Effective from the 1st April 2025, Lesotho enters a transformative phase in its commercial and financial legal landscape with the commencement of the Insolvency Act, 2022. This landmark legislation replaces a fragmented and outdated insolvency regime, introducing a unified framework for both corporate and personal insolvency.
From Fragmentation to Integration
Until now, Lesotho’s insolvency framework was split between two principal sources:
- The Companies Act 2011 governed corporate insolvency matters like liquidation and judicial management.
- The Insolvency Proclamation 1957 regulated personal bankruptcy, operating on principles that were increasingly antiquated and incompatible with modern commercial realities.
The new Insolvency Act repeals the aforementioned laws, consolidating all insolvency procedures into a single statute, ensuring a coherent, streamline and consistent approach to debt resolution across the board.
Restructured Oversight: Divided Responsibility
Previously, the Master of the High Court held expansive oversight over all insolvent estates.
The new Act introduces a dual oversight model:
- The Master of the High Court will now exclusively oversee individual (natural person) insolvencies.
- The Registrar of Companies assumes control over corporate insolvencies, embedding these matters within the companies registry framework.
The Insolvency Regulator (Part 8 of the Act)
One of the most groundbreaking innovations in the new Act is the creation of an Insolvency Regulator – a dedicated regulatory body tasked with:
- Licensing insolvency practitioners (liquidators, trustees, business rescue practitioners).
- Monitoring compliance and professional conduct.
- Receiving reports and performance assessments.
- Enforcing discipline, including removal of non-compliant practitioners.
It is important to note, however, that the Commencement Notice has specifically indicated that Part 8 (aforementioned) shall come into effect at a later date as the Minister may appoint by notice published in the gazette.
Important highlights of the Act.
- The Act has done away with judicial management.
- The Act has introduced amongst others, the concept of corporate rescue proceedings and cross-border insolvency.
- The Act does not apply to estates whose winding-up process has commenced and the liquidation and distribution account approved before the commencement of the Act.
- As articulated above, part 8 (Insolvency Regulator) is not yet in force.
For further information or advice contact the Webber Newdigate Insolvency Department here
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