20.3 120 DAY RULE
There is a time limit for the solvency and distribution test to take place.
S 46
(3) If the distribution contemplated in a particular board resolution, court order or existing legal obligation has not been completed within 120 business days after the board made the acknowledgment required by subsection (1) (c), or after a fresh acknowledgment being made in terms of this subsection, as the case may be—
(a) the board must reconsider the solvency and liquidity test with respect to the remaining distribution to be made pursuant to the original resolution, order or obligation; and
(b) despite any law, order or agreement to the contrary, the company must not proceed with or continue with any such distribution unless the board adopts a further resolution as contemplated in subsection (1) (c).
In the event that the full distribution does not take place within 120 days the board of directors have to carry out a solvency and liquidity test again as well as acknowledge that they can proceed and complete a distribution. In other words, if 120 days has expired and the distribution has not been completed in full then the test has to be completed again before the distribution can be continued.
Once the acknowledgment has taken place periodic testing must take place if the company intends proceeding with the distribution.