LEGAL PRINCIPLE: COMPANY LAW — Liquidation — Construction of Instrument of Appointment of Provisional Liquidator — Whether Restrictive
PRINCIPLE STATEMENT
The instrument appointing a provisional liquidator should not be construed so as to curtail his powers under the law unless they are expressly curtailed. The primary object is to prevent directors from dissipating the company's assets.
RATIO DECIDENDI (SOURCE)
Per Iguh, JSC, in Provisional Liquidator of Tapp Industries Limited v. Tapp Industries Limited (1995) NLC-2281991(SC) at p. 36; Paras. B–C.
"The instrument appointing a provisional liquidator should not be construed so as to curtail his powers under the law unless they are expressly curtailed in his instrument of appointment. The primary object of his appointment is to prevent the directors of the company from dissipating the company's assets. Unless expressly restricted, therefore, the provisional liquidator has the authority of any liquidator vis-a-vis securing the safety of the properties that would appear to belong to the company being wound up."
EXPLANATION / SCOPE
A provisional liquidator has broad powers to preserve assets. The appointment instrument should be liberally construed. Express restrictions are required to limit powers. The principle applies to all liquidations. The primary purpose is asset preservation. The liquidator may take steps to secure company property. The court will not imply restrictions. The rule protects creditors and shareholders. The liquidator acts under court supervision.