LEGAL PRINCIPLE: COMPANY LAW — Liquidation — Powers of Provisional Liquidator — Whether Restricted by Instrument of Appointment
PRINCIPLE STATEMENT
Unless expressly restricted in his instrument of appointment, the provisional liquidator has the ordinary powers of a liquidator under Section 224 of the Companies Act, 1968, and is entitled to take into his custody all property to which the company appears to be entitled pending the making of a winding up order.
RATIO DECIDENDI (SOURCE)
Per Ogundare, JSC, in Provisional Liquidator of Tapp Industries Limited v. Tapp Industries Limited (1995) NLC-2281991(SC) at pp. 19–20; Paras. A–B.
"Where the court has appointed a provisional liquidator, he shall be entitled to take into his custody or under his control all the property and chose in action to which the company is or appears to be entitled pending the making of a winding up order by the court. The principal purpose of appointing a provisional liquidator is to preserve the company's assets and prevent the directors from dissipating them before a winding up order can be made. Unless expressly restricted in his instrument of appointment, the provisional liquidator has the ordinary powers of a liquidator under Section 224 of the Companies Act, 1968."
EXPLANATION / SCOPE
A provisional liquidator’s powers are broad and preservative. The instrument of appointment must expressly restrict powers to limit them. The primary purpose is asset preservation pending winding up. The principle applies to all provisional liquidators. The liquidator may take custody of property appearing to belong to the company. The court will not imply restrictions. The rule protects creditors and shareholders. The liquidator acts under court supervision. The powers are statutory under Section 224 of the Companies Act.