Armstrongs is proud to have represented Alexander Forbes in a successful appeal before the Court of Appeal in a dispute with the Botswana Unified Revenue Service.
Alexander Forbes had provided services to a client over several years. It was later discovered that the client had been overcharged in earlier years. To correct this, Alexander Forbes refunded the client and recorded the refund as a rebate in its 2017 financial statements.
BURS argued that this amount should not be deducted for tax purposes because it related to earlier years and effectively changed past tax returns. It therefore issued an additional tax assessment disallowing the deduction. Alexander Forbes challenged this decision first before the Board of Adjudicators, which ruled in favour of BURS, and then before the High Court, which ruled in favour of Alexander Forbes.
The Court of Appeal agreed with Alexander Forbes and confirmed the High Court’s decision. It found that the rebate was part of the company’s normal business activities and was sufficiently connected to income it had already earned. The Court also held that, even though the overcharge happened in earlier years, the obligation to refund the client only arose in 2017, so the deduction was correctly claimed in that year. In addition, the Court found that BURS was out of time to reopen the assessment, as it had not met the legal requirements to do so after the four-year limit had passed.
This judgment makes it clear that businesses can claim deductions for expenses that arise when correcting earlier transactions, provided those expenses are closely linked to their business. It also confirms that tax authorities must act within strict time limits when seeking to reopen assessments.
Armstrongs commercial partner Sipho Ziga acted for Alexander Forbes in the matter
Reckless trading is not expressly defined in Botswana’s Companies Act (the “Act”) or in any other legislation.
However, in broad terms, it may be described as carrying on business, or incurring further obligations, in circumstances where there is no reasonable basis for believing that the company will be able to meet those obligations as they fall due. It is not limited to fraud or deliberate misconduct, and may also arise from negligent conduct, willful blindness, or a serious disregard of the company’s financial position and the risk of prejudice to creditors.
In today’s economic climate, many companies face increasing financial strain. Cash flow tightens, creditors apply pressure, and directors are required to make difficult commercial decisions. In such circumstances, it is often tempting to continue trading in the hope that the company’s position will improve. However, once a company is no longer able to meet its obligations, or is clearly heading towards insolvency, the legal position changes fundamentally.
In terms of the Act, directors occupy a fiduciary position and are subject to strict legal duties. Section 130 requires directors to act in good faith and in the best interests of the company, while section 158 requires them to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. These duties require active oversight of the company’s financial position and informed decision making at all times.
A company is not solvent simply because it continues to operate. It must be able to pay its debts as they fall due, and its assets must exceed its liabilities. Once this is no longer the case, the focus of directors shifts away from shareholder value and towards the protection of creditors.
The Act creates clear mechanisms through which directors and officers may be held personally liable where that shift is ignored. Section 160 of the Act provides that a director who is knowingly party to the company incurring a debt without a reasonable or probable expectation that it will be paid may be required to compensate for the resulting loss. In addition, section 158 exposes directors to civil liability where they fail to act with the required level of care, diligence and skill.
The position becomes even more acute once a company is placed under liquidation or judicial management, as its affairs then come under greater scrutiny.
Once appointed, a liquidator or judicial manager will investigate the affairs of the company for the purpose of recovering value for the benefit of creditors, including by pursuing individuals involved in the conduct of its business.
Section 481 of the Act empowers the court, on the application of a liquidator, judicial manager, or any interested person such as a creditor, to hold any person who knowingly participated in reckless or fraudulent trading personally liable, without limit, for all or part of the company’s debts.
This exposure is not confined to directors. It extends to any person who was knowingly party to the conduct of the business, including company officers and others involved in its management or affairs, and it does not require the company to be in liquidation or judicial management for the provision to apply.
The consequences are not only financial. In addition to personal liability, the High Court may, under section 501 of the Act, disqualify a person from acting as a director where that person’s conduct falls below the standard required of those entrusted with the management of a company.
This may arise where a director has, inter alia, persistently failed to comply with the Act or the Botswana Stock Exchange Act, breached duties owed to the company or its stakeholders, engaged in fraudulent conduct, acted in a reckless or incompetent manner, or was responsible for a company being forced into insolvency, restructuring, or winding up due to its inability to meet its obligations.
Such an order under section 501 may prohibit that person, without leave of the court, from acting as a director or promoter of, or being involved, directly or indirectly, in the management of a company for a period not exceeding five years, with significant implications for future directorships and professional standing.
In practice, the risk of personal liability rarely arises from a single decision. Rather, it develops over time. It often begins with mounting pressure on cash flow and an increasing inability to meet obligations as they fall due. This is frequently followed by a reliance on new credit to sustain operations, decisions taken on the basis of uncertain or informal funding arrangements, and a gradual erosion of financial discipline.
Certain patterns also tend to emerge. These include a failure to maintain proper accounting records, the absence of reliable financial information, the use of company funds for purposes outside the ordinary course of business, and the continued incurring of obligations in circumstances where there is no clear basis for repayment.
The Act does not seek to penalise honest commercial judgment. It does, however, require directors to act in good faith, exercise reasonable care, diligence and skill, and ensure that decisions are properly informed and documented. In practical terms, this requires directors to maintain sufficient oversight of the company’s financial position, to interrogate the basis upon which obligations are incurred, and to act decisively where financial distress becomes apparent. This may include obtaining appropriate legal, financial, or restructuring advice at an early stage.
Reckless trading is not simply about business failure. It arises where financial reality is ignored and creditors are exposed to risk without a reasonable basis. Once insolvency sets in, the risk no longer rests with the company alone. It may shift to the individuals behind it.
On the 1st December 2025, the Employment and Labour Relations Act, 2025 was published in the Botswana Government Gazette.
Key dates to note:
Date of Assent:27th November 2025
Date of Commencement:On Notice
The publication of this Act marks a significant milestone in the ongoing reform of employment and labour relations law in Botswana. Once brought into force, this Act will have wide-ranging implications for employers, employees, trade unions, and practitioners across the labour and employment landscape.
The changes are significant and will materially change the employment and labour law landscape of Botswana.
Stakeholders are advised to ensure full compliance with the new legislative framework in anticipation of the commencement notice which may be issued any day.
Get in touch with our Employment and Labour Law Team to get up-to date with the changes in Botswana’s labour law space and to understand how these changes will impact your business:
On Friday, 15 August 2025, the Banking Act No. 8 of 2023 came into force.
The Act has officially reshaped Botswana’s financial landscape, repealing the 1995 Act and introducing a modern, risk-sensitive, and governance-driven framework.
Key highlights of the new Act include:
Wider scope – covering banks, deposit-taking institutions, and cross-border entities.
Prohibition of foreign branches – ensuring stronger local oversight.
Robust governance – mandatory board committees and enhanced accountability.
A new resolution regime – tools to manage failing banks without destabilising the system.
Stronger risk management – early intervention, recovery plans, and biometric reporting.
Independent Appeals Tribunal – offering impartial recourse for regulatory disputes.
Alignment with Basel & IFRS – positioning Botswana as a credible player in global finance.
The new Act is more than just a reform – it represents a strategic recalibration of Botswana’s financial regulatory architecture. For banks, investors, and businesses, it sets a new standard for compliance, stability, and transparency.
Our Commercial Team at Armstrongs —
Introduction
When demand letters and follow-ups fail, many creditors turn to the courts. But as many discover, a judgment is only as good as its enforcement. Whether you’re a company, landlord, bank or individual, recovery doesn’t end with a court order, it begins with it. That final step, the one that turns your court victory into actual payment, is where Deputy Sheriffs come in.
With the new Deputy Sheriff’s Act, 2024 and its Regulations, Botswana has transformed the legal framework for enforcing court orders. These changes bring greater oversight, transparency and professionalism, offering creditors a more reliable path to getting paid.
Key Changes Creditors Should Know
1. Structured Oversight and Regulation
Previously, Deputy Sheriffs were appointed under Section 18 of the High Court Act (CAP 04:02) by the Registrar of the High Court. The Registrar also served as Sheriff and was responsible for their supervision. This was an arrangement with no clear statutory framework. There were no qualification requirements, no formal register of Deputy Sheriffs and no built-in accountability mechanisms.
Now, under Part II of the new Act (sections 3 – 4), the Sheriff is a standalone public official appointed by the President to oversee the profession. The Sheriff’s functions include maintaining the register of Deputy Sheriffs, issuing and renewing practising certificates, resolving public complaints against Deputy Sheriffs, inspecting and approving storage facilities for attached property and assessing reports from Deputy Sheriffs.
Working alongside the Sheriff is the Board of Deputy Sheriffs, established under Part VIII (sections 19 – 30). The Board recommends suitable candidates for appointment as Deputy Sheriffs, issues Fidelity Fund certificates, manages the Fidelity Fund, inspects compliance with the Code of Conduct and professional standards. It can also investigate complaints and establish specialist committees to assist in oversight.
Together, the Sheriff and Board of Deputy Sheriffs replace a fragmented structure with a clear, institutionally governed framework, ultimately giving creditors more confidence in who they are instructing.
2. Financial Safeguards and the Fidelity Fund
One of the most important reforms is the introduction of statutory financial safeguards.
Under section 18 of the new Act, Deputy Sheriffs must operate a separate trust account for client monies. These accounts must be audited annually, and interest that accrues to the trust account must be paid into the Fidelity Fund. The money in these accounts is protected by law and cannot be treated as the Deputy Sheriff’s personal or business assets, even in the event of that Deputy Sheriff’s death or insolvency.
In addition, Part XI (sections 41 – 47) establishes the Fidelity Fund for Deputy Sheriffs. No Deputy Sheriff may lawfully practise without holding a valid Fidelity Fund certificate, which is issued and renewed annually (section 49). The certificate is issued by the Board of Deputy Sheriffs upon application and payment of a prescribed fee (sections 42, 48 and 50). The Fund is financed through prescribed levies, application fees, interest from trust accounts and income from investments (section 43). It may be used to compensate persons who suffer loss or hardship due to dishonesty or misconduct by a Deputy Sheriff or their employee (section 45).
If funds are misused or delayed, creditors now have a clear statutory route to claim compensation under section 45, instead of attempting to claim same through a long civil suit. This combination of trust accounts and a Fidelity Fund provides both preventive and remedial protection.
3. Qualifications, Licensing and Removal
Under sections 5 – 8, only applicants who hold a certificate in law, commerce, accounts, tracing, auctioneering or a related field may be appointed as Deputy Sheriffs (section 7). These requirements ensure that Deputy Sheriffs have a baseline understanding of the legal, commercial or financial principles necessary for executing judicial mandates responsibly. Disqualifying factors include prior convictions for dishonesty, insolvency, dismissal from a position of trust or past misconduct (section 8).
Under sections 14 – 17, Deputy Sheriffs must also hold a practising certificate, issued annually by the Sheriff. If they fail to renew, or breach the Code of Conduct, they may be removed from the official register.
The profession is now tightly regulated and only those who meet legal, financial and ethical standards may remain in practice.
4. Code of Conduct, Tariff Caps and Complaint Procedure
The Deputy Sheriffs Regulations, 2025 (S.I. No. 33 of 2025) introduce a Code of Conduct (Schedule 3) and a fixed tariff schedule (Schedule 2). Both are designed to protect clients and creditors from abuse or uncertainty.
The Code of Conduct requires Deputy Sheriffs to act with diligence, use only reasonable force, avoid property damage during enforcement, and most importantly for creditors, remit client funds without delay or unauthorised deductions. These obligations are enforceable and failure to comply can result in suspension or removal.
The tariff system standardises Deputy Sheriffs’ fees. Execution of a writ against immovable property, for example, is now capped at BWP 2,000.00, with travel and service charges clearly regulated. If enforcement is withdrawn or becomes unnecessary due to insolvency, the Deputy Sheriff may claim 1.5% of the writ amount, making the costs predictable even where full recovery has not been achieved.
In addition to the above, procedures governing how execution and civil imprisonment are to be carried out are set out in the Deputy Sheriffs (Execution) Regulations, 2025 (S.I. No. 34 of 2025) and the Deputy Sheriffs (Procedure for Civil Imprisonment) Regulations, 2025 (S.I. No. 32 of 2025).
When a Deputy Sheriff fails to comply with the procedures or standards set out in the Regulations, creditors now have a formal complaint procedure to turn to. In terms of Regulation 9 of the Deputy Sheriffs Regulations (S.I. No. 33 of 2025), complaints against a Deputy Sheriff may be lodged with the Board of Deputy Sheriffs using a prescribed form (Form 6, Schedule 1). Complaints may also be forwarded to the Board by the Judicial Service Commission, a court or a member of the Administration of Justice. If the Board finds the complaint reasonable, it may initiate a hearing, order a refund of unaccounted funds, suspend the Deputy Sheriff’s certificate or refer the matter for prosecution or civil action (Regulation 10).
Conclusion
The Deputy Sheriffs Act, 2024 represents a significant shift from a loosely regulated enforcement environment to one that is professionally governed, financially accountable and protective of creditors’ interests. With stronger oversight, predictable costs and legal protections for recovered funds, creditors can now enforce their rights with greater speed, security and confidence.
Deputy Sheriffs who were operating under the old system have been given a 12-month window from the commencement of the Act to align with the new requirements. After that, they must be fully licensed under the new regime to continue practising. This transition ensures continuity while reinforcing the expectation that all enforcement is now subject to a more reliable legal framework.
