Insolvency Act

Chapter 11:01

Citation: Chapter 11:01
Date: 31 December 2017
Language: English
Type: Act

Insolvency Act

Chapter 11:01

Published on 20 May 2016
Commenced on 20 May 2016
[This is the version of this document at 31 December 2017 and includes any amendments published up to 31 October 2021.]
[Note: This version of the Act was revised and consolidated in the Fifth Revised Edition of the Laws of Malawi (L.R.O. 1/2018), by the Solicitor General and Secretary for Justice under the authority of the Revision of the Laws Act.]

[9 of 2016; G.N. 16/2016]An Act to regulate matters relating to insolvency and bankruptcy; to make provision for the procedures and processes for bankruptcy; to make provisions for administration of insolvency and to provide for matters incidental thereto and connected therewith

Part I – Preliminary

1. Short title

This Act may be cited as the Insolvency Act.

2. Interpretation

In this Act, unless the context otherwise requires—"administrator" means a person appointed under this Act to manage the affairs, business and property of a company under reorganization and where the context requires, includes reference to a former administrator;"bankrupt" means a natural person who has been adjudicated bankrupt, and includes a partnership, sole proprietorship or other body corporate which cannot be wound-up under the provisions of Part V;"company" means a company incorporated under the Companies Act and includes any other company not registered in Malawi which has its affairs dealt with under the provisions of this Act;[Cap. 46:03]"company reorganization order" means an order appointing a person as the administrator of a company;"contributory" has the meaning assigned thereto in the Companies Act;[Cap. 46:03]"correspondence" includes correspondence by telephonic or other electronic means;"Court" means the High Court of Malawi established under the Constitution;"declaration of solvency" means a declaration by or on behalf of a company that the company’s assets exceed its liabilities and that the company is able to pay its debts as they fall due;"Director" means the Director of Insolvency referred to in section 4 (1);"discharge" means—(a)in relation to a bankruptcy order, the removal of the impediment of bankruptcy; and(b)in relation to a company reorganization order, the setting aside or discontinuance of a company reorganization order by the Court;"financial institution" has the meaning ascribed thereto in the Financial Services Act;[Cap. 44:05]"financial service law" has the meaning ascribed thereto in the Financial Services Act;[Cap. 44:05]"immovable property" means land whether covered by water or not, any estate or interest in, or over, land, or arising out of, or relating to, land, and anything permanently attached to the earth, or permanently fastened to anything so attached;"inability to pay its debts" has the meaning ascribed thereto in section 182 and section 183;"insolvency practitioner" means a duly qualified natural person who is entitled to practice as such in terms of Part X;"insolvency proceeding" means a collective judicial or administrative proceeding, including an interim proceeding, pursuant to a law relating to insolvency whether personal or corporate in which the assets and affairs of a debtor are subject to control or supervision by a judicial or other authority competent to control or supervise that proceeding, for the purpose of reorganization or liquidation;"liquidator" means a liquidator appointed in terms of the provisions of this Act, and includes a provisional liquidator;"market value" means the amount which would be realized on a sale of property in the open market by a willing vendor;"Official Receiver" means the person or office designated an Official Receiver under section 5;"partnership" has the meaning ascribed thereto in the Partnership Act;[Cap. 46:04]"prohibition order" means an order made under section 100 or section 180;"qualifications" in relation to an insolvency practitioner, means those qualifications that would entitle a person to act as a qualified auditor or a licensed legal practitioner in Malawi, or such other qualifications as may be prescribed by the Minister in accordance with section 311 (1) (b);"qualifying security interest" means—(a)a valid security interest;(b)a number of valid security interests; or(c)valid security interests and other forms of security,over the whole or substantially the whole of the property of a company, partnership or sole proprietorship in terms of the provisions of the Personal Property Security Act;[Cap. 48:03]"receiver" means a receiver duly appointed under the provisions of Part IV;"Registrar of Companies" means the public officer for the time being holding the office of Registrar of Companies established by section 3 of the Companies Act, and includes a Deputy or Assistant Registrar;[Cap. 46:03]"related person", in relation to a natural person, means—(a)his parent, spouse, child, brother, or sister;(b)the parent, child, brother or sister of his spouse; or(c)a nominee or trustee of the person specified in paragraphs (a) and (b);"Rules" means the Rules promulgated in terms of this Act;"secured creditor" means a creditor with valid and enforceable security amounting to—(a)a security interest over movable property in terms of the provisions of the Personal Property Security Act; and[Cap. 48:03](b)a valid mortgage over immovable property;"statutory demand" means, in relation to—(a)a company being wound-up in terms of this Act, a statutory demand described in section 184; and(b)a bankrupt, a statutory demand as described in section 190;"the purpose of company reorganization" means an objective specified in section 14 (1).

3. Application of this Act

This Act shall not apply to financial institutions unless provided otherwise in the Financial Services Act.[Cap. 44:05]

Part II – Administration of this Act

4. Director of Insolvency

(1)The Secretary responsible for industry and trade or such other person as the Minister may appoint, shall be the Director of Insolvency (hereinafter referred to as "Director"), who shall be responsible for the effective administration and application of this Act.

(2)Without derogating from the generality of subsection (1), the functions of the Director shall be to—

(a)keep under review the law and practice relating to the insolvency of individuals, partnerships, sole proprietorships, companies and other corporate bodies in Malawi and make recommendations to the Minister on any changes considered to be necessary;

(b)have an overview of the administration of insolvency in Malawi and in particular the administration of insolvency under this Act;

(c)receive reports from the Official Receiver on the administration of insolvencies, monitor the performance of the Official Receiver and report to the Minister on any resourcing or other needs in relation to the effective performance of the Official Receiver’s functions;

(d)monitor the performance of insolvency practitioners and, where required, make an application to the Court for the discipline or removal of an insolvency practitioner;

(e)set rules and provide guidance governing the performance and conduct of insolvency practitioners in consultation with the relevant professional bodies;

(f)foster the development of training and in-service seminars to enhance the skills and encourage improved standards of performance on the part of insolvency practitioners in consultation with all relevant professional bodies;

(g)carry out research, commission studies, disseminate information and provide public education in the area of insolvency administration;

(h)establish and maintain communication and liaise with international agencies, in the area of international insolvencies and insolvency administration; and

(i)advise the Minister generally on any matter relating to the law and practice of insolvency and insolvency administration.

(3)The Director shall have a seal and such seal shall bear the words "Director of Insolvency, Malawi".

(4)In the performance of his duties under this Act, the Director shall be subject to—

(a)the general and special directions of the Minister, not inconsistent with the provisions of this Act; and

(b)for avoidance of doubt, the provisions of the Public Service Act.[Cap. 1:03]

5. Official Receiver

(1)The Minister shall designate a suitable person or office to be the Official Receiver.

(2)The Chief Justice shall by Rules prescribe a mandatory threshold including the procedure for small individual bankruptcies and individual voluntary arrangements to be adjudicated upon and administered by courts of the Chief Resident Magistrate summarily notwithstanding anything to the contrary.

6. Office and name of Official Receiver

(1)The Official Receiver shall have legal personality and may sue and be sued as the Official Receiver of the property of bankrupt, or of the company which is the subject of a winding-up order, and may do all acts necessary or expedient to be done in the execution of his office.

(2)The Official Receiver may administer oaths and take declarations and may appear in Court and examine a bankrupt or the directors of a company who are the subject of a winding-up order or any other person who appears in proceedings under this Act.

(3)The Official Receiver may execute all documents, signing his private name under the official name, and may affix a seal to any document:Provided that nothing in this subsection shall prevent the Official Receiver from affixing the seal of his office to any document.

7. Vacation of office of Official Receiver

(1)A person shall not act or continue to act as Official Receiver in relation to the estate of any debtor of which he is a creditor (not being a creditor in the capacity of Official Receiver in the property of any other bankrupt or the liquidator of any company) if the creditors declare by resolution that they do not wish him to act as Official Receiver.

(2)In any case where a disqualification under subsection (1) occurs, the Minister shall appoint a suitable person to act as the Official Receiver of the estate referred to in subsection (1).

8. Register of insolvency practitioners

(1)The Director shall keep and maintain a register of insolvency practitioners in which there shall be entered the name, address and qualifications of every insolvency practitioner.

(2)An insolvency practitioner shall, within the prescribed period of the date of his appointment, give notice to the Director in the prescribed form.

(3)An insolvency practitioner who for a period of six months has ceased to hold office as an insolvency practitioner shall give notice of that fact to the Director within the prescribed period.

(4)An insolvency practitioner who is suspended or removed from the practice of accountancy or law or the practice of a company secretary by the relevant professional body in Malawi, or by a comparable professional body outside Malawi, shall give notice of that fact to the Director within the prescribed period of the insolvency practitioner receiving notice of the suspension or removal from practice.

(5)Where the Director receives notice under subsection (4), or is otherwise advised by the professional body concerned, or has reasonable grounds to suspect that an insolvency practitioner has been suspended from the practice of accountancy or law or the practice of a company secretary, the Director may, where he has reasonable ground to suspect that the person may be unfit to continue to act as an insolvency practitioner, after providing the insolvency practitioner with an opportunity to be heard, suspend the insolvency practitioner from continuing in office as an insolvency practitioner pending the making of further inquiries and the making of an application to the Court under section 9, and the issuance by the Court of a prohibition order pursuant to section 100 or section 180.

(6)The Director shall enter against the name of a person concerned in the register of insolvency practitioners any of the following matters that may affect the person—

(a)that the person has been subject to a prohibition order by the Court under section 100 or section 180;

(b)where the Director has received notice to that effect from the professional body or from the person concerned that the person has been suspended or removed from the practice of accountancy or law or the practice of a company secretary by any professional body in Malawi, or by any comparable body outside Malawi;

(c)that the person has died; or

(d)that the person has ceased to practice as an insolvency practitioner and has requested the Director to remove his name from the register.

9. Conduct and performance of insolvency practitioners

(1)The Director shall keep under review the conduct and performance of persons appointed to be insolvency practitioners and may require any document or information concerning an insolvency practitioner to be provided to the Director by the Official Receiver, the Court, the Minister, any other insolvency practitioner or any person who is or has been an auditor of a company in which the insolvency practitioner has held office.

(2)The Director may receive representations from any person on the conduct and performance of an insolvency practitioner and shall within the prescribed period of receiving any such representation disclose the substance of the representation to the insolvency practitioner and seek comment on it.

(3)Any representation made to the Director under subsection (2) and any communication of the terms of the representation made in confidence shall be protected by absolute privilege.

(4)Where the Director has reasonable ground to suspect that an insolvency practitioner has—

(a)failed to comply with a provision of this Act in a manner which has or may materially affect creditors, contributories or persons dealing in good faith with a debtor; or

(b)been suspended or removed from the practice of accountancy or law or the practice of a company secretary by a professional body in Malawi, or by a comparable body outside Malawi,

the Director may inquire into the conduct of the insolvency practitioner.

(5)For the purposes of an inquiry under subsection (4), the Director may, by notice in writing, require a director, shareholder, a company or any other person, including the secretary of any relevant professional body to deliver to the Director such books, records or documents of the company in that person’s possession or under that person’s control that are relevant to the subject matter of the inquiry as the Director requires.

(6)The Director may, for the purposes of an inquiry under subsection (4), by notice in writing require—

(a)a director or former director of a company;

(b)a shareholder of a company;

(c)a person who was involved in the promotion of formation of a company;

(d)a person who is, or has been, an employee of a company;

(e)a receiver, liquidator, administrator, accountant, auditor, bank officer or other person having knowledge of the affairs of a company; or

(f)a person who is acting or who has at any time acted as a legal practitioner for a company,

to do any of the things specified in subsection (7).

(7)A person referred to in subsection (6) may be required to—

(a)appear before the Director at such reasonable time and at such place as may be specified in a request;

(b)provide the Director with such information about the business, accounts, or affairs of the company as the Director requests;

(c)be examined on oath by the Director or by a legal practitioner acting on behalf of the Director on any matter relating to the business, accounts or affairs of the company; or

(d)assist the Director to the best of the person’s ability.

(8)The Director may pay to a person referred to in subsection (6) (c), (d) or (f), not being an employee of the company, reasonable travelling and other expenses in complying with a requirement of the Director under subsection (7).

(9)No action or proceeding (including disciplinary proceedings by any professional tribunal, body or authority having jurisdiction in respect of professional conduct) shall lie against any person arising from disclosure in good faith of information to the Director pursuant to this section.

10. Director may make application to Court

(1)Where the Director, as a result of the outcome of an inquiry under section 9 or otherwise, considers that there is reasonable ground to believe that the insolvency practitioner is unfit to act as such by reason of—

(a)persistent failure to comply with this Act;

(b)the seriousness of the failure to comply with this Act; or

(c)misconduct or serious incompetence on the part of the insolvency practitioner,

the Director may apply to the Court for a prohibition order under section 100 or section 180.

(2)Where the Court makes a prohibition order pursuant to subsection (1), that fact shall be entered in the register kept under section 12 and in the register of prohibited persons kept pursuant to section 180 (5).

11. Disclosure to and consultation with, Director

(1)Every person who holds or at any time has held office as an agent for, or trustee of, holders of any security issued by a company, or who has been an auditor of a public company, shall disclose to the Director information relating to the affairs of the company obtained in the course of holding that office where, in the opinion of the person—

(a)the company is insolvent, is likely to become insolvent or is in serious financial difficulties; or

(b)the company has breached, or is likely to breach in a significant respect—

(i)the terms of the agency deed or trust deed for secured parties;

(ii)the terms of the offer of any securities; or

(iii)the disclosure of the information is likely to assist, or be relevant to, the exercise of any power conferred on the Director or the Court under this Part.

(2)Every auditor of, or agent or trustee for, secured parties in a secured transaction shall, before disclosing any information to the Director under subsection (1), take reasonable steps to inform the company concerned of his intention to disclose the information and the nature of the information.

(3)The agent, trustee or auditor who has made disclosure to the Director under subsection (1), may on his own initiative, consult with the Director or may be required by the Director to consult with him on the position of the company and the way in which the difficulties of the company may be addressed.

(4)The Director may, for the purpose of addressing the difficulties of a company identified by a consultation under subsection (3), give advice and assistance in connexion with any scheme for resolving the difficulties of the company, and may appoint an independent advisor to work with the company to address such difficulties and report to the Director.

(5)No action or proceedings including disciplinary proceedings by any professional tribunal, body or authority having jurisdiction in respect of professional conduct, shall lie against any agent, trustee or auditor arising from the disclosure in good faith of information to the Director pursuant to subsection (1).

12. Other registers to be kept by Director

(1)The Director shall keep and maintain—

(a)a public register of discharged and undischarged bankrupts; and

(b)a public register of persons who are subject to an individual voluntary arrangement.

(2)The registers shall be maintained in accordance with the Rules.

Part III – Company reorganization

13. Meaning of a company in reorganization

(1)For the purposes of this Part—

(a)a company is "in company reorganization" while the appointment of an administrator of the company has effect;

(b)a company "enters company reorganization" when the appointment of an administrator takes effect;

(c)a company ceases to be in company reorganization when the appointment of an administrator of the company ceases to have effect in accordance with this Act;

(d)a company shall not cease to be in company reorganization merely because an administrator vacates office whether by reason of resignation, death or otherwise or is removed from office;

(e)the provisions of sections 182 and 183 shall apply when determining whether or not a company is unable to pay its debts under section 17; and

(f)the provisions of section 136 shall apply mutatis mutandis, to a company or companies "in company reorganization".

(2)A person may be appointed as administrator by a company reorganization order of the Court under section 19.

(3)The provisions of this Part shall apply, in so far as they may be conveniently applied, to a case of a business reorganization carried on by a partnership or a sole proprietorship.

14. Objective of company reorganization

(1)The administrator shall perform his functions with the objective of—

(a)rescuing the company as a going concern; restoring the company to solvency and thereby preserving the company and its business operations as a going concern; or

(b)achieving a better result for the company’s creditors as a whole than would be likely if the company were wound-up without first being in company reorganization, which may include a sale or a transfer of any business of the company as a going concern; or

(c)realizing property in order to make a distribution to one or more secured or preferential creditors.

(2)Subject to subsection (4), the administrator shall perform his functions in the interests of the company’s creditors as a whole.

(3)The administrator shall perform his functions with the objective specified in subsection (1) (a) unless he thinks that—

(a)it is not reasonably practicable to achieve the objective; or

(b)the objective specified in subsection (1) (b) would achieve a better result for the company’s creditors as a whole.

(4)The administrator may perform his functions with the objective specified in subsection (1) (c) only if—

(a)he determines that it is not reasonably practicable to achieve the objectives specified in subsection (1) (a) or (b); and

(b)the performance of his functions would not unnecessarily harm the interests of the creditors of the company as a whole.

(5)The administrator shall perform his functions as quickly and efficiently as is reasonably practicable.

15. Administrator to be an officer of the Court

An administrator shall be an officer of the Court.

16. Appointment of an administrator

A person may be appointed as administrator only if he is qualified to act as an insolvency practitioner in relation to the company.

17. Conditions for making reorganization order

The Court shall make a company reorganization order in relation to a company only if satisfied—

(a)that the company is or is likely to become unable to pay its debts as they fall due; and

(b)that the company reorganization order is reasonably likely to achieve the objective set out in section 14.

18. Application for a reorganization order

(1)An application to the Court for a company reorganization order in respect of a company (a "company reorganization application") may be made only by—

(a)the company;

(b)the directors of the company;

(c)one or more creditors of the company; or

(d)a combination of persons listed in paragraphs (a), (b) and (c).

(2)As soon as is reasonably practicable after the making of a company reorganization application, the applicant shall notify—

(a)any person who has appointed a receiver of the company under Part IV;

(b)any person who is or may be entitled to appoint a receiver of the company under Part IV; and

(c)such other persons as may be prescribed.

(3)A company reorganization application shall not be withdrawn without the order of the Court.

(4)In subsection (1), "creditor" includes a contingent creditor and a prospective creditor.

19. Powers of Court

(1)On hearing a company reorganization application, the Court may—

(a)make the company reorganization order sought;

(b)dismiss the application;

(c)adjourn the hearing conditionally or unconditionally;

(d)make an interim order;

(e)treat the application as a winding-up petition and make any order which the Court could make under section 109; and

(f)make any other order which the Court thinks appropriate.

(2)The appointment of an administrator by company reorganization order shall take effect—

(a)at a time appointed by the order; or

(b)where no time is appointed by the order, when the order is made.

(3)An interim order under subsection (1) (d) may, in particular—

(a)restrict the exercise of a power of the directors of the company;

(b)make provision conferring discretion on the Court or on a person qualified to act as an insolvency practitioner in relation to the company.

20. Application by holder of qualifying security interest

This section shall apply where a company reorganization application—

(a)is made by a holder of a qualifying security interest; and

(b)includes a statement that the application is made in reliance on this section.

21. Intervention by holder of a qualifying security interest

(1)This section shall apply where—

(a)a company reorganization application in respect of a company is made by a person who is not the holder of a qualifying security interest; and

(b)the holder of a qualifying security interest applies to the Court to have a specified person other than the person specified by the company reorganization applicant appointed as Administrator.

(2)The holder of a qualifying security interest may make a company reorganization application.

(3)The Court shall grant an application under subsection (1) (b) unless the Court determines it right to refuse the application because of the particular circumstances of the case.

22. Application for reorganization order where company in liquidation

(1)The holder of the qualifying security interest may make a company reorganization application.

(2)This section shall apply where the holder of a qualifying security interest cannot apply for a company reorganization order due to the fact that the company is already in liquidation by virtue of a winding-up order by the Court.

(3)The liquidator of a company may make a company reorganization application.

(4)If the Court makes a company reorganization order on hearing an application under subsection (3)—

(a)the Court shall discharge any winding-up order in respect of the company;

(b)the Court shall make orders for such matters as may be prescribed;

(c)the Court may make other consequential orders;

(d)the Court shall specify which of the powers under this Act are to be exercisable by the administrator; and

(e)this Act shall have effect with such modifications as the Court may specify.

(5)If the Court makes a company reorganization order on hearing an application made under subsection (1)—

(a)the Court shall discharge the winding-up order;

(b)the Court shall make orders for such matters as may be prescribed;

(c)the Court may make such other consequential orders;

(d)the Court shall specify which of the powers under this Act are to be exercisable by the administrator; and

(e)this Act shall have effect with such modifications as the Court may specify.

23. Effects of receivership

(a)Where an application for a company reorganization order is made after a receiver of a company has been appointed under the provisions of Part IV, the Court shall dismiss the application in respect of the company, unless the person by whom or on behalf of whom the receiver was appointed, or the receiver himself when he has the necessary authority to do so, consents to the making of the company reorganization order; or

(b)the Court considers that the security by virtue of which the receiver was appointed would be liable to be released, discharged or challenged under Part VIII.

24. Dismissal of pending winding-up petition

A petition for the winding-up of a company shall be dismissed on the making of a company reorganization order in respect of the company.

25. Dismissal of receiver

(1)A receiver of a company shall vacate office when a company reorganization order takes effect in respect of the company.

(2)Where a company is in company reorganization, any receiver of part of the company’s property shall vacate office if the administrator requires him to.

(3)Where a receiver vacates office under subsection (1) or (2), his remuneration shall be charged on and paid out of any property of the company which was in his custody or under his control immediately before he vacated office.

(4)In the application of subsection (3)—

(a)"remuneration" includes expenses properly incurred and any indemnity to which the receiver is entitled out of the assets of the company;

(b)the costs so imposed shall take priority over any security interests; and

(c)the provision for payment shall be subject to section 27.

26. Moratorium on insolvency proceedings

(1)This section shall apply to a company in company reorganization.

(2)Where a company is in company reorganization—

(a)a resolution may not be passed for the winding-up of the company; and

(b)an order may not be made for the winding-up of the company.

27. Moratorium on other legal processes

(1)No steps shall be taken to create, perfect or enforce any security interests over the company’s property except with—

(a)the consent of the administrator; or

(b)the permission of the Court.

(2)A landlord shall not exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company except with—

(a)the consent of the administrator; or

(b)the permission of the Court.

(3)No legal process, including legal proceedings, execution or distress may be instituted or continued against the company or property of the company except with—

(a)the consent of the administrator; or

(b)the permission of the Court.

(4)Where the Court gives permission under this section, it may impose any condition or requirement as it sees fit.

(5)In this section, "landlord" includes a person to whom rent is payable.

28. Interim moratorium

(1)This section shall apply where a company reorganization application in respect of a company has been made and the application has—

(a)not yet been granted or dismissed; or

(b)been granted, but the company reorganization order has not yet taken effect.

(2)The provision of sections 26 and 27 shall apply, except for any reference to the consent of the administrator.

(3)If there is a receiver of the company when the company reorganization application is made, the provisions of sections 26 and 27 shall not apply by virtue of this section until the person by or on behalf of whom the receiver was appointed consents to the making of the company reorganization order.

29. Publicity

(1)While a company is in company reorganization, every document issued by or on behalf of the company or the administrator shall state—

(a)the name of the administrator; and

(b)that the affairs, business and property of the company are being managed by him.

(2)Any of the following persons commits an offence if without reasonable excuse, he authorizes or permits a contravention of subsection (1)—

(a)the administrator;

(b)an officer of the company; and

(c)the company.

30. Announcement of administrator’s appointment

(1)This section shall apply where a person becomes the administrator.

(2)As soon as is reasonably practicable, the administrator shall—

(a)send a notice of his appointment to the company; and

(b)publish a notice of his appointment in the prescribed manner.

(3)As soon as is reasonably practicable, the administrator shall—

(a)obtain a list of the company’s creditors; and

(b)send a notice of his appointment to each creditor of whose claim and address he is aware of.

(4)The administrator shall send a notice of his appointment to the Director and the Registrar of Companies within the prescribed period, beginning with the date of the order.

(5)The administrator shall send a notice of his appointment to such other persons as may be prescribed before the end of the prescribed period, beginning with the date of the order.

(6)The Court may direct that subsection (3) (b) or subsection (5)—

(a)shall not apply; or

(b)shall apply with the substitution of a different period.

(7)A notice under this section shall—

(a)contain the prescribed information; and

(b)be in the prescribed form.

31. Statement of company’s affairs

(1)Within the prescribed period after appointment, the administrator shall by notice in the prescribed form require one or more relevant persons to provide the administrator with a statement of the affairs of the company.

(2)The statement shall—

(a)be verified by a statutory declaration in accordance with the Oaths, Affirmations and Declarations Act;[Cap. 4:07]

(b)be in the prescribed form;

(c)give particulars of the company, debts and liabilities;

(d)give the names and addresses of the company’s creditors;

(e)specify the security interests held by each creditor;

(f)give the date on which each security interest was perfected; and

(g)contain such other information as may be prescribed.

(3)In subsection (1), "relevant person" means—

(a)a person who is or has been an officer of the company;

(b)a person who took part in the formation of the company during the period of one year ending with the date on which the company enters company reorganization;

(c)a person employed by the company during the period referred to in paragraph (b); and

(d)a person who is or has been during that period an officer or employee of a company which is, or has been during that year an officer of the company.

(4)For the purposes of subsection (3), a reference to employment is a reference to employment through a contract of employment or a contract for services.

32. Prescribed period for submission of statement of affairs

(1)A person required to submit a statement of affairs shall do so within the prescribed period, beginning with the date on which he receives notice of the requirement.

(2)The administrator may—

(a)revoke a requirement under section 31 (1); or

(b)extend the period specified in subsection (1), whether before or after the expiry of such period.

(3)If the administrator refuses a request to act under subsection (2)—

(a)the person whose request is refused may apply to the Court; and

(b)the Court may take action of a kind specified in subsection (2).

33. Administrator’s proposals

(1)The administrator shall make a statement setting out proposals for achieving the purpose of company reorganization.

(2)A statement under subsection (1) shall, in particular—

(a)deal with such matters as may be prescribed; and

(b)where applicable, explain why the administrator thinks that the objective mentioned in section 14 (1) (a) or (b) cannot be achieved.

(3)Proposals under this section may include a proposal for an arrangement to be sanctioned under the provisions of section 156.

(4)The administrator shall send a copy of the statement of his proposals to—

(a)the Registrar of Companies;

(b)the Director;

(c)every creditor of the company of whose claim and address he is aware of; and

(d)every member of the company of whose claim and address he is aware of.

(5)The administrator shall comply with subsection (4)—

(a)as soon as is reasonably practicable after the company enters company reorganization; and

(b)in any event, before the end of the prescribed period beginning with the day on which the company enters company reorganization.

(6)The administrator shall be taken to comply with subsection (4) (d) if he publishes in the prescribed manner a notice undertaking to provide a copy of the statement of proposals free of charge to any member of the company who applies in writing to a specified address.

34. Creditors’ meeting

(1)In this Act, "creditors’ meeting" means a meeting of creditors of a company summoned by the administrator—

(a)in the prescribed manner; and

(b)giving the prescribed period of notice to every creditor of the company of whose claim and address he is aware of.

(2)A period prescribed under subsection (1) (b) may be varied in accordance with the Rules.

(3)A creditors’ meeting shall be conducted in accordance with the Rules.

35. Requirement for initial creditors' meeting

(1)Each copy of an administrator’s statement of proposals sent to a creditor under section 33 shall be accompanied by an invitation to a creditors’ meeting (hereinafter referred to as an "initial creditors’ meeting").

(2)The date set for an initial creditor’s meeting shall be as soon as is reasonably practicable after the company enters company reorganization and in any event within the prescribed period beginning with the date on which the company enters company reorganization.

(3)An administrator shall present a copy of his statement of proposals to an initial creditors’ meeting.

(4)A period specified in this section may be varied in accordance with the Rules.

(5)Subsection (1) shall not apply where the statement of proposals states that the administrator thinks that—

(a)the company has sufficient property to enable each creditor of the company to be paid in full;

(b)the company has insufficient property to enable a distribution to be made to unsecured creditors; or

(c)none of the objectives specified in section 14 can be achieved.

(6)Notwithstanding the provisions of subsection (5), the administrator shall summon an initial creditors’ meeting if it is requested—

(a)by creditors of the company whose debts amount to at least the prescribed amount as determined by the Rules;

(b)in the prescribed manner; and

(c)in the prescribed period.

(7)A meeting requested under subsection (6) shall be summoned for a date in the prescribed period.

(8)The period prescribed under subsection (7) may be varied in accordance with the Rules.

36. Business and result of initial creditors’ meeting

(1)An initial creditors’ meeting to which an administrator’s proposals are presented shall consider the proposals and may—

(a)approve them without modification in accordance with subsection (2); or

(b)approve them with modification to which the administrator consents.

(2)Subject to the provisions of subsection (3), the administrator’s proposals shall be deemed to be approved when a majority in value of those creditors present and voting, in person or by proxy, have voted in favour of the proposals.

(3)The administrator’s proposals shall not be approved if those voting against the proposals include more than half in value of the creditors to whom notice of the meeting was sent and who are not, to the best of the chairman of the meeting’s belief, persons connected with the company.

(4)After the conclusion of an initial creditors’ meeting, the administrator shall as soon as is reasonably practicable report any decision taken to—

(a)the Court;

(b)the Director;

(c)the Registrar of Companies; and

(d)such other persons as may be prescribed.

37. Substantial revision after approval

(1)This section shall apply where—

(a)an administrator’s proposals have been approved at an initial creditors’ meeting;

(b)the administrator proposes a revision to the proposals; and

(c)the administrator thinks that the proposed revision is substantial.

(2)The administrator shall—

(a)summon a creditors’ meeting;

(b)send a statement in the prescribed form, of the proposed revision with the notice of the meeting sent to each creditor;

(c)send a copy of the statement, within the prescribed period, to each member of the company of whose address he is aware of; and

(d)present a copy of the statement to the meeting.

(3)The administrator shall be taken to have complied with subsection (2) (c) if he publishes a notice undertaking to provide a copy of the statement free of charge to any member of the company who applies in writing to a specified address.

(4)A notice under subsection (3) shall be published—

(a)in the prescribed manner; and

(b)within the prescribed period.

(5)A creditors’ meeting to which a proposed revision is presented shall consider it and may—

(a)approve it without modification; or

(b)approve it with modification to which the administrator consents,

by applying the voting rules set out in section 36 (2) and (3).

(6)After the conclusion of a creditors’ meeting, the administrator shall as soon as is reasonably practicable report any decision taken to—

(a)the Court;

(b)the Director;

(c)the Registrar of Companies; and

(d)such other persons as may be prescribed.

38. Failure to obtain approval of administrator's proposals

(1)This section shall apply where an administrator reports to the Court that—

(a)an initial creditors’ meeting has failed to approve the administrator’s proposals presented to it; or

(b)a creditors’ meeting has failed to approve a revision of the administrator’s proposal presented to it.

(2)The Court may—

(a)order that the appointment of an administrator shall cease to have effect from a specified time;

(b)adjourn the hearing conditionally or unconditionally;

(c)make an interim order; and

(d)make any other order which the Court thinks appropriate.

39. Further creditors’ meetings

The administrator shall summon a creditors’ meeting if—

(a)it is requested in the prescribed manner by creditors of the company whose debts amount to at least ten per cent of the total debts of the company; or

(b)he is directed by the Court to summon a creditors’ meeting.

40. Creditors’ committee

(1)A creditors’ meeting may establish a creditors’ committee.

(2)A creditors’ committee may require the administrator to—

(a)attend on the committee at any reasonable time of which he is given notice of at least the prescribed number of days; and

(b)provide the committee with information about the exercise of his functions.

41. Correspondence instead of creditors' meeting

(1)Anything which is required or permitted by or under this Act to be done at a creditors’ meeting may be done by correspondence between the administrator and creditors—

(a)in accordance with the Rules; and

(b)subject to any prescribed condition.

(2)A reference in this Act to anything done at a creditors’ meeting shall include a reference to anything done in the course of correspondence in reliance on subsection (1).

(3)A requirement to hold a creditors’ meeting shall be satisfied by conducting correspondence in accordance with this section.

42. General powers of administrator

(1)The administrator may do anything necessary or expedient for the management of the affairs, business and property of the company.

(2)A provision of this Act which expressly permits the administrator to do a specified thing shall be without prejudice to the generality of subsection (1).

(3)A person who deals with the administrator in good faith need not inquire whether the administrator is acting within his powers.

(4)In addition to the powers conferred on the administrator by this Act, he shall also have the powers specified in the Rules.

(5)The administrator may—

(a)remove a director of the company; and

(b)appoint a director of the company whether or not to fill a vacancy.

(6)The administrator may call a meeting of members or creditors of the company.

(7)The administrator may apply to the Court for directions in connexion with his functions.

(8)A company in company reorganization or an officer of a company in company reorganization may not exercise a management power without the consent of the administrator.

(9)The administrator may raise finance by way of a loan or other credit or finance facility for the benefit of the company, provided that such loan or facility is necessary for the continuation of any business of the company.

(10)In exercising the powers conferred by subsection (9), the administrator may give security interests over the assets of the company:Provided that no such security interests shall take priority over any existing security interests in favor of a creditor of the company without the consent of the creditor holding the security interest or an order of the Court.

(11)The administrator may apply to the Court for an order under subsection (10).

(12)Upon an application under subsection (11), the Court may grant such order only if the Court is satisfied that the interest of any existing secured creditor will not be adversely affected.

(13)For the purposes of subsection (8)—

(a)"management power" means a power which could be exercised so as to interfere with the exercise of the administrator’s powers and it is immaterial whether the power is conferred by a written law or an instrument; and

(b)consent may be general or specific.

43. Distribution

(1)The administrator may make a distribution to a creditor of the company.

(2)Section 297 shall apply in relation to a distribution under this section as it applies in relation to a winding-up.

(3)A payment may not be made by way of distribution under this section to a creditor of the company who is not secured or preferential unless the Court gives permission.

(4)The administrator may make a payment otherwise than in accordance with subsection (2) or (3) or as prescribed in the Rules if he thinks it likely to assist achievement of the purpose of company reorganization.

44. General duties of administrator

(1)The administrator shall, on his appointment, take custody or control of all the property to which he thinks the company is entitled.

(2)Subject to subsection (3), the administrator shall manage the affairs, business and property of the company in accordance with—

(a)any proposals approved under section 36;

(b)any revision of those proposals which is made by him and which he does not consider substantial; and

(c)any revision of those proposals approved under section 37.

(3)If the Court gives directions to the administrator in connexion with any aspect of his management of the company’s affairs, business or property, the administrator shall comply with such directions.

(4)The Court may give directions under subsection (3) only if—

(a)no proposals have been approved under section 36;

(b)the directions are consistent with any proposals or revision approved under section 36 or 37;

(c)the Court thinks the directions are required in order to reflect a change in circumstances since the approval of proposals or a revision under section 36 or 37; or

(d)the Court thinks the directions are desirable because of a misunderstanding about proposals or a revision approved under section 36 or 37.

45. Administrator as agent of the company

In exercising his functions under this Act, an administrator shall act as the agent of the company.

46. Secured property: qualifying security interest

(1)An administrator may dispose of, or take action, relating to property which is subject to a qualifying security interest as if it were not subject to the security interest.

(2)Where property is disposed of in reliance on subsection (1), the holder of the qualifying security interest shall have the same priority in respect of acquired property as he had in respect of the property disposed of.

(3)In subsection (2), "acquired property" means property which directly or indirectly represents the property disposed of.

47. Secured property: non-qualifying security interest

(1)The Court may by order enable an administrator to dispose of property which is subject to a security interest other than a qualifying security interest, as if it were not subject to the security interest.

(2)An order under subsection (1) may be made only—

(a)on the application of an administrator; and

(b)where the Court thinks that disposal of the property would be likely to promote the purpose of company reorganization in respect of the company.

(3)An order under this section shall be subject to the condition that there be applied towards discharging the sums secured by the security interest—

(a)the net proceeds of disposal of the property; and

(b)any additional money required to be added to the net proceeds so as to produce the amount determined by the Court as the net amount which would be realized on a sale of the property at market value.

(4)If an order under this section relates to more than one security interest, application of money under subsection (3) shall be in the order of the priorities of the securities.

(5)An administrator who makes a successful application for an order under this section shall send a copy of the order to the Director and the Registrar of Companies within the prescribed period starting with the date of the order.

48. Protection for secured or preferential creditor

(1)An administrator’s statement of proposals under section 33 shall not include any action which—

(a)affects the right of a secured creditor of the company to enforce his security interest;

(b)would result in a preferential debt of the company being paid otherwise than in priority to its non-preferential debts; or

(c)would result in one preferential creditor of the company being paid a smaller proportion of his debt than another.

(2)Subsection (1) shall not apply to—

(a)action to which the relevant creditor consents; or

(b)a proposal for an arrangement to be sanctioned under the provisions of section 156.

(3)The reference to a statement of proposals in subsection (1) shall include a reference to a statement as revised or modified.

49. Challenge to administrator’s conduct of company

(1)A creditor or member of a company in company reorganization may apply to the Court claiming that the administrator—

(a)is acting or has acted so as to unfairly harm the interests of the applicant whether alone or in common with some or all other members or creditors; or

(b)proposes to act in a way which would unfairly harm the interests of the applicant whether alone or in common with some or all other members or creditors.

(2)A creditor or member of a company in company reorganization may apply to the Court claiming that the administrator is not performing his functions as quickly or as efficiently as is reasonably practicable.

(3)The Court may—

(a)grant relief;

(b)dismiss the application;

(c)adjourn the hearing conditionally or unconditionally;

(d)make an interim order; or

(e)make any other order it thinks appropriate.

(4)An order under this section may—

(a)regulate the administrator’s exercise of his functions;

(b)require the administrator to do or not to do a specified thing;

(c)require a creditors’ meeting to be held for a specified purpose;

(d)provide for the appointment of an administrator to cease to have effect; or

(e)make consequential provision.

(5)An order may be made on a claim under subsection (1) whether or not the action complained of—

(a)is within the administrator’s powers under this Act;

(b)was taken in reliance on an order under section 47.

(6)An order may not be made under this section if it would impede or prevent the implementation of—

(a)an arrangement sanctioned in terms of the provisions of section 156; or

(b)proposals or a revision approved under section 36 or 37 more than the prescribed number of days before the day on which the application for the order under this section is made.

50. Misfeasance

(1)The Court may examine the conduct of a person who—

(a)is, or purports to be the administrator; or

(b)has been or has purported to be the administrator.

(2)An examination under this section may be held only on the application of—

(a)the Official Receiver;

(b)the administrator;

(c)the liquidator of the company;

(d)a creditor of the company;

(e)a contributory of the company; or

(f)the Director.

(3)An application under subsection (2) shall allege that the administrator—

(a)has misapplied or retained money or other property of the company;

(b)has become accountable for money or other property of the company;

(c)has breached a fiduciary or other duty in relation to the company; or

(d)has been guilty of misfeasance.

(4)On an examination under this section into a person’s conduct, the Court may order him to—

(a)repay, restore or account for money or property;

(b)pay interest; or

(c)contribute a sum to the company’s property by way of compensation for breach of duty or misfeasance.

(5)In subsection (3), "administrator" includes a person who purports or has purported to be a company’s administrator.

(6)An application under subsection (2) in respect of an administrator who has been discharged under section 64 shall not be made without the permission of the Court.

51. Automatic end of company reorganization

(1)Subject to subsections (2), (3) and (4), the appointment of an administrator shall cease to have effect at the end of the period of six months beginning with the date on which it takes effect.

(2)On the application of an administrator, the Court may by order extend the term of office of the administrator for a further six months.

(3)Where the Court has extended an administrator’s term of office under subsection (2), it may by order further extend his term of office for a specified period for good cause shown.

(4)An administrator’s term of office may be extended for a specified period not exceeding six months by consent.

(5)An order of the Court under subsection (3)—

(a)may be made in respect of an administrator whose term of office has already been extended by order or by consent; and

(b)may not be made after the expiry of the administrator’s term of office.

(6)Where an order is made under subsection (5), the administrator shall as soon as is reasonably practicable notify the Director and the Registrar of Companies.

(7)In subsection (4), "consent" means the consent of—

(a)each secured creditor of the company; and

(b)if the company has unsecured debts, creditors whose debts amount to more than fifty per cent of the company’s unsecured debts, disregarding debts of any creditor who does not respond to an invitation to give or withhold consent.

(8)Notwithstanding subsection (7), where the administrator has made a statement under section 35 (6) (b), "consent" means—

(a)consent of each secured creditor of the company; or

(b)if the administrator thinks that a distribution may be made to preferential creditors, the consent of—

(i)each secured creditor of the company; and

(ii)preferential creditors whose debts amount to more than fifty per cent of the preferential debts of the company, disregarding debts of any creditor who does not respond to an invitation to give or withhold consent.

(10)Consent for the purposes of subsection (4) may be—

(a)written; or

(b)signified at a creditors’ meeting.

[Please note: numbering as in original.]

(11)An administrator’s term of office may—

(a)be extended by consent only once;

(b)not be extended by consent after extension by order of the Court; and

(c)not be extended by consent after expiry.

(12)Where an administrator’s term of office is extended by consent, he shall as soon as is reasonably practicable—

(a)file notice of the extension with the Court; and

(b)notify the Director and the Registrar of Companies.

52. Court ending company reorganization on application of administrator

(1)On the application of an administrator, the Court may provide for the appointment of an administrator to cease to have effect from a specified time.

(2)An administrator shall make an application under this section if—

(a)he thinks the purpose of company reorganization cannot be achieved in relation to the company;

(b)he thinks the company should not have entered company reorganization; or

(c)a creditors’ meeting requires him to make an application under this section.

(3)On an application under this section, the Court may—

(a)adjourn the hearing conditionally or unconditionally;

(b)dismiss the application;

(c)make an interim order; and

(d)make any order it thinks appropriate whether in addition to, in consequence of or instead of the order applied for.

53. Termination of company reorganization where objective achieved

(1)If an administrator thinks that the purpose of company reorganization has been sufficiently achieved in relation to the company he may file a notice to that effect in the prescribed form.

(2)An administrator’s appointment shall cease to have effect when the requirements of subsection (1) are satisfied.

(3)Where an administrator files a notice, he shall, within the prescribed period, send a copy to every creditor of the company of whose claim and address he is aware of.

(4)The Rules may provide that an administrator shall be taken to have complied with subsection (3) if before the end of the prescribed period he publishes in the prescribed manner a notice undertaking to provide a copy of the notice under subsection (1) to any creditor of the company who applies in writing to a specified address.

54. Court order ending company reorganization on application of creditor

(1)On the application of a creditor of a company, the Court may order that the appointment of an administrator of the company cease to have effect at a specified time.

(2)An application under this section shall allege an improper motive on the part of the applicant for the company reorganization order.

(3)On an application under this section, the Court may—

(a)adjourn the hearing conditionally or unconditionally;

(b)dismiss the application;

(c)make an interim order; or

(d)make any order it thinks appropriate whether in addition to, in consequence of, or instead of, the order applied for.

55. Public interest winding-up of company in company reorganization

(1)This section shall apply where a winding-up order is made for the winding-up of a company in company reorganization on a petition presented under section 107 (2) (e).

(2)This section shall apply where a provisional liquidator of a company in company reorganization is appointed following the presentation of a petition under section 107 (2) (e).

(3)The Court may order that the appointment of the administrator—

(a)cease to have effect; or

(b)continue to have effect.

(4)If the Court makes an order under subsection (3) (b), it may—

(a)specify which of the powers under this Act are to be exercisable by the administrator; and

(b)order that this Act shall have effect in relation to the administrator with specified modifications.

56. Moving from company reorganization to creditors' voluntary winding-up

(1)This section shall apply where the administrator thinks that—

(a)the total amount each secured creditor of the company is likely to receive has been paid to him or set aside for him; and

(b)a distribution will be made to unsecured creditors of the company if there are any.

(2)The administrator shall send to the Director and the Registrar of Companies a notice that this section applies.

(3)On receipt of a notice under subsection (2), the Director and the Registrar of the Company shall register the notice.

(4)If an administrator sends a notice under subsection (2), he shall as soon as is reasonably practicable—

(a)file a copy of the notice with the Court; and

(b)send a copy of the notice to each creditor of whose claim and address he is aware.

(5)On the registration of a notice under subsection (3)—

(a)the appointment of an administrator in respect of the company shall cease to have effect; and

(b)the company shall be wound-up as if a resolution for voluntary winding-up under section 141 (1) (b) were passed on the day on which the notice is registered.

(6)The liquidator for the purposes of the winding-up shall be—

(a)a person nominated by the creditors of the company in the prescribed manner and within the prescribed period; or

(b)if no person is nominated under paragraph (a), the administrator.

(7)In the application of Part V to a winding-up by virtue of this section—

(a)section 106 shall apply as if the reference to the time of the passing of the resolution for voluntary winding-up were a reference to the beginning of the date of registration of the notice under subsection (2); and

(b)section 141 (3) shall not apply;

(c)section 141 (8) shall apply as if the reference to the time of the passing of the resolution for voluntary winding-up were a reference to the beginning of the date of registration of the notice under subsection (3);

(d)sections 143, 146, and 147 shall not apply;

(e)any creditors’ committee which is in existence immediately before the company ceases to be in company reorganization shall continue in existence after that time as if appointed as a liquidation committee under section 148.

57. Moving from company reorganization to dissolution

(1)If the administrator thinks that the company has no property which might permit a distribution to its creditors, he shall send a notice to that effect to the Director and the Registrar of Companies.

(2)The Court may on the application of the administrator disapply subsection (1) in respect of the company.

(3)On receipt of a notice under subsection (1), the Registrar of Companies shall register the notice.

(4)On the registration of a notice in respect of a company under subsection (1), the appointment of an administrator shall cease to have effect.

(5)If an administrator sends a notice under subsection (1), he shall, as soon as is reasonably practicable—

(a)file a copy of the notice with the Court; and

(b)send a copy of the notice to each creditor of whose claim and address he is aware.

(6)At the end of the prescribed period beginning with the date of registration of a notice in respect of a company under subsection (1), the company shall be deemed to be dissolved.

(7)On an application in respect of a company by the administrator or another interested person, the Court may—

(a)suspend or extend the period specified in subsection (6); or

(b)disapply subsection (6).

(8)Where an order is made under subsection (7) in respect of a company, the administrator shall as soon as is reasonably practicable notify the Director and the Registrar of Companies.

58. Discharge of company reorganization order where company reorganization ends

(1)This section shall apply where the Court makes an order under this Act providing for the appointment of an administrator to cease to have effect.

(2)The Court shall discharge the company reorganization order where company reorganization ends.

59. Notice to Registrar of Companies where company reorganization ends

(1)This section shall apply where the Court makes an order under this Act providing for the appointment of an administrator to cease to have effect.

(2)The administrator shall send a copy of the order to the Director and the Registrar of Companies within the prescribed period beginning with the date of the order.

60. Resignation of administrator

(1)An administrator may resign only in the prescribed circumstances.

(2)Where an administrator may resign, he may do so only by notice in writing to the Court.

61. Removal of administrator from office

The Court may order the removal of an administrator from office.

62. Administrator ceasing to be qualified

(1)An administrator shall vacate office if he ceases to be qualified to act as an insolvency practitioner in relation to the company.

(2)Where an administrator vacates office by virtue of subsection (1) he shall give notice in writing to the Court.

63. Vacancy in office of administrator

(1)This section shall apply where an administrator—

(a)dies;

(b)resigns;

(c)is removed from office under section 61; or

(d)vacates office under section 62.

(2)The Court may replace the administrator on an application under this subsection made by—

(a)a creditors’ committee of the company;

(b)the company;

(c)the directors of the company;

(d)one or more creditors of the company; or

(e)where more than one person was appointed to act jointly or concurrently as the administrator, any of those persons who remain in office.

(3)An application may be made in reliance on subsection (2) (b), (c) and (d) only where—

(a)there is no creditors’ committee of the company;

(b)the Court is satisfied that the creditors’ committee or a remaining administrator is not taking reasonable steps to make a replacement; or

(c)the Court is satisfied that for another reason it is right for the application to be made.

(4)The Court may replace an administrator on the application of a person listed in subsection (2) if the Court is of the opinion that for any reason, it is right for the Court to make the replacement.

64. Vacation of office: discharge from liability

(1)Where a person ceases to be the administrator, whether because he vacates office by reason of resignation, death or otherwise, because he is removed from office, or because his appointment ceases to have effect, he shall be discharged from liability in respect of any of his actions as administrator.

(2)The discharge provided by subsection (1) shall take effect—

(a)in the case of an administrator who dies, on the filing with the Court of notice of his death; or

(b)in any other case, at a time specified by the Court.

(3)The discharge under this section shall—

(a)apply to liability accrued before the discharge takes effect; and

(b)not prevent the exercise of the Court’s powers under section 50.

65. Vacation of office: charges and liabilities

(1)This section shall apply where a person ceases to be the administrator whether because—

(a)he vacates office by resignation, death or otherwise;

(b)he is removed from office; or

(c)his appointment ceases to have effect.

(2)In this section—

(a)"the former administrator" means the person referred to in subsection (1); and

(b)"cessation" means the time when he ceases to be the company’s administrator.

(3)The former administrator’s remuneration and expenses shall be—

(a)charged on and payable out of property of which he had custody or control immediately before cessation; and

(b)payable in priority to any security to which section 46 applies.

(4)A sum payable in respect of a debt or liability arising out of a contract entered into by the former administrator or a predecessor before cessation shall be—

(a)charged on and payable out of property of which the former administrator had custody or control immediately before cessation; and

(b)payable in priority to any security interest arising under subsection (3).

(5)Subsection (4) shall apply to a liability arising under a contract of employment which was adopted by the former administrator or a predecessor before cessation; and for that purpose—

(a)action taken within the prescribed period after an administrator’s appointment shall not be taken to amount or contribute to the adoption of a contract;

(b)no account shall be taken of a liability which arises, or in so far as it arises, by reference to anything which is done or which occurs before the adoption of the contract of employment; and

(c)no account shall be taken of a liability to make a payment other than wages or salary.

(6)In subsection (5) (c), "wages or salary" includes—

(a)a sum payable in respect of a period of holiday (for which purpose the sum shall be treated as relating to the period by reference to which the entitlement to holiday accrued);

(b)a sum payable in respect of a period of absence through illness or other good cause;

(c)a sum payable in lieu of holiday;

(d)in respect of a period, a sum which would be treated as earnings for that period for the purposes of a written law about social security; and

(e)a contribution to an occupational pension scheme.

66. Multiple appointments

(1)In this Act—

(a)a reference to the appointment of an administrator includes a reference to the appointment of a number of persons to act jointly or concurrently as the administrator; and

(b)a reference to the appointment of a person as administrator includes a reference to the appointment of a person as one of a number of persons to act jointly or concurrently as the administrator.

(2)The appointment of a number of persons to act as administrator shall specify—

(a)which functions (if any) are to be exercised by the persons appointed acting jointly; and

(b)which functions (if any) are to be exercised by any or all of the persons appointed.

67. Joint administrators

(1)This section shall apply where two or more persons are appointed to act jointly as an administrator of a company.

(2)A reference to an administrator of the company is a reference to those persons acting jointly.

(3)Notwithstanding subsection (2), a reference to an administrator in sections 60 to sections 66 inclusive is a reference to any or all of the persons appointed to act jointly.

(4)Where an offence of omission is committed by the administrator, each of the persons appointed to act jointly—

(a)commits the offence; and

(b)may be proceeded against and punished individually.

(5)The reference in section 29 (1) (a) to the name of the administrator is a reference to the name of each of the persons appointed to act jointly.

(6)Where persons are appointed to act jointly in respect of only some of the functions of the administrator, this section shall apply only in relation to those functions.

68. Concurrent administrators

(1)This section shall apply where two or more persons are appointed to act concurrently as the administrator.

(2)A reference to the administrator in this Act is a reference to any of the persons appointed (or any combination of them).

69. Joint or concurrent administrators

(1)Where a company is in company reorganization, a person may be appointed to act as administrator jointly or concurrently with the person or persons acting as the administrator of the company.

(2)An appointment under subsection (1) shall be made by the Court on the application of—

(a)a person or group listed in section 26 (1), (2) and (3); or

(b)the person or persons acting as the administrator of the company.

(3)An appointment under subsection (1) may be made only with the consent of the person or persons acting as the administrator of the company.

70. Presumption of validity

An act of the administrator shall be valid notwithstanding a defect in his appointment or qualification.

71. Majority decision of directors

A reference in this Act to something done by the directors of a company includes a reference to the same thing done by a majority of the directors of a company.

72. Extension of time limit

(1)Where a provision of this Act provides that a period may be varied in accordance with this section, the period may be varied in respect of a company—

(a)by the Court; and

(b)on the application of the administrator.

(2)A time period may be extended in respect of a company under this section—

(a)more than once; and

(b)after expiry of the period.

73. Variation of period

(1)A period specified in sections 33 (5), 34 (1) (b) or 35 (2) may be varied in respect of a company by the administrator with consent.

(2)The power to extend under subsection (1) may—

(a)be exercised in respect of a period only once;

(b)not be used to extend a period by more than the prescribed period;

(c)not be used to extend a period which has been extended by the Court; and

(d)not be used to extend a period after expiry.

74. Extended period

Where a period is extended under section 72 or 73, a reference to the period shall be taken as a reference to the period as extended.

Part IV – Receivership

75. Appointment of receiver

(1)A receiver—

(a)may be appointed—

(i)under any instrument that confers on a secured creditor the power to appoint a receiver; or

(ii)by the Court, whether or not the person appointed is empowered to sell any of the property in receivership; and

(b)shall not include a mortgagee in possession who personally or as or through an agent exercises a power to—

(i)receive income from mortgaged property;

(ii)enter into possession or assume control of mortgaged property; or

(iii)sell or otherwise alienate mortgaged property.

(2)An instrument that creates a security interest in respect of the property of the company may confer on the secured party the power to appoint a receiver, or a receiver and manager, of the property concerned or of that part which is secured by the security interest.

(3)A receiver may not be appointed under this Part if a company is already in company reorganization under Part III, or where an application has already been made to place the company under company reorganization.

76. Qualification of receiver

(1)Unless the Court orders otherwise, no person may be appointed as a receiver who—

(a)is not qualified to be an insolvency practitioner;

(b)is a creditor of the debtor;

(c)is or has within the prescribed period immediately preceding the commencement of the receivership been a director, officer or auditor of the debtor of the property in receivership, or of any company which is a related company of the secured party;

(d)has, or has within the prescribed period immediately preceding the commencement of the receivership had, an interest, direct or indirect, in a share issued by the debtor;

(e)is a person in respect of whom an order for his removal as an insolvency practitioner has been made or is prohibited from acting as an insolvency practitioner; or

(f)is a person who is disqualified from acting as a receiver by the instrument that confers the power to appoint a receiver.

77. Appointment of receiver under instrument

(1)When an instrument confers on the secured party the power to appoint a receiver or a receiver and manager, the secured party may appoint a receiver or a receiver and manager by an instrument in writing signed by him or on his behalf.

(2)A receiver or a receiver and manager appointed by, or under a power conferred by, an instrument shall be the agent of the debtor, unless the instrument expressly provides otherwise.

(3)A receiver or a receiver and manager may be appointed under this section—

(a)notwithstanding any other law; and

(b)whether or not the property in respect of which the receiver or receiver and manager is appointed includes immovable property.

(4)A person appointed a receiver shall not act as receiver and manager unless the instrument appointing him includes his appointment as a manager.

(5)A power conferred by an instrument to appoint a receiver includes, unless the instrument expressly provides otherwise, the power to appoint—

(a)two or more receivers;

(b)a receiver additional to a receiver in office; and

(c)a receiver to succeed a receiver whose office has become vacant.

78. Appointment of receiver by Court

(1)The Court may appoint a receiver, or a receiver and manager, on the application of a secured party or of any other person and on notice to the company, where the Court is satisfied that—

(a)the company has failed to pay a debt due to the secured party or has otherwise failed to meet any obligation to the secured party, or that any principal money borrowed by the company or interest is in arrears for more than the prescribed period;

(b)the company proposes to sell or otherwise dispose of the secured property in breach of the terms of any instrument creating the security interest; or

(c)it is necessary to do so to ensure the preservation of the secured property for the benefit of the secured party.

(2)A receiver or receiver and manager may be appointed under this section—

(a)notwithstanding any other law; and

(b)whether or not the property in respect of which the receiver is appointed includes immovable property.

(3)A person appointed by the Court as a receiver shall be appointed receiver and manager unless the Court directs that the person is to be appointed only as a receiver.

79. Notice of appointment of receiver

(1)A receiver shall, within the prescribed period after being appointed—

(a)give written notice of his appointment to the debtor;

(b)give public notice of his appointment, including—

(i)the receiver’s full name;

(ii)the date and time of the appointment;

(iii)the receiver’s office address; and

(iv)a brief description of the property in receivership; and

(c)send a copy of the notice to the Director and the Registrar of Companies.

(2)Where the appointment of the receiver is in addition to that of a receiver who already holds office or is in place of a person who has vacated office as receiver, every notice under this section shall state that fact.

80. Notice of receivership

(1)Where a receiver is appointed, every agreement entered into, and every document issued, by or on behalf of the chargor or the receiver and on which the name of the chargor appears shall state clearly that a receiver has been appointed.

(2)Where a receiver is appointed in relation to a specific asset, every agreement entered into, and every document issued, by or on behalf of the chargor or the receiver that relates to the asset and on which the name of the chargor appears shall state clearly that a receiver has been appointed.

(3)A failure to comply with subsection (1) or (2) shall not affect the validity of the agreement or document.

81. Vacancy in office of receiver

(1)The office of a receiver shall become vacant if the person holding office resigns, dies or becomes disqualified.

(2)A receiver appointed under a power conferred by an instrument may resign office by giving written notice of not less than the prescribed period of his intention to resign to the person by whom he was appointed.

(3)If for any reason other than resignation a vacancy occurs in the office of a receiver, written notice of the vacancy shall forthwith be delivered to the Director and to Registrar of Companies by the person vacating office or, if that person is unable to act, by his legal representative.

(4)A receiver appointed by the Court shall not resign without first obtaining the leave of the Court to do so.

(5)A person vacating the office of receiver shall, where practicable, provide such information and give such assistance in the conduct of the receivership to his successor as that person reasonably requires.

(6)On the application of a person appointed to fill a vacancy in the office of receiver, the Court may make any order that it considers necessary or desirable to facilitate the performance of his duties.

82. Powers of receiver

(1)A receiver shall have the powers and authorities expressly or impliedly conferred by the instrument or the order of the Court by or under which the appointment was made.

(2)Subject to the instrument or order of the Court by or under which the appointment was made, a receiver shall have and may exercise the powers set out in the Rules.

(3)A receiver may, subject to the instrument or order of the Court by or under which the appointment is made, exercise the receiver’s powers and authorities to the exclusion of the board of directors or debtor company.

(4)Two or more receivers may act jointly or severally to the extent that they have the same powers unless the instrument under which, or the order of the Court by which, they are appointed expressly provides otherwise.

83. Execution of documents

(1)A receiver may execute in the name and on behalf of the company every document necessary or incidental to the exercise of the receiver’s powers.

(2)A document signed on behalf of a company by a receiver shall be deemed to have been properly signed on behalf of the company.

(3)Notwithstanding any other law, or the memorandum and articles of association of a company that is a debtor, where the instrument under which a receiver is appointed empowers him to execute a document and to use the company’s common seal for that purpose, the receiver may execute the document in the name and on behalf of the company by affixing the company’s seal to the document and attesting the affixing of the seal or in such a manner as may be prescribed in the Rules.

84. Obligations of company and directors

(1)Where a receiver is appointed in respect of the property of a company, the company and every director of the company shall—

(a)within the prescribed period make available to the receiver all books, documents and information relating to the property in receivership in the company’s possession or under the company’s control;

(b)if required to do so by the receiver, verify by affidavit that the books, documents and information are complete and correct;

(c)within the prescribed period after receipt of the notice of the receiver’s appointment, or such longer period as may be allowed by the Court, make out and submit a statement as to the affairs of the company;

(d)give the receiver such assistance as he may reasonably require; and

(e)where the company has a seal, make the seal available for use by the receiver.

(2)The receiver shall within the prescribed period after receipt of the statement under subsection (1) (c) or such extended period as the Court may allow—

(a)lodge with the Director and the Registrar of Companies a copy of the statement and of any comments the receiver sees fit to make on the statement;

(b)send to the company a copy of any such comments or, if the receiver does not see fit to make any comment, a notice to that effect.

(3)The statement as to the affairs of a company required by subsection (1) (c) shall show—

(a)the particulars of the company’s assets;

(b)debts and liabilities;

(c)the names and addresses of its creditors;

(d)security interests held by them respectively;

(e)the dates when the security interests were respectively created; and

(f)a statement confirming that payment for amounts owing to the government and relating to taxes or any other levies, have been paid on the due dates.

(4)The statement as to the affairs of a company required by subsection (1) (c) shall be submitted in the form of an affidavit by a director and a secretary of the company or by any of the following persons whom the receiver may require—

(a)a person who is or has been an officer of the company;

(b)a person who has taken part in the formation of the company at any time within one year before the date of the receiver’s appointment;

(c)a person who is or has been an employee of the company within that year and is, in the opinion of the receiver, capable of giving the information required; or

(d)a person who is or has been within that year an officer of or employee of a corporate which is, or within that year was, an officer of the company to which the statement relates.

(5)Any person making a statement under this section shall be allowed and shall be paid by the receiver out of his receipts such costs and expenses incurred in and about the preparation and making of the statement as the receiver may consider reasonable.

(6)Any person aggrieved by a decision of the receiver under subsection (5) may, within the prescribed period, appeal to the Court and the Court, on hearing the appeal, may make such order as it thinks appropriate.

(7)On the application of the receiver, the Court may make an order requiring the company or a director of the company to comply with subsection (1).

85. Validity of act of receiver

(1)Subject to subsection (2), no act of a receiver shall be invalid merely because the receiver was not validly appointed or is disqualified from acting as a receiver or is not authorized to do the act.

(2)No transaction entered into by a receiver shall be invalid merely because the receiver was not validly appointed or is not authorized to enter into the transaction unless the person dealing with the receiver has, or ought to have, by reason of his relationship with the receiver or the property by whom the receiver was appointed, knowledge that the receiver was not validly appointed or did not have authority to enter into the transaction.

86. Consent of mortgagee to sale of property

(1)Where the consent of a mortgagee is required to the sale of property in receivership and the receiver is unable to obtain that consent, the receiver may apply to the Court for an order authorizing the sale of the property, by itself or together with other assets.

(2)The Court may, on application under subsection (1), make such order as it thinks appropriate authorizing the sale of the property by the receiver where it is satisfied that—

(a)the receiver has made reasonable efforts to obtain the mortgagor’s consent; and

(b)the sale—

(i)is in the interests of the chargor and chargor’s creditors; and

(ii)will not substantially prejudice the interests of the mortgagee.

87. General duties of receiver

(1)A receiver shall exercise his powers in good faith.

(2)A receiver shall exercise his powers in a manner which he believes on reasonable grounds to be in the interests of the person in whose interest he was appointed.

(3)While acting in accordance with subsections (1) and (2), a receiver shall exercise his powers with reasonable regard to the interests of—

(a)the debtor company;

(b)the persons claiming, through the debtor company, interests in the property in the receivership;

(c)unsecured creditors of the chargor; and

(d)sureties who may be called upon to fulfill obligations of the chargor.

(4)A receiver shall not be bound to act in accordance with the directions of the person appointing him and any such failure shall not be regarded as being in breach of the duty referred to in subsection (2).

(5)A receiver who exercises a power of sale of property in a receivership owes a duty to the debtor company to obtain the best price reasonably obtainable as at the time of sale.

(6)Notwithstanding any other law or anything contained in the instrument by or under which a receiver is appointed—

(a)it shall not be a defence to proceedings against a receiver for a breach of the duty imposed by subsection (5) that the receiver was acting as the debtor company’s agent or under a power of attorney from the debtor company; and

(b)a receiver shall not be entitled to compensation or indemnity from the property in receivership or the debtor company in respect of any liability incurred by the receiver arising from a breach of the duty imposed by subsection (5).

(7)A receiver shall keep money relating to the property in receivership separate from other money received in the course of, but not relating to, the receivership and from other money held by or under the control of the receiver.

(8)A receiver shall at all times keep accounting records that correctly record and explain all receipts, expenditure and other transactions relating to the property in receivership.

(9)The accounting records shall be retained by the receiver for not less than the prescribed period after the receivership ends.

(10)The receiver shall, in claiming remuneration, be entitled to include the reasonable costs of storage of records required to be kept by this section.

88. First report by receiver

(1)Not later than the prescribed period after his appointment, receiver shall prepare a report on the state of the affairs with respect to the property in receivership including—

(a)particulars of the assets comprising the property in receivership;

(b)particulars of the debts and liabilities to be satisfied from the property in receivership;

(c)the names and addresses of the creditors with an interest in the property in receivership;

(d)particulars of any secured interest over the property in receivership held by any creditor including the date on which it was created;

(e)particulars of any default by the debtor company in making relevant information available; and

(f)such other information as may be prescribed.

(2)The report required to be prepared under subsection (1) shall also include details of—

(a)the events leading up to the appointment of the receiver, so far as the receiver is aware of them;

(b)property owing, as at the date of appointment, to any person in whose interests the receiver was appointed;

(c)amounts owing, as at the date of appointment, to any person in whose interest the receiver was appointed;

(d)amounts owing, as at the date of appointment, to creditors of the debtor company having preferential claims; and

(e)amounts likely to be available for payment to creditors other than those referred to in subsection (2) (c) or (d).

(3)A receiver may omit from the report required to be prepared under subsection (1) details of any proposals for disposal of the property in receivership where he considers that their inclusion would materially prejudice the exercise of his functions.

89. Further report by receiver

(1)Not later than the prescribed period after—

(a)the end of each period of six months after his appointment as receiver; and

(b)the date on which the receivership ends, a receiver or a person who was a receiver at the end of the receivership, as the case may be, shall prepare a further report summarizing the state of affairs with respect to the property in receivership as at those dates, and the conduct of the receivership, including all amounts received and paid, during the periods to which the report relates.

(2)The report required to be prepared under subsection (1) shall include details of—

(a)property disposed of since the date of any previous report and any proposals for the disposal of property in receivership;

(b)amounts owing, as at the date of the report, to any person in whose interests the receiver was appointed;

(c)amounts owing, as at the date of the report, to creditors of the debtor company who have preferential claims; and

(d)amounts likely to be available as at the date of the report for payment to creditors, other than those referred to in subsection (2) (b) or (c).

(3)A receiver may omit from the report required to be prepared in accordance with subsection (1) (a) details of any proposal of property in receivership if he considers that their inclusion would materially prejudice the exercise of his functions.

90. Extension of time for preparing reports

A period of time within which a person is required to prepare a report under section 88 or 89 may be extended, on the application of the person, by—

(a)the Court, where the person was appointed a receiver by the Court; or

(b)the Registrar of Companies, where the person was appointed a receiver by or under an instrument.

91. Persons entitled to receive reports

(1)A copy of every report prepared under section 88 or 89 shall be sent by the person required to prepare it to the debtor company and the debtor company shall as soon as possible cause public notice to be given that a report has been prepared and is available for inspection.

(2)A person appointed as a receiver by the Court shall file a copy of every report prepared under section 88 or 89 with the Court.

(3)Not later than the prescribed period after receiving a written request for a copy of any report from—

(a)a creditor, director or surety of the debtor company; or

(b)any other person with an interest in any of the property in the receivership,

and on payment of the costs of making and sending the copy, the person who prepared the report shall send a copy of the report to the person requesting it.

(4)Within the prescribed period after preparing a report under section 88 or 89, the person who prepared the report shall send or deliver a copy of the report to the Director and the Registrar of Companies in the prescribed manner.

(5)A person to whom a report must be sent in accordance with subsection (1) or (3) shall be entitled to inspect the report during normal working hours at the office of the person required to send it.

92. Duty to notify breaches of Acts

(1)A receiver who considers that the company or any director or officer of the company has committed an offence under the Companies Act or the Securities Act shall forthwith report that fact to the Director and the Registrar of Companies.

(2)A report made under subsection (1), and any communication between a receiver and the Director and the Registrar of Companies relating to that report, shall be protected by absolute privilege.[Cap. 46:03; Cap. 46:06]

93. Notice of end of receivership

Not later than the prescribed period after a receivership ceases, the person who held office as receiver at the end of the receivership shall send or deliver to the Director and the Registrar of Companies notice in writing of the fact that the receivership has ceased.

94. Preferential claims

(1)Subject to the rights of any of the persons referred to in subsection (2), a receiver shall pay moneys received by him to the secured party of the secured transaction by virtue of which he was appointed in or towards satisfaction of the debt secured by the secured transaction.

(2)The following persons shall be entitled to payment out of the property of a company in receivership in priority to the secured party under a security interest, and in the following order of priority—

(a)first, the receiver for his expenses and remuneration and any indemnity to which he is entitled from out of the property of the company;

(b)second, any amount secured by any security interest that ranks in priority to the security in relation to which the receiver was appointed; and

(c)third, where the company is in liquidation, the persons entitled to preferential claims to the extent and in the order of priority required by section 297.

(3)The receiver shall hold and retain from any personal property of a company subject to the security interest or any proceeds of realization of such property, sufficient funds or value of property to discharge any claims under subsection (2) (b) and (c).

95. Powers of receiver on liquidation

(1)Subject to subsection (2), a receiver may continue to act as a receiver and exercise all the powers of a receiver in respect of property of a company that has been put into liquidation unless the Court orders otherwise.

(2)After the commencement of the winding-up of a company, a receiver shall not be appointed in respect of the property of the company except under an order of the Court on such terms as the Court thinks appropriate.

(3)A receiver holding office in respect of property referred to in subsections (1) and (2) may act as the agent of the chargor only with the written—

(a)approval of the Court; or

(b)consent of the liquidator.

(4)A debt or liability incurred by a chargor through the acts of a receiver who is acting as the agent of the chargor in accordance with subsection (2) shall not be a cost, charge or expense of liquidation.

96. Liability of receiver

(1)Subject to subsections (2) and (3), a receiver shall be personally liable—

(a)on a contract entered into by the receiver in the exercise of any of his powers; and

(b)for payment of wages or salary that, during the receivership, accrue under a contract of employment relating to the property in receivership and entered into before his appointment if notice of the termination of the contract is not lawfully given within the prescribed period after the date of appointment.

(2)The terms of a contract referred to in subsection (1) (a) may exclude or limit the personal liability of the receiver other than a receiver appointed by the Court.

(3)The Court may, on the application of a receiver, made before the end of the period of the prescribed period, extend the period within which notice of the termination of a contract is required to be given under subsection (1) (b) and may extend that period on such terms and conditions as the Court thinks fit.

(4)Subject to subsection (6), a receiver shall be personally liable, to the extent specified in subsection (5), for rent and any other payments becoming due under an agreement subsisting at the date of his appointment relating to the use, possession or occupation by the chargor of property in receivership.

(5)The liability of a receiver under subsection (4) shall be limited to that portion of the rent or other payments which is attributed to the prescribed period commencing after the date of appointment of the receiver and ending on—

(a)the date on which the receivership ends; or

(b)the date on which the debtor company ceases to use, possess or occupy the property,

whichever occurs earlier.

(6)The Court may, on the application of a receiver—

(a)limit the liability of the receiver to a greater extent than that specified in subsection (5); or

(b)excuse the receiver from the liability under subsection (4).

(7)Nothing in subsection (4) or subsection (5)—

(a)shall be taken as giving rise to an adoption by the receiver of an agreement referred to in subsection (4); or

(b)shall render a receiver liable to perform any other obligation under the agreement.

(8)A receiver shall be entitled to an indemnity out of the property in receivership in respect of his personal liability under this section.

(9)Nothing in this section shall—

(a)limit any other right of indemnity to which a receiver may be entitled;

(b)limit the liability of a receiver on a contract entered into without authority; or

(c)confer on a receiver a right to an indemnity in respect of liability on a contract entered into without authority.

97. Relief from liability

(1)The Court may relieve a person who has acted as a receiver from any personal liability incurred in the course of the receivership where it is satisfied that—

(a)the liability was incurred solely by reason of a defect in the appointment of the receiver or in the instrument or order of the Court by or under which the receiver was appointed; and

(b)the receiver acted honestly and reasonably and ought, in the circumstances, to be excused.

(2)The Court may exercise its powers under subsection (1) subject to such terms as it thinks appropriate.

(3)A person in whose interests a receiver was appointed shall be liable, subject to such terms as the Court thinks appropriate, to the extent to which the receiver is relieved from liability under subsection (1).

98. Court supervision of receiver

(1)The Court may, on the application of a receiver—

(a)give directions in relation to any matter arising in connexion with the performance of the functions of the receiver; and

(b)revoke or vary any such directions.

(2)The Court may, on the application of a person referred to in subsection (3)—

(a)in respect of any period, review the remuneration of a receiver at a level which is reasonable in the circumstances;

(b)to the extent that an amount retained by a receiver as remuneration is found by the Court to be unreasonable in the circumstances, order the receiver to refund the amount; or

(c)declare whether or not a receiver was validly appointed in respect of any property or validly entered into possession or assumed control of any property.

(3)Any of the following persons may apply to the Court under subsection (2)—

(a)the receiver;

(b)the debtor company;

(c)a creditor of the debtor company;

(d)a person claiming, through the debtor company, an interest in the property in receivership;

(e)a liquidator; or

(f)the Director.

(4)The powers of the Court under subsections (1) and (2)—

(a)shall be in addition to any other power which the Court may exercise; and

(b)may be exercised whether or not the receiver has ceased to act as receiver when an application is made.

(5)The Court may, on the application of a person referred to in subsection (3), revoke or vary an order made under subsection (2).

(6)Subject to subsection (7), it shall be a defence to a claim against a receiver in relation to any act or omission by the receiver that he acted in accordance with a direction given under subsection (1).

(7)The Court may, on the application of a person referred to in subsection (3), order that, by reason of the circumstances in which a direction was obtained under subsection (1), a receiver is not entitled to the protection given by subsection (6).

99. Court may terminate or limit receivership

(1)The Court may, on the application of the debtor company or a liquidator of the debtor company—

(a)order that a receiver shall cease to act as such as from a specified date, and prohibit the appointment of any other receiver in respect of the property in receivership; or

(b)order that a receiver shall, as from a specified date, act only in respect of specific assets forming part of the property in receivership.

(2)An order shall not be made under subsection (1) unless the Court is satisfied that—

(a)the purpose of the receivership has been satisfied so far as possible; or

(b)circumstances no longer justify its continuation.

(3)Unless the Court orders otherwise, a copy of an application under this section shall be served on the receiver not less than the prescribed period before the hearing of the application, and the receiver may appear and be heard at the hearing.

(4)An order under subsection (1)—

(a)may be made on such terms as the Court thinks appropriate; and

(b)shall not affect a security interest over the property in respect of which the order is made.

(5)The Court may, on the application of any person who applied for or is affected by the order, rescind or amend an order under this section.

100. Order to enforce receiver's duties

(1)An application for an order under this section may be made by—

(a)the Registrar of Companies;

(b)a receiver;

(c)a person seeking appointment as a receiver;

(d)the debtor company;

(e)the secured party;

(f)a person with an interest in the property in receivership;

(g)a creditor of the debtor company;

(h)a guarantor of an obligation of the debtor company;

(i)a liquidator of the debtor company;

(j)the Director; or

(k)a receiver of the property of a debtor company in relation to a failure to comply by another receiver of the property of the debtor company.

(2)No application shall be made to the Court in relation to a failure to comply unless notice of the failure to comply has been served on the receiver not less than the prescribed number of days before the date of the application and, as at the date of the application, there is a continuing failure to comply.

(3)Where the Court is satisfied that there is, or has been, a failure to comply, the Court may—

(a)relieve the receiver of the duty to comply, wholly or in part; or

(b)without prejudice to any other remedy that may be available in relation to a breach of duty by the receiver, order the receiver to comply with the extent specified in the order.

(4)The Court may, in respect of a person who fails to comply with an order made under subsection (3) (b), or is or becomes disqualified to become or remain a receiver—

(a)remove the receiver from office; or

(b)order that the person may be appointed and act or may continue to act as a receiver, even when he is not qualified.

(5)Where it is shown to the satisfaction of the Court that a person is unfit to act as a receiver by reason of—

(a)persistent failures to comply; or

(b)the seriousness of a failure to comply,

the Court shall make, in relation to that person, a prohibition order for a period not exceeding the prescribed period.

(6)A person to whom a prohibition order applies shall not—

(a)act as a receiver in any receivership and if currently acting shall cease to act;

(b)act as a liquidator in any liquidation; or

(c)act as an administrator.

(7)In making an order under this section, the Court may, if it thinks appropriate—

(a)make an order extending the time for compliance;

(b)impose any term or condition; or

(c)make any other ancillary order.

(8)A copy of every order made under subsection (5) shall, within the prescribed period of the order being made, be delivered by the applicant to the Registrar of Companies and to the Director who shall keep it on a public file indexed by reference to the name of the receiver concerned.

(9)Evidence that, on two or more occasions within the preceding prescribed period—

(a)a Court has made an order to comply under this section, and section in respect of the same person; or

(b)an application for an order to comply under this section has been made in respect of the same person and that in each case the person has complied after the making of the application and before the hearing, is, in the absence of special reasons to the contrary, evidence of persistent failures to comply for the purposes of this section.

101. Order for protection of property in receivership

The Court may, on making an order that removes, or has the effect of removing, a receiver from office, make such order as it thinks fit—

(a)for preserving the property in receivership; and

(b)requiring the receiver for that purpose to make available to any person specified in the order any information and document in the possession or under the control of the receiver.

102. Refusal to provide essential service

(1)In this section—

(a)"essential service" means—

(i)retail supply of electricity;

(ii)the supply of water; or

(iii)telecommunication services; and

(b)"telecommunication services" means the conveyance from one device to another by any line, radio frequency or other medium, of any sign, signal, impulse, writing, image, sound, instruction, information or intelligence of any nature, whether or not for the information of a person using the device.

(2)Notwithstanding any other written law or any contract, a supplier of an essential service shall not—

(a)refuse to supply the service to a receiver or to the owner of the property in receivership by reason of the chargor’s default in paying charges due for the service in relation to a period before the date of the appointment of the receiver; or

(b)make it a condition of the further supply of the service to a receiver or to the owner of property in receivership that payment be made of outstanding charges due for the service in relation to a period before the date of appointment of the receiver.

(3)Nothing in this section shall prevent the supplier of an essential service from exercising any right or power under any contract or under any written law in respect of a failure by a company to pay charges due for the service in relation to any period after the commencement of the liquidation.

(4)The provision of services under this section forms part of the costs of receivership.

Part V – Winding-up of companies

Division I—Winding-up of other bodies corporate and foreign companies

103. Winding-up of other bodies corporate

(1)Subject to the provisions of this Act, any body corporate, not being a company, foreign company (or body corporate specified in subsection (2)), a partnership or sole proprietorship which has assets situated in Malawi, may be wound-up under this Part, and all the provisions of this Part shall apply to such body corporate as if it were a company.

(2)This section shall not apply to any body corporate incorporated by or under any written law for the time being in force in Malawi, which law makes specific provision for the winding-up of bodies corporate formed by or under it.

(3)Section 104 shall apply to a winding-up under this section, as if the body corporate were an external company.

104. Winding-up of foreign companies

(1)A foreign company may be wound-up pursuant to this Part whether or not it has been dissolved or has otherwise ceased to exist according to the law of the country of its incorporation.

(2)A foreign company being wound-up in terms of the provisions of this part shall be subject to the provisions of this section.

(3)A foreign company shall not be wound-up except on a petition to the Court.

(4)A foreign company may be wound-up by the Court—

(a)if it is in the course of being wound-up, voluntarily or otherwise, in the country of its incorporation;

(b)if it is dissolved in the country of its incorporation or has ceased to carry on business in Malawi, or is carrying on business for the purpose only of winding-up its affairs;

(c)if it is unable to pay its debts;

(d)if the Court is of the opinion that the business or objects of the company, or any of them, are unlawful, or that the company is being operated in Malawi for any unlawful purpose or is carrying on a business or operations not authorized by its charter, memorandum or constitution;

(e)if the company has, for three months or more immediately preceding the filing of the petition, failed to comply with any provision of this Part requiring the delivery of any document or notice by the company to the Registrar of Companies for registration; or

(f)if the Court is of the opinion that it is just and equitable that the company should be wound-up.

(5)In determining whether the external company is unable to pay its debts, the provisions of sections 182 and 183 shall apply.

(6)Where an order is made by the Court for the winding-up in Malawi of a foreign company the company shall, for all of the purposes of such winding-up, be treated as if it were a company incorporated in Malawi and, subject to the provisions of Part X, only the assets and liabilities situated in Malawi shall be deemed to be the assets and liabilities thereof.

(7)The Court may, in the winding-up order or on subsequent application by the liquidator, direct that all transactions in Malawi by or with such foreign company shall be deemed to be validly done notwithstanding that they occurred after the date when such foreign company was dissolved or otherwise ceased to exist according to the law of the country of its incorporation, and may make such order on such terms and conditions as it deems fit.

Division II—Winding-up generally

105. Modes of winding-up

(1)The winding-up of a company may be effected by way of—

(a)winding-up order made by the Court; or

(b)a voluntary winding-up commenced by a resolution passed by the company.

(2)A voluntary winding-up may be—

(a)a creditors’ voluntary winding-up where the company is insolvent and the liquidator is appointed by a meeting of creditors; or

(b)a shareholder’s voluntary winding-up where the company is solvent and the liquidator is appointed by a shareholders’ meeting.

106. Commencement of winding-up

(1)Where, before the presentation of a petition to the Court under section 107, a resolution has been passed by the company for voluntary winding-up, the winding-up of the company shall be deemed to have commenced at the time of the passing of the resolution, and, unless the Court on proof of fraud or mistake thinks fit to direct otherwise, all proceedings taken in the voluntary winding-up shall be deemed to have been validly taken.

(2)In every other case of a winding-up by the Court, the winding-up shall be deemed to have commenced at the time of the presentation of the petition for the winding-up.

(3)Where—

(a)a liquidator is appointed under section 113 (1) the Court shall record on the order appointing the liquidator the date on which, and the time at which, the order was made;

(b)a liquidator is appointed under section 113 (2), the board of the company shall cause to be recorded in the instrument appointing the liquidator the date on which, and the time at which, the special resolution is passed.

(c)a liquidator is appointed under section 104, the shareholders shall cause to be recorded in the special resolution appointing the liquidator the date on which, and the time at which, the special resolution is passed.

(4)If any question arises as to whether on the date on which a liquidator was appointed an act was done or a transaction was entered into or effected before or after the time at which the liquidator was appointed, the act or transaction shall, in the absence of proof to the contrary, be deemed to have been done or entered into or affected, as the case may be, after that time.

Division III—Winding-up by Court

107. Petition for winding-up

(1)Subject to the provisions of this section, a company may, whether or not it is being wound-up voluntarily and on petition made in accordance with this section, be wound-up under an order of the Court.

(2)A petition to wind-up by a company may be presented by—

(a)the company;

(b)a shareholder;

(c)a creditor, including a contingent or prospective creditor, of the company;

(d)a liquidator; or

(e)the Director.

(3)The Court shall not hear a petition presented by a contingent or prospective creditor until such security for costs has been given as the Court thinks reasonable and a prima facie case for winding-up has been established to the satisfaction of the Court.

(4)Subject to this section, a petition to wind-up may be presented where—

(a)the company has by special resolution resolved that it be wound-up by the Court;

(b)the company is unable to pay its debts;

(c)the company does not commence its business (if any) within a year from its incorporation or suspends its business for a whole year;

(d)the number of members is reduced below two;

(e)the period, if any, fixed for the duration of the company by the memorandum or articles expires or the event, if any, on the occurrence of which the memorandum or articles provide that the company is to be dissolved, has occurred; or

(f)the Court is of opinion that it is just and equitable to do so.

108. Preliminary costs

(1)Where a person, other than a company or a liquidator, presents a petition under section 107 and a winding-up order is made, the person shall at his own cost prosecute all proceedings in the winding-up until a liquidator is appointed.

(2)The liquidator shall, unless the Court otherwise directs, reimburse the petitioner out of the assets of the company the reasonable costs incurred by the petitioner under subsection (1).

(3)Where a winding-up order is made on the petition of a company or a liquidator, the costs incurred under subsection (1) shall, unless the Court otherwise directs, be paid out of the assets of the company as if they were the costs of any other petitioner.

109. Power of Court on petition for winding-up

(1)Subject to this section, on hearing a petition to wind-up, the Court may in its discretion grant the petition and make a winding-up order, dismiss the petition, adjourn the hearing conditionally or unconditionally, adjourn the petition in the case of a company in company reorganization, or make such interim or other order that it thinks fit, but the Court shall not refuse to make a winding-up order by reason that—

(a)the assets of the company have been charged to an amount equal to or in excess of those assets;

(b)the company has no assets; or

(c)in the case of a petition by a contributory, there will be no assets available for distribution, amongst the contributories.

(2)The Court may at the hearing of a petition, adjourn the petition for not more than the prescribed period and direct that the Director prepare a report for the Court, with a copy being provided to the company and the petitioner, on whether it is appropriate in the circumstances for the company to be placed in company reorganization under Part III.

(3)The Court may, at the hearing of a petition or at any other time, on the application of the petitioner, the company, or any person who has given notice that he intends to appear on the hearing of the petition—

(a)direct that notices be given or any other steps be taken before or after the hearing of the petition;

(b)dispense with any notice being given or step being taken which is required by this Act or by any previous order of the Court; or

(c)give such other directions as to the proceedings as the Court thinks fit.

(4)An order for winding-up of a company shall operate in favour of all the creditors and contributories of the company as if it was made on the joint petition of a creditor and of a contributory.

(5)Where the Court dismisses a petition and considers that the petition is frivolous or vexatious and ought not to have been brought, it may award costs against the petitioner.

110. Proceedings against company

(1)At any time after the presentation of a petition under section 107 and before a winding-up order is made, the company, a creditor, or member may, where any action or proceedings against the company is pending, apply to the Court to stay further proceedings in the action or proceedings, and the Court may stay or restrain the proceedings accordingly on such terms as it thinks appropriate.

(2)Where a winding-up order has been made or a provisional liquidator has been appointed, no action or proceedings shall be proceeded with or commenced against the company except—

(a)by leave of the Court; and

(b)on such terms as the Court thinks appropriate.

111. Property of company

(1)A disposition of any property of a company and a transfer of shares or alteration in the status of a shareholder made after the commencement of the winding-up by the Court shall, unless the Court otherwise directs, be void.

(2)Any attachment, sequestration, distress or execution put in force against the assets of a company after the commencement of the winding-up by the Court shall be void.

112. Lodging and service of order

A petitioner shall, within the prescribed period after the making of a winding-up order—

(a)lodge with the Director—

(i)a copy of the order; and

(ii)the name and address of the liquidator;

(b)deliver a copy of the order to the Official Receiver;

(c)cause a copy of the order to be served on the secretary of the company or on such other person or in such manner as the Court directs; and

(d)deliver a copy of the order to the liquidator with a statement that the requirements of this section have been complied with.

113. Appointment of provisional liquidator

(1)The Court may, on the presentation of a petition under section 107 and at any time thereafter but before the making of a winding-up order, and on being satisfied that—

(a)there are reasonable grounds for believing that the company is unable to pay its debts; or

(b)any of the property of the company available to meet its debts is at risk or may be removed from Malawi,

appoint the Official Receiver or any other qualified person to be provisional liquidator who shall, subject to such limitations and restrictions as the Court may specify in the order, have and may exercise all the functions and powers of a liquidator.

(2)On his appointment under subsection (1), a provisional liquidator shall forthwith take into his custody or control all the property, movable or immovable, including all bank accounts and other financial assets, to which the company is or appears to be entitled.

(3)Where a winding-up order is made—

(a)the Official Receiver shall, unless another person has been appointed, become the provisional liquidator and continue to act as such until he or another person becomes liquidator and is capable of acting as such;

(b)the Official Receiver shall, where no liquidator is appointed, summon separate meetings of the creditors and contributories of the company for the purpose of determining whether or not an application is to be made to the Court for appointing a liquidator in the place of the Official Receiver;

(c)the Court may appoint a liquidator and, if there is a difference between the determination of the meetings of the creditors and members in that respect, make such order as it thinks fit;

(d)the Official Receiver shall, where a liquidator is not appointed by the Court, be the liquidator;

(e)subject to paragraph (f), the official receiver shall be the liquidator during any vacancy in the office of liquidator; and

(f)any vacancy in the office of a liquidator appointed by the Court may be filled by the Court.

(4)A meeting of creditors under this section shall be called and conducted in accordance with the Rules.

(5)Where the names and address of all creditors are not known to the Official Receiver, public notice of the meeting shall be advertised in at least two daily newspapers of national circulation.

(6)The Official Receiver shall not be required to call a meeting of creditors under subsection (3) (b) where—

(a)he considers, having regard to the assets and liabilities of the company, the likely result of the liquidation of the company, and any other relevant matters, that no such meeting should be held;

(b)he gives notice in writing to the creditors stating—

(i)that he does not consider that a meeting should be held;

(ii)the reasons for his views; and

(iii)that no such meeting will be called unless a creditor gives notice in writing to the Official Receiver within the prescribed period after receiving the notice, requiring a meeting to be called; and

(c)no notice requiring the meeting to be called is received by the Official Receiver within that period.

(7)A notice under subsection (6) (b) shall be given to every known creditor—

(a)where section 119 (1) (c) applies, together with the report and notice referred to in section 119 (1) (c); or

(b)where section 119 (1) (c) is not applicable, at the time the Official Receiver would have been required to send the report and notice referred to in section 119 (1) (c) if it were applicable.

(8)A liquidator, other than the Official Receiver, appointed by the Court may resign or, on good cause shown, be removed from office by the Court.

(9)Where the Court appoints more than one liquidator, it shall declare whether anything by this Act required or authorized to be done by the liquidator is to be done by all or any one or more of the persons appointed.

114. Custody and vesting of company's property

(1)Where a provisional liquidator has been appointed or a winding-up order has been made, the provisional liquidator or liquidator shall forthwith take into his custody or under his control all the property to which the company is or appears to be entitled.

(2)The Court may, on the application of the liquidator, order that the property of the company vest in the liquidator and the property shall, subject to subsection (4), vest accordingly and the liquidator may, after giving such indemnity, if any, as the Court directs, bring or defend any action which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding-up the company and recovering its property.

(3)On the service of an order appointing a provisional liquidator or liquidator on any bank, financial institution, issuer of securities or any other person holding property or securities on behalf of or in the name of the company, the bank, institution, issuer or person shall hold the property for and at the discretion of the provisional liquidator or liquidator.

(4)Where an order is made under subsection (2), every liquidator in relation to whom the order is made shall, within the prescribed period of the making of the order—

(a)lodge with the Director a copy of the order; and

(b)where the order relates to land, delivery a copy of the order to the Land Registrar or Deeds Registrar, as the case may be.

(5)No order under subsection (2) shall have effect to transfer or otherwise vest land until the appropriate entries are made with respect to the vesting by the Land Registrar or Deeds Registrar, as the case may be.

115. Statement of company’s affairs

(1)There shall be delivered to the liquidator in accordance with subsection (2) a statement as to the affairs of the company as at the date of the winding-up order showing—

(a)the particulars of its assets, including any inventory of stock, debts and liabilities;

(b)the names and addresses of its creditors;

(c)the security interests held by them;

(d)the dates on which the security interests were respectively given; and

(e)such further information as may be prescribed or as the liquidator requires.

(2)The statement shall be verified by the statutory declaration of one or more of the persons who at the date of the winding-up order are directors, and by the secretary of the company, or by such of the following persons as the liquidator may, subject to any order made by the Court, require—

(a)a person who is or has been an officer;

(b)a person who has taken part in the formation of the company at any time within two years before the date of the winding-up order; or

(c)a person who is, or has been, within that period an officer of, or in the employment of, a corporation which is, or within that period was, an officer of the company to which the statement relates.

(3)The statement shall be submitted within the prescribed period after the date of the winding-up order or within such extended time as the liquidator or the Court may authorize.

(4)The liquidator shall, within the prescribed period after its receipt, file with the Court and lodge with the Director a copy of the statement and, where the Official Receiver is not the liquidator, cause a copy to be delivered to the Official Receiver.

(5)Any person making or concurring in making a statement required by subsection (1) may, subject to any order made by the Court, be allowed and paid, out of the assets of the company, such costs and expenses incurred in, and about, the preparation and making of the statement as the liquidator considers reasonable.

116. Liquidator’s report

(1)The liquidator shall, within the prescribed period after receipt of the statement of affairs, submit a preliminary report to the Court—

(a)as to the amount of capital issued, subscribed and paid up and the estimated amount of assets and liabilities;

(b)where the company is unable to pay its debts, as to the likely causes of the inability; and

(c)whether in his opinion, further inquiry is desirable as to any matter relating to the promotion, formation or inability to pay debts of the company or the conduct of its business.

(2)The liquidator may also, if he thinks fit, make further reports stating the manner in which the company was formed and whether in his opinion any fraud has been committed or any material fact has been concealed by any person in its promotion or formation or by any officer in relation to the company since its formation, and whether any officer of the company has contravened or failed to comply with any provision of this Act, and specifying any other matter which in his opinion is desirable to bring to the notice of the Court.

117. Principal duty of liquidator

Subject to section 118, the principal duty of the liquidator shall be to act in a reasonable and efficient manner so as to—

(a)take possession of, protect, realize, and distribute the assets, or the proceeds of the realization of the assets, of the company to its creditors in accordance with this Act; and

(b)where there are surplus assets remaining, distribute them, or the proceeds of the realization of the surplus assets, in accordance with sections 303 and 304.

118. Liquidator not required to act in certain cases

(1)Notwithstanding this Part—

(a)except where a security interest is surrendered or taken to be surrendered under the Rules, a liquidator may, but is not required to, carry out any duty or exercise any power in relation to property that is subject to a security interest; and

(b)where—

(i)a company is wound-up by order of the Court; and

(ii)the company has no assets available for distribution to creditors of the company,

the liquidator shall not be required, without the consent of the Director, to carry out any duty or exercise any power in connexion with the liquidation where to do so would or would be likely to involve incurring any expense.

119. Other duties of liquidator

(1)A liquidator shall—

(a)within the prescribed period of being appointed or being notified of his appointment, give public notice in the prescribed manner;

(b)within the prescribed period of being appointed or being notified of his appointment, submit to the Director and the Registrar of Companies notice of his appointment;

(c)within the prescribed period, or at the end of each period of six months following the commencement of the liquidation, prepare and send to every known creditor and shareholder, and submit to the Director and the Registrar of Companies, a report—

(i)on the conduct of the liquidation during the preceding six months;

(ii)containing the prescribed information; and

(iii)of any further proposals which the liquidator has for completing the liquidation.

(2)The Court may, on the application of a liquidator and on such terms as it thinks appropriate—

(a)exempt the liquidator from compliance with any of the provisions of this section; or

(b)modify the application of those provisions in relation to the liquidator.

(3)A liquidator shall not be required to comply with subsection (1) (c) where he is satisfied that the value of the assets of the company available for distribution to unsecured creditors, not being creditors entitled to be paid in the order of the priority set out in section 297, is not likely to exceed the prescribed amount owed to such creditors.

(4)A liquidator who considers that the company or any person has—

(a)committed an offence in relation to the company;

(b)been guilty of any negligence, default, breach of duty or trust in relation to the company; or

(c)committed any offence that is material to this Act, the Companies Act or the Securities Act,

shall within the prescribed period submit a written report of that fact to the Director and the Registrar of Companies and give the Director such information or documents, and such assistance, including further reports, and access to and facilities for inspecting and taking copies of any documents, as the Director may require.[Cap. 46:03; Cap. 46:06]

(5)A liquidator shall ensure that every document entered into, made, or issued by him on behalf of a company shall state in a prominent position that the company is in liquidation.

120. Powers of liquidator

A liquidator of a company shall have power to do all or any of the following—

(a)commence, continue, discontinue and defend legal proceedings;

(b)carry on the business of the company to the extent necessary for the liquidation;

(c)appoint a legal practitioner to assist him in his duties;

(d)appoint an agent or expert to do any business which the liquidator himself is unable to do;

(e)with the leave of the liquidation committee or the Court, pay any class of creditors in full;

(f)subject to section 156, make a compromise or any arrangement with creditors or persons claiming to be creditors or who have or allege the existence of claim against the company, whether present or future, actual or contingent, or ascertained or not;

(g)compromised cause and liabilities for cause, debts and liabilities capable of resulting in debts and claims, present or future, actual or contingent, or call ascertain or not, subsisting or supposed to subsist between the company and any person and all questions relating to or affecting the assets or the liquidation of the company, on such terms as may be agreed, and take security for the discharge of any such call, debt, liability or claim and give a complete discharge;

(h)sell or otherwise dispose of the property of the company with the approval of the liquidation committee;

(i)act in the name and on behalf of the company and enter into deeds, contracts and arrangements in the name and on behalf of the company;

(j)prove, rank and claim in the bankruptcy or a shareholder for any balance against that person’s estate, and receive dividends in the bankruptcy or insolvency, as a separate debt due from the bankrupt or insolvent, and ratably with the other separate creditors;

(k)draw, accept, make and endorse a bill of exchange or promissory note in the name and on behalf of the company in the course of its business;

(l)borrow money whether with or without providing security over the assets of the company;

(m)take action in his name as liquidator for transfer to the heir or executor of a deceased shareholder of any shares in the name of the deceased and to do in that name any other act necessary for obtaining payment of money due from a shareholder or his estate which cannot be conveniently done in the name of the liquidator; or

(n)call a meeting of creditors or shareholders for—

(i)the purpose of informing creditors of progress in the liquidation;

(ii)the purpose of ascertaining the views of creditors or shareholders on any matter arising in the liquidation; or

(iii)such other purpose connected with the liquidation thinks fit.

121. Power of liquidator relating to documents and information

(1)A liquidator shall in pursuance of the powers provided under section 120 have power to obtain documents and information set out in this section.

(2)A liquidator may, by notice in writing, require a director or former director or shareholder of the company or any other person to give him such record or document of the company in that person’s possession or under that person’s control as he may require.

(3)A liquidator may, by notice in writing, require—

(a)a director or former director of the company;

(b)a shareholder of company;

(c)a person who was involved in the promotion or formation of the company;

(d)a person who is, or has been, an employee of the company;

(e)a receiver, accountant, auditor, bank officer, or other person having knowledge of the affairs of the company; or

(f)a person who is acting or has at any time acted as a legal practitioner for the company,

to do any of the things specified in subsection (4).

(4)A person referred to in subsection (3) may be required to—

(a)attend on the liquidator at such reasonable time or times and at such place, including a place of meeting of creditors, as may be specified in the notice;

(b)provide the liquidator with such information about the business, accounts, or affairs of the company as the liquidator request and be examined by the liquidator in connexion with such affairs of the company; and

(c)assist in the liquidation to the best of the person’s ability.

(5)Where a person directed to attend before the liquidator under subsection (3) applies to the Court to be exculpated from any charges made or suggested against him, the liquidator shall appear on the hearing of the application and call the attention of the Court to any matters which appear to him to be relevant and the Court may, after hearing any evidence given or witnesses called by the liquidator, grant the application.

(6)Notes of the examination of a person under subsection (4)—

(a)shall be reduced to writing;

(b)shall be read over to, or by, and signed by, the person examined;

(c)may, subject to section 124, thereafter be used in evidence in any legal proceedings against the person examined; and

(d)shall be open to the inspection of any creditor or member.

122. Document in possession of receiver

(1)A receiver shall not be required to hand over to a liquidator any record or document that the receiver requires for the purpose of exercising any powers or functions as receiver in relation to property of a company in liquidation.

(2)A liquidator may, by notice in writing, require a receiver to—

(a)make such record and document available for inspection by the liquidator at any reasonable time; and

(b)provide the liquidator with copies of such record and document, or extracts from them.

(3)The liquidator shall pay the reasonable expenses of the receiver in complying with a requirement of the liquidator under subsection (2).

(4)No person may, as against the liquidator of a company, claim or enforce a lien over a record or document of the company.

123. Document creating charge over property

(1)A person may be required to give a document to a liquidator under section 121 even though possession of the document creates a security interest over property of a company.

(2)Production of the document to the liquidator under subsection (1) shall not prejudice the existence or priority of the security interest.

(3)Notwithstanding subsection (2), the liquidator shall make the document available to the person entitled to it for the purpose of dealing with or realizing the security interest.

124. Power of Court

(1)The Court may, on the application of a liquidator, order a person who has failed to comply with a requirement of the liquidator under sections 120 and 121 to comply with the requirement.

(2)A liquidator may apply to the Court for directions in relation to any particular matter in a winding-up.

(3)The Court may, on the application of the liquidator, order a person to whom section 119 (3) applies to—

(a)attend before the Court and be examined on oath or affirmation by the Court, the liquidator or a legal practitioner acting on behalf of the liquidator on any matter relating to the business, accounts or affairs of the company; and

(b)produce any record or document relating to the business, accounts, or affairs of the company in that person’s possession or under that person’s control.

(4)Where a person is examined under subsection (3) (a)—

(a)the examination shall be recorded in writing; and

(b)the person examined shall sign the record.

(5)Subject to any direction by Court, a record of an examination under this section shall be admissible in evidence in any proceedings under this Act.

(6)A person shall not be excused from answering a question put in course of being examined under subsection (3) on the ground that the answer might incriminate or tend to incriminate that person.

(7)The testimony of the person examined shall not be admissible as evidence in criminal proceedings against that person except on a charge of perjury in relation to that testimony.

125. Release of liquidator and dissolution of company

(1)Where a liquidator has—

(a)realized all the property of the company or so much as can in his opinion be realized without needlessly protracting the liquidation;

(b)distributed a final dividend, if any, to the creditors;

(c)adjusted the rights of the members among themselves; and

(d)made a final return, if any, to the members,

he may apply to the Court for an order that he be released or for an order that he be released and that the company be dissolved.

(2)Where a liquidator has resigned or been removed from his office, he may apply to the Court for an order that he be—

(a)released; or

(b)released and that the company be dissolved.

(3)A liquidator shall present to the Court an account showing how the winding-up has been conducted and how the property of the company has been disposed of.

(4)Where an order is made that the company be dissolved, the company shall from the date of the order be dissolved accordingly.

(5)The Court—

(a)may cause a report on the accounts of a liquidator, other than the Official Receiver, to be prepared by the Official Receiver or by a qualified auditor appointed by the Court;

(b)shall, on the liquidator complying with all the requirements of the Court, take into consideration the report and any objection which is urged by the Official Receiver, auditor, any creditor, contributory or other person interested against the release of the liquidator; and

(c)shall grant or withhold the release accordingly.

(6)Where the release of a liquidator is withheld, the Court may, on the application of any creditor, contributory or person interested, make such order as it thinks appropriate charging the liquidator with the consequence of any act done or default which he may have done or made contrary to his duty.

(7)Subject to subsection (8), an order of the Court releasing a liquidator shall discharge him from all liability in respect of any act done or default made by him in the administration of the affairs of the company or otherwise in relation to his conduct as liquidator.

(8)Any order under subsection (7) may be revoked on proof that it was obtained by fraud or by suppression or concealment of any material fact.

(9)Where the liquidator has not previously resigned or been removed, his release shall operate as a removal from office.

(10)Where the Court has made—

(a)an order that the liquidator be released; or

(b)an order that the liquidator be released and the company be dissolved,

a copy of the order shall be lodged with the Director and the Registrar of Companies by the liquidator and delivered to the Official Receiver within the prescribed period.

126. Liquidation committee in winding-up by Court

(1)The liquidator may summon separate meetings of the creditor and members for the purpose of determining whether or not creditors or members require the appointment of a liquidation committee to act with the liquidator, and if so, who are to be members of the committee provided that in the case of a public company or on request by a creditor or a member, the summon of the meeting shall be mandatory.

(2)If the meeting of members requires a liquidation committee to be appointed, the Court shall decide whether such a committee should be appointed, and the Court shall also determine any difference as to who are to be members of the committee and make such order as it thinks fit.

(3)A liquidation committee shall consist of a number of creditors and members of the company or of persons holding—

(a)general powers of attorney from creditors; or

(b)special authority from creditors or members authorizing the persons named thereto and therein to act on such a committee appointed by the meetings of creditors and contributories in such proportions as are agreed to or in case of difference as are determined by the Courts.

(4)The liquidator may at any time on his own motion at least once every six months, and shall, within the fourteen days on the written request of a creditor or member, summons a meeting of creditors or of members to consider any appointment or revoke the appointment and appoint another creditor or member or person holding a general power or special authority as specified in subsection (1) to be a member of the committee.

(5)The Rules shall govern proceedings at meetings of a liquidation committee.

127. List of members

(1)As soon as it deems fit after making a winding-up order, the Court may settle a list of members and rectify the shareholder or member’s register in every case where rectification is required pursuant to this Part, and shall cause the assets of the company to be collected and applied in discharge of its liabilities.

(2)In settling a list of members, the Court shall distinguish between persons who are members in their own right and person who are members as being representatives of or liable for the debts of others.

(3)This list of members, when settled, shall be prima facie evidence of the liabilities of the persons named therein as members.

128. Liabilities of present and past shareholders

(1)This section shall apply only in the case of a company being limited by guarantee, an unlimited company, and a company having shares which are not fully paid up.

(2)On a company being wound-up, any past member shall, subject to the provisions of this section, be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities, and the costs, charges and expenses of the winding-up and for the adjustment of the rights of the members among themselves.

(3)A past member shall not be liable to contribute in respect of any debt or liability of the company contracted after he has ceased to be a member.

(4)A past member shall not be liable to contribute if he has ceased to be a member for one year or more before the commencement of the winding-up.

(5)A past member shall not be liable to contribute unless it appears to the Court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this Act.

(6)In the case of a company limited by shares, no contribution shall be required from any past member exceeding the amount unpaid on the shares in respect of which he is liable.

(7)For the purposes of this section, any reference to a member shall, unless the context otherwise requires—

(a)be deemed to include a past member who is liable by virtue of this section, to contribute to the assets of the company; and

(b)for the purpose of all proceedings for determining, and of all proceedings prior to the final determination of, the persons who are deemed to be so liable (including the presentation of a winding-up petition), includes any person claiming or alleged to be so liable.

129. Death of member

If a member dies before or after he has been placed on the list of those liable to contribute to the assets of the company, his personal representatives shall be so liable in due course of administration and, if they make default in paying any money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased members and for compelling payment there out of the money due.

130. Bankruptcy of member

If a member becomes bankrupt, before or after he has been placed on the list of those liable to contribute to the assets of the company—

(a)his trustee in bankruptcy shall represent him for all the purposes of the winding-up, and shall be liable to contribute accordingly; and

(b)there may be proved against the estate of the bankrupt the estimated value of his liability to future calls and as to calls already made.

131. Payment of debt due by contributory

(1)The Court may make an order directing a member for the time being on the list of contributories to pay to the company in the manner directed by the order any money due from him or from the estate of the person whom he represents, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act, and may—

(a)in the case of unlimited company, allow to the contributory by way of set-off any money due to him or to the estate which he represents from the company on any independent dealing or contract other than money due to him as a shareholder or member in respect of any dividend or profit;

(b)in the case of a limited company, make a similar allowance to a director whose liability is unlimited, or to his heir; and

(c)in the case of any company, when all the creditors are paid in full, allow a contributory by way of set-off against any subsequent call any money due on any account whatever to a contributory from the company.

(2)The Court may, before or after it has ascertained the sufficiency of the company—

(a)make a call on any contributory for the time being on the list of contributories, to the extent of his liability, for—

(i)the payment of any money which the Court consider necessary to satisfy the debts and liability of the company and the costs, charges and expenses of winding-up; and

(ii)the adjustment of the rights of the contributories among themselves; and

(b)make an order for payment of all calls so made, and, in making a call, the Court may have regard to the probability that some of the contributories may partly or wholly fail to pay the call.

(3)The Court may order any contributory or other person from whom money is due to the company to pay the amount due to the account of the liquidator into a bank named in the order instead of to the liquidator, and any such order may be enforced in the same manner as if it had directed payment to the liquidator.

(4)An order made by the Court under this section shall, subject to any right of appeal, be conclusive evidence that any money thereby appearing to be due or ordered to be paid is due, and that any other relevant fact therein stated is true and correctly stated.

132. Special manager

(1)Where a liquidator is satisfied that the nature of the assets or business of the company, or the interests of the creditors or members generally, require the appointment of special manager other than himself, he may, apply to the Court which may appoint a special manager to act during such time as the Court directs with such powers, including any of the powers of a receiver or manager, as are entrusted to him by the Court.

(2)The special manager—

(a)shall give such security and account in such manner as the Court directs;

(b)shall receive such remuneration as is fixed by the Court; and

(c)may at any time resign after giving not less than one month’s written notice to the liquidator or his intention to resign, or on cause shown be removed by the Court.

133. Receiver for secured creditors

Where an application is made to the Court to appoint a receiver on behalf of the secured creditors of a company which is being wound-up by the Court, the Court may grant the application on such terms as the Court thinks appropriate.

134. Creditor’s claim

The Court may fix a date on or before which creditors are to prove their debts or claims, after which date they will be excluded from the benefit of any distribution made before those debts are proved.

135. Power of arrest

(1)The Court may, at any time before or after making a winding-up order, on proof of probable cause for believing that a member or officer or a former member or officer of the company, is about to leave Malawi or otherwise to abscond or to remove or conceal any of his property for the purpose of evading payment of any money due to the company or of avoiding examination regarding the affairs of the company, may cause the member, office or former member or officer to be arrested and his books and papers and movable personal property to be seized and be kept safely until such time as the Court orders otherwise.

(2)For the purposes of this section, "officer" shall include a banker, legal practitioner or auditor of the company.

136. Foreign companies

(1)Subject to the provisions of this section, a liquidator may be appointed for a foreign company as defined in the Companies Act by the Court on the application of—

(a)a liquidator appointed in the country of the company’s incorporation;

(b)a creditor; or

(c)the Director,

and thereupon the provisions of this Act shall apply.

(2)Where the circumstances regarding an external company set out in section 369 (1) of the Companies Act have been brought to the attention of the Director, the Director may apply to the Court for an order for the winding-up of the affairs of the company in so far as they relate to its assets in Malawi.[Cap. 46:03]

(3)Where, on an application under subsection (1) or (2), an order is made for the winding-up of the affairs of the company so far as assets in Malawi are concerned, the company shall not carry on business or establish or keep a place of business in Malawi.[Cap. 46:03]

137. Pooling of assets of related companies

(1)If, on the application of a liquidator, creditor or shareholder, the Court is satisfied that it is just and equitable to do so, the Court may order that—

(a)a company that is, or has been, related to a company in liquidation shall pay to the liquidator any claim made in the liquidation; or

(b)where two or more related companies are in liquidation, the liquidations in respect of each company must proceed together as if they were one company to the extent that the Court so orders and subject to such terms as the Court may impose.

(2)The Court may make such orders or give such directions to facilitate giving effect to an order under subsection (1) as it thinks appropriate.

138. Guidelines for orders

(1)In deciding whether it is just and equitable to make an order under section 137 (1) (a), the Court shall have regard to the extent to which the circumstances that gave rise to the liquidation of the company are attributable to the actions of the related company.

(2)In deciding whether it is just and equitable to make an order under section 137 (1) (a), the Court shall have regard to—

(a)the extent to which any of the companies took part in the management of any of the other companies;

(b)the conduct of any of the companies towards the creditors of any of the other companies;

(c)the extent to which the circumstances that gave rise to the liquidation of any of the companies are attributable to the actions of the other companies; and

(d)the extent to which the business of the companies have been combined.

(3)The fact that creditors of a company in liquidation relied on the fact that another company is, or was, related to it shall not be a ground for making an order under section 137.

139. Duty to identify and deliver property

A present or former director or employee of a company in liquidation shall—

(a)forthwith after the company is put into liquidation give the liquidator details of property of the company in his possession or under his control; and

(b)on being required to do so by the liquidator forthwith or within such time as may be specified by the liquidator, deliver the property to the liquidator or such other person as the liquidator may direct, or dispose of the property in such manner as the liquidator may direct.

140. Refusal to supply essential service

(1)For the purposes of this section—

(a)"essential service" means—

(i)the retail supply of electricity;

(ii)the supply of water; or

(iii)telecommunications services; and

(b)"telecommunication service" means the conveyance from one device to another by a line, radio frequency, satellite transmission or other medium of a sign, signal, impulse, writing, image, sound, instruction, information or intelligence of any nature, whether or not for the information of a person using the device.

(2)Notwithstanding any other law, a supplier of an essential service shall not—

(a)refuse to supply the service to a liquidator, or to a company in liquidation, by reason of the company’s default in paying charges due for the service in relation to a period before the commencement of the liquidation; or

(b)make it a condition of the supply of the service to a liquidator, or to a company in liquidation, that payment be made of outstanding charges due for the service in relation to a period before the commencement of the liquidation.

(3)The charges incurred by a liquidator for the supply of an essential service shall be an expense incurred by the liquidator as part of the costs of the liquidation.

Division IV—Voluntary winding-up

141. Circumstances for voluntary winding-up

(1)Subject to subsection (2), a company may be wound-up voluntarily where—

(a)the period, if any, fixed for its duration by its memorandum and articles of association expires, or the event, if any, occurs, on the occurrence of which the memorandum and articles of association provides that the company is to be dissolved, and the company passes an ordinary resolution that it shall be wound-up; or

(b)the company passes a special resolution that it shall be wound-up.

(2)Where an application for winding-up has been presented on the ground that a company is unable to pay its debts, the company shall not, without the leave of the Court, resolve that it be wound-up voluntarily.

(3)A company shall—

(a)within the prescribed period, lodge with the Director and the Registrar General a copy of the winding-up resolution; and

(b)within the prescribed period, give notice of the winding-up resolution in one daily newspaper and in the Gazette.

(4)Where it appears to the directors of a company that the company is insolvent, the directors may, before holding a meeting for the passing of the special resolution referred to in subsection (1)—

(a)lodge with the Director and the Registrar of Companies a declaration and deliver a copy thereof to the Official Receiver, stating that—

(i)the company cannot by reason of its liabilities continue its business; and

(ii)meetings of the company and of its creditors have been summoned for a date not later than the prescribed period of the date of the declaration; and

(b)appoint a person to be the provisional liquidator who shall, subject to such limitations and restrictions as may be prescribed, have and may exercise all the functions and powers of a liquidator in a creditors’ winding-up.

(5)The appointment of a provisional liquidator shall continue for the prescribed period from the date of his appointment or for such further period as the Official Receiver may allow or until the appointment of a liquidator, whichever occurs first.

(6)The company shall, within the prescribed period, give notice of the appointment of a provisional liquidator and the lodging of the declaration in one daily newspaper and in the Gazette.

(7)A provisional liquidator shall be entitled to receive remuneration as determined in the Rules.

(8)A voluntary winding-up shall commence—

(a)where a provisional liquidator is appointed under subsection (4) before a winding-up resolution is passed, at the time when a declaration under subsection (4) is lodged; and

(b)in every other case, at the time of the passing of the winding-up resolution.

142. Effect of voluntary winding-up

(1)A company shall, from the commencement of its winding-up, cease to carry on its business except so far as is in the opinion of the liquidator required for the beneficial winding-up of the company.

(2)The corporate status and corporate powers of the company shall, notwithstanding anything in the memorandum and articles of association, continue until it is dissolved.

(3)Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the shareholders made after the commencement of the winding-up, shall be void.

143. Declaration of solvency

(1)Where it is proposed to wind-up a company voluntarily as a shareholders’ voluntary winding-up, the directors or the majority of them shall, before the date on which the notices of the meeting at which the winding-up resolution is to be proposed are set out, make a written declaration to the effect that—

(a)they have made an inquiry into the affairs of the company; and

(b)at a meeting of directors, they have formed the opinion that the company will be able to pay its debts in full within a period not exceeding the prescribed period after the commencement of the winding-up.

(2)There shall be attached to the declaration under subsection (1) a statement of the affairs of the company showing—

(a)the assets of the company and the total amount expected to be realized therefrom;

(b)the liabilities of the company; and

(c)the estimated expenses of winding-up, made up to the latest practicable date before the making of the declaration.

(3)A declaration made under subsection (1) shall have no effect unless it is—

(a)made at the meeting of directors referred to in subsection (1); or

(b)made within the prescribed period immediately preceding the passing of the winding-up resolution; and

(c)lodged with the Director and the Registrar of Companies before the date on which the notices of the meeting at which the resolution for the winding-up of the company is to be proposed are sent out.

144. Liquidator in voluntary winding-up

(1)The company shall, in a general meeting, appoint a liquidator for the purpose of winding-up the affairs and distributing the assets of the company, and may fix the remuneration to be paid to the liquidator.

(2)On the appointment of a liquidator, all the powers of the directors shall cease except so far as the liquidator, or, with the liquidator’s consent, the company in a general meeting, may otherwise determine.

(3)Subject to subsection (4), the company in a general meeting convened by a contributory may, by special resolution of which special notice has been given to the creditors and the liquidator, remove a liquidator.

(4)A resolution under subsection (3) shall have no effect if, on the application of the liquidator or a creditor, the Court otherwise directs.

(5)Where a vacancy occurs, by death, resignation, removal or otherwise, in the office of a liquidator the company in a general meeting may fill the vacancy by the appointment of a liquidator and fix the remuneration to be paid to him, and for that purpose a general meeting may be convened by a contributory, or, if there were more liquidators than one, by the continuing liquidators.

(6)A general meeting under subsection (5) shall be held in the manner provided by the Rules, the Companies Act or in such manner as, on the application of a contributory or the continuing liquidators, the Court may direct.[Cap. 46:03]

(7)Where a company in a general meeting has failed to fill a vacancy under subsection (5), any creditor or member of the company may apply to the Court for the appointment of the Official Receiver as provisional liquidator of the company and, if appointed by the Court, the Official Receiver shall act as provisional liquidator of the company until further order of the Court made on application by the company following a resolution in a general meeting nominating a liquidator for appointment by the Court.

145. Insolvency of company

(1)Where a liquidator is of the opinion that the company will not be able to pay or provide for the payment of its debts in full within the period stated in the declaration of solvency made under section 143, he shall forthwith—

(a)summon a meeting of the creditors; and

(b)lay before the meeting a statement of the assets and liabilities of the company.

(2)The notice summoning the meeting shall draw the attention of the creditors to the right conferred upon them by subsection (3).

(3)The creditors may at the meeting appoint some other person to be liquidator for the purpose of winding-up the affairs and distributing the assets of the company instead of the liquidator appointed by the company.

(4)Where the creditors appoint some other person under subsection (3), the winding-up shall proceed as if the winding-up were a creditors’ winding-up.

(5)The liquidator or, if some other person has been appointed by the creditors to be the liquidator, the person so appointed, shall, within the prescribed period, lodge a notice of the holding of the meeting with the Director and deliver a copy to the Official Receiver.

(6)Where, at a meeting summoned under subsection (1), the creditors do not appoint another liquidator, the winding-up shall proceed as if the winding-up were a creditors’ voluntary winding-up.

(7)The liquidator shall not be required to summon an annual meeting of creditors at the end of the first year from the commencement of the winding-up if the meeting was held less than three months before the end of that year.

146. Creditor’s meeting

(1)Where no declaration of solvency is made under section 143, the voluntary winding-up shall be a voluntary winding-up by resolution.

(2)Directors shall cause—

(a)a meeting of the creditors of the company to be summoned for the day, or the day next following the day on which there is to be held the meeting at which a winding-up resolution is to be proposed; and

(b)the notice of the meeting of creditors shall be given in the prescribed manner at the same time as the notice of the meeting of the company are sent.

(3)Directors shall convene the meeting at a time and place convenient to the majority in value of the creditors and shall—

(a)give the creditors at least the prescribed period of notice of the meeting; and

(b)send to each creditor with the notice a statement showing the names of all creditors and the amounts of their claims.

(4)Directors shall cause notice of the meeting of the creditors to be advertised at least for the prescribed number of days before the date of the meeting in one daily newspaper.

(5)Directors shall—

(a)cause a full statement of the company’s affairs showing, in respect of assets, the method and manner in which the valuation of the assets was arrived at, together with a list of the creditors and the estimated amount of their claims to be laid before the meeting of creditors; and

(b)appoint one of their number to attend the meeting.

(6)A director appointed under subsection (5) (b) shall attend the meeting and disclose to the meeting the company’s affairs and the circumstances leading up to the proposed winding-up.

(7)Creditors may appoint one of their number or the director appointed under subsection (5) (b) to preside at the meeting.

(8)The chairman shall at the meeting determine whether the meeting has been held at a time and place convenient to the majority in value of the creditors and his decision shall be final.

(9)Where the chairman decides that the meeting has not been held at a time and place convenient to the majority, the meeting shall lapse and a further meeting shall be summoned by the company as soon as is practicable.

(10)The Rules shall apply to the meeting so far as they are applicable and consistent with this section.

147. Liquidator in creditors' winding-up

(1)Creditors may nominate a person to be the liquidator for the purpose of winding-up the affairs and distributing the assets of the company, and if the creditors and the directors nominate different persons, the person nominated by the creditors' shall be the liquidator, and if no person is nominated by the creditors, the person nominated by the directors shall be the liquidator.

(2)Where different persons are nominated to be the liquidator, any director, shareholder or creditor may, within the prescribed period after the date on which the nomination was made by the creditors, apply to the Court for an order directing that the person nominated as liquidator by the directors shall be the liquidator instead of, or jointly with, the person nominated by the creditors.

(3)The liquidator, or liquidators, where more than one has been appointed, shall be entitled to remuneration in the amount and in the order of priority as set out in the Rules.

(4)On the appointment of a liquidator, all the powers of the directors shall cease, except so far as the liquidation committee or, if there is no such committee, the creditor, approve the continuance thereof.

(5)Where a liquidator, other than a liquidator appointed by, or by the direction of, the Court, dies, resigns or otherwise vacates the office, the creditors may fill the vacancy and for the purpose of so doing, a meeting of the creditors may be summoned by any two of their number.

148. Liquidation committee in voluntary winding-up

(1)The creditors at a meeting summoned pursuant to section 146 or 147, or at any subsequent meeting may, if they think fit, appoint a liquidation committee consisting of not more than five persons, whether creditors or not.

(2)Where a liquidation committee is appointed, the directors may, at the meeting at which the winding-up resolution is passed or at any time subsequently in a general meeting, appoint such number of persons not being more than five as it thinks fit, to act as members of the committee.

(3)The creditors may, if they think fit, resolve that all or any of the persons appointed by the directors under subsection (2) ought not to be members of the liquidation committee and, if the creditors so resolve, the persons mentioned in the resolution shall not, unless the Court otherwise directs, be qualified to act as members of the committee, and on any application to the Court under subsection (2), the Court may, if it thinks fit, appoint other persons to act as such members in place of the persons mentioned in the resolution.

(4)A committee appointed under this section shall meet at least once every six months.

(5)The provisions in the Rules shall apply to a liquidation committee appointed under this section.

149. Property and proceedings

(1)Any attachment, sequestration, distress or execution put in force against the assets of a company after the commencement of a creditors’ winding-up shall be void.

(2)After the commencement of a creditors’ winding-up, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court thinks appropriate.

150. Distribution of property

(1)Subject to sections 297, 303 and 304, the free assets of a company shall, on its winding-up—

(a)be applied pari passu in satisfaction of its liabilities; and

(b)unless the memorandum and articles of association provide otherwise, be distributed among the shareholders according to their rights and interests in the company.

Division V—Liquidators

151. Appointment and removal of liquidator

(1)Where there is no liquidator acting in a voluntary winding-up, the Court may appoint a liquidator.

(2)The Court may, on cause shown, remove a liquidator and appoint another liquidator.

(3)The acts of a liquidator shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.

(4)Any assignment, transfer, or other disposition of a

Insolvency Act

Chapter 11:01

Related documents

Insolvency Act

Chapter 11:01

Part I – Preliminary

1. Short title

2. Interpretation

3. Application of this Act

Part II – Administration of this Act

4. Director of Insolvency

5. Official Receiver

6. Office and name of Official Receiver

7. Vacation of office of Official Receiver

8. Register of insolvency practitioners

9. Conduct and performance of insolvency practitioners

10. Director may make application to Court

11. Disclosure to and consultation with, Director

12. Other registers to be kept by Director

Part III – Company reorganization

13. Meaning of a company in reorganization

14. Objective of company reorganization

15. Administrator to be an officer of the Court

16. Appointment of an administrator

17. Conditions for making reorganization order

18. Application for a reorganization order

19. Powers of Court

20. Application by holder of qualifying security interest

21. Intervention by holder of a qualifying security interest

22. Application for reorganization order where company in liquidation

23. Effects of receivership

24. Dismissal of pending winding-up petition

25. Dismissal of receiver

26. Moratorium on insolvency proceedings

27. Moratorium on other legal processes

28. Interim moratorium

29. Publicity

30. Announcement of administrator’s appointment

31. Statement of company’s affairs

32. Prescribed period for submission of statement of affairs

33. Administrator’s proposals

34. Creditors’ meeting

35. Requirement for initial creditors' meeting

36. Business and result of initial creditors’ meeting

37. Substantial revision after approval

38. Failure to obtain approval of administrator's proposals

39. Further creditors’ meetings

40. Creditors’ committee

41. Correspondence instead of creditors' meeting

42. General powers of administrator

43. Distribution

44. General duties of administrator

45. Administrator as agent of the company

46. Secured property: qualifying security interest

47. Secured property: non-qualifying security interest

48. Protection for secured or preferential creditor

49. Challenge to administrator’s conduct of company

50. Misfeasance

51. Automatic end of company reorganization

52. Court ending company reorganization on application of administrator

53. Termination of company reorganization where objective achieved

54. Court order ending company reorganization on application of creditor

55. Public interest winding-up of company in company reorganization

56. Moving from company reorganization to creditors' voluntary winding-up

57. Moving from company reorganization to dissolution

58. Discharge of company reorganization order where company reorganization ends

59. Notice to Registrar of Companies where company reorganization ends

60. Resignation of administrator

61. Removal of administrator from office

62. Administrator ceasing to be qualified

63. Vacancy in office of administrator

64. Vacation of office: discharge from liability

65. Vacation of office: charges and liabilities

66. Multiple appointments

67. Joint administrators

68. Concurrent administrators

69. Joint or concurrent administrators

70. Presumption of validity

71. Majority decision of directors

72. Extension of time limit