position in the global cutting and polishing industry.

‘It’s helpful but not a game changer,’ said Dr. Keith Jefferis, managing director of Econsult Botswana.

‘The main problem is that India is so much more efficient (lower cost) in diamond cutting and polishing that the 10% tariff cost advantage in Botswana vs India is offset by much higher costs in general in Botswana compared to India. So, for most diamonds India is still more competitive, even with the 10% US tariff.’

The comments come as Botswana stands to benefit from preferential access to the U.S. market after Washington maintained a 10% tariff on Indian diamond imports while granting Botswana duty-free treatment, potentially giving the world’s leading rough diamond producer a pricing advantage in one of the industry’s most important consumer markets.

Jefferis said the biggest opportunity lies in larger, higher-value stones where labour costs play a smaller role in determining competitiveness. ‘The exception is for larger diamonds (3 or 5ct+) that can be cut cost effectively in Botswana, and it is possible that more of these will be cut in BW and less in India,’ he said.

Even if demand for Botswana-polished diamonds rises, Jefferis warned that local manufacturers may struggle to expand production because of domestic policy constraints.

‘However, the local industry still faces constraints in expanding. First firms cannot get the work permits they need to bring in trainers and highly skilled polishers, and second there is a punitive Training Levy that is imposed on a firm’s turnover and therefore penalises high value low margin businesses such as diamond cutting and polishing.’

He said Botswana’s levy places local firms at a disadvantage against rival polishing centres. ‘In competing jurisdictions, the TL is imposed on a firm’s wage bill not turnover, and does not impose this penalty.’ The tariff advantage also does little to address the industry’s biggest long-term challenge which is the rapid rise of lab-grown diamonds, which continue to undercut natural stones on price.

Dr. Jefferis also says the newly secured duty-free access to the United States ‘does little to change the relative price points of Botswana natural diamonds vs synthetic diamonds, as the latter has a price advantage of 70-80%’.

The assessment suggests Botswana’s improved access to the U.S. market could provide a welcome boost for selected segments of its downstream diamond industry, particularly larger stones. But without reforms to lower business costs and ease skills shortages, the country is unlikely to significantly erode India’s commanding share of the global cutting and polishing market despite the new tariff landscape.

Public accountability does not end when a public officer leaves office. Whether through retirement, resignation, transfer, or the conclusion of a term, departure from public service does not erase the responsibility to explain decisions made while exercising public authority. Botswana’s constitutional and statutory framework recognises this principle through mechanisms designed to ensure that Parliament can properly perform its oversight role.

The legal foundation for this power lies primarily in the National Assembly (Powers and Privileges) Act, rather than in the Standing Orders of Parliament. Standing Orders regulate the internal procedures of the National Assembly and do not, by themselves, create obligations for persons outside it. The Act, by contrast, gives Parliament legally enforceable powers, including the ability to require attendance, compel evidence, and address non-compliance.

Section 9 of the Act permits an order requiring a person to attend before the Assembly or a committee, and its wording is directed at ‘any person’, without limitation to serving public officers. This includes former office-holders where their evidence is relevant to an inquiry. Section 10 requires such an order to be formalised through a summons served on the person concerned, ensuring clear notice of the obligation to attend. If the person fails to comply, section 11 empowers the Speaker to direct the issue of a warrant of apprehension, executable by the Botswana Police Service to secure attendance.

These provisions are not punitive in purpose; they exist to protect Parliament’s constitutional responsibility to oversee public administration and the use of public resources. Section 12 allows witnesses to be examined under oath, while section 19 creates offences relating to failure to attend, refusal to answer lawful questions, and the giving of false evidence.

The Act also recognises reasonable limits. Section 13 permits a witness to object to a question concerning private matters unrelated to the inquiry, though the Speaker, not the witness, determines whether the objection is valid, preventing the protection from becoming an automatic refusal mechanism. Section 14 similarly protects sensitive government or security-related information, but through constitutional and executive process rather than by the witness simply declining to answer. Section 14(4) further limits the use of answers given before Parliament in unrelated civil or criminal proceedings, except in cases of perjury or obstruction arising from that evidence.

The question of former officials becomes especially relevant to parliamentary oversight of public finances. The Public Accounts Committee examines accounts and reports certified by the Auditor-General under the Public Finance Management Act, and such examinations typically occur after the relevant financial period has ended, by which time the responsible official may no longer hold the position. Were accountability to end the moment an official left office, oversight would be significantly weakened, since officials could avoid scrutiny simply by departing before inquiries commence.

The Constitution supports this approach. Section 41 protects a sitting President from certain legal proceedings during the period of office, but that protection is tied to the office and the period of incumbency. Once the office is vacated, the constitutional position changes; a former office-holder retains no general exemption from lawful process merely by virtue of having previously held high public office.

This approach is consistent with parliamentary practice in jurisdictions sharing Botswana’s Westminster legal heritage, where the authority of legislatures to call for persons, papers, and records has long been understood to extend beyond current office-holders, where the information sought concerns matters of public importance and decisions taken during a person’s tenure.

The broader principle is therefore straightforward: public office is a position of responsibility, not a shield from accountability after departure. Parliament’s ability to call former officials before it depends not on whether they remain in office, but on whether their evidence is relevant to its oversight function. A separate constitutional question remains as to how far comparable powers may apply to certain serving constitutional office-holders, including the President, and that issue requires its own analysis. The narrower position, however, is settled: under Botswana’s existing statutory framework, Parliament has both the authority and the mechanisms to require former public officials to account for decisions taken while entrusted with public responsibility.

Botswana’s economy has emerged from two years of recession, but economists warn the recovery will remain fragile unless government accelerates long-delayed reforms, reduces borrowing and tackles the country’s heavy dependence on diamonds.

The latest Econsult Botswana Review says the economy is sending ‘mixed signals’, with GDP returning to positive territory while inflation, weak diamond exports and high borrowing costs continue to weigh on businesses and households. ‘The Botswana economy continues to send mixed signals,’ economist Keith Jefferis writes in the quarterly review.

The economy grew by just 0.2 percent in the first quarter of 2026, ending successive contractions recorded in 2024 and 2025. However, mining output still declined 9.6 percent, despite stronger performances from copper and soda ash producers. The report argues Botswana’s biggest challenge is no longer simply recovering from the diamond slump, but transforming an economy still heavily dependent on a commodity facing growing competition from synthetic stones and weak global prices.

Although diamond production rose 4.7 percent during the first quarter, exports between January and May fell 29 percent, forcing producers to stockpile unsold stones. Overall exports dropped 17 percent in the first five months of the year, widening Botswana’s trade deficit to P12.8 billion. One encouraging sign, however, was a 16 percent increase in non-diamond exports, driven by stronger copper and manufactured exports, suggesting diversification efforts are beginning to gain traction.

Households have meanwhile been squeezed by rising prices. Annual inflation climbed from 4.2 percent in March to 10.7 percent in June, largely because of higher global oil prices linked to conflict in the Middle East. Econsult expects the spike to ease following July fuel price cuts. ‘We expect Botswana inflation to fall from current levels in the coming months,’ the report says, forecasting inflation of around 8 percent by year-end.

Businesses face another hurdle: expensive credit. Despite ample liquidity in the banking sector, lending has slowed sharply as high interest rates and government borrowing crowd private firms out of the credit market.

‘Government borrowing to finance large budget deficits is crowding out the private sector from the credit market,’ the report says, noting lending to businesses and households has turned negative for the first time in three decades.

Government finances have improved, helped by a P7.3 billion dividend from the Bank of Botswana, although public debt still rose from 29 percent to 34 percent of GDP last year. Econsult expects the economy to grow between 2.5 percent and 4.5 percent this year as Debswana increases production. But Jefferis says lasting growth depends on faster implementation of the Botswana Economic Transformation Plan (BETP).

‘The BETP is an admirable programme,’ the report concludes, ‘but would benefit from better reporting on its progress.’ It adds that reforms, including privatisation and improving governance of state-owned enterprises, ‘need to be accelerated.’

Botswana Meat Commission (BMC) has again failed to fully utilise the country’s annual Norway beef quota after recurring foot-and-mouth disease outbreaks disrupted cattle movements and slaughter operations, allowing neighbouring Namibia to secure additional export volumes in one of the region’s most lucrative beef markets.

Botswana and Namibia each have access to about 1,600 tonnes of duty-free beef exports to Norway under a preferential quota arrangement. Norway remains a premium market because imports outside the quota attract steep tariffs.

Namibia’s state-owned meat processor, Meatco, said it had secured additional quota volumes released by Botswana and had exported 45.2% of its Norway allocation by mid-April, compared with 29.2% at the same stage in 2024.

The Norway market contributes 18% of Meatco’s international revenue and helped drive the company’s return to profitability. In the 2024/25 financial year, Meatco earned N$1.514 billion (about P1.16 billion) from direct beef sales, with Norway accounting for roughly N$227 million (about P174 million) of revenue.

The latest shortfall extends Botswana’s struggle to consistently utilise the Norway quota since 2021, despite reforms aimed at reviving BMC. Government ended live cattle exports for slaughter in 2023 to increase supplies to domestic abattoirs after BMC struggled to secure enough cattle for export markets.

Bank of Botswana data show exports of meat and meat products recovered from P137.2 million in 2022 to P311.9 million in 2023, P403.6 million in 2024 and P441.5 million in 2025, but remain about 62% below the P1.15 billion recorded in 2016, before the prolonged decline in Botswana’s beef exports.

The debate on Batswana’s lips over whether President Duma Boko is taking Botswana in the right direction or the wrong one will, for the first time, be grounded in hard evidence when the Mo ibrahim Foundation releases the 2026 Inbrahim Index of African Governance.

On social media, homes and social gatherings across the country, opinions are shaped by perceptions, political loyalty and lived experience. The upcoming 2026 Ibrahim Index is expected to cut through the noise, offering a data driven assessment of Botswana is performing under President Boko’s leadership.

The Ibrahim Index measures governance broadly. Its methodology covers political participation, rights, rule of law, security, public administration, economic opportunity, human development and other dimensions of state performance.

The 2026 edition will draw on hundreds of variables from dozens of international data sources. Crucially, the index will be released on October 31st, the second anniversary of Boko’s presidency, giving it added political and symbolic weight as a mid-term benchmark of his administration’s early performance.

The forthcoming index should not be treated as a verdict on Boko’s presidency. Its data will only cove through the end of 2025, meaning that that the index captures only the early part of the Unvrella For Democratic Change (UDC) administration. It will take several more editions befoe a clear trend under Boko can be established. But the 2026 index will nevertheless be significant. It will provide the first independent, continent-wide statistical benchmark against which the new government’s governance record can be measured.

Anti-corruption performance wil be particularly important. The Mo Ibrahim Foundation’s preliminary findings for the forthcoming index show that corruption remains one of the continent’s major governance challenges, with African countries divided between those improving and those experiencing deterioration.

Although Botswana remains ranked sixth in Africa with an Anti-Corruption score of 57.8, the index classifies the country among only six African nations experiencing ‘Increasing Deterioration’-a category reserved for countries whose anti-corruption performance has not only declined but where the pace of decline has accelerated since 2021.

The report shows Botswana’s score has fallen by 8.6 points over the past decade, causing the country to drop three places in continental rankings.

Botswana is listed among the five countries recording the worst anti-corruption deterioration since 2016, alongside Comoros, Liberia, South Africa and Niger.

The Mo Ibrahim Foundation’s preliminary 2026 Anti-corruption assessment provides a decade-long measure of Botswana’s anti-corruption trajectory through 2025, including the first year of the Boko administration. The report is expected to reveal details on whether the the country’s anti-corruption deterioration continues under Boko’s presidency or is being reversed.

Another crucial measure will be whether President Boko’s recent sweeping changes in the leadership in Botswana’s civil service has made the state better or worse off.

Botswana’s public administration has traditionally been regarded as one of the country’s institutional strengths. The Ibrahim Index preliminary report has recorded a decline in the effectiveness of the state. The preliminary index however captured a decade-long trend and does not have specific findings for the period under the UDC government. Those figures are expected in the detailed final report.

The economic test will also be increasingly important because the new government has inherited a much less comfortable fiscal environment than previous administrations enjoyed. The global diamond market has experienced a prolonged downturn and for Boko, fiscal discipline could be a governance issue as much as an economic one.

Botswana’s blood transfusion services are facing significant operational and structural challenges that require urgent reforms. This is according to the World Health Organization (WHO) Botswana Country Office Biennial Report 2024-2025.

The report highlights weaknesses ranging from fragmented coordination and outdated equipment to shortages of essential supplies, limited data systems and gaps in quality assurance – issues that could affect the country’s ability to provide safe and timely blood products to patients.

The WHO assessment found that Botswana’s National Blood Policy, introduced in 2018, remains in draft form and lacks a supporting strategic implementation plan.

It also noted the absence of a national advisory body responsible for providing oversight and guiding the development of the blood transfusion system.

‘Blood transfusion services coordination remains fragmented,’ the report states. It warns that many blood centres operate with ageing equipment, inadequate cold-chain systems and manual processes for preparing blood components.

The WHO said procurement challenges have contributed to periodic shortages of reagents and other essential consumables needed for blood processing and testing.

‘Critical shortages exist across donor recruitment, laboratory operations, quality management and data systems,’ the report said.

The global health agency warned that staff capacity also requires strengthening, with healthcare workers needing additional training in quality assurance, automation, regulatory compliance and international standards.

The report further raised concerns about Botswana’s blood information management systems noting that although the Integrated Patient Management System (IPMS) is expanding, the country still lacks a unified national blood information system.

According to WHO, inconsistent transmission of hospital data to the National Blood Transfusion Services (NBTS) limits real-time monitoring and weakens evidence-based decision-making.

The organisation also highlighted weaknesses in clinical transfusion practices, saying existing guidelines require updating to align with modern Patient Blood Management (PBM) principles.

‘Haemovigilance systems are weak, and most hospitals do not have functioning transfusion committees,’ the report stated, warning that this contributes to under-reporting of transfusion reactions and gaps in quality oversight.

To address the challenges, WHO has recommended a comprehensive reform programme covering governance, regulation, infrastructure, human resources and information systems.

The organisation called on Botswana to finalise and implement its revised National Blood Policy, establish a National Blood Advisory Group and strengthen the organisational structure of the NBTS.

It also recommended accelerating the enactment of the Medicines and Related Substances Bill and supporting accreditation of blood establishments through recognised bodies such as the Africa Society for Blood Transfusion (AfSBT).

On infrastructure, WHO called for investment in automated blood component production technologies, modern cold-chain systems and improved procurement mechanisms to prevent stockouts.

The report also recommends developing a national plasma strategy and recruiting specialised personnel to strengthen technical and managerial capacity.

WHO noted that despite significant government investment in health, the country continues to face financing inefficiencies, with 80-90 percent of the health budget allocated towards curative services, leaving prevention and health promotion underfunded.

‘Primary healthcare remains underfunded, despite being essential for achieving universal health coverage,’ the report noted.

The organisation also highlighted medicine shortages, supply chain weaknesses and disruptions affecting HIV/AIDS services following reductions in external funding.

Botswana’s maternal, newborn, child and adolescent health programmes also face persistent challenges, including shortages of health workers, vaccine stockouts, limited outreach services and gaps in reporting systems.

WHO further warned that Botswana’s ability to respond to public health emergencies remains constrained by regulatory and operational gaps.

The report noted that several emergency preparedness plans and standard operating procedures remain in draft form awaiting approval, while the absence of a fully operational Public Health Emergency Operations Centre (PHEOC) weakens coordination during outbreaks.

WHO said stronger multisectoral coordination, improved logistics systems and increased surge capacity in laboratories and healthcare staffing are needed to strengthen national emergency response.

The current state of the economy has left many businesses across Botswana grappling with declining sales, delayed customer payments, rising operating costs, and increasing pressure from creditors. For most directors, the first instinct is to ride out the storm with the hope that the financial turbulence will eventually subside. What many directors fail to appreciate is that this is often the point at which the risk of reckless trading starts to emerge.

Financial distress often places directors in the difficult position of deciding whether to continue trading in the hope of recovery or to take steps to protect creditors from incurring losses.

Where directors continue to incur obligations despite clear evidence that the company is unlikely to meet them, they risk crossing the line from prudent commercial decision-making into reckless trading. In such circumstances, the law empowers the courts to hold directors civilly liable where they have knowingly allowed the company to incur debts despite there being no reasonable prospect of those debts being paid as they fell due.

In practice, this means that where directors fail to exercise oversight over the affairs of the company or ignore financial warning signs, and those failures result in loss or prejudice to the company or its stakeholders, they may be required to compensate the company, creditors, or other affected stakeholders for the resulting losses.

In many cases, reckless trading does not arise from deliberate misconduct or wilful negligence. Instead, directors and management fall into it by continuing with familiar ways of managing financial challenges, believing that strategies which worked in the past will carry the company through another difficult period.

One of the most common mistakes made by company executives is failing to distinguish between temporary cash-flow pressure and actual insolvency. It is common for companies to experience short-term liquidity challenges caused by delayed customer payments, seasonal fluctuations or broader economic conditions. These challenges do not necessarily mean that a business is likely to fail. However, directors should be cautious of assuming that short-term liquidity pressures will resolve themselves without a clear assessment of the company’s financial position and a realistic plan for recovery.

Reckless trading may also occur when a company starts relying on new debt to service existing obligations. While obtaining short-term finance or negotiating extended credit terms may form part of a legitimate turnaround strategy, directors should be cautious of relying on new debt to meet existing obligations and incurring liabilities that cannot realistically be honoured.

One of the defining characteristics of companies that ultimately fail is delayed intervention. Directors frequently seek legal, financial or restructuring advice only after creditors have commenced legal proceedings or the company’s financial position has deteriorated beyond repair. At this point, many of the restructuring options that were previously available may no longer be viable. Boards that recognise financial distress early on and seek professional advice place themselves in a far better position to consider business rescue solutions such as judicial management before liquidation becomes unavoidable.

Too often, boards regard judicial management and liquidation as measures of last resort, only to discover that they have acted when it is already too late. In reality, both are statutory mechanisms intended to protect companies, creditors and directors alike.

Once a company is placed under judicial management, a court appointed judicial manager takes over the control of the company and its affairs. The judicial manager is then tasked with ensuring that measures aimed at restoring the company to financial viability are implemented.

A key advantage of judicial management is that it provides the company with relief from creditor action while a recovery plan is developed and implemented. During this period, legal action against the company is put on hold, giving the judicial manager time to understand the company’s challenges, develop a recovery plan and negotiate with creditors without the immediate pressure of enforcement action.

Where the company has been successfully rehabilitated and is able to meet its obligations going forward, the court may terminate the judicial management order and control of the company’s affairs may return to the directors. However, where the company cannot be rescued and there is no reasonable prospect of recovery, the judicial manager may recommend that the company be placed into liquidation.

The decision to move from preservation to liquidation is one that requires careful consideration by the board. Directors must recognise that their duty is not to preserve the company at all costs, particularly where continued trading is likely to increase losses and prejudice creditors. It is the directors’ fiduciary duty to initiate or support liquidation of the company where there is no reasonable prospect of rehabilitation.

Liquidation provides a structured and orderly process for winding up the affairs of a company. An independent liquidator is appointed to take control of the company’s assets, realise them for the benefit of creditors, investigate the company’s financial affairs where necessary, and distribute the proceeds in accordance with the priorities prescribed by law. By bringing trading to an end, liquidation also prevents further debts from being incurred and protects creditors from additional losses that may result from continued trading.

In carrying out their duties, liquidators are required to investigate the circumstances that led to the company’s failure and determine whether there is evidence of misconduct, reckless trading, fraudulent trading or breaches of directors’ duties. Where appropriate, they may institute proceedings to recover losses on behalf of the company or its creditors or seek orders holding directors and other responsible parties personally liable.

Ultimately, the hallmark of good corporate governance is not keeping a financially distressed company alive at all costs but recognising when the company requires a different course of action. In today’s challenging economic environment, the most effective boards are not those that avoid judicial management or liquidation, but those that have the courage and foresight to implement the right process at the right time.