Section 241A of the Companies Act 1993 requires that the document appointing a liquidator, whether a special resolution of the shareholders or Court order, must record the date on which and the time at which the special resolution was passed or the Court order was made.
The recent decision in Re Nikau Enterprises Ltd confirms that the recording of the date and time is essential. If either requirement is missed the appointment of the liquidator will be invalid.
In Re Nikau Enterprises Ltd, the liquidator of Nikau Enterprises Limited sought an order declaring himself to have been validly appointed, when the special resolution appointing him was dated but did not state the time at which the special resolution was passed.
The Court concluded that the failure to state the time of the special resolution meant the appointment was not valid. The Court made the following observations:
the legislative history of ss 241 and 241A indicates that the inclusion of the requirement for stating the time on the resolution was a purposeful and deliberate issue, intending to make it a mandatory requirement, rather than merely directory determining the exact time of appointment is important when determining directors' and liquidators' ability to exercise their powers and to exercise control of company assets the Liquidation Regulations are subordinate in nature to the Act and accordingly R36 which validates any defects or irregularities in appointment of liquidators where their powers are subsequently exercised in good faith was not applicable in this case. In any event the Court found that this Rule operates to validate acts of the liquidator not the actual appointment.This is a general summary only and should not be taken as a substitute for specific advice.
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