1. Liquidation Of Companies

   A company may be wound up in terms of the Companies Act 61 of 1973. There are two ways in which this can be done , either by
   1.1	Court ; or
   1.2	Voluntarily. A voluntary winding up of a company may be:
   	1.2.1	A creditors voluntary winding up
   	1.2.2	A members voluntary winding up

2. Winding Up By The Court (Section 344 -348 Of The Companies ACT)

   The High Court has jurisdiction to entertain an application for liquidation where the registered office is situated in the jurisdiction of the High Court or where the company has it’s principal place of business.

Who may bring the Application?

1. The company by special resolution or by the directors in terms of the articles,

2. The creditors,

3. The members provided such member has been registered as such for at least six months prior to the date of application and only upon certain limited grounds

4. Jointly by any or all of the parties above.

5. A provisional judicial manager on the discharge of a provisional judicial management order.

6. A final judicial manager (if he is of the opinion that the company will not become a successful concern) on fourteen days notice per registered post to all members and creditors.

7. The Master (only in the case of a voluntary liquidation)

8. The Master in the case of fraud (Section 262).

3. The Circumstances In Which A Company May Be Wound Up By Court  (SECTION 344)

1. By Special Resolution

2. The company commenced business before the Registrar certified that it was entitled to commence business.

3. The company has failed to commence business within one year from incorporation or has suspended it’s business for one whole year.

4. In the case of a public company, where the number of members has been reduced below

5. 75% of the issued share capital of the company has been lost or has become useless for the business of the company.

6. The company is unable to pay it’s debts as described in Section 345.

7. If an external company has been dissolved in it’s country of origin, or has ceased to carry on business, or is carrying on business only for the purposes of winding up it’s affairs.

8. If it appears just and equitable to the Court that the company should be wound up.

1. When it has failed to pay/secure or compound it’s debts within 3 weeks after service of a letter of demand at the company’s registered address (this claim must be at least R100,00 which must be due, owing and payable).

2. When a nulla bona return in respect of the property (movable or immovable) of a Judgment of a Court.

3. When it is proved to the satisfaction of the Court, that it is commercially unable to pay it’s debts.

The Application is brought on a Notice of Motion and if circumstances warrant it it may be brought on an urgent basis. The Notice of Motion must be supported by Affidavits of the Applicant setting out the reasons for the application as well as conforming to all the other statutory requirements.

The Court hearing the application has got a discretion and is not obliged to liquidate the company. It can grant a provisional order, dismiss the application, adjourn the application (conditionally or unconditionally), refer the matter for hearing of evidence, or make any other order it deems fit.

1. The transfer of any shares after commencement of winding up is void.

2. The disposition of property after commencement is void.

3. All proceedings against the company are suspended until appointment of a final liquidator as of the date of the Court Order.

4. Any attachments/execution put in force against the company after commencement or winding up is void.

5. Directors cease to be in charge of the company after the company has been liquidated.

In four weeks after the appointment of a liquidator, he must be given three weeks notice in writing before legal proceedings against the company is continued otherwise such proceedings will be considered to be abandoned.

BY THE MEMBERS

Voluntary winding up of a company shall be a members voluntary winding up if the resolution so states, but such resolution shall be of no force and effect unless:

1. It has been registered in terms of Section 200.

2. Prior to registration, security has been furnished to the Master for payment of the debts of the company within 12 months after commencement of the winding up.

3. The Master has dispensed with security because:

	3.1	The Director’s declared under oath that the company has no debts.
	3.2	The Auditor certified that the company has no debts.

Within 28 days after the special resolution has been registered, a certified copy thereof must be lodged with the Master plus, if a further resolution was passed, appointing a liquidator, a certified copy thereof.

In order for the Master to value the adequacy of the security, the company’s last balance sheet must be provided.

Notice of voluntary winding up must be published in the Government Gazette within 28 days after the special resolution has been registered.

A copy of the special resolution must, within 14 days after registration thereof be transmitted by the company to:

1. The Sheriff of the Province where it’s registered office is, the Sheriff of every Province in which it appears that the company owns property, every Registrar of Deeds who maintains a register which shows that the company owns property and every messenger who holds property of the company under attachment.

2. The effective date is the date of registration of the special resolution.

7. The Creditors Voluntary Winding Up

PROCEDURE

1. Members must adopt a special resolution stating that it is a creditors winding up.

2. The special resolution must be registered in terms of Section 200.

3. A statement of the company’s affairs verified under oath by the Directors must serve before the meeting where the special resolution is to be adopted.

4. Two certified copies thereof to be lodged with the Master.

5. Special resolution to be lodged with the Master.

6. Publication of voluntary winding up in the Government Gazette.

7. Copy of the special resolution as in paragraph 8 must be given effect to.

The principle difference between a member’s voluntary winding up and a creditor’s winding up and a creditor’s winding up is that, in the former, the liquidator exercises his powers subject to directions of the company in a general meeting, whereas in the latter he does so subject to the directions of the creditors.

The liquidation of Close Corporations is governed by Sections 66 to 81 of Act 69 of 1984.

The provisions of the Company’s Act which relates to the winding up of a company including the regulations made hereunder shall apply mutatis mutandis and in so far as they can be applied to the liquidation of a corporation in respect of any matter not specifically provided for in this Act.

  9.  Liquidation By Court (Section 68.1)

GROUNDS

1. Members who hold more than one half of the votes, sign a written resolution to this effect.

2. The CC has not commenced business within one year of its registration or has suspended it’s business for one year.

3. CC is unable to pay it’s debts.

4. It is just an equitable, to the satisfaction of Court for example:

   4.1	Internal disputes make it impossible to carry on  business or
   4.2	It is impossible for the Close Corporation to achieve it’s main object or
   4.3	Those who are in control are guilty of gross misconduct.

The creditor who has a claim of at least R200,00 which is due and payable may apply to the Court in the same manner as for the liquidation of a company.

Section 69 states the circumstances in which a Close Corporation is unable to pay it’s debts, which are:

1. Failure to pay/secure or compound it’s debt within 21 days after service of a letter of demand.
2. There is a nulla bona return in respect of disposable property of the Close Corporation.
3. It is proved to the satisfaction of the Court that the Close Corporation is unable to pay it’s debts.

The High Court has concurrent jurisdiction with the Magistrate’s Court to hear the application.

The High Court or Magistrate’s Court which has jurisdiction is the one where the registered office or main place of business of the Close Corporation is situated.

The procedure is the same as in the liquidation of a company except that no provisional liquidator is appointed, only a liquidator, even if a provisional order is granted.

 10. Voluntary Liquidation (Section 67)