Liquidation of Solvent Companies Based on a Deadlock Between Directors and Shareholders

Abstract

This research report discusses challenges experienced by solvent companies when there are deadlocks between directors or shareholders leading to the liquidation of these companies. This report illustrates that currently, section 81(1)(d) of the 2008 Act only offers liquidation of solvent companies as a sole mechanism to unlock deadlocks. Further that, the 2008 Act prohibits courts from crafting remedies they consider appropriate to unlock deadlocks between company directors and or shareholders. This report argues that the 2008 Act is not adequately placed to assist directors and shareholders to unlock deadlocks that can lead to the liquidation of their companies. In line with the Canadian model relating to shotgun provisions, this report proposes the amendment of section 81(1) of the 2008 Act to grant courts powers to craft remedies that they consider appropriate to unlock deadlocks between company directors and or shareholders.