What Is A Company: What and Who Gives Life and Identity To A Company: At What Point Does a Company Cease To Exist?

Brian Kaungu, 09/01/2021

Knowledge is a fundamental prerequisite in the successful execution of any operation that mankind can engage in because it is knowledge that precedes the decisions and actions undertaken by the living in their various endeavors.

As such, in the world of commerce, it is important for prospective and existing entrepreneurs to continuously seek knowledge about business including its environment and dynamics.

One such platform for knowledge acquisition and accumulation is the Connections2Communities (C2C) which seeks to empower and capacitate people to collaborate in solving problems and in collectively utilizing opportunities as compared to doing it individually.

Some of the benefits associated with being a member of the C2C initiative includes mentorship, corporate and legal literacy programs, business opportunities, policy advocacy as well as networking and collaboration on different important activities of life.

C2C, among other mediums of communication uses social media platforms such as Facebook and WhatsApp in engaging with people in their diversity in the search of a shared understanding on matters of interest to the community.

One such social media platform is a WhatsApp group called WHAT IS A COMPANY which is a corporate literacy initiative that helps people to understand the identity, characteristics and limitations of a company so that entrepreneurs will act informed in their business pursuits.

A case in point can be that of Zimbabwe, a company under the control of an Administrator instead of the Board of Directors because it was placed under reconstruction through the country’s Reconstruction of State Indebted Insolvent Companies Act (24:07).

Questions can be raised on whether Air Zimbabwe which is now under liquidation has the same identity as before reconstruction compared to Air Zimbabwe after reconstruction or one ceases to exist in order for another to take effect.

In the following WhatsApp conversation between businessman Mutumwa Mawere and lawyer, Rikkie, discuss various ‘company’ related issues including factors and circumstances that gives life and identity to a company as well as those which brings its existence to a stop.

[1/8, 4:30 PM] mdmawere1: What are the properties of a company? What qualifies an idea to be a company?

[1/8, 4:36 PM] Rikki: A company is nothing more than a piece of paper registered in the relevant countries Companies Office. SMM remained registered in the company office of Zimbabwe and as such remained a recognized legal entity.

[1/8, 4:41 PM] mdmawere1: Do you agree that a company is a creature of law?

[1/8, 4:41 PM] Rikki: Yes

[1/8, 4:42 PM] Rikki: By law a company only ceases to exist once removed from the Company’s registry

[1/8, 4:42 PM] mdmawere1: Do you agree that the control and direction of a company is vested in its directors?

[1/8, 4:44 PM] mdmawere1: Do you agree that a company is created in terms of a Companies Act and as such can only wind up in terms of the provisions of this Act?

[1/8, 4:44 PM] mdmawere1: In terms of the Companies Act who has the power to appoint and remove directors?

[1/8, 4:45 PM] Rikki: I do agree but where you go wrong is that you link this control with the existence of the company itself, which is not the case. By law, the control can be divested from the board, i.e. when the company and not the board goes into liquidation. The board and the company are distinctly different things.

[1/8, 4:47 PM] mdmawere1: Do you agree that liquidation falls within the ambit of the Companies Act?.

Liquidations must be preceded by a court determination of the existence and quantum of Indebtedness.

[1/8, 4:48 PM] mdmawere1: Do you agree that shareholders have the right to appoint directors and once appointed, the directors owe a duty to the company and not the shareholders?

[1/8, 5:11 PM] Rikki: Yes

[1/8, 5:12 PM] Rikki: Under normal circumstances

[1/8, 5:12 PM] Rikki: Agree on both statements i.e. creation and winding up.

[1/8, 5:12 PM] mdmawere1: Do you agree that in terms of SA Constitution, this control and direction cannot be divested outside the four corners of the law of general application?

[1/8, 5:13 PM] Rikki: Agree but then the Master of the High Court appoints the liquidators. The Masters powers to do so also emanate from the Companies Act

[1/8, 5:13 PM] Rikki: Agree

[1/8, 5:14 PM] Rikki: A company becomes a living breathing person in the eyes of the law in the same way as we as individuals are

[1/8, 5:15 PM] Rikki: What do you mean by general application?

[1/8, 5:16 PM] mdmawere1: Indeed. Do you agree that a debtor and creditor are equal before the law?

The existence and quantum of Indebtedness cannot be determined without the knowledge and consent of the other.

Any other alternative offends the doctrine of equality, a fundamental tenet if the rule of law.

[1/8, 5:16 PM] mdmawere1: A law that applies to all parties and not targeted at certain known facts and circumstances.

[1/8, 5:19 PM] Rikki: Unfortunately, not all debtors and creditors are equal in the eyes of the law. That is where the problem start.

[1/8, 5:20 PM] Rikki: The existence and quantum of a debt cannot be determined without the knowledge and consent of the parties to a legal transaction.

[1/8, 5:22 PM] mdmawere1: Do you agree that no creditor can enjoy unilateral rights over a debtor?

[1/8, 5:24 PM] Rikki: There seems to be a general misunderstanding as to what the Constitution really is. The Constitution is nothing more than a set of laws that we accept to be the cornerstone of all other laws. Any other law cannot offend or go beyond the provisions of the set of laws contained in the Constitution.

What has happened is that people see the Constitution as the foundation of laws, when it is not. It should be seen as the ceiling of all laws. Having a bottom-up approach has allowed the legislature to abuse these cornerstone laws by expanding and overreaching systematically.

[1/8, 5:26 PM] mdmawere1: Do you agree that choice and consent are the fundamental building blocks of any just and fair society?

[1/8, 5:35 PM] Rikki: Agree. Of any open and democratic society.

[1/8, 5:39 PM] Rikki: Now that we understand and agree on these fundamentals, where does it take us with your original question?

[1/8, 5:51 PM] mdmawere1: It means we have a standard to test the existence of a company that is universally accepted.

1. A company without directors or successors created in terms of the Companies Act is not a company.

[1/8, 6:02 PM] Rikki: Disagree. No directors or successors are created in the Companies Act. It simply means that the company has no lawful drivers of the vehicle known as a company. The company is incorporated and exist independently from its directors or shareholders.

[1/8, 6:04 PM] mdmawere1: Interesting. Now let us turn to authority. Who is authorized to authorize litigation in relation to a company?

[1/8, 6:51 PM] mdmawere1: If I can persuade you to agree that the SMM that was before the SA Court was not a company but an undefined creature which could not be recognized in terms of the limitations imposed by the SA laws and constitution, then we can begin to lean forward and expose the real travesty of justice that unfolded before your eyes.

[1/9, 08:28] Mr Mawere: [1/9, 8:19 AM] mdmawere1: I like your thinking here. Are you proposing that death occurs when it is registered in the records or it occurs when it does?

[1/9, 8:20 AM] Rikki: It only occurs once it is done

 [1/9, 8:20 AM] mdmawere1: What does done mean?

[1/9, 8:21 AM] Rikki: When the company has been removed from the Companies registrar then only is the company dead and no longer legally exist until then it remains alive and independent

[1/9, 8:22 AM] mdmawere1: So a dead person is only dead when the reality is in the records?