On 16 June 2011, the Supreme Court of Mauritius, acting through its jurisdiction of Judge in Chambers, delivered an Interlocutory Judgment on the appointment of an administrator under the Insolvency Act 2009. This recent piece of legislation has replaced existing legislation, and now governs matters touching on insolvency and winding-up in Mauritius.
In Alridge v. Mordaunt Estates Ltd 2011 SCJ 186, a shareholder challenged both a decision taken by the board of directors of a Mauritian company to place the company into voluntary administration and the appointment of an administrator.
The shareholder applied to the Judge in Chambers for an Interim Writ of Injunction:
- to prohibit forthwith the administrator from continuing to act as administrator of the Mauritian company; and
- to prohibit the Mauritian company from passing any resolution that would appoint any administrator. The Judge sitting in Chambers declined to grant the injunction as he took the view that the applicant shareholder had failed to establish a prima facie case for the prayers that he sought.
From a legal perspective, even though this is a Judgment given in Chambers and remains open to challenge, it is noteworthy as this is the first decision of the Supreme Court, through its jurisdiction of the Judge in Chambers, regarding the appointment of administrators under the Insolvency Act 2009. This Judgment provides a precedent as to the approach that the Supreme Court is likely to adopt in the future in similar matters.
The interesting points to note are:
- as a matter of law, a shareholder has the sufficient locus to challenge the appointment of an administrator. Accordingly, there is not need for the shareholder to invoke any of the provisions of the Insolvency Act 2009 in order to justify his application;
- under the Insolvency Act 2009, the decision of the company to be placed in voluntary administration means the decision of the board of directors of that company not the decision of the shareholders of the company. If it was the intention of the legislator that the aforesaid decision should be one of the shareholders, then this would have been provided for expressly in the Insolvency Act 2009. The Judge found support for this approach in the terms of section 105(1)(e) of the Companies Act 2001 that provides that "notwithstanding the constitution of the company, where the shareholders exercise a power to put the company into liquidation, the power shall be exercised by special resolution". He also relied on the terms of Section 162 of the Companies Act 2001 that casts a positive duty on any director of a company who takes the view that the company is unable to pay its debts as they fall due to call a meeting of the board of directors forthwith, failing which a director faces the risk of being personally liable for failing to discharge this duty. Insofar as the Insolvency Act 2009 was concerned, the Judge observed that it was silent on the question and took the view that it had to be the decision of the board;
- once the board of directors of a company has resolved to place the company into voluntary administration, the board is perfectly entitled to appoint a sub-committee, thereby delegating to that sub-committee the power to appoint an administrator. This is in line with the terms of Section 131 of the Companies Act 2001.
Appleby appeared for the Co-Respondent No. 3, another Mauritian company, and moved that the Co- Respondent No. 3 be put out of cause in view of the absence of any prayer against it in its application and were successful.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.