Ex parte Russlyn Construction (Pty) Ltd

• Jurisdiction: South Africa
• Citation: 1987 (1) SA 33 (D)

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

1987 (1) SA p33

Citation	1987 (1) SA 33 (D)
Court	Durban and Coast Local Division
Judge	Didcott J
Heard	July 8, 1986
Judgment	July 10, 1986

Flynote : Sleutelwoorde

Company — Winding-up — Who can apply for — Application by company, directors of which had passed resolution for I liquidation in terms of s 346(1) (a) of Companies Act 61 of 1973 — No consent thereto by shareholders — Liquidation of company not the exercise of power of 'management' of company which was derived from art 60 of Table B of First Schedule to Act — Article 60 not enlarging or augmenting power of management — No decision reached by company therefore to J apply for liquidation.

1987 (1) SA p34

Headnote : Kopnota A

The applicant company applied for its liquidation in terms of s 346(1)(a) of the Companies Act 61 of 1973. It appeared that a resolution had been adopted by the directors of the company authorising the application without there being any such resolution passed by the shareholders. The company's articles of association were not before the Court but the Court was prepared to deal with the matter on the basis that they had borrowed from art 60 of Table B to the First Schedule of the Act which provided that 'The business of the company shall be B 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'. It was argued on behalf of the applicant, firstly, that a decision to liquidate the company was one taken in the management of its business and was therefore authorised by the articles, and, secondly, that as the company had the power to decide that it should be liquidated and neither the Act nor the C rest of the company's articles required such power to be exercised by a general meeting of shareholders in terms of art 60 the directors could consequently exercise this power.

Held, as regards the first contention, that the termination of a company's very existence was not the managing of the business of the company but rather the antithesis of management.

Held, as regards the second contention, that article 60 did not enlarge or augment the power of management: all it accomplished D was to facilitate the exercise of such power.

Held, accordingly, that the decision to seek the company's liquidation was one lying beyond the powers of the directors and therefore no such decision had been reached by the applicant. Application adjourned sine die in order to enable applicant to put the proceedings in order. E

Case Information

Application for the liquidation of a company in terms of s 346(1)(a) of the Companies Act 61 of 1973. The facts appear from the reasons for judgment.

P M Meskin for the applicant.

Cur adv vult.

F Postea (July 10).

Judgment

Didcott J:

An order for the liquidation of a company is sought from the Court in this case. The grounds are that it cannot pay G its debts.

The company itself purports to apply for the order. That it has locus standi to seek such is clear from 346(1)(a) of the Companies Act 61 of 1973. Whether it does so indeed, whether it has decided effectively to do so, is the question that arises.

The deponent to the affidavit supporting the application is one of the company's directors. He has produced a resolution H explicitly sanctioning the proceedings and authorising him to see to them. The resolution was adopted, however, by the directors and not the shareholders, who have passed no separate resolution either. Did the directors on their own have the power, one therefore asks, to decide for the company that it should apply for its liquidation? To that question the one I have posed boils down.

I The company's articles of association are not before me. What the exact powers of the directors happen to be in terms of them is therefore beyond my ken. The affidavit tells me that they 'place control of the affairs of the applicant in the hands of its directors'. This sounds to me more like their gist, as understood by the deponent, than any actual wording lifted from them. Counsel thought so too. He asked me in the circumstances J to assume that they had borrowed art 60 from Table B to the Act's First

1987 (1) SA p35

Didcott J

Schedule, repeating its language but going no further and A containing nothing else which counted. I am willing to fall in with this and, for the time being, to deal with the case on that footing.

The part of art 60 which matters goes thus:

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

A decision that the company should be liquidated, counsel argued in the first place, was one taken in the...