Notarial Bonds: Securing debt in times of uncertainty
Should directors neglect their duties by continuing to operate without proper consideration for a weakening financial position, they could be held liable for the losses as a result.
Schindlers Attorneys explains more in this story https://www.schindlers.co.za/2020/directors-duties-to-a-company-when-considering-business-rescue
A creditor is often faced with the decision of what form of security for the due and proper performance by the debtor of its obligations under, for example, a loan agreement, would be most beneficial to the creditor.
Common forms of security include suretyships, guarantees, pledges, mortgage bonds (if the debtor owns immovable property) and notarial bonds (“Bond/s”) (if the mortgagor owns movable property).
Bonds are a lesser known form of security and under-utilised in commercial practice. Bonds may be used in conjunction with other forms of security, depending on the transaction.