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Companies in liquidation - response

17 February 2011

In my response to Liquidation of COs and CCs ("the article"), I have no hesitation in agreeing that, "being wound up by the Court" and "being wound up under the supervision of the Court", mean two different matters. However, I am unable to agree that the "certificate by the Master of the High Court, Port Elizabeth, that the winding up of the company was being done under supervision of the Master of the High Court on behalf of the High Court", means a winding-up "under the supervision of the court", as contemplated in section 56 (1) (b) of the Deeds Registries Act, 1937 (Act No. 47 of 1937), as amended, ("the DRA"). I cannot find any authoritative source of reference for such a principal and agent relationship.

The exercise of powers and discharge of duties by the Master, in particular, in liquidation proceedings, are exercised and discharged by virtue of clear, specific, legislative provisions. The powers and duties, including the supervision of the winding-up of a company, are not exercised or discharged by the Master on behalf of the Court. This position is made clear, for example, by section 417 (1) and (2) of the Companies Act, 1973 (Act No. 61 of 1973), as amended, ("the CA"), in terms of which the Court and the Master are individually empowered to do the same thing.

Section 417 (1) of the CA provides that: "In any winding-up of a company unable to pay its debts, the Master or the Court may, at any time after a winding-up order has been made, summon before him or it any director or officer of the company or person known or suspected to have in his possession any property of the company or believed to be indebted to the company, or any person whom the Master or the Court deems capable of giving information concerning the trade, dealings affairs or property of the company"(emphasis added).

According to The Master v Zick 1958 (2) SA 539 (T) at p544: "Supervision necessarily implies the power to ………….." Refer to The Master v Talmud 1960 (1) SA 236 (C) at p238, where a distinction was made between jurisdiction and power.

In my opinion, the "supervision" referred to in section 56 (1) (b) of the DRA is that exercised by the Court, in contradistinction to the Master. The supervision is exercised, for example, under sections 354 (1), 362 (1) and (2), 417 (1) and (2) and 388 (1) and (2) of the CA. Suffice it to quote the provisions of section 354 (1) of the CA, in terms of which: "The Court may at any time after the commencement of a winding-up, on the application of any liquidator, creditor or member, and on proof to the satisfaction of the Court that all proceedings in relation to the winding-up ought to be stayed or set aside, make an order staying or setting aside the proceedings or for the continuance of any voluntary winding-up on such terms and conditions as the Court may deem fit."

Thabo Nqhome
15 February 2011


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