State-owned company fighting liquidation
News24 reported that the High Court has postponed a decision on whether to halt Ithala State-Owned Company’s provisional liquidation.
This comes after the Prudential Authority applied to the Pietermaritzburg High Court for the Ithala’s provisional liquidation on Thursday, 16 January 2025.
Ithala is a licenced financial services company and registered credit provider wholly owned by the KwaZulu-Natal provincial government.
Commonly referred to as a bank, the Prudential Authority clarified in its statement that Ithala was never granted a banking licence. Therefore, it is not a registered bank.
Instead, it has operated similarly to a bank under an exemption granted to Ithala by the Finance Minister, which allowed it to receive deposits.
The Banks Act does not allow provincially owned state-owned entities to register as banks. Only a public company incorporated or registered as a national state-owned company can register as a bank.
The last of Ithala’s exemption notices, enabling it to operate as a bank, was issued in July 2022 and lapsed on 15 December 2023.
This was the last exemption notice Ithala was granted, which was the final chance for the company to regularise its deposit-taking activities following a series of non-compliance issues.
One condition of the last exemption notice required Ithala to obtain authorisation to establish a bank before 30 June 2023, which the company failed to do.
Ithala’s application for authorisation to establish a bank did not sufficiently demonstrate how it would address the numerous supervisory concerns the Prudential Authority raised.
Therefore, the Prudential Authority released a statement on Thursday saying it had filed papers for Ithala’s provisional liquidation.
However, Ithala launched an urgent application on Friday, 17 January, seeking to challenge its provisional liquidation.
In addition, News24 reported that the company sought to halt the actions of repayments administrator Johannes Kruger, who the regulator appointed to take control of Ithala’s deposits.
The publication reported that the Pietermaritzburg High Court heard Ithala’s urgent application on Friday but postponed proceedings until 28 January to give the Prudential Authority time to respond.
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