Ex parte New Seasons Auto Holdings (Pty) Ltd

• Jurisdiction: South Africa

Ex parte New Seasons Auto Holdings (Pty) Ltd
2008 (4) SA 341 (W)

2008 (4) SA p341

Citation	2008 (4) SA 341 (W)
Case No	08/8143
Court	Witwatersrand Local Division
Judge	Horwitz AJ
Heard	March 31, 2008
Judgment	March 31, 2008
Counsel	T Machaba for the applicant.

Flynote : Sleutelwoorde B

Company — Winding-up — Who can apply — Application by company for its own winding-up in terms of s 346(1)(a) of Companies Act 61 of 1973 — Whether competent for court to grant winding-up order on strength of directors' resolution alone — Liquidation of company not being exercise of power of C 'management' of company derived from art 60 of Table B of First Schedule to Act — Board of directors, on its own, having no power to put end to existence of company by resolving to seek order for its winding-up.

Headnote : Kopnota

A board's powers to manage the business of the company, derived from art 60 of Table B to the Companies Act 61 of 1973, do not include the power to D wind up the company. A board of directors therefore does not have the power to launch an application for the company's own winding up without a resolution approved by a general meeting of the company. (At 344G - H and 345H - I.)

Cases Considered

Annotations:

Reported cases E

Ex parte Graaff-Reinet Rollermeule (Edms) Bpk 2000 (4) SA 670 (E): not followed

Ex parte Russlyn Construction (Pty) Ltd 1987 (1) SA 33 (D): followed

Ex parte Screen Media Ltd 1991 (3) SA 462 (W): followed

Ex parte Tangent Sheeting (Pty) Ltd 1993 (3) SA 488 (W): not followed. F

Statutes Considered

Statutes

The Companies Act 61 of 1973, s 346(1)(a): see Juta's Statutes of South Africa 2006/7 vol 2 at 1-243.

Case Information

Application by a company for its own winding up. The facts and issues appear from the judgment. G

T Machaba for the applicant.

Judgment

Horwitz AJ:

The present application is one by a company for its own winding up. The application was launched on the strength of a resolution passed by the company's board of directors that such an application be made, and what falls to be decided is whether it is competent to grant a H winding-up order on the strength of their resolution alone.

Mr Machaba, who appeared on behalf of the applicant, provided me with very full heads of argument and I am grateful to him for them. It is apparent that there are two diametrically opposed lines of thought. According to the one view, a resolution of the board of directors of a I company is insufficient to have the company wound up; only the members in general meeting may resolve to do so. According to the opposing view, the directors are indeed vested with the power to cause the company of which they are directors to be wound up, without a members' resolution. J

2008 (4) SA p342

Horwitz AJ

A Support for the former view is to be found in the respective judgments of Didcott J in Ex parte Russlyn Construction (Pty) Ltd 1987 (1) SA 33 (D) and Leveson J in Ex parte Screen Media Ltd 1991 (3) SA 462 (W). The latter view found favour with Schutz J (as he then was) in Ex parte Tangent Sheeting (Pty) Ltd 1993 (3) SA 488 (W) and Leach J B in Ex parte Graaff-Reinet Rollermeule (Edms) Bpk 2000 (4) SA 670 (E).

The matter has also received comprehensive attention in Henochsberg on the Companies Act vol 1 at 717 to 719.

No good purpose will be served in my reviewing the English and Irish C authorities and the older South African ones. That was done in the four South African cases which I have just mentioned and none provided the answer in any of those four cases. I intend therefore to limit myself to a review of the motivation in each of the latter, to draw what I can upon the learning in Henochsberg, and with the aid of those resources, express an opinion which I will happily be able to say is supported by 50% of the D case law on the subject, albeit at odds with the other 50%.

The Companies Act 61 of 1973 (to which I will henceforth refer simply as 'the Act') does not itself legislate in regard to the powers of directors of a company. This is something dealt with in the Articles of Association of each company. Didcott J did not have before him the articles of the E applicant in that case but went on to assume that they were identical to art 60 of Table B in the First Schedule to the Act. Mr Machaba tendered me a copy of the articles of the applicant in the case before me. The relevant article is also numbered 60 and is identical to art 60 of Table B. I quote the relevant portion thereof:

F The business of the company shall be managed by the directors who . . . may exercise all such powers of the company as are not by the Act or by these articles required to be exercised by the company in general meeting.

The same position pertained in the matter before Leveson J, the only G difference having...