ELGATE INVESTMENTS (PVT) LTD v MASTER & ORS 2011 (1) ZLR 286 (H)

Flynote

Company — judicial management — purpose of — distinction from liquidation — rights of owners and shareholders of company under judicial management — right to be involved in matters relating to operation of their company

Headnote

A company placed under judicial management does not automatically lose its ownership or shareholding. It is the management that changes, for the sole reason that, if properly managed, the company might move out of the problems that led to judicial management. The purposes of a liquidation order are entirely different from those of judicial management. In the former situation, the object is to wind up the affairs of a company and effect its dissolution; in the latter, the object is just the opposite, namely, to avoid liquidation, where there is a chance of the company surmounting its difficulties by proper management, namely, management by a person appointed as judicial manager to conduct the affairs of the company, subject to the supervision of the court.

Held, that there is, accordingly, a fundamental difference between the function and powers of a liquidator and those of a judicial manager. There are also material differences between the rights of creditors. The owners and shareholders of a company under judicial management should never be ignored in any court which have a direct bearing on the operations of the companies under judicial management. The owners or shareholders have, through a court process, only divested management to the provisional judicial manager. They remain the owners or shareholders of the company under provisional judicial management, and that alone entitles them to involvement in any matter related to the operations of their judicially managed companies. Judicial management means that the court, through the Master of the High Court, is managing the affairs of the entities

A placed under judicial management, whether provisional or final. The provisional judicial manager only operates under the directions of the Master. It is therefore important and reasonable that any party wishing to vary the original directions of the court must seek leave to do so.