CORPORATE INSOLVENCY ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY PROVISIONS

   1.   Short title and commencement

   2.   Interpretation

PART II
RECEIVERSHIP

   3.   Reference to receiver under enabling instrument

   4.   Appointment of receiver

   5.   Notification of appointment of receiver

   6.   Statement of company’s affairs

   7.   Offences relating to statement of affairs

   8.   Payment of preferential creditors

   9.   Eligibility for appointment as receiver

   10.   Disqualification of body corporate or firm from appointment as receiver

   11.   Remuneration of receiver

   12.   Receivers appointed by Court

   13.   Receivers appointed under deed of appointment

   14.   Liabilities of receivers on contracts

   15.   Statement of appointment of receivership on stationery

   16.   Management of assets before disposal

   17.   Statement of affairs and accounts where receiver appointed

   18.   Accounts of receivers

   19.   Report by receiver

   20.   Vacation of office by receiver

PART III
BUSINESS RESCUE PROCEEDINGS

   21.   Resolution to begin business rescue proceedings

   22.   Objections to resolution to begin business rescue proceedings

   23.   Court order to commence business rescue proceedings

   24.   Duration of business rescue proceedings

   25.   General moratorium on legal proceedings against company

   26.   Protection of property interests

   27.   Post-commencement finance

   28.   Effect of business rescue on employees and contracts

   29.   Invalidation of transfer of securities other than by ordinary course of business

   30.   Qualifications of business rescue administrators

   31.   Removal and replacement of business rescue administrator

   32.   General powers and duties of business rescue administrator

   33.   Investigation of affairs of company

   34.   Directors to co-operate with and assist business rescue administrator

   35.   Remuneration of business rescue administrator

   36.   Participation by creditors

   37.   Participation by holders of company’s securities

   38.   Participation by shareholders

   39.   First meeting of creditors

   40.   Functions, duties and membership of committees of creditors and employees

   41.   Proposal of business rescue plan

   42.   Meeting to determine future of company

   43.   Consideration and approval of business rescue plan

   44.   Failure to adopt business rescue plan

   45.   Discharge of debts and claims

PART IV
SCHEMES OF ARRANGEMENTS AND COMPROMISE

   46.   Compromise between company, creditors and members

   47.   Effect of compromise or arrangement with creditors and members

   48.   Reconstruction and amalgamation of companies

PART V
WINDING-UP OF COMPANIES GENERALLY

   49.   References to member of company

   50.   Modes of winding-up

   51.   Liability of members on winding-up

   52.   Limitation of liability

   53.   Nature of liability of member

   54.   Liability on death or bankruptcy of member

PART VI
WINDING-UP BY COURT

   55.   Jurisdiction over winding-up proceedings

   56.   Petition to wind-up company

   57.   Circumstances for winding-up by Court

   58.   Commencement of winding-up by Court

   59.   Payment of preliminary costs

   60.   Powers of Court on hearing petition

   61.   Power to stay or restrain proceedings against company

   62.   Avoidance of dispositions

   63.   Avoidance of attachments

   64.   Registration of copy of order

   65.   Provisional liquidator

   66.   Stay of actions

   67.   Appointment of liquidator by Court and performance of functions in absence of liquidator

   68.   Lodging of notice of appointment with Official Receiver and access to company

   69.   Control of liquidators by Official Receiver

   70.   Remuneration of liquidators

   71.   Custody and vesting of company’s property

   72.   Statement on company’s affairs

   73.   Report by liquidator

   74.   Powers of liquidator

   75.   Exercise and control of liquidator’s powers

   76.   Committee of inspection

   77.   Constitution and proceedings of committee of inspection

   78.   Application for order of release of liquidator and dissolution of company

   79.   Order for release and dissolution

   80.   Power to stay winding-up

   81.   Appointment of special manager

   82.   Claims of creditors and distribution of assets

   83.   Inspection of books by creditors and members

   84.   Power to summon persons connected with company

   85.   Power to order public examination

   86.   Power to arrest absconding member or officer

   87.   Cumulative powers of Court

PART VII
VOLUNTARY WINDING-UP

   88.   Voluntarily winding-up

   89.   Commencement of voluntary winding-up

   90.   Effect of voluntary winding-up

   91.   Declaration of solvency

   92.   Appointment and remuneration of liquidator

   93.   Duty of liquidator to call creditors

   94.   Staying of members’ voluntary winding-up

   95.   Creditors’ voluntary winding-up

   96.   Appointment of committee of inspection

   97.   Fixing of liquidators’ remuneration and vesting of directors’ powers in liquidator

   98.   Stay of proceedings after commencement of creditor’s voluntary winding-up

PART VIII
MISCELLANEOUS PROVISIONS ON WINDING-UP

   99.   Distribution of assets of company

   100.   Court appointed liquidator

   101.   Reviewing remuneration during voluntary winding-up

   102.   Powers and duties of liquidators during voluntary winding-up

   103.   Liquidator to accept shares, etc., as consideration for sale of property of company

   104.   Annual meeting of members and creditors

   105.   Final meeting and dissolution of company

   106.   Arrangement entered before or during voluntary winding-up binding

   107.   Applications to determine questions or exercise of powers

   108.   Costs

   109.   Limitation on the right to voluntary wind-up

   110.   Meetings of creditors

   111.   Conduct of meetings of creditors

   112.   Eligibility for appointment as liquidator

   113.   Acts of Liquidator valid

   114.   General provisions on liquidators

   115.   Disposal of company’s assets by liquidator

   116.   Powers of Official Receiver where no committee of inspection

   117.   Appeal against decision of liquidator

   118.   Service of document on liquidator

   119.   Liquidator’s accounts

   120.   Notification of company in liquidation

   121.   Records of company

   122.   Payment of surplus funds to members

   123.   Unclaimed assets

   124.   Expenses of winding-up where assets insufficient

   125.   Meetings to ascertain wishes of members or creditors

   126.   Proof of debts

   127.   Preferential debts

   128.   Voidance of certain acts

   129.   Voidance of floating charge

   130.   Liquidator’s right to recover in respect of certain sales to or by company

   131.   Disclaimer of onerous property

   132.   Restriction of rights of creditor on execution or attachment

   133.   Duties of sheriff for goods in execution

   134.   Liability for contracting debt

   135.   Power of Court to assess damage against delinquent officers

   136.   Prosecution of delinquent officer and members

   137.   Fraud by officers of companies in liquidation

   138.   Winding-up of other bodies corporate

   139.   Winding-up of other foreign bodies corporate

PART IX
INSOLVENCY PRACTITIONERS

   140.   Insolvency practitioners

   141.   Qualifications for appointment as insolvency practitioners

   142.   Accreditation of insolvency practitioner

   143.   Register of Insolvency Practitioners

   144.   Insolvency practitioner acting in foreign State

   145.   Eligibility for accreditation

PART X
CROSS-BORDER INSOLVENCY

   146.   Application

   147.   Court to have jurisdiction

   148.   Public policy exceptions

   149.   Additional assistance under other laws

   150.   Limited jurisdiction

   151.   Access of foreign representative to Court

   152.   Application for recognition of foreign proceedings

   153.   Recognition of foreign proceeding by the Court

   154.   Subsequent information

   155.   Interim relief during proceedings for recognition

   156.   Relief granted upon recognition of foreign proceeding

   157.   Co-operation and communication between insolvency administrator and foreign representatives

   158.   Forms of co-operation

   159.   Communication of proceedings in Zambia after recognition of foreign main proceeding

   160.   Co-ordination in concurrent proceedings

   161.   Payment in concurrent proceedings

   162.   Regulations on cross-border insolvency

PART XI
MISCELLANEOUS PROVISIONS

   163.   Electronic transactions and processes

   164.   Netting off

   165.   Exercise of discretionary power

   166.   Request for information

   167.   Registration of documents

   168.   Extension of time

   169.   Documents to be in official language

   170.   Administrative penalties

   171.   Offences by officers of companies relating to winding-up or other proceedings

   172.   Inducement relating to insolvency practitioner

   173.   Destruction, alteration, mutilation or falsifying of book, etc

   174.   Liability where proper accounts not kept

   175.   Responsibility for fraudulent trading

   176.   Offence by body corporate and principal officer or shareholders of body corporate or unincorporated body

   177.   General penalty

   178.   Rules by Chief Justice

   179.   Regulations

   180.   Transitional provisions

AN ACT

to provide for corporate receiverships, appointment of receivers and the duties and responsibilities of receivers; business rescue, appointment, duties and responsibilities of business rescue administrators, rights of affected persons during business rescue proceedings and business rescue plans; schemes of arrangements or compromise with creditors; winding-up of companies, appointment of liquidators and the duties and responsibilities of liquidators, committees of inspection, special managers and the Official Receiver; insolvency practitioners and the duties and responsibilities of insolvency practitioners; cross-border insolvency; and matters connected with, or incidental to, the foregoing.

[On Notice]

Act 9 of 2017.

PART I
PRELIMINARY PROVISIONS

1.   Short title and commencement

This Act may be cited as the Corporate Insolvency Act, 2017, and shall come into operation on the date appointed by the Minister for the coming into operation of the Companies Act, 2017.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

“account fairly stated” means the annual accounts stated in a manner that ensures sufficient disclosure, reasonable detail and absence of bias;

“accounting records” include—

   (a)   invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry; and

   (b)   such working papers and other documents as are necessary to explain the methods and calculations by which the accounts are made up;

“accounts” means the financial statements of a company or group of companies together with accompanying notes, excluding the auditors’ report or annual report of the company;

“affected person” includes a regulator, shareholder, member, director, creditor or an employee, a former employee of a company, registered trade union representing employees of the company and the Registrar;

“Agency” means the Patents and Companies Registration Agency established in accordance with the Patents and Companies Registration Agency Act, 2010;

“agent of the company” includes any banker or legal practitioner of the company and any person appointed by the company as auditor;

“annual accounts” means the annual financial statements of a company that give a true and fair view of the financial performance, financial position and cash flows of the company, including the consolidated financial statements for a group of companies that give a true and fair view of the group of companies’ financial performance, financial position and cash flows;

“auditor” has the meaning assigned to the word in the Accountants Act, 2008;

“bailiff” means an officer appointed in accordance with the Sheriffs Act;

“bank” has the meaning assigned to the word in the Banking and Financial Services Act, 2017;

“beneficial owner” has the meaning assigned to the word in the Companies Act, 2017;

“board of directors” means the board of directors of a company and “board” shall be construed accordingly;

“body corporate” has the meaning assigned to the word in the Companies Act, 2017;

“book” has the meaning assigned to the word in the Companies Act, 2017;

“business” includes a trade or profession;

“business rescue administrator” means a person qualified in accordance with section 30 and appointed as an administrator for purposes of business rescue proceedings;

“business rescue plan” means a plan provided for in accordance with section 41;

“business rescue proceedings” means the process of facilitating the rehabilitation of a company that is financially distressed by providing for—

   (a)   the temporary supervision of the company and management of its affairs, business and property;

   (b)   a temporary moratorium on the rights of claimants against the company or in respect of property in its possession; or

   (c)   the development and implementation, if approved in accordance with this Act, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue in existence, results in a better return for the company’s creditors or shareholders than would result if the company was to be liquidated;

“charge” has the meaning assigned to the word in the Companies Act, 2017;

“committee of inspection” means a committee of inspection appointed in the course of a winding-up in accordance with this Act;

“company” has the meaning assigned to the word in the Companies Act, 2017;

“contingent creditor” means a prospective or anticipated creditor;

“control” means the control of a company by a person who—

   (a)   beneficially owns more than 25 percent of the issued share capital of the company;

   (b)   is entitled to vote a majority of the votes that may be cast at a general meeting of the company, or has the ability to control the voting of a majority of those votes, either directly or through a controlled entity of that person;

   (c)   is able to appoint or to veto the appointment of a majority of the directors of the company;

   (d)   is a holding company and the company is a subsidiary of that company as provided for in the Companies Act, 2017;

   (e)   in the case of a company that is a trust, has the ability to control the majority of the votes of the trustees, to appoint the majority of the trustees or to appoint or change the majority of the beneficiaries of the trust; or

   (f)   has the ability to materially influence the policy of the company in a manner comparable to a person who, in ordinary commercial practice, can exercise an element of control referred to in paragraphs (a) to (e);

“corporate” means an entity, including a company or body corporate, that is separate and distinct from its owners and which is recognised as such by law and acts as a single entity;

“Court” means the High Court for Zambia;

“creditor” means a person who is entitled to claim that debt is owing to that person by a company and includes a person entitled to enforce a final judgment or order of the Court;

“creditors’ voluntary winding-up” means a voluntary winding-up of a company by the creditors where no declaration of insolvency was made;

“current liability” means a liability that would, in the ordinary course of events, be payable within 12 months after the end of the financial year to which the accounts of a company or group of companies relate;

“debenture” means a document issued by a corporate that evidences or acknowledges a debt of the corporate, whether or not it constitutes a charge on property of the corporate, in respect of money that is or may be deposited with or lent to the corporate, other than a document of the following kinds—

   (a)   a document acknowledging a debt incurred by the corporate in respect of money that is or may be deposited with or lent to the corporate by a person—

      (i)   in the ordinary course of a business carried on by the person; and

      (ii)   in the ordinary course of such business of the corporate as is not part of a business of borrowing money and providing finance;

   (b)   a document issued by a bank in the ordinary course of its banking business that evidences or acknowledges indebtedness of the bank arising in the ordinary course of that business;

   (c)   a cheque or order for the payment of money or bill of exchange; and includes—

      (i)   a unit of a debenture;

      (ii)   debenture stock;

      (iii)   a bond; and

      (iv)   any other security issued by a company, whether constituting a charge on the assets of the company or not;

“debenture holder” includes a debenture stockholder;

“declaration” means a declaration of insolvency made by the Official Receiver;

“declaration of solvency” means a declaration made in accordance with section 91;

“deed of appointment” means the instrument by which the holder of a charge appoints a receiver;

“director” means a person appointed as a director of a company in accordance with the Companies Act, 2017 and the words “the directors” means the directors acting collectively;

“dissolution” means the termination of a company’s legal existence by liquidation in accordance with this Act;

“establishment” means any place of operations where a debtor carries out non-transitory economic activity;

“financial institution” has the meaning assigned to the word in the Banking and Financial Services Act, 2017;

“financially distressed” means a company is likely to be insolvent within the immediately ensuing six months;

“financial year” has the meaning assigned to the word in the Companies Act;

“foreign Court” means a judicial or other authority competent to determine foreign proceedings;

“foreign main proceeding” means proceedings taking place in the State where the debtor’s main interests are situated;

“foreign non-main proceeding” means foreign proceedings, other than a foreign main proceeding, taking place in a State where the debtor has an establishment;

“foreign proceeding” means a judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which the assets and affairs of the debtor are subject to determination by a foreign Court, for the purpose of re-organisation or liquidation;

“foreign representative” means a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the re-organisation or the liquidation of the debtor’s assets or affairs or to act as a representative for the foreign proceedings;

“general meeting” means an annual general meeting or an extraordinary general meeting;

“goods” includes personal property;

“independent creditor” means a person who is—

   (a)   a creditor of the company, including an employee of the company; and

   (b)   not related to the company, a director, or the business rescue administrator;

“insolvency practitioner” means the Official Receiver or a person who is qualified to be appointed—

   (a)   a receiver, receiver manager or judgment receiver;

   (b)   a liquidator; or

   (c)   business rescue administrator,

of a company, as specified in sections 139 and 142;

“insolvency proceeding” means a judicial or administrative proceeding relating to bankruptcy, liquidation, receivership, judicial or statutory management or voluntary administration;

“insolvent” means having liabilities that exceed the value of assets, having stopped paying debts in the ordinary course of business or being unable to pay them as they fall due;

“judgment receiver” means a receiver who collects or diverts funds from a judgment debtor to the creditor;

“liquidation” means the process of converting the property of a company into cash in order to settle the company’s debt and other liabilities;

“liquidator” means a person appointed to wind-up the affairs of a company;

“member” means a shareholder or stockholder of a company or a subscriber to a company limited by guarantee;

“members voluntary winding-up” means the termination of a corporation, initiated by the board of directors and approved by the shareholders;

“Oath” has the meaning assigned to the word in the Constitution;

“officer” includes a—

   (a)   director, secretary or executive officer of a body corporate; and

   (b)   local director of a foreign company;

“Official Receiver” means the person appointed as official receiver under the Bankruptcy Act;

“ordinary resolution” has the meaning as assigned to the word in the Companies Act, 2017;

“property” means the assets of the company, including money, goods, choses in action and land, whether real or personal, legal or equitable and situated in Zambia or elsewhere, and obligations, easements and every description of estate, interest and profit, present or future, vested or contingent and arising out of, or incidental to the property;

“proposal” means a proposal for a voluntary arrangement or for extension of time;

“provable claim” includes any claim or liability provable in proceedings commenced or lodged in accordance with this Act by a creditor;

“provisional liquidator” means the Official Receiver or any person appointed provisionally by the Court after the presentation of a winding-up petition but before the making of a winding-up order;

“receiver” means a disinterested individual appointed as a receiver, receiver manager or judgment receiver, in accordance with this Act, for a corporate or other person, for the protection or collection of property that is the subject of diverse claims, is litigated or has been litigated or income arising from the property of the corporate or other person, and includes the Official Receiver;

“recognised professional body” means a professional body recognised by the Minister as a professional body, in accordance with this Act;

“record’’ includes a computer record and any other non-documentary record;

“Register of Insolvency Practitioners” means the Register kept by the Registrar in accordance with section 143;

“Register of Liquidators” means a Register of liquidators kept by the Registrar in accordance with this Act;

“Register of receivers” means a Register of receivers kept by the Registrar in accordance with this Act;

“Registrar” means the Registrar appointed under the Patents and Companies Registration Agency Act, 2010;

“relative” in relation to an individual means—

   (a)   a parent, spouse, son, daughter, brother, sister, nephew, niece, uncle, aunt, grandparent or cousin of the individual;

   (b)   a parent, child, brother or sister of the spouse of the individual; or

   (c)   a nominee or trustee of any of the persons specified in paragraph (a) or (b);

“secured creditor” means a person holding a mortgage, pledge, charge or lien on, or against, the property of the debtor or any part thereof as security for a debt due or accruing to that person from a debtor, or a person whose claim is based on, or secured by, a negotiable instrument held as collateral security and on which the debtor is only indirectly or secondarily liable;

“securities” means—

   (a)   shares;

   (b)   debt securities;

   (c)   public debt securities;

   (d)   derivatives;

   (e)   any rights, options or derivatives in respect of any such shares, debt securities or public debt securities;

   (f)   any rights under a contract to secure a profit or avoid a loss by reference to fluctuations in—

      (i)   the value or price of any shares, debt securities or public debt securities;

      (ii)   the value or price of a group of shares, debt securities or public debt securities; or

      (iii)   an index of shares, debt securities or public debt securities;

   (g)   unit trusts and interests under collective investment schemes;

   (h)   commercial paper;

   (i)   depository receipts;

   (j)   warehouse receipts; or

   (k)   any other instrument commonly known as securities or which are prescribed by a relevant authority,

excluding bills of exchange, promissory notes, certificates of deposit issued by a bank;

“security agreement” means an agreement under which property becomes subject to a security for the performance of an obligation;

“service provider” means an entity or person who supplies water and sanitation services, electricity, telecommunications or such other services as may be prescribed;

“shareholder” has the meaning assigned to the word in the Companies Act, 2017, and includes a person who is the beneficial owner of, holds shares in, or is in a position to exert control over more than 15 percent of the shares of a company or body corporate;

“shares” means an ownership interest or stocks issued or proposed to be issued by a company in the capital of the company;

“solvency test” means a test to determine that—

   (a)   a company is able to pay its debts as they become due in the normal course of business; and

   (b)   the value of the company’s assets is greater than the value of its liabilities, including contingent liabilities;

“special manager” means a person appointed in accordance with section 81 to manage an estate or business of a company, or the interests of the creditors or members generally, where the liquidator is satisfied of the necessity of such an appointment due to the nature of the estate or business;

“special resolution” has the meaning assigned to the word in the Companies Act, 2017;

“successor in title” means the successor of a person and includes an heir, executor, liquidator, administrator or other legal representative of a person, as the case may be;

“supervision” means the oversight imposed on a company during that company’s business rescue proceedings;

“transaction” includes a gift, agreement or arrangement, and “entering into a transaction” shall be construed accordingly;

“trustee” means a trustee in bankruptcy of a member, as provided in section 54;

“voluntary arrangement” means an arrangement entered into by a company and that company’s creditors by way of—

   (a)   a composition for the satisfaction of the company’s debts;

   (b)   a scheme; or

   (c)   arrangement of the company’s affairs;

“voting interest” means an interest that is appraised and valued in accordance with section 39; and

“winding-up” means the process of settling accounts and liquidating assets in anticipation of a company’s dissolution.

   (2) A word or term used in this Act which is not defined but is defined in the Companies Act, Securities Act, 2016, or the Banking and Financial Services Act, 2017, shall have the meaning assigned to it in those Acts.

PART II
RECEIVERSHIP

3.   Reference to receiver under enabling instrument

A reference in this Act to the appointment of a receiver under powers vested in any instrument, includes a reference to an appointment made under powers which, by virtue of any law, are implied in, and have effect as if, vested in that instrument.

4.   Appointment of receiver

   (1) Where a charge over property of a company has become enforceable, the Court may, on the application of the chargee, appoint a receiver of the property.

   (2) The Court may, in the case of a floating charge, whether or not the charge has become enforceable, on the application of the chargee, appoint a receiver of the property and undertaking of the company if the charge is satisfied that events have occurred or are about to occur which render it unjust to the chargee that the company should retain power to dispose of the company’s assets.

   (3) A person may appoint a receiver under deed of appointment.

   (4) An individual shall not be appointed as a receiver unless the individual is eligible for appointment as provided in section 9.

   (5) A person shall not be appointed as receiver as a means of enforcing a debenture where there is no secured interest.

5.   Notification of appointment of receiver

   (1) A person who obtains an order for the appointment of a receiver, or who appoints a receiver under a deed of appointment, as specified in section 4, shall, within 14 days after obtaining the order or making the appointment, lodge a notice of the order or appointment with the Registrar, in the prescribed form.

   (2) A person who is appointed as a receiver shall, within 14 days after the appointment, lodge with the Registrar and the Official Receiver a notice in the prescribed form.

   (3) Where a person ceases to be a receiver, the person shall, within seven days after ceasing to be a receiver, lodge with the Registrar a notice that the person has ceased to be a receiver.

   (4) The Registrar shall, on the lodgement of a notice as specified in sub-section (1) or (3), cause a notice of the appointment of the person as receiver or the cessation of the person as receiver, to be published in the Gazette.

6.   Statement of company’s affairs

   (1) Where a receiver is appointed over all or a part of the assets of a company, unless the Court otherwise directs, the directors of a company shall, within three months of the appointment of the receiver, prepare and submit to the receiver a statement as to the affairs of the company as at the date of the appointment of the receiver, showing—

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

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

   (c)   the securities held by each of the creditors;

   (d)   the dates when the securities were respectively given; and

   (e)   such further information as may be prescribed or as the receiver may require.

   (2) The statement, referred to in sub-section (1), shall be verified by a statutory declaration of at least one director or the secretary of the company not later than seven days after the preparation of the statement.

   (3) Where the directors of a company fail or neglect to prepare the statement referred to in sub-section (1), the receiver shall, not more than three months after the expiry of the period referred to in sub-section (1), prepare a statement of the affairs of the company, from the available information.

   (4) A receiver may, subject to the direction of the Court, by notice in the prescribed manner and form, require a person to verify, by statutory declaration, such part of the statement, specified in sub-section (1), as that person is in a position to verify, if that person—

   (a)   is, or was, within two years before the date of the appointment of the receiver, an officer of the company; or

   (b)   took part in the formation of the company, if the company was formed less than two years before the date of the appointment of the receiver.

   (5) A person required to verify a statement, in accordance with sub-section (4), shall, within 14 days after receiving the notice referred to in that sub-section, or within such extended period as the receiver or the Court may specify, submit a statutory declaration verifying the statement specified in sub-section (3) or such part of the statement as that person is in a position to verify.

   (6) A receiver shall, within 21 days after receiving the statement submitted in accordance with sub-section (1) or a statutory declaration submitted in accordance with sub-section (5), cause copies to be—

   (a)   filed with the Court, if the receiver is appointed by the Court;

   (b)   lodged with the Registrar;

   (c)   delivered to the Official Receiver, if the Official Receiver is not the receiver; and

   (d)   lodged with the holder of the charge by virtue of which the receiver was appointed.

   (7) A person required under this section to verify a statement shall be paid, out of the assets of the company, such costs and expenses incurred in and relating to the verification of information, as the receiver considers reasonable, subject to an appeal to the Court.

   (8) The Registrar may, where a receiver does not—

   (a)   submit a statement of affairs, in accordance with sub-section (1), issue a reminder to the receiver to submit the statement within 14 days; and

   (b)   comply with the notice issued by the Registrar under paragraph (a), cause the receiver to be disqualified from acting as a receiver under this Act.

   (9) A statement made in accordance with this section may be used as evidence in any proceedings against a person making it.

7.   Offences relating to statement of affairs

   (1) Where a person or an officer contravenes section 6, the person or officer commits an offence and is liable, on conviction—

   (a)   to a fine not exceeding one hundred thousand penalty units or to imprisonment for a period not exceeding one year, or to both; and

   (b)   in the case of a continuing offence, to a fine not exceeding fifty thousand penalty units for each day that the failure continues or to imprisonment for a period not exceeding 18 months, or to both.

   (2) Despite the generality of sub-section (1), a person that provides false or misleading information with respect to a statement of affairs made in accordance with section 6 commits an offence and is liable, on conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

8.   Payment of preferential creditors

Where a receiver is appointed on behalf of the holder or trustee of any debenture of a company that is secured by a floating charge, or possession is taken by or on behalf of the holder or trustee of the debenture of property comprised in or subject to the charge, if the company is not at the time in the course of being wound-up, the debts which in every winding-up are to be paid in priority to all other debts, as provided in this Act, shall—

   (a)   be paid out of any assets coming into the hands of the receiver or the person taking possession in priority to any claim for principal or interest in respect of the debentures; and

   (b)   the date of the appointment of the receiver or of possession being taken, shall be considered to be the date of commencement of the winding-up.

9.   Eligibility for appointment as receiver

   (1) An individual is eligible for appointment as a receiver if that individual has been practicing as a chartered accountant or a legal practitioner for a period of at least seven years and is accredited by the Registrar as an insolvency practitioner.

   (2) An individual who wishes to perform the function of a receiver shall apply for accreditation in the prescribed manner and form and pay the prescribed fee.

   (3) An individual shall not be appointed, act or continue to act as a receiver of the property or undertaking of a company if the individual is—

   (a)   by reason of a mental disability incapable of performing the functions;

   (b)   prohibited or disqualified from so acting by any order of a court of competent jurisdiction;

   (c)   a mortgagee or chargee of the company;

   (d)   an undischarged bankrupt;

   (e)   a person who is, or has been within the previous two years, a director or officer of the company or any related body corporate, except with the leave of the court;

   (f)   a trustee under any trust deed for the benefit of debenture holders of the company, except with the leave of the court;

   (g)   a person who has been convicted, within the previous five years, of an offence involving fraud or dishonesty; or

   (h)   a person who has been removed, within the previous five years, from an office of trust by order of a court of competent jurisdiction.

   (4) Accreditation as a receiver is valid for a period of one year from the date of accreditation and is subject to renewal in the prescribed manner and form and upon payment of the prescribed fees.

   (5) Accreditation that is not renewed in accordance with sub-section (4) is void.

   (6) A person who acts or continues to act as a receiver, contrary to this Act, commits an offence and is liable, on conviction, to a fine not exceeding two hundred thousand penalty units or to imprisonment for a period not exceeding two years, or to both.

10.   Disqualification of body corporate or firm from appointment as receiver

   (1) Subject to sub-section (2), a body corporate or firm is not qualified for appointment as a receiver and a body corporate or firm which acts as such is liable to a fine not exceeding two hundred thousand penalty units.

   (2) This section does not apply to the Official Receiver.

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