SU12- PART 2 Flashcards
Meetings: Creditors’ meetings
At least two meeting authorized by court after the winding up order or special resolution.
Purpose:
1. allow creditors to consider the company’s statement of affairs
2. prove claims against the company
3. nominate a liquidator
Meetings: Members’ meetings
Purpose:
1. consider the statement of affairs
2. nominate a liquidator
If company already disposed of the above at the general meeting then this meeting is not necessary
Proof of claims: Winding by the court
Creditors must prove their claims against the company at the creditor’s mutatis mutandis in accordance with the provisions relating to the proof of claims against the insolvent estate- s366(1)
Liquidator sets time by application the M
Proof of claims: Member’s voluntary winding up
Creditors do not have to prove their claims.
Liquidator settles all outstanding debts, realizes assets, and submits his liquidation and distribution account to the M
The liquidator
As soon as winding up order is made, the M must appoint any suitable person as a provisional liquidator- s368
Appointment of a liquidator
The Master must appoint as liquidator(s):
1. In the case of members’ voluntary winding-up, the person nominated in resolution;
2. In the case of creditors’ voluntary winding-up and a winding-up by the court, the person(s) nominated by first meeting of creditors and initial meeting of members.
Persons disqualified from being liquidator- s372(a)-(j)
- An insolvent;
- A minor or any other person under legal disability;
- …declared to be incapable of being appointed as a liquidator for dishonesty or abuse of his position;
- …removed from an office of trust by court or who has been disqualified from being a director;
- A body corporate
- …convicted of theft, fraud, forgery, uttering a forged instrument or perjury and has been sentenced to imprisonment without the option of a fine or a fine exceeding R 20.00
- …who, by misrepresentation or reward, induced or attempted to induce any person to vote or to nominate him;
- …not residing in South Africa;
- …who has acted as director, officer or auditor of company within 12 months before winding-up;
- An agent authorised to vote for or on behalf of a creditor at a meeting who acts or purports to act under such authority
*Business rescue= practitioner not to be appointed
Removal of liquidator from office- s379(a)- (e)
- not qualified, or has become disqualified
- not performed his duties satisfactorily;
- his estate has become insolvent or he has become mentally or physically incapable;
- the majority in number and value of creditors or members, has requested the Master in writing;
- the Master is of the opinion that the liquidator is no longer suitable
If M does not remove the liquidator, the court may…
In terms of s 379 and/or for any other good cause remove liquidator.
*It must be satisfied that removal of the liquidator will be to the general advantage and benefit of all interested in the winding-up
**The Court will take into account, the impact that the removal will have on the liquidator’s professional standing and reputation and the expense, disruption, and inconvenience of employing a new liquidator to complete the work
Impeachable transactions- s340(1)
If the company is wound up and unable to pay its debts, every disposition of property may be aside
Jurisdiction-CC
- High Court and Magistrates court
- Co-operations registered office/place of business
Grounds mirror those of in/solvent companies
- Resolution of members
- Failure to commence or continue with business
- Inability to pay debts- Ex parte Harmse
- Just and equitable- Gatenby
Jurisdiction
- High Court/ Magistrate Court
- Cooperation registered office/Place of business
Inability to pay debts case law: Ex Parte Harmse 2005
The Court held that the applicant had failed to adduce sufficient evidence to establish on a balance of probabilities that he was insolvent : “It is only when it is established that it is improbable that the debtor’s assets will realize sufficient to settle the amount of these debts in full that it can truly be said that the Court ought to be satisfied that the estate of the debtor is insolvent. Only acceptable and admissible evidence can displace the prima facie inference of solvency when the applicant’s own estimate of values exceeds the amount of the liabilities
Just and equitable case law: Gatenby case
Note the view of the court that there is a common feature in the legislation relating to companies and close corporations which is also to be found in the common law.
It is the acknowledgement of the underlying equitable principle that no co-owner, no partner, no shareholder and no member is normally oblige to remain a co-owner, partner, shareholder or member against his will in circumstances where this is unfair or oppressive to him.
*According to the court section 49(2) of the Close Corporation Act is designed for an extraordinary situation.
**On the face of it, the regulation of the future conduct of the affairs of a close corporation includes the sale of the corporation’s assets to pay the corporation’s debts with the proceeds.
**The court is satisfied that section 49(2) gives the court the power to order the sale of a corporation asset in order to enable a member who is being prejudiced to be paid out for his interest and thereby to bring about a termination of his membership.
