Project thunder shareholder liquidating trust
The shareholder agreement could not provide a resolution to the stalemate as there was no deadlock breaking method such as the Texas Auction clause.
Clause 8.2 dealing with deadlock at board level excluded the inability to obtain the required vote at board meetings as a ground for winding up the company.
In its application, the just and equitable ground does not admit of a strict categorical approach.
As Ponnan JA observed in "there is no necessary limit to the words 'just and equitable"'.
In other words, the appellants' nominees and the respondents' nominees each had 50% of the vote at both board and management level.
The shareholders appointed directors who vote in blocks in proportion to their shareholding.
Apco was to refer clients' work required to be performed on the African continent to the company.
The residual profit generated by the company was to be shared on an equal footing while the directors seconded by Arcay were to manage the affairs of the company.
The warring parties were equipollent at management and shareholder level.The answer to this question emerges from certain principles distilled from the cases which have considered the just and equitable ground since The ground is usually applied in four situations: (1) where there has been a disappearance of substratum; (2) where there exists justifiable lack of confidence among members; (3) where, in practical terms, the relationship resembles that of a partnership and lacks the protection of a more formal corporate structure; and (4) where the parties are deadlocked.The partnership analogy and deadlock are commonly relied upon to justify judicial intervention.If there was a reasonable hope of tiding over the period of deep conflict and of Nkonjane emerging from its malaise to carry on at a profit, there may well have been insufficient reason for a court to wind up the company on the just and equitable provision.However, the evidence showed a justifiable breakdown of mutual trust and confidence between the shareholders regarding the conduct and management of the company's affairs.