Botha N O and Others v Jonker and Others

Jonker Products CC was finally liquidated on 29 October 2020. The joint liquidators were appointed and, more than one month after final liquidation, summoned the first meeting of creditors and members, which was held on 6 May 2021. They did so without having obtained the Master’s consent as required by s 78(1) of the Close Corporations Act 69 of 1984 for meetings convened after the one-month period. At the meeting, claims were proved and resolutions were adopted, including authorising an enquiry into the affairs of the close corporation. When summonses were issued for the enquiry, the respondents challenged the validity of the first meeting on the basis that the Master’s consent had not been obtained. The Master declined to grant consent ex post facto after the meeting had already been held. The High Court declared the meeting and its resolutions invalid, prompting the liquidators to appeal to the Supreme Court of Appeal.

The appeal was dismissed. The costs of the appeal were ordered to be costs in the liquidation. It was declared that s 78(1) of the Close Corporations Act permits the Master to grant consent to summon a first meeting of creditors and members after the expiry of one month from final liquidation, at any time before the meeting so summoned is held.

The judgment clarifies the proper interpretation of s 78(1) of the Close Corporations Act and resolves uncertainty about when the Master’s consent must be obtained if the first meeting of creditors is convened late. It affirms the supervisory role of the Master in liquidations while avoiding an unduly rigid interpretation that would frustrate efficient administration. The case is important for liquidators of close corporations and for the broader law of insolvency administration in South Africa.