Welcome to the new SeyLII website. Enjoy an improved search engine and new collections. If you are used to accessing SeyLII via Google, note Google will take some time to re-index the site.

We are still busy migrating some of the old content. If you need anything in particular from the old website, it will be available for a while longer at https://old.seylii.org/

Companies Ordinance, 1972 (Chapter 40)

(unknown)
This is the latest version of this legislation commenced on 01 Dec 2014.

Seychelles

Companies Ordinance, 1972

Chapter 40

  • Commenced on 1 January 1972

  • [This is the version of this document at 1 December 2014.]


[Ord 13-1973; Decree 7-1979 All sections in force except sections 192-195; S.I. 86/1972; S.I. 65/1974; Act 8 of 2007; Act 14 of 2011; Act 10 of 2012; Act 5 of 2013][Note: The amendment brought in by Act 14 of 2011 requires that the word “bearer” be deleted wherever it appears in the Act, which is why there are some parts of the Act that appear to be nonsensical such as there being two definitions of the word ”debenture” (one used to be for “bearer debenture”). To indicate wherever the word “bearer” has been deleted, two asterisks have been inserted.]


Part I – Preliminary

1. Short title and commencement

(1)This Ordinance may be cited as the Companies Ordinance, 1972.
(2)Subject to any express provision to the contrary, this Ordinance shall come into operation on such day as the Minister may, by notice in the Gazette, appoint, and different days may be appointed for different provisions of this Ordinance or for the same provision in relation to different cases or classes of case.

2. Interpretation

(1)In this Ordinance"accounts" includes the group accounts of a company or corporation;"annual accounts" and "annual accounts and reports" have the meanings assigned to them respectively by section 141(5);"annual general meeting" means the general meeting held for any year under section 119;"annual return" means the return required to be made under section 114;"articles" means the articles of association of a company, as originally framed or as altered by special resolution, including, so far as they apply to the company, the regulations contained in Part II or, in the case of a proprietary company, Part IV of the First Schedule to this Ordinance, and in the case of an existing company, means the regulations contained in the notarial deed, contract, statutes, articles of association or other instrument under which the company was constituted insofar as such regulations would not, in the case of a company formed under this Ordinance, be required to be set out in its memorandum of association;"assets" means any property in which a company has any interest or over which it has any rights;"associated company" has the meaning assigned to it by section 111(3);"**" means a debenture the principal or interest of which is by its terms payable to the ** of the debenture for the time being, and includes a renounceable or transferable letter of allotment or acceptance in respect of debentures;"**" means a certificate by the terms of which the ** of the certificate for the time being is entitled to the shares specified in it, and includes a renounceable or transferable letter of allotment or acceptance in respect of shares;"book and paper" and "book or paper", include accounts, deeds, writings, and documents;"capital reserve" means the total of the amounts referred to in section 55(5);"chairman" means the person who presides at a meeting or during part of a meeting;"company" means a company formed and registered under this Ordinance or an existing company;"contributory" has the meaning assigned to it under the Insolvency Act 2013;[Act 5 of 2013]"convertible debenture" has the meaning assigned to it by section 173(5);"court" means the Supreme Court of Seychelles, except in connection with criminal proceedings for contraventions of this Ordinance, when it means the court before which such proceedings may be brought;"creditors" voluntary winding up" has the meaning assigned to it under the Insolvency Act 2013;[Act 5 of 2013]"debenture" means a written acknowledgment of indebtedness issued by a company in respect of a loan made to it or to any other person (whether before, or at the time of, or subsequently to the issue of the debenture) or in respect of existing indebtedness of the company or any other person, and includes debenture stock, a bond, an obligation (whether under seal or authenticated by a notarial deed or not), loan stock, an unsecured note or any other instrument executed, authenticated, issued or created in consideration of such a loan or existing indebtedness, whether constituting a charge on any of the assets of the company or not, but does not include a bill of exchange, cheque, promissory note, banker's draft, banker's cheque or letter of credit, nor an acknowledgment of indebtedness issued in the ordinary course of business for goods or services supplied, nor a deposit certificate, pass book or similar document issued in connection with a deposit or current account at a bank, nor a policy of insurance;"debenture stock" means a debenture by which a company or trustees of a debenture trust deed acknowledge that the holder of the stock is entitled to participate in the debt owing by the company to the trustees under the debenture trust deed, and includes loan stock;"debenture trust deed" means a deed executed by a company and trustees appointed by the deed in connection with the issue of debentures, together with any supplemental deed, resolution or scheme of arrangement modifying the terms thereof, and any deed substituted therefor;"derivative interest" has the meaning assigned to it by section 26(2);"director" includes any person occupying the position of director by whatever name called, and any person in accordance with whose directions or instructions the directors of a company are accustomed to act, but does not include a holding company or a substantial shareholder merely by virtue of its or his position as such;"directors' annual report" has the meaning assigned to it by section 153(1);"document" includes a summons, notice, order, or other legal process, and a register;"employee share subscription scheme" has the meaning assigned to it by section 173(6);"equity capital" means the issued share capital of a company or corporation, except non-participating preference shares and preference shares which do not entitle their holders to unrestricted voting rights as defined by section 118(7);"existing company" means a limited company (societe anonyme) formed and proclaimed under the provisions of the Commercial Code;"extraordinary general meeting" has the meaning assigned to it by section 120(1);"financial year" means in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate is made up, whether that period is a year or not;"firm" means a partnership (societe en nom collectif), limited partnership (societe en commandite) or civil company (societe civile);"floating charge" means a security created over a class or classes of assets of a company when the instrument creating the security does not identify the constituent items comprised in the said class or classes, and does not restrict the security to assets of the company at the date the charge is created;"general floating charge" means a floating charge created over the whole or substantially the whole of the property or assets of a company, and a security expressed to be created over the undertaking, or business, or the assets generally, of a company is a general floating charge;"goods" means tangible moveables and property which, by virtue of articles 520 to 525 inclusive of the Civil Code is deemed to be immoveable, but which under a contract of sale or any other contract is to be severed and converted into tangible moveables either immediately or after an interval;"group accounts" means the consolidated balance sheet and consolidated profit and' loss account of a body corporate which is a holding company at the end of the financial year to which they relate, or if the body corporate prepares a consolidated balance sheet and consolidated profit and loss account in respect of itself and less than ail its subsidiaries, such consolidated balance sheet and consolidated profit and loss account together with the balance sheets and profit and loss accounts of its subsidiaries not included in the consolidated balance sheet and profit and loss accounts for financial years of the subsidiaries ending on dates within the financial year to which the consolidated profit and loss account relates;"group of companies" means two or more companies or bodies corporate one of which is the holding company of the other or others;"holding company" means a company or body corporate which either(i)holds more than half of the equity capital of another company or body corporate; or(ii)by contract, or by the memorandum or articles of another company or body corporate or other wise is entitled to appoint, or to prevent the appointment of, a managing director or more than half of the directors (other than the managing director) of the other company or body corporate; or(iii)is the holding company of another company or body corporate which is itself the holding company of the company or body corporate in question;"interim dividends" has the meaning assigned to it by section 160(5);"issue price" means the amount agreed to be paid to a company for a share or debenture, and if the consideration for a share does not consist entirely of cash, means the amount agreed to be paid to the company in cash (if any) plus the agreed value of the consideration other than cash;"loan stock" means debenture stock the holder of which is not entitled to the benefit of any security over the assets of the company or of any other person;"member" has the meaning assigned to it by section 23(1) and (2);"members' voluntary winding up" has the meaning assigned to it under the Insolvency Act 2013;[Act 5 of 2013]"memorandum" means the memorandum of association of a company, as originally framed or as altered in pursuance of this Ordinance, or in the case of an existing company the provisions of the notarial deed, statutes, articles of association or other instrument under which the company was constituted which, in the case of a company formed under this Ordinance, would be required to be contained in its memorandum association;"nominal capital" has the meaning assigned to it by section 4(4);"non-participating preference share" means a preference share which confers on its holder the right to a dividend of a fixed amount, or not exceeding a fixed amount, whether cumulative or not, and the right to repayment of capital in a winding up in priority to another class or other classes of shares, but which confers no other rights in respect of dividend or capital whatsoever;"officer", in relation to a body corporate, includes a governor, president, vice-president, director, manager (except a manager appointed by or for the benefit of debenture holders), secretary or treasurer, and in relation to an overseas company includes its managing agent and a local director, manager or executive having the superintendence of its affairs in Seychelles;"Official Receiver" has the meaning assigned to it under the Insolvency Act 2013;[Act 5 of 2013]"ordinary resolution" has the meaning assigned to it by section 122(1);"ordinary share" means a share which is not a preference share;"overseas company" means an incorporated or unincorporated body formed under the laws of a country other than Seychelles which has as its object the acquisition of gain by it or its members, but does not include a partnership or limited partnership some or all of whose members are liable for its debts without limit and shares in which are not transferable free from any restrictions;"preference share" means a share which carries the right to payment of a dividend of a fixed amount, or not exceeding a fixed amount, in priority to payment of a dividend on another class or other classes of shares, whether with or without other rights;"prescribed" means prescribed by regulations made under this Ordinance;"printed" means produced by ordinary letterpress or lithography or by such other process as the Registrar in his discretion may accept;"procedural resolution" has the meaning assigned to it by section 125(4);"promoter" means any person engaged in the formation of a company, or in raising money to enable a company to be formed or to acquire any assets or an existing business, or in negotiating the acquisition of any assets or an existing business by or for a company, and includes any person engaged in doing any of those acts for the benefit of an overseas company, but does not include a person who acts only in a professional capacity on behalf of a promoter;"property" means land, movables (whether tangible or not), debts, claims, rights of action, licences, concessions, patents, copyright, trademarks, designs, knowledge and information which has been confidentially communicated or which is protected by law similarly to intangible movables, all other chooses in action of any kind whatsoever, and the capital of a company which has not been called or paid up or credited as paid up;"proprietary company" has the meaningassigned to it by section 24;"prospectus" means any invitation, whether written, visual or oral, and by whatever means conveyed, to subscribe for shares or debentures, or to purchase shares or debentures which have been allotted to any person with a view to them being offered for sale, and without prejudice to the generality of the foregoing, includes an advertisement published in connection with the placing of shares or debentures on a stock exchange, a letter of rights and a provisional letter of allotment, but does not include a letter of rights, or a letter of allotment or a letter of acceptance, or a provisional or renounceable share certificate or similar document in respect of debentures issued in connection with a capitalisation of profits or reserves;"prospectus issued to the public" has the meaning assigned to it by section 40(16);"qualification shares" has the meaning assigned to it by section 166(6);"registered" means registered in the register of members or debenture holders;"Registrar" means the Registrar of Companies;"revenue reserves" has the meaning assigned to it by section 160(5);"rights issue" has the meaning assigned to it by section 54(5);"share" means a share in the capital of a company and includes stock;"shares carrying unrestricted voting rights" has the meaning assigned to it by section 118(8);"shareholder" has the meaning assigned to it by section 23(3);"special resolution" has the meaning assigned to it by section 122(2);"stock" means the interest of a holder of a share in a company which has been converted into stock;"stock exchange" means any exchange or association of dealers in securities which provides facilities for the sale and purchase of shares or debentures, and publishes at intervals of: not more than one week the prices at which shares or debentures are currently being sold and purchased; "a stock exchange in Seychelles" means a stock exchange carrying on such activities in Seychelles, whether or not also carrying on such activities elsewhere; and "a recognised overseas stock exchange" means any other stock exchange declared by the Governor to be such a stock exchange;"subsidiary" means a company or body corporate of which another company or body corporate is the holding company;"substantial shareholder" has the meaning assigned to it by section 112(6);"transfer" means an instrument of transfer of registered shares or debentures and "to transfer" means to execute and deliver such an instrument, or in the case of a ** or a **, to deliver it with the intention of passing the title to the shares or debentures represented by it;"trustee in bankruptcy" means a trustee or assignee in the bankruptcy or insolvency of a person or partnership and includes the official assignee in bankruptcy;"underwriting contract" has the meaning assigned to it by section 40(16);"wholly owned subsidiary" has the meaning assigned to it by section 143(4);"winding up resolution" has the meaning assigned to it under the Insolvency Act 2013.[Act 5 of 2013]
(2)A person shall not be deemed to be within the meaning of any provision in this Ordinance a person in accordance with whose directions or instructions the directors of a company are accustomed to act, by reason only that the directors of the company act on advice given by him in a professional capacity.
(3)References in this Ordinance to a body corporate or to a corporation shall be construed as not including a corporation sole, but as including a body corporate or corporation incorporated outside Seychelles; and references to the memorandum or articles shall in the case of a corporation which is not a company be construed to mean the legislation constituting it, its charter, certificate or articles of incorporation, statutes, or other instrument having the same function as the memorandum and articles of a company, and references to its directors shall be construed to mean members of its governing body, by whatever name called.
(4)Notwithstanding anything contained in this section, a body corporate shall not (except for the purposes of Part VII of this Ordinance) be deemed to be the holding company or subsidiary of another body corporate if neither body corporate is a company within the meaning of this section, and a body corporate shall not (except as aforesaid) be deemed to belong to the same group of companies as another body corporate if neither body corporate is a company within the meaning of this section.
(5)Any provision of this Ordinance which overrides a company's articles shall, except as provided by this Ordinance, apply to articles of existing companies at the coming into operation of this Ordinance, as well as to articles of companies formed under this Ordinance, and shall apply also in relation to a company's memorandum as it applies in relation to its articles.
(6)Unless the context otherwise requires, references (howsoever expressed) in any provision of this Ordinance to the commencement of this Ordinance shall be read as references to the commencement of that provision.

Part II – Incorporation of Companies Memoranda and Articles of Association and matters incidental  thereto

Memorandum of Association

3. Mode of forming incorporated company

(1)Any two or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Ordinance in respect of registration, form an incorporated company with limited liability.
(2)The liability of a member of a company to contribute towards its assets or, in the winding up of the company, toward payment of the debts and liabilities of the company and the costs of the winding up, shall be limited to the amount for the time being not paid up, or credited as paid up, of the nominal value of the shares registered in his name and of the excess (if any) of the issue price of the shares over their nominal value.
(3)No member of a company shall be personally liable to any person claiming any debt, damages, compensation or other sum whatsoever from it by reason only of being a member of the company.
(4)For the purpose of the Commercial Code and all other laws a company shall be deemed to be commercial in character whether its objects or activities are commercial or not.

4. Requirements with respect to memorandum

(1)The memorandum of every company shall be in the English language and must state—
(a)the name of the company, with "Limited" as the last word of the name and the word "Proprietary" as the penultimate word of the name in the case of a proprietary company;
(b)that the registered office of the company is to be situate in Seychelles;
(c)the objects or the lawful purpose of the company; and
(d)that the liability of the members of the company is limited.[Act 5 of 2013]
(2)The objects or lawful purpose of the company to be state shall be the business or businesses which it is formed to carry on, or the purpose or purposes which it is formed to achieve, and it shall not be necessary or permissible to set out in the memorandum or the articles the powers or means by which the company is to attain its objects.
(3)The memorandum may not contain
(a)a provision that the company may pursue such objects or do such things as its directors or members shall think fit, or shall think conducive or incidental to the achievement of its objects; or
(b)a provision that the contents of different parts of the clause or clauses of the memorandum setting out the objects of the company shall be construed independently of one other as though each such part stated the sole objects of the company; or
(c)any objects which are not stated with reasonable certainty.
(4)The memorandum must state
(a)the number of shares which the company may issue and the nominal value of those shares, and whether each of those shares has the same nominal value or different nominal values are attributed to shares of different classes;
(b)the total of the nominal values of all the shares which the company may issue ("the nominal capital of the company"); and
(c)the total of the nominal values of all the shares of each class of shares which the company may issue ("the nominal capital of the company in respect of a class of shares").
(5)If a company has different classes of shares, the memorandum shall state the rights and obligations of each class (except so far as such rights and obligations are prescribed by this Ordinance or are uniform for all classes of shares), and no rights or obligations attached to shares by the articles, the terms of issue of shares, resolutions of the directors or members of the company or otherwise shall be valid if not set out in the memorandum.
(6)For the purpose of this Ordinance, shares belong to different classes if different rights or obligations attach to them in respect of dividend, repayment of capital, voting at general meetings of the company, or the times at which, or the amounts by which, the issue price of the shares payable in cash is to be paid to the company; but shares do not belong to different classes merely because the holders of some of them are members of the company and the holders of others of them are not, nor because some of them are issued for a consideration other than cash.
(7)The form of the memorandum of a company shall be in accordance with the form set out in Part I of the First Schedule to this Ordinance, or in the case of a proprietary company, in Part III of the said Schedule, or as near thereto as circumstances permit.

5. Subscription of the memorandum

(1)The subscribers of the memorandum of a company which is not a proprietary company shall write opposite their signature to the memorandum the number of shares in the company which they agree to take, being not less in total than one-tenth of all the shares the company may issue (except shares to be allotted for a consideration other than cash).
(2)The subscribers of the memorandum of a proprietary company shall by subscribing be deemed to agree jointly and severally to take all the shares which the company may issue, but unless the memorandum otherwise provides, they shall as between themselves take such shares in equal proportions.
(3)The memorandum must be signed by each subscriber in the presence of at least one witness who must attest the signature.

6. Payment for shares by a consideration other than cash

(1)If by an arrangement made before its incorporation any shares of a company are to be paid for by a consideration other than cash, the memorandum shall state the nature of such consideration, its value and the amount by which the shares to be issued in respect of it will be credited as paid up, not exceeding the stated value of such consideration.
(2)If within five years after the incorporation of a company any consideration for which shares have been issued under subsection (1) is sold by the company for less than the amount by which the shares are credited as paid up in respect of it, or if within the said five years the company is wound up or any of its debenture holders become entitled to realise a security comprising the consideration, and the consideration is sold by the liquidator or by the receiver or any other person acting for the benefit of debenture holders for less than the amount by which the shares are so credited as paid up, the first directors of the company and the person who furnished such consideration shall be jointly and severally liable to pay the difference to the company or the liquidator or the receiver, as the case may be, unless they satisfy the court:
(a)that if the consideration had been sold immediately after the incorporation of the company, it would have realised not less than the amount by which the shares are credited as paid up; or
(b)that since the acquisition of the consideration by the company, the company has so used, altered or dealt with it, or its nature or condition has so changed, that the amount for which it has been sold does not bear any reasonable relationship to its value at the date of the incorporation of the company.
(3)If within a year after its incorporation a company issues shares to be paid for by a consideration other than cash, or accepts a consideration other than cash in complete or partial payment for shares which were issued for a consideration in cash, it shall be presumed, unless the contrary is proved, that an arrangement was made before the company was incorporated that the shares were to be paid for by a consideration other than cash, and the directors of the company and the person furnishing the consideration other than cash shall incur the liabilities imposed by the last foregoing subsection.
(4)If judgment is given against two or more persons under subsection (2) or (3) of this section, the court may order that they shall make such contribution between themselves, or that one or more of them shall indemnify the other or others of them, as to the court shall seem just.
(5)No shares shall be issued to be paid for by the performance of services after the date of their issue, or by the person to whom they are issued or any other person contracting to perform such services.
(6)For the purpose of this Ordinance shares are issued for a consideration other than cash unless they are to be paid for wholly by legal tender or by a cheque, banker's draft or banker's cheque, or by setting off a debt which is owned by the company and is immediately payable; in such excepted cases the shares are issued for a consideration in cash.
(7)For the purpose of this section debenture holders shall be deemed to become entitled to enforce their security in the circumstances set out in section 8(1) and (2) of the Companies (Debentures and Floating Charges) Ordinance, 1970.
(8)If a memorandum is delivered to the Registrar without subsection (1) of this section being complied with, the first directors of the company who are in default shall be guilty of an offence.
(9)If a person accepts an issue of shares for a consideration other than cash knowing that subsection (1) of this section applies but has not been complied with, he shall be guilty of an offence.
(10)If within a year after the incorporation of a company an issue of shares is made for a consideration other than cash, or a payment for shares is made otherwise than in cash, the directors of the company and the person to whom the issue is made, or who holds the shares at the time the payment is made (as the case may be), shall be guilty of an offence if they know that the issue or payment is made pursuant to an arrangement made before the company was incorporated and that subsection (1) of this section has not been complied with.
(11)If shares are issued in contravention of subsection (5) of this section, the directors of the company who are in default and the person to whom the issue is made shall be guilty of an offence.
(12)An offence under this section shall be punishable by a fine not exceeding ten thousand rupees or imprisonment for not more than two years, or by both such fine and such imprisonment.
(13)Subsections (1) to (4) and (7) to (10) inclusive shall not apply to a proprietary company.
(14)This section shall not apply to an existing company.

Articles of Association

7. Subscription of articles of association

There may in the case of any company be registered, with the memorandum, articles of association signed by the subscribers of the memorandum and prescribing regulations for the company.

8. Statutory regulations

If a company is incorporated without articles being registered, or if articles are registered but do not exclude the regulations set out in Part II of the First Schedule to this Ordinance, or in the case of a proprietary company, in Part IV of the said Schedule, those regulations shall, insofar as the registered articles do not exclude or modify them or make express provision for the same matter, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles.

9. Printing and signature of articles

Articles shall be in the English language and must

(a)be printed;
(b)be divided into paragraphs numbered consecutively; and
(c)be signed by each subscriber of the memorandum of association in the presence of at least one witness who must attest the signature.

Registration

10. Registration of memorandum and articles

(1)The memorandum and the articles, if any, shall be delivered to the Registrar, and he shall retain and register them.[Act 5 of 2013]
(2)
(a)The Registrar shall satisfy himself that the memorandum and articles comply with the forgoing provisions of this Act and the objects or lawful purposes of the company, are lawful.
(b)A company shall not be identical to a name of a previously registered company or a name which is undesirable.
(3)If the Registrar is not satisfied as to any of the matters mentioned in the foregoing subsection, he shall in writing and within one month so inform the person who presented the memorandum and articles for registration, stating his reasons.
(4)Any person aggrieved by the failure of the Registrar to register the memorandum and articles may appeal to the court within one month after the Registrar has informed the person who presented the memorandum and articles for registration under the foregoing subsection, and upon the hearing of such an appeal the Court shall either direct the Registrar to register the memorandum and articles or dismiss the appeal, and the decision of the Court shall be final.
(5)The Mortgage and Registration Ordinance shall not apply to the memorandum and articles of a company.

11. Effect of registration

(1)On the registration of the memorandum of a company the Register shall certify under his hand that the company is incorporated and the date of the registration. The certificate issued by the Registrar shall be in the form set out in the Second Schedule to this Ordinance.
(2)On and from the date of incorporation mentioned in the certificate of incorporation, the subscribers of the memorandum, together with such other persons as may from time to time become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession, but with such liability on the part of the members to contribute to the assets of the company as is mentioned in this Ordinance.
(3)The Mortgage and Registration Ordinance shall not apply to a certificate of incorporation issued under this section.

12. Power of company to hold lands

(1)A company incorporated under this Ordinance shall have power to hold lands in any part of Seychelles.
(2)This section shall take effect subject to the provisions of the Immovable Property (Transfer Restriction) Ordinance, 1963.

13. Conclusiveness of certificate of incorporation

(1)A certificate of incorporation given by the Registrar in respect of any association shall be conclusive evidence that all the requirements of this Ordinance in respect of registration and of matters precedent and incidental thereto have been complied with, and that the association is a company authorised to be registered and duly registered under this Ordinance.
(2)A signed declaration that all requirements have been complied with, may be provided by an attorney-at-law or notary.[subsection (2) repealed and substituted by Act 10 of 2012 with effect from 17 December 2012]
(3)In the case of a proprietary company the said declaration shall state that the company will on its incorporation fulfil the conditions set out in section 24(1) of this Ordinance.

14. Power to dispense with "Limited" in name of charitable and other companies

(1)Where it is proved to the satisfaction of the Minister that an association about to be formed as a company is to be formed for promoting commerce, art, science, religion, charity, or any other useful object, and intends to apply its profits or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Minister may by licence direct that the association may be registered as a company without the addition of the word "Limited" to its name, and the association may be registered accordingly.
(2)A licence by the Minister under this section may be granted on such conditions and subject to such limitations as the Minister thinks fit, and those conditions and limitations shall be binding on the association, and shall, if the Minister so directs, be inserted in the memorandum and articles, or in one of those documents.
(3)The association shall on registration enjoy all the privileges of a company and be subject to all the obligations of a company, except that of using the word "Limited" as part of its name.
(4)A licence under this section may at any time be revoked by the Minister, and upon revocation the Registrar shall enter the word "Limited" at the end of the name of the association upon the register, and the association shall cease to enjoy the exemption granted by this section:Provided that, before a licence is so revoked, the Minister shall give to the association notice in writing of his intention, and shall afford the association an opportunity of stating its opposition to the revocation.
(5)This section shall not apply to a proprietary company.

General provisions with respect to memorandum and articles

15. Effect of memorandum and articles

(1)Subject to the provisions of this Ordinance, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by each member and on behalf of the company, and contained contractual undertakings on the part of each member and the company to observe all the provisions of the memorandum and of the articles.
(2)All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

16. Copies of memorandum and articles to be given to members

(1)A company shall, on being so required by any member, shareholder or debenture holder of the company send to him a copy of the memorandum and of the articles, if any, subject to payment of a fee of five rupees or such less sum as the company may specify.
(2)If a company makes default in complying with this section, the company and every officer of the company who is in default shall be liable for each offence to a fine of one hundred rupees.

17. Issued copies of memorandum to embody alterations

(1)Where an alteration is made in the memorandum or articles of a company, every copy of the memorandum or articles issued after the date of the alteration shall be in accordance with the alteration.
(2)If, where any such alteration has been made, the company at any time after the date of the alteration issues any copies of the memorandum or articles which are not in accordance with the alteration, it shall be liable to a fine of one hundred rupees for each copy so issued, and every officer of the company who is in default shall be liable to the like penalty.

Alteration of the memorandum and articles

18. Alteration of memorandum

(1)Subject to the following provisions of this Ordinance, a company may by special resolution alter or add to any of the provisions of its memorandum. Notice of the meeting called to pass the special resolution shall be given to all shareholders and debenture holders of the company and to the trustees of all debenture trust deeds covering debentures issued by the company in like manner as it is, given to members of the company.
(2)No company may alter the provisions of its memorandum that its registered office is to be situate in Seychelles.
(3)The share capital of a company may be altered only in the ways specified in sections 59 and 63.
(4)Notwithstanding anything in the memorandum or articles of a company, no member of the company shall be bound by an alteration made in the memorandum after the date on which he became a member, if and so far as the alteration requires him to take or subscribe for more shares than the number held by him at the date on which the alteration is made, or in any wav increases his liability as at that date to contribute to the share capital of, or otherwise to pay money to, the company:Provided that this subsection shall not apply in any case where the member agrees in writing, either before or after the alteration is made, to be bound thereby.
(5)A company may change its name only if the Registrar has previously approved the proposed new name, and the new name conforms to the requirements of section 4(1) of this Ordinance.
(6)If, through inadvertence or otherwise, a company on its first registration or on its registration by a new name is registered by a name which, m the opinion of the Registrar, is too like the name by which a company in existence has previously been registered, the first-mentioned company may change its name with the consent of the Registrar, and, if he so directs within six months of its being registered by that name, it shall change it within a period of six weeks from the date of the direction or such longer period as the Registrar may think fit to allow.If a company makes default in complying with a direction under this subsection, it shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues.
(7)Where a company changes its name under this section, the Registrar shall enter the new name on the register in place of the former name, and shall issue a certificate of incorporation altered to meet the circumstances of the case,
(8)A change of name by a company under this section shall not affect any rights or obligations of the company or render defective any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.
(9)Any alteration of or addition to the objects of a company shall be subject to the rules contained in section 4(2) and (3) of this Ordinance.
(10)No provision of the memorandum required to be contained in it by section 6(1) of this Ordinance shall be altered so, however, that nothing in this subsection shall be construed as prohibiting the deletion of any such provision as aforesaid after the expiration of the period of five years mentioned in section 6(2).
(11)Alterations and additions made to the memorandum may themselves be altered or added to in like manner as though they had originally been contained in the memorandum.
(12)The Mortgage and Registration Ordinance shall not apply to a certificate of incorporation issued under this section.

19. Alteration of rights and obligations attached to classes of shares

(1)No alteration of or addition to the memorandum shall be made in respect of the rights or obligations attached to shares of any class, if the company's share capital is divided into different classes of shares, unless, not earlier than one month before the alteration or addition is made, a meeting of the holders of shares of the class in question is held and a resolution consenting to the alteration is passed at the meeting by a majority comprising at least three-quarters of the votes cast.
(2)The provisions of this Ordinance and the articles of the company relating to meetings of a class of shareholders shall apply to a meeting held under the last foregoing subsection, except that the quorum for such a meeting shall be one or more persons present in person or by proxy holding at least one-third of the issued shares of the class in question.
(3)If the company's articles provide for postal voting at general meetings, postal votes may be given at a meeting held under this section.
(4)The memorandum shall be considered as being altered in respect of the rights or obligations attached to a class of shares if
(a)the words setting them out are altered; or
(b)the rights are made substantially less advantageous, or the obligations are made substantially more onerous, even though the words stating them are not altered; or
(c)shares carrying voting rights at general meetings are issued on a capitalisation of profits or reserves to the holders of another class of shares, but not to the holders of the class of shares in question; or
(d)shares of the class in question are issued to the holders of shares of another class on a capitalisation of profits or reserves; or
(e)the rights or obligations attached to another class of shares are altered or added to in a manner which will or may result in the rights attached to the class of shares in question being substantially less advantageous or the obligations attached to them being substantially more onerous.
(5)This section shall not apply to
(a)a class of shares none of which has been issued; or
(b)a class of shares all of which have either been transferred to or redeemed by the company, or are held, by the company or by a nominee for it, and none of which have been re-issued.

20. Alteration of articles

(1)Subject to the provisions of this Ordinance and to the conditions contained in its memorandum, a company may by special resolution alter its articles.
(2)Any alteration so made in the articles shall, subject to the provisions of this Ordinance, be as valid as if originally contained therein, and be subject in like manner to alteration by special resolution.
(3)Section 18(4) shall apply to the alteration of the articles of a company as it applies to an alteration of its memorandum.

21. Applications to the court to cancel alteration of memorandum or articles

(1)Within one month after an alteration of the memorandum or articles has been made, the holders of not less than ten per cent of the company's issued shares, or if it has issued shares of different classes, the holders of not less than ten per cent of the issued shares of any class, may apply to the court to cancel the alteration.
(2)Within one month after such an alteration has been made the holders of not less than twenty per cent of the company's issued debentures secured by a general floating charge, or if it has issued more than one class of such debentures, the holders of not less than twenty per cent of the issued debentures of any such class, may apply to the court to cancel the alteration.
(3)An application may be made under either of the two foregoing subsections on behalf of persons who together are entitled to make the application by such one or more of their number as they may appoint in writing for the purpose before the application is made, and such a written appointment may consist of several documents each signed by one or more such persons.
(4)In determining the number of shares or debentures whose holders may make an application under subsection (1) or (2), no account shall be taken of shares or debentures issued after the alteration of the memorandum or articles is made, and no holder of any such shares or debentures may make or concur in making such an application, or be authorised to make, or authorise any other person to make, such an application by virtue of his holding of any such shares or debentures.
(5)No shareholder who voted in person or by proxy in favour of an alteration of the company's memorandum or articles, or in favour of the approval of the class of shareholders to which he belongs being given to the alteration, may make an application under subsection (1), or concur in making such an application or be authorised to make, or authorise any other person to make, such an application.
(6)In determining the number of debentures whose holders may make an application under subsection (2), regard shall be had to the respective principal amounts of the debentures, or if they are redeemable at a premium, to their respective principal amounts plus the highest premium which may be payable on their redemption at any time after the alteration of the memorandum or articles is made; debentures shall be deemed to belong to different classes if any of the conditions specified in section 69(3) apply.
(7)An alteration of a company's memorandum or articles shall not take effect until the expiration of one month after it is made, and if an application is made to the court under subsection (1) or (2) during that time, it shall not take effect until the court has confirmed it on each such application.
(8)On the hearing of an application under subsection (1) or (2) the court shall cancel the alteration if the applicants satisfy it that the alteration was not authorised by this Ordinance, or did not satisfy the conditions or requirements imposed by this Ordinance at the time the alteration was made.
(9)On the hearing of an application under subsection (1), the court may cancel the alteration if the applicants satisfy it either
(a)that the alteration will operate unfairly or unreasonably to the detriment of the applicants without an adequate compensating advantage being conferred on them; or
(b)that the alteration is in respect of the objects of the company, and that the nature, extent or mode of conducting the business which the company has hitherto carried on, or the nature or mode of achieving the purposes which the company has hitherto pursued, will in consequence be so substantially changed that it is not reasonable that the applicants should be constrained to remain shareholders of the company.
(10)On the hearing of an application under subsection (2) of this section the court may cancel an alteration if the applicants satisfy it either
(a)that the alteration will or may result in a breach of the company's obligations under the debentures held by the applicants or under the debenture trust deed (if any) covering such debentures; or
(b)that the alteration is in respect of the objects of the company, and that the nature, extent or mode of conducting the business which the company has hitherto carried on, or the nature or mode of achieving the purposes which the company has hitherto pursued, will in consequence be so substantially changed that the security for the debentures held by the applicants will be substantially and detrimentally affected.
(11)If the court is satisfied that the alteration is objectionable for any of the reasons set out in subsections (9) or (10), it may, instead of cancelling the alteration, confirm it subject to the condition that the company shall acquire the shares or debentures of the applicants in right of which the application is made on payment of the fair market value of such shares or debentures as ascertained by the court, or, if the application is made by the holders of redeemable shares or debentures which the company has the right or is under an obligation to redeem not later than five years after the date of the alteration, on payment of the fair market value of such shares or debentures as ascertained by the court, or the nominal value or principal amount of such shares or debentures plus the highest premium which may be payable on their redemption at any time after the alteration to the memorandum or articles is made, whichever is the greater.
(12)If the court confirms the alteration subject to the condition mentioned in subsection (11), the alteration shall not be effective until the sum fixed by the court has been paid to the applicants, and if the said sum is not paid within six months after the date of the court's decision, the alteration shall be deemed to have been cancelled by the court.
(13)If no application to cancel an alteration of the memorandum or articles is made within one month after it is made, or if all such applications are rejected by the court, the validity of the alteration shall not thereafter be questioned in any legal proceedings whatsoever.
(14)This section, shall not apply to any alteration made to a company's memorandum under section 59 or 63.
(15)Nothing in this section shall affect the right of any person to make an application to the court under section 136.

22. Registration of alteration of memorandum or articles

(1)A company which has altered its memorandum or articles shall give notice of the date, form and effect of the alteration to the Registrar:
(a)if no application is made to the court under section 21, within fifteen days after the expiration of the period for making an application there-under; or
(b)if such an application is made, or if two or more such applications are made, within fifteen days after the drawing up of the order embodying the decision of the court on the last of such applications to be heard, and in that case the notice given to the Registrar shall be accompanied by office copies of the orders made by the court on all such applications.
(2)If a company makes default in delivering to the Registrar any document required by this section to be delivered to him, the company and every officer of the company who is in default shall be liable to a fine not exceeding one hundred rupees for every day during the first month that the default continues, two hundred and fifty rupees for every day during the next two months that default continues, and five hundred rupees for every day that default continues thereafter.
(3)This section shall not apply to any alteration of a company's memorandum made under section 59 or 63.

Members and shareholders of companies

23. Definition of members and shareholders

(1)The subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.
(2)Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.
(3)The following persons shall be shareholders of the company:
(a)a person who is a member of the company under subsection (2);
(b)a subscriber of the memorandum to whom shares have been issued;
(c)the heir or other persons entitled to the shares of a deceased shareholder under his will or on his intestacy, and the trustee in bankruptcy of a bankrupt shareholder;
(d)a person who is on his own behalf in possession of a **, whether by himself or by an agent acting for him.
(4)In this Ordinance references to holders of shares mean the persons who are shareholders in respect of them, and references to holding shares shall be construed accordingly.
(5)In this Ordinance shares shall be considered as having been issued if any person is a shareholder in respect of them.

Proprietary companies

24. Definition of a proprietary company

(1)A company is a proprietary company if
(a)the penultimate word of its name is "Proprietary";
(b)it has not more than fifty members, excluding persons who are in the employment of the company (other than directors) and persons who were in the employment of the company (otherwise than as directors) when they became members of the company and have continued to be members of it without interruption since they ceased to be employed by it;
(c)all its shareholders are members of the company, so however that the heir or other person entitled to the shares of a deceased member under his will or on his intestacy, the trustee in bankruptcy of a bankrupt member and a person in whose favour a transfer of shares has been executed shall not be taken into account for this purpose;
(d)the company has no preference shares issued and outstanding;
(e)at least three-quarters of the issued shares of the company are held by its directors, or if less than three quarters of its issued shares are so held, the company has not more than twenty members;
(f)all directors of the company are members of it;
(g)none of the members or directors of the company is a corporation, and the company has no holding company.
(2)If a company is formed as a proprietary company but fails at any time to satisfy all the conditions set out in the foregoing subsection, it shall immediately cease to be a proprietary company, and shall cease to have or use the word "Proprietary" as part of its name.
(3)If a proprietary company which has ceased to be such a company, or a company which was not formed as a proprietary company, at any time satisfies all the conditions set out in subsection (1) (with the exception of the condition in paragraph (a) of that subsection), it may apply to the Registrar to be treated as a proprietary company, and if the Registrar considers that the company satisfies the said conditions at the date of the application, he shall issue a certificate of incorporation to it in the name it had immediately before the application with the addition of the word "Proprietary" as the penultimate word thereof, and thereupon the company shall become a proprietary company:Provided that an application may not be made under this subsection if there is subsisting any derivative interest created out of the company's shares or debentures, other than a derivative interest excepted by section 26(1) or (3).
(4)Subsection (2) of this section shall apply to a company which has become a proprietary company under the last foregoing subsection as from the date of its application to be treated as a proprietary company, but without prejudice to the company again becoming a proprietary company under the last foregoing subsection.
(5)A proprietary company shall cease to be such a company
(a)if the heir or other person entitled to the shares of a deceased member under his will or on his intestacy, or the trustee in bankruptcy of a bankrupt member, or persons deriving title under them respectively, do not become members of the company within nine months after the death of the deceased member or the adjudication in bankruptcy of the bankrupt member, as the case may be; or
(b)if the person in whose favour a transfer of shares has been executed, or if two or more such transfers have been executed in respect of the same shares, the person in whose favour the latest transfer has been made, has not become a member of the company within two months after the execution of the transfer or the first of such transfers as the case may be), unless the transfer or all the transfers (as the case may be) have been cancelled.
(6)If a company ceases to be a proprietary company under the last foregoing subsection, subsections (3) and (4) shall apply to it, but the Registrar shall not be bound to issue a certificate of incorporation under subsection (3) if he considers that transfers of shares in the company have been made on numerous occasions and have not been registered within the said period of two months in order to conceal from the public the identity of the persons who are or have been substantial shareholders of the company.
(7)An application under subsection (3) shall be supported by a signed declaration by all the directors of the company that the company satisfies the requirements of that subsection at the date of the declaration, and the Registrar may accept such a declaration as sufficient evidence of the facts stated.
(8)The cessation of the right to have the word "Proprietary" as part of the name of a company, or the acquisition of that word as part of its name, by virtue of this section shall not be deemed to be a change in the name of the company for the purposes of sections 18 and 22(1) of this Ordinance, but section 18(8) of this Ordinance shall nevertheless apply, and the company shall within fifteen days of such cessation give notice to the Registrar of that fact, the date when the cessation occurred, and the reason for its occurrence.
(9)A company and any director of the company who is in default shall be guilty of an offence if the company:
(a)uses the word "Proprietary" as part of its name when it is not entitled to do so; or
(b)applies to the Registrar to be treated as a proprietary company when the conditions mentioned in subsection (1) are not satisfied; or
(c)fails to give notice to the Registrar that the word "Proprietary" has ceased to be part of its name in compliance with subsection (8).
(10)An offence under this section shall be punishable on conviction by a fine not exceeding ten thousand rupees.
(11)The Mortgage and Registration Ordinance shall not apply to a certificate of incorporation issued under this section.

25. Proprietary companies may not issue prospectuses etc. to the public

(1)A proprietary company shall not issue to the public a prospectus or invitation to make deposits with it.
(2)If a proprietary company contravenes the foregoing subsection, it shall immediately cease to be a proprietary company and shall cease to have or use the word "Proprietary" as part of its name, and section 24(3), (4), (7), (8) and (9) of this Ordinance shall apply as though the company had ceased to be a proprietary company under that section.
(3)If a company which has contravened subsection (1) of this section applies to the Registrar to be treated as a proprietary company at any time after the contravention, the Registrar shall not accede to the application unless he is satisfied that the contravention was inadvertent or in consequence of a mistake of fact made in good faith.
(4)A proprietary company which contravenes subsection (1) of this section and its directors who are in default shall be guilty of an offence punishable on conviction by a fine not exceeding ten thousand rupees.

26. Prohibition on derivative interests

(1)No derivative interest shall be created in shares or debentures of a proprietary company, except
(a)the interest of a purchaser under a contract of sale which is completed by the vendor executing an instrument of transfer within six months after the date of the contract;
(b)the interests of the heir or other person entitled to the shares or debentures of a deceased holder under his will or on his intestacy; and
(c)the title or interest of the trustee in bankruptcy of a bankrupt member or debenture holder and the interests of his creditors upon his bankruptcy,
(2)For the purpose of this Ordinance "derivative interest" means an unregistered transfer, trust, usufruct, mortgage, charge or other security, contract (or option) to purchase or exchange, right of preemption, the interest of a person in shares or debentures which are registered in the name of a nominee on his behalf, and the interest of a person to whom the holder of the shares or debentures has agreed or arranged to pay or transfer the whole or part of the dividends, interest, repayments of capital, principal or premiums, or to transfer or make available distributions of shares, debentures or assets received by him in respect of the shares or debentures in question.
(3)If a derivative interest other than an interest excepted from subsection (1) is created or arises in respect of shares or debentures issued by a proprietary company, the company shall immediately cease to be a proprietary company and shall cease to have or use the word "Proprietary" as part of its name, and section 24(3), (4), (7), (8) and {9) shall apply as though the company had ceased to be a proprietary company under that section.

27. Right of pre-emption

(1)The continuing members of a proprietary company shall be entitled to purchase the shares of an out-going member.
(2)An outgoing member is a member who
(a)has died or been adjudged bankrupt;
(b)has resigned a directorship of the company;
(c)has contracted to sell any of his shares; or
(d)has created a derivative interest in his shares;

and the continuing members are all other members of the company.

(3)Upon the occurrence of any of the events specified in subsection (2) of this section, the outgoing member or the heir or other person entitled to his shares on his death under his will or on his intestacy shall notify the secretary of the company of the date and nature of the event, and within seven days after such notification, or if the secretary has not been notified within that time, within seven days after he discovers that the event has occurred, the secretary shall notify the continuing members of the number of shares held by the outgoing member, by the continuing members and by the continuing members who are directors respectively.
(4)Within three months after the secretary notifies the continuing members of the matters specified in the foregoing subsection, or if he fails to notify any continuing member of those matters within the time limited by that subsection, within four months of the occurrence of the relevant event under subsection (2), any continuing member may by writing addressed to the secretary offer to purchase all or any of the shares of the outgoing member at a price specified therein, but if he fails to make such an offer within the time aforesaid his rights under subsection (1) of this section shall lapse.
(5)The continuing members who have offered the highest price or the highest sequence of prices for shares equal in the aggregate to the number of shares held by the outgoing member (in this section called "the highest bidders") shall, subject to the next following subsection, be bound and entitled to acquire those shares at the price or prices offered by them respectively, and on paying such price to the secretary, each of them may execute a transfer of the shares which he is entitled to acquire in the name and on behalf of the outgoing member or the heir or other person entitled to the shares on his death or his trustee in bankruptcy (as the case may be).
(6)Within seven days after the expiration of the period of three months or four months limited by subsection (4) of this section, the secretary shall notify the outgoing member, or his heir or the other person entitled to his shares on his death, or his trustee in bankruptcy (as the case may be) of the offers received by him from the highest bidders (specifying the number of shares which they have respectively offered to purchase and the prices which they have respectively offered for those shares). The outgoing member, or his heir or the other person entitled to his shares on his death, or his trustee in bankruptcy (as the case may be) may within fifteen days thereafter notify the secretary and auditor of the company of his or their unwillingness to transfer the shares of the outgoing member to the highest bidders. In that event the auditor of the company shall within one month after receiving such notification make an estimate of the fair value of the said shares, and if his estimate of their value exceeds the price or prices offered by any one or more of the highest bidders, subsection (5) shall take effect with the substitution of the value estimated by the auditor for any price bid by a highest bidder which it exceeds. If the auditor's estimate of the value of the said shares does not exceed the price offered by any of the highest bidders, subsection (5) shall take effect as though the outgoing member, or his heir or the other person entitled to his shares on his death, or his trustee in. bankruptcy, had not notified the secretary and the auditor of their unwillingness to transfer the said shares to the highest bidders.
(7)An estimate under the last foregoing subsection shall be made in writing and copies of it shall be sent by the auditor simultaneously to the secretary, the highest bidders and the outgoing member, or his heir or the other person entitled to his shares on his death, or his trustee in bankruptcy (as the case may be). In making his estimate the auditor shall take into account the net value of the company's assets (after deducting its liabilities and contingent and prospective liabilities), its earnings in each of its most recent five complete financial years and its current financial year, the expansion or contraction of the company's undertaking during those five years and the prospect that such expansion or contraction will continue in the future, but the auditor shall not take into account the facts that a purchaser of the shares would acquire them subject to the rights of other members of the company under this section, or that the shares do or do not enable the outgoing member to control the voting at general meetings of the company, or that the shares are not readily saleable.
(8)If the continuing members offer to acquire less than all the shares of the outgoing member, this section shall apply in respect of the number of shares they offer to acquire, and references in this section to all the continuing members who offer to acquire the shares shall be substituted for references to the highest bidders.
(9)If two or more highest bidders have offered to acquire shares at the same price, and the number of shares available for them under subsection (5) of this section is less than the total number of shares they have offered to acquire, this section shall apply as if they had offered to acquire the number of shares available for them, and those shares shall be distributed among them in proportion to the number of shares they have respectively offer to acquire.
(10)The secretary shall hold any money received under subsection (5) of this section as agent on behalf of the outgoing member or the persons entitled to his shares on his death or his trustee in bankruptcy (as the case may be).
(11)An offence is committed by
(a)an outgoing member who does not notify the secretary in accordance with subsection (3);
(b)a secretary who does not notify the continuing members in accordance with subsection (3), or the outgoing member, or his heir or the other person entitled to his shares on his death, or his trustee in bankruptcy in accordance with subsection (6);
(c)an auditor who does not send written copies of his estimate to the secretary, the highest bidders and the outgoing member or his heir or the other person entitled to his shares on his death, or his trustee in bankruptcy, within the period limited by subsection (6).
(12)An offence under this section shall be punishable on conviction by a fine not exceeding one thousand rupees.
(13)If the secretary of a company to which this section applies on the death of an outgoing member is unaware of the identity of his heir or of all or some of the persons entitled to his shares on his death under his will or on his intestacy, the secretary may instead of giving notification required by this section to those persons give notifications instead to the Curator of Vacant Estates, and such notifications given to the Curator shall be deemed to be the notifications required by this section.

28. Expulsion of a member of a proprietary company

(1)Any member of a proprietary company may apply to the court for an order that another member shall be expelled from membership of the company.
(2)An application may be made under this section on any of the following grounds, namely:
(a)that the member whose expulsion is sought:
(i)has been guilty of serious or persistent breaches of the provisions of the memorandum or articles of the company; or
(ii)has been guilty of conduct seriously detrimental to the interests of the company or its members as a whole; or
(iii)has an interest or holds a position in another company, corporation, firm or undertaking which is likely to cause him to act to the detriment of the company and to result in substantial harm to it; or
(b)that the member whose expulsion is sought is a director of the company and:
(i)has been guilty of serious breaches of duty as such a director; or
(ii)has been guilty of serious breaches of duty as a director of another company or corporation, or as a partner in a firm; or
(iii)has been convicted of a criminal offence involving dishonesty.
(3)If the court in its discretion accedes to the application, the member whose expulsion is sought shall forthwith cease to be a member, and section 27 of this Ordinance shall thereupon apply as though he had become an outgoing member.
(4)If offers to acquire all the shares of an expelled member are not made within the time limited by section 27(4), the continuing members of the company shall be deemed to have offered to take the shares not bid for at a price equal to their fair value as estimated by the company's auditor under section 27(6) and (7), and the auditor shall make an estimate in like manner as if the outgoing member had notified the secretary under section 27(6) that he was unwilling to transfer the said shares.

29. Preservation of proportion of issued shares held by directors

(1)If as the result of either section 27 or 28 of this Ordinance, continuing members become entitled to acquire so many shares that if transfers of those shares were registered the directors who are continuing members would cease to hold three-quarters of the issued shares of the company, section 27(5) shall operate so that those directors shall be substituted for the highest bidders who are not directors in respect of such number of shares of the outgoing member as are required to ensure that the directors who are continuing members will hold three-quarters of the issued shares.
(2)The shares to be acquired by directors under sub-section (1) of this section shall, as between themselves, be distributed between them in proportion to their existing holdings, and the shares shall be taken from those which the highest bidders who have offered the lowest price or the lowest sequence of prices would otherwise have acquired.
(3)The price to be paid by the directors for shares acquires under subsection (1) shall be the price which they respectively have offered as highest bidders under section 27(5), or if any of them has not offered such a price, the higher of the price which they have offered and the fair value of the shares as estimated by the company’s auditor under section 27(6) and (7), and the auditor shall in that case make an estimate in like manner as if the outgoing member had notified the secretary under section 27(6) that he was unwilling to transfer the said shares.
(4)This section shall not apply if the number of the continuing members of the company does not exceed twenty.

30. Voting agreements

No agreement by a member of a proprietary company with another person, whether a member or not, whereby the other person may require the member to vote, or not to vote, or to vote in a particular manner at any meeting of the company, or whereby the member agrees to vote in a particular manner, or not to vote, at any such meeting, shall be valid.

31. **s etc., may not be issued

No proprietary company may issue **s, **s, or convertible debentures, and any purported issue of such securities shall be void.

32. Permitted agreements in respect of proprietary companies

(1)Notwithstanding anything contained in sections 27 and 30, two or more members of a proprietary company may lawfully agree that:
(a)any one or more of them shall be entitled to require the other or others of them to cast the votes in respect of his or their shares for the re-election of each of the first-mentioned members as a director of the company, or for the payment to each of the first-mentioned members as such directors of agreed remuneration; or
(b)on the death or resignation of one or more of them, he or they may nominate one or more other persons (whether members of the company or not) to succeed him or them as a director or directors of the company, and the other parties to the agreement will (if necessary) cast the votes in respect of their shares in the company for the election of each of those persons as a director; or
(c)any right of pre-emption which may become exercisable over the shares of any one or more members shall be exercised so that an agreed price, or not less than an agreed price, is paid in respect of those shares; or
(d)on the death or resignation of a directorship of one or more of them, the other or others will not exercise any right of pre-emption over his or their shares, or will not exercise a right of pre-emption if certain agreed conditions are fulfilled, or unless certain agreed conditions are not fulfilled.
(2)For the purposes of this section price shall be deemed to be an agreed price, and remuneration shall be deemed to be agreed remuneration, if it is either fixed by the agreement or is ascertainable by applying a method of calculation prescribed by it.
(3)If the performance or fulfilment of a contract which is valid under this section would, in the circumstances existing at the time of performance or fulfilment, cause the company of which the parties are members to cease to be a proprietary company, the agreement shall be enforceable only if;
(a)the articles of the company do not require its members to abstain from any act whereby the company may cease to be a proprietary company; or
(b)the agreement is authorised or approved by an ordinary resolution passed by a general meeting of the company.

Capacity, contracts, authorisation etc.

33. Capacity to contract etc

(1)A company shall, subject to the provisions of section 12, have the same capacity to enter into contracts, incur liabilities, and acquire, hold and dispose of property as an individual of full age who is not under any disability or interdicted, and may sue and be sued in its corporate name.
(2)The capacity of a company shall not be limited by any provision of its memorandum or articles as to its objects or powers, or as to the powers of its directors or of meetings of its members to act in its name or on its behalf.
(3)Nothing in this section shall relieve a director or officer of a company from liability to the company for a breach of the provisions of its memorandum or articles, or for entering into transactions unconnected with the promotion or carrying on of the company's business as stated in the memorandum, or the achievement of the purposes there stated, and nothing in this section shall restrict the right of a shareholder to apply to the court under section 136, or to present a petition under section 201, or to present a petition for the winding up of the company.

34. Power of directors to act on company's behalf

(1)The directors of a company shall have power to do all acts on its behalf which are necessary for or incidental to the promotion and carrying on of its business as stated in its memorandum, or the achievement of the purposes there stated, and all persons dealing with the company, whether shareholders or not, may act accordingly.
(2)Each director of a proprietary company and each managing director of any other company shall have power to do the acts mentioned in subsection (1) without the concurrence of any other director.
(3)Without prejudice to the generality of the foregoing, the directors of a company, each director of a proprietary company and each managing director of any other company shall, subject to any contrary provisions of the memorandum or articles, have power to do the acts specified in the Third Schedule to this Ordinance on behalf of the company.
(4)Nothing in this section shall relieve a director or officer of a company from liability to the company for a breach of the provisions of memorandum or articles, or for entering into transactions unconnected with the promotion or carrying on of the company's business as stated in the memorandum, or the achievement of the purposes there stated; and nothing in this section shall restrict the right of a shareholder to apply to the court under section 136, or to present a petition under section 201, or to present a petition for the winding up of the company.

35. Form of contracts

(1)Contracts on behalf of a company may be made as follows
(a)a contract which, if made between private persons, would be by law required to be in writing, or to be evidenced by writing, or to be signed by the parties to be charged therewith, or by the parties or any party thereto, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied;
(b)a contract which if made between private persons would by law be valid although not reduced into writing, may be made orally on behalf of the company by any persons acting under its authority, express or implied.
(2)A contract made according to this section shall be effectual in law in point of form, and shall bind the company and all other parties thereto.
(3)A contract made according to this section may be varied or discharged in the same manner in which it is authorised by this section to be made.

36. Bills of exchange etc

(1)A bill of exchange, cheque or promissory note shall be deemed to have been drawn, made, accepted or endorsed on behalf of a company if drawn; made, accepted or endorsed in the name of, or by or on behalf or on account of, the company by any person acting under its authority.
(2)Nothing in this section shall affect section 26(2) of the Bills of Exchange Ordinance, 1959.

37. Authentication of documents

A document or proceeding requiring authentication by a company may be signed by a director, secretary, or other authorised officer of the company on its behalf.

38. Notice of matters by the company

A company shall be considered as having notice of any matter if notice of it is given to, or received or obtained by, any director, except a director who obtains such notice for the purpose, or in the course, of committing a breach of duty as a director, or a fraud or wrong upon the company.

39. Protection of persons dealing with directors and agents

(1)A person who deals with the directors of a company, or a director of a proprietary company, or a managing director of any other company, shall not be affected by any irregularity of procedure in connection with the authorisation of the transaction by a general meeting or other meeting of shareholders, or by the directors or any committee of directors, or the non-fulfilment of any condition imposed by the memorandum or articles in connection with the transaction.
(2)A person who deals with another person who is represented by the directors, or by a director of a proprietary company, or by a managing director of any other company, as having authority to act on the company's behalf in connection with any transaction, may treat the company as bound by the acts of that person done within his apparent authority, even though he has not been authorized by the company to do those acts on its behalf.
(3)This section shall not entitle anyone to recover a debt from a company, or to enforce any liability against it, or to treat a transaction as binding on it, if in connection with the same matter he has been guilty of a fraud upon the company, or has participated or acquiesced in a fraud committed upon it.

Part III – Share capital and debentures

Prospectuses and allotments

40. Registration of prospectuses and prohibition orders [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007]

41. Contents of prospectuses [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007]

42. Opening of subscription lists [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007]

43. Minimum subscription [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007]

44. Application for quotation on a stock exchange [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007 ]

45. Action for rescission [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007 ]

46. Claims for compensation [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007 ]

47. Documents to be delivered to Registrar with copy of prospectus [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007 ]

48. Offers for sale of shares and debentures [Repealed]

[ Repealed by Act 8 of 2007 with effect from 29 October 2007 ]

49. Registration statements [Repealed]

[Repealed by Act 8 of 2007 with effect from 29 October 2007]

50 Fraudulent inducements to invest in shares or debentures

(1)Any person who by any statement, promise or forecast which he knows to be false, deceptive or misleading, or by recklessly making any statement, promise or forecast which is false, deceptive or misleading, induces or attempts to induce another person to enter into, or to offer to enter into, an agreement to subscribe for, underwrite, sell, purchase, exchange or surrender shares or debentures, or to create any derivative interest out of shares or debentures, shall be guilty of an offence.
(2)For the purpose of this section a statement, promise or forecast is made recklessly if
(a)it is made without belief that it is true, or in the case of a promise or forecast, that it is likely to be fulfilled; or
(b)if a reasonable man who had the same knowledge of the surrounding circumstances as the accused, would not have believed that the statement was true, or that the promise or forecast was likely to be fulfilled.
(3)This section shall apply whether the inducement or attempted inducement is contained in a prospectus, a document within section 48 of this Ordinance, or a registration statement, or in any other communication whether written or oral.
(4)An offence under this section shall be punishable by a fine not exceeding one hundred thousand rupees, or three times the value of the consideration obtained, or sought to be obtained, by the accused, whether for himself or another person (whichever is the greater), or by imprisonment for not more than seven years, or by both such fine or imprisonment.
(5)Any person guilty of conspiracy to commit an offence under this section shall be punishable as if he had committed such an offence.

51. Return of allotments

(1)A company shall within one month after allotting any of its shares or debentures deliver to the Registrar:
(a)a return of allotments, stating the number of the shares or debentures comprised in the allotments, the names, addresses and descriptions of the allottees, the issue price of the shares or debentures and the amount paid up or credited as paid up on each share or debenture; and
(b)in the case of shares or debentures allotted as fully or partly paid up otherwise than in cash, a copy of the contract in writing constituting the title of the allottee to the allotment together with a copy of the contract of sale, exchange or for the other consideration in respect of which that allotment was made, and a return stating the number of shares or debentures so allotted, the extent to which they are credited as paid up, and the consideration for which they have been allotted.
(2)Where such a contract as above mentioned is not reduced to writing, the company shall within one month after the allotment deliver to the Registrar for registration the prescribed particulars of the contract.
(3)If shares or debentures are allotted or agreed to be allotted with a view to all or any of them being offered for sale (whether by the allottee or through another person or persons), this section shall apply as if the shares or debentures had been allotted by the company to the first holders of them who do not take them with, a view to offering them for sale.
(4)If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine not exceeding one hundred for every day during the first month that default continues, two hundred and fifty rupees for every day during the next two months that default continues, and five hundred rupees for every day that default continues thereafter.
(5)Copies of contracts and the prescribed particulars of contracts delivered to the Registrar shall be deemed not to be writings for the purposes of the Mortgage and Registration Ordinance.

Commissions, financial assistance for the acquisition of shares and debentures, and acquisitions of shares of a company by itself

52. Power to pay commission

(1)It shall be lawful for a company to pay a com-commission. mission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares or debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares or debentures of the company, only if
(a)the payment of the commission is authorised by the articles; and
(b)the commission paid or agreed to be paid does not exceed ten per centum of the price at which the shares or debentures are issued or the amount or rate authorised by the articles, whichever is the less; and
(c)the amount or rate per centum of the commission paid or agreed to be paid is disclosed in the prospectus, or if there is no prospectus, in the registration statement in respect of the shares or debentures; and
(d)the number of shares or debentures which persons have for a commission agreed to underwrite firmly is disclosed in manner aforesaid.
(2)A vendor to a company, or any other person who receives payment in money, shares or debentures from a company, shall have, and shall be deemed always to have had, power to apply any part of the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section.
(3)Nothing in this section shall affect the difference or margin between the issue or other price paid or to be paid by a person who takes an allotment or transfer, or agrees to take an allotment or transfer, of shares or debentures with a view to offering all or any of them for sale, and the price at which that person sells or agrees to sell the shares or debentures. For the purpose of this subsection the word "price" shall include any valuable consideration, and the words "sale" and "sell" shall include any disposition for valuable consideration.
(4)It shall be unlawful for a company to pay or to agree to pay a commission falling within subsection (1) of this section by the company allotting or agreeing to allot any of its shares or debentures, or by the company conferring a right to subscribe for other shares or debentures to be issued or re-issued by it; and any such allotment, agreement for allotment, or conferment of a right to subscribe for such shares or debentures shall be void.
(5)For the purposes of this Ordinance a person shall be considered as underwriting shares or debentures firmly if he enters into an underwriting contract, and also applies to the company for the shares or debentures to which the contract relates to be allotted to him, whether or not they are also applied for by other persons.
(6)Any contravention of this section by a director or any other officer of the company or by any other person shall be punishable by a fine not exceeding ten thousand rupees.

53. Prohibition of financial assistance by company for acquisition of shares or debentures of the company and its holding company etc.

(1)It shall not be lawful for a company to give, whether directly or indirectly, and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of, or in connection with, a purchase or subscription made, or to be made, by any person of or for any shares or debentures of the company, or of a company which belongs to the same group of companies as the company:Provided that nothing in this section shall be taken to prohibit:
(a)where the lending of money is part of the ordinary business of a company, the lending of money by the company in the ordinary course of its business, without any obligation or condition being imposed on the borrower that he shall expend the whole or any part of the money lent in subscribing for or purchasing shares or debentures of the company, or of such other company as aforesaid;
(b)the gratuitous provision by the company, in accordance with any scheme authorised by an ordinary resolution passed at a general meeting of the company, of money for the subscription or purchase of fully paid shares of the company or of any other company or body corporate, being a subscription or purchase by trustees of shares or debentures to be held by or for the benefit of employees (including directors holding a salaried employment or office) of the company or of a company which belongs to the same group of companies as the company;
(c)the making by a company of loans to employees (including any director holding a salaried employment or office) of the company or of a company which belongs to the same group of companies as the company with a view to enabling those persons to subscribe for or purchase shares or debentures of any such company;
(d)the provision of money, guarantees, or securities by a company under an employee share subscription scheme to which it is a party.
(2)A contravention of this section by a director, or any other officer of a company, or by any other person shall be an offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or by both such fine and such imprisonment.

54. Acquisition by a company of shares of itself or its holding company

(1)A company may not acquire or contract to acquire any shares issued or re-issued by itself or its holding company, or any derivative interest in such shares, whether directly or by means of an agent, nominee or trustee or otherwise.
(2)This section shall not prevent the transfer or surrender of shares to a company:
(a)if the shares are fully paid and no consideration is given or paid for them by the company; or
(b)if the shares are held in the company to which the transfer or surrender is made, and are replaced immediately by other shares (whether carrying the same rights or not) allotted to the persons making the transfer or surrender, being shares having unpaid upon them not less than the amount unpaid on the shares which are transferred or surrendered; or
(c)if the shares are fully paid and are transferred in consideration of a payment made out of the profits or revenue reserves of the company; or
(d)if the shares are fully paid and are transferred to the company as an agent, nominee or trustee under an arrangement in which it has no beneficial interest other than its right to remuneration and to an indemnity for its expenses.
(3)This section shall not apply:
(a)to the issue to a company of shares in its holding company on a capitalisation of the profits or reserves of the holding company, or on a rights issue being made by the holding company; or
(b)to a mortgage or charge in favour of a company on shares issued or re-issued by it or its holding company for any part of the issue price or for any debt owed to the company; or
(c)to a company's right to remuneration or to an indemnity against its expenses under an arrangement falling within paragraph (d) of subsection (2); or
(d)to the issue of shares on a rights issue being made by the company or its holding company in respect of shares held by the company under an arrangement falling within paragraph (d) of subsection (2).
(4)All shares of a company transferred or surrendered to the company itself under paragraphs (a), (b) or (c) of subsection (2) shall be cancelled and shall become void as from the time of the transfer or surrender, and shall thenceforth be deemed not to be issued shares for the purposes of this Ordinance, but without prejudice to the company's power to re-issue such shares under sections 55(4) and 61.
(5)In this Ordinance a "rights issue" means an issue of shares" under an offer made by a company to its existing shareholders in proportion to the number of shades, or the number of shares of a particular class, which they already hold.
(6)Any contravention of this section by a director or any other officer of the company or by any other person shall be punishable by a fine not exceeding ten thousand rupees.

Payment for shares

55. Payment of the issue price of shares; capital reserve

(1)Subject to the provisions of this section, the issue price of a share shall not be less than its nominal value.
(2)If a company issues a share at an issue price which exceeds its nominal value the excess, when paid to the company, shall be carried to the credit of the company's capital reserve. If shares are issued for a consideration other than cash, the excess of the value of the consideration (as determined under section 6 or 57) over the total of the nominal values of the shares so issued, shall be carried to the credit of capital reserve.
(3)Subject to the following provisions of this section, a share may not be issued at a discount, that is to say, on terms that the share shall be credited as paid up to a greater extent than the amount actually paid to the company for it. In the case of shares issued for a consideration other than cash, the shares shall be considered as issued at a discount if the value of the consideration (as determined under section 6 or 57) is less than the total of the nominal values of the shares so issued.
(4)For the purpose of this Part of this Ordinance, the amount for the time being standing to the credit of a company's capital reserve shall be treated as though it were paid up share capital, but it shall be permissible for a company by an ordinary resolution passed in general meeting to provide for the use of its capital reserve:
(a)in paying up the nominal value or the issue price of unissued, surrendered or redeemed shares which are issued to the existing shareholders as fully paid bonus shares in the same proportions as b dividend might be paid to them in cash out of the company’s profits or revenue reserves; or
(b)in paying up the amount of any discount on shares issued at a discount; and shares issued on terms that their nominal value shall be paid in part by the holders thereof and in part under this paragraph shall not be considered as shares issued at a discount within the prohibition contained in subsection (3).
(5)The capital reserve of a company shall consist of the amounts credited to capital reserve under subsection (2), the amounts transferred to it under sections 56(5), 60 and 61 on the re-issue or redemption of any shares, and the amounts transferred to it from the company's profits and revenue reserves under section 160(3), less the amounts applied out of capital reserve under the foregoing subsection and the amounts by which it has been reduced under sections 62 and 63.
(6)Nothing in this section shall affect the provisions of section 19(4) of this Ordinance.
(7)This section applies to shares issued before or after the coming into force of this Ordinance.

56. Enforcement of payment for shares

(1)The issue price of shares issued to be paid for in cash shall be paid to the company within five years of payment for shares, after they are issued.
(2)The prospectus or registration statement under which shares are issued may state the amounts of the instalments by which the issue price is to be paid and the dates when such instalments will respectively become due, and the issue price of the shares shall then become due and payable accordingly.
(3)If subsection (2) does not apply to an issue of shares, the company may make calls on the holders of the shares in accordance with its memorandum and articles, and any part of the issue price which has not been called up at the expiration of five years after the issue of the shares shall then become immediately due and payable.
(4)If a shareholder fails to pay an instalment of the issue price or a call in respect of shares held by him within one month after the instalment or call becomes due, the company may serve a written notice on him stating the amount due in respect of his shares and the date on which it became due, and further stating that unless the amount is paid within one month after the notice is served, the shares will be forfeited, but without prejudice to the company's right to recover any unpaid instalment from" the shareholder after forfeiture. If the instalment or call is not paid within the period limited by the notice, the allotment of the shares shall become void, and the shares shall be forfeited without any resolution of the directors or a general meeting being passed.
(5)A company may re-issue shares whose allotment has become void under the foregoing provisions of this section. The re-issued shares shall be credited as paid up to the same extent as they were paid up immediately before the avoidance of the last preceding allotment of them. If the company receives any consideration on such a re-issue (other than payment of any instalments of the issue price or calls which are due and unpaid), the value of the consideration shall be credited to capital reserve. A re-issue of shares shall be treated for all purposes in the same way as an allotment of the shares, and if any instalment of the issue price of the shares or call which becomes due after the avoidance of the previous allotment is not paid, the provisions of this section as to forfeiture and re-issue of the shares and recovery of unpaid instalments or calls shall apply. Re-issued shares shall for all purposes be treated as though they formed part of the issue of shares of the same class, and accordingly they shall carry the same rights, obligations and priorities as shares of that class originally issued, and shall be taken into account in the same way as such shares in determining the percentage of shareholders, or of shareholders of any class, who may apply or appeal to the court or may present a petition to the court under any of the provisions of this Ordinance.
(6)A company shall not be accountable to a shareholder for instalments of the issue price of his shares or calls which have been, paid if the company avoids the allotment of the shares under this section, and the company may recover from the shareholder any instalments of the issue price or calls which are due but unpaid at the date the allotment is avoided.
(7)This section (except subsections (1) to (3) inclusive) shall apply to shares issued before the commencement of this Ordinance.

57. Payment for shares issued for a consideration other than cash

(1)If shares are issued for a consideration other than cash, the shares shall not be allotted until the assets constituting consideration have been transferred to the company.
(2)Except in cases to which section 6 applies, no allotment of shares for a consideration other than cash shall be made, unless:
(a)the directors of the company have passed a resolution that the allotment shall be made;
(b)the resolution states the nature of the consideration, its value and the extent to which the shares to be issued in respect of it will be credited as paid up by virtue of it; and
(c)the resolution has been approved by an ordinary resolution passed by a general meeting of the company.
(3)For the purposes of this section, assets shall be considered as transferred to the company:
(i)in the case of goods, when the ownership passes to the company or when they are delivered to it;
(ii)in the case of negotiable instruments, when the company becomes entitled to enforce all the rights embodied in them in its own name without the concurrence of any other person; and
(iii)in any other case, when the ownership or lesser rights agreed to be vested in the company are legally vested in it.
(4)Section 6(5) shall apply to issues of shares under this section as it applies to issues under that section.
(5)If upon an allotment of shares for a consideration other than cash in circumstances in which this section applies
(a)subsection (1) or (2) of this section is not complied with; or
(b)the shares are issued in contravention of subsection (4);

the directors of the company who are in default shall be guilty of an offence.

(6)If a person accepts an allotment of shares knowing that subsection (1) or (2) of this section has not been complied with, or accepts an allotment of shares in contravention of subsection (4), he shall be guilty of an offence.
(7)An offence under this section shall be punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or by both such fine and such imprisonment.

58. Subscribers of the memorandum

(1)Sections 56 and 57 of this Ordinance shall not apply to the subscribers of the memorandum of a company.
(2)The shares for which the subscribers have subscribed the memorandum shall be allotted to them immediately after the incorporation of the company, and they shall pay the nominal value of such shares in cash to the company within one year after the company is incorporated:Provided that if within one month after its incorporation the company issues a prospectus or prospectuses inviting the public to subscribe for the whole of its nominal capital and in consequence the whole of such capital is subscribed by the public or by the underwriters named in the prospectus, the obligation of the subscribers of the memorandum to take and pay for the shares for which they subscribed the memorandum shall be discharged; and if less than the whole of the nominal capital is subscribed by the public or by such underwriters as aforesaid, the obligation of the subscribers of the memorandum shall extend only to the shares not subscribed by the public or by such underwriters, but so that the subscribers of the memorandum shall not be required to take and pay for more shares than the number for which they subscribed the memorandum.

Alteration and redemption of share capital

59. Alteration of share capital

(1)A company may by an ordinary resolution alter the contents of its memorandum as follows, that is to say, it may
(a)increase its share capital by new shares of such nominal value as it thinks expedient; or
(b)consolidate and divide all or any of its shares into shares of larger nominal value; or
(c)convert all or any of its fully paid shares into stock, and reconvert that stock into fully paid shares; or
(d)subdivide its shares, or any of them, into shares of a smaller nominal value than is fixed by the memorandum, so, however, that in the subdivision the proportion between the part of the nominal value paid and the part unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; or
(e)cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its nominal capital by amount of the shares so cancelled.
(2)A cancellation of shares in pursuance of this section shall not be deemed to be a reduction of share capital within the meaning of this Ordinance.

60. Redeemable shares

(1)Subject to the provisions of this section, a company may issue shares which by the terms of issue will be redeemed, or at the option of the company may be redeemed:Provided that
(a)no such shares shall be redeemed except out of profits or revenue reserves of the company which would otherwise be available for the payment of dividends, or out of the proceeds of a fresh issue of shares made for the purpose of the redemption;
(b)no such shares shall be redeemed unless they are fully paid;
(c)the premium (if any) payable on redemption, must be provided out of the profits or the revenue reserves of the company which would otherwise be available for the payment of dividends before the shares are redeemed;
(d)where any such shares are redeemed otherwise than out of the proceeds of a fresh issue of shares, there shall out of the profits or the revenue reserves of the company which would otherwise have been available for dividends, be transferred to capital reserve a sum equal to the nominal value of the shares which are redeemed.
(2)If shares are issued which may be redeemed at the option of the company, the memorandum shall state the terms of the option, and in particular, the earliest date on which the company may redeem the shares and the latest date by which it must redeem them (if any such latest date is provided for), and the manner by which the company will exercise its option, whether by itself selecting shares for redemption, or by drawings or ballot or otherwise.
(3)The redemption of shares under this section by a company shall not be deemed to be a reduction of capital within the meaning of this Ordinance, but shares which have been redeemed shall be deemed not to be issued shares for the purpose of this Ordinance.
(4)If a company has redeemed or is about to redeem any shares out of the proceeds of a fresh issue of shares, it shall have power to issue shares whose total nominal values do not exceed the total nominal value of the shares redeemed or to be redeemed as though those shares had never been issued.
(5)This section shall not apply to a proprietary company.

61. Re-issue of shares

(1)A company which has taken a transfer or surrender of shares in itself under paragraphs (a), (b) or (c) of section 54(2) of this Ordinance, may re-issue such shares on the same terms (other than as to the issue price) and with the same rights, obligations and priorities as attached to them when they were redeemed by or transferred or surrendered to the company, and with the same amounts credited as paid up thereon as were paid up at the date of the redemption, transfer or surrender.
(2)Section 56(5) of this Ordinance (except the first two sentences thereof) shall apply to the re-issue of shares under this section
(3)This section shall not apply if the terms of issue of the shares provide that they shall not be re-issued.

62. Registration of alterations of share capital and of the surrender, redemtion and re-issue of shares

(1)If a company has
(a)increased its share capital; or
(b)consolidated and divided its share capital into shares of larger amount than its existing shares; or
(c)converted any shares into stock; or
(d)re-converted stock into shares; or
(e)subdivided its shares or any of them; or
(f)redeemed any shares; or
(g)cancelled any shares, otherwise than in connection with a reduction of share capital under section 63 and 65; or
(h)taken a transfer or surrender of shares under paragraphs (a), (b) or (c) of section 54(2); or
(i)re-issued shares under sections 56(5) or 61;

it shall within fifteen days after so doing give notice thereof to the Registrar.

(2)If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a fine not exceeding one hundred rupees for every day during the first month that default continues, two hundred and fifty rupees for every day during the next two months that default continues, and five hundred rupees for every day that default continues thereafter.

Reduction of share capital

63. Special resolution for reduction of share capital

(1)Subject to confirmation by the court, a company may by special resolution reduce its share capital in any way, and in particular, without prejudice to the generality of the foregoing power, may
(a)extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or
(b)either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or
(c)either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share capital which is in excess of the wants of the company;

and may, in connection with the reduction, alter its memorandum by reducing the amount of its nominal capital and the nominal value of its shares.

(2)On a reduction of share capital a company may, but shall not be required to, reduce its nominal capital.
(3)This section shall apply to the capital reserve of a company as though it were paid up share capital.
(4)A special resolution under this section is in this Ordinance referred to as "a resolution for reducing share capital".

64. Application to the court for confirmation of reduction of share capital

(1)Where a company has passed a resolution for reducing share capital, it may apply to the court for an order confirming the reduction.
(2)Where the proposed reduction of share capital involves either a diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, and in any other case if the court so directs, the following provisions shall have effect, subject nevertheless to the next following subsection
(a)every creditor of the company who at the date fixed by the court is entitled to any debt or claim which, if that date were the commencement of the winding up of the company, would be admissible in proof against the company, shall be entitled to object to the reduction;
(b)the court shall settle a list of creditors so entitled to object, and for that purpose shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a period within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction;
(c)where a creditor entered on the list whose debt or claim is not discharged or has not been determined, does not consent to the reduction, the court may, if it thinks fit, dispense with the consent of that creditor on the company securing payment of his debt or claim by appropriating, as the court may direct, the following amount
(i)if the company admits the full amount of the debt or claim, or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim;
(ii)if the company does not admit and is not willing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the court after the like inquiry and adjudication as if the company were being wound up by the court.
(3)Where a proposed reduction of share capital involves either the diminution of any liability in respect of unpaid share capital, or the payment to any shareholder of any paid-up share capital, the court may, if having regard to any special circumstances of the case it thinks proper so to do, direct that subsection (2) of this section shall not apply as regards any class or any classes of creditors.
(4)The court shall direct that the provisions of subsection (2) shall apply if the proposed reduction of share capital is because the company has lost paid up share capital, or because paid up share capital is unrepresentative by assets, and a creditor or shareholder of the company establishes a prima facie case that there has been no loss or diminution in the value of the company's assets, or that the loss or diminution is less than the reduction of capital specified in the resolution for reducing share capital.

65. Order confirming reduction of share capital

(1)The court, if satisfied with respect to every creditor of the company who under the last foregoing section is entitled to object to the reduction, that either his consent to the reduction has been obtained, or his debt or claim has been discharged or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks fit.
(2)In deciding whether to confirm a reduction of share capital the court shall take into account:
(a)if the liability to pay unpaid capital in respect of a class of shares is cancelled or reduced, or if the capital in respect of a class of shares is to be repaid wholly or in part, the sufficiency of the assets of the company to provide for the repayment of the capital in respect of all classes of the company's shares which rank for repayment of capital before that class of shares;
(b)if liability to pay unpaid capital is cancelled or reduced as aforesaid, or if capital is to be repaid as aforesaid, in respect of a class of shares, the sufficiency of the profits which the company is likely to earn in the future to provide for the fixed dividends on all classes of the company's preference shares which rank for payment of a fixed dividend before that class of shares; and
(c)the desirability of not cancelling the whole of the nominal value of shares, except, on a repayment of paid-up share capital.
(3)If the resolution for the reduction of share capital provides for the repayment of the whole or part of the amounts paid up on a class of preference shares, or on certain shares of a class, the court shall not confirm the reduction unless it is satisfied either:
(a)that the amount to be paid to the shareholders will, if re-invested, yield to them not less than the average annual income they have received in respect of the shares, or in respect of that part of the amount paid up on the shares which is to be repaid (as the case may be), during the five complete financial years of the company immediately preceding the date when the resolution for reducing share capital was passed; or
(b)that the amount to be paid to the shareholders is reasonable having regard to the circumstances in which the shares were issued, the situation of the company, the yield on the issued shares of the company which are not to be repaid (in whole or part) by the terms of the resolution for reducing share capital, and the amount which the shareholders whose shares are to be repaid (in whole or part) would receive if the company were wound up forthwith;

but in no case shall the court confirm the resolution for reduction of capital in respect of preference shares if the amount to be paid to the holders of those shares is less than the amount by which the capital paid up on the shares held by them is to be reduced.

(4)If the resolution for reducing share capital provides for the cancellation of paid up capital which is lost or unrepresented by available assets, the court shall not confirm the reduction unless the loss or deficiency is borne by the holders of shares who would bear it if the company were wound up immediately, in the same order and in the same proportions as in such a winding up.

66. Registration of order confirming reduction of share capital

(1)The Registrar shall register a resolution for reducing share capital which has been confirmed by the court, on delivery to him of a copy of an order of the court confirming the reduction of capital together with a minute approved by the court showing with respect to the share capital of the company as altered by the order:
(a)the nominal capital of the company;
(b)the issued share capital of the company; and
(c)the number and nominal values of shares issued or re-issued by the company and remaining out-standing, and the number and nominal values of such shares comprised in each different class of shares of the company;
(d)the amount (if any) deemed to be paid up on each such share and the amount remaining to be paid thereon;
(e)the number of unissued, forfeited, transferred and surrendered shares which the company may issue or re-issue and the nominal values of such, shares,
(2)On the registration of the order of the court and minute, and not before, the resolution for reducing share capital as confirmed by the order shall take effect.
(3)Notice of the registration shall be published in such manner as the court may direct
(4)The Registrar shall certify under his hand the registration of the order and minute, and his certificate shall be conclusive evidence that all the requirements of this Ordinance with respect to reduction of share capital have been complied with, and that the share capital of the company is such as is stated in the minute.
(5)The minute when registered shall be deemed to be substituted for the corresponding part of the memorandum, and shall be valid and alterable as if it had been originally contained therein.
(6)The substitution of any such minute as aforesaid for part of the memorandum of the company shall be deemed to be an alteration of the memorandum within the meaning of section 17 of this Ordinance.
(7)The Mortgage and Registration Ordinance shall not apply to a certificate issued under subsection (4).

67. Liability of shareholders after a reduction of share capital

When the share capital of a company has been reduced, no share holder of the company, past or present, shall be liable to pay or contribute in respect of any shares held or formely held by him more than the difference (if any) between the nominal values of the shares shown in the minute registered under the last foregoing section, and the amount paid up on the shares, or the reduced amount (if any) which in consequence of the reduction is deemed to have been paid up on the shares:Provided that this section shall not affect the liability of any person to pay or contribute any part remaining unpaid of the premium at which the shares were issued.

68. Penalty for concealment of name of creditors etc

(1)If any director or other officer of a company in connection with any proceedings under sections 64 and 65:
(a)wilfully conceals the name of any creditor of the company; or
(b)knowingly misrepresents the nature or amount of the debt or claim of any such creditor; or
(c)knowingly misrepresents the extent or value of the company's assets, or the nature or amount of its liabilities or contingent liabilities, or the profits it has earned in the past or is likely to earn in the future, or the circumstances in which any shares of the company were issued, or the present financial situation of the company;

he shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or imprisonment for not more than two years, or by both such fine and such imprisonment.

Debentures

69. Cases in which a debenture trust deed must be executed

(1)If a company issues or agrees to issue debentures of the same class to more than twenty-five persons in Seychelles, or to any one or more persons with a view to the debentures or any of them being offered for sale to more than twenty-five persons in Seychelles, the company shall before issuing any of the debentures execute a debenture trust deed in respect of them and procure the execution of the deed by the trustees appointed thereby.
(2)For the purpose of this section, debentures shall be deemed to be issued to more than twenty-five persons if the debentures or the trust deed covering them permits the company to issue further debentures which will form part of the same class as the debentures originally issued, and does not restrict the total number of persons to whom the original and any further debentures may be issued to not more than twenty-five.
(3)For the purpose of this Ordinance, debentures belong to different classes if different rights attach to them in respect of
(a)the rate of, or dates for, payment of interest; or
(b)the dates when, or the instalments by which, the principal of the debentures will be repaid, unless the difference is solely that the class of debentures will be repaid during a stated period of time and particular debentures will be repaid at different dates during that period according to selections made by the company, or by drawings, ballot or otherwise; or
(c)any right to subscribe for or convert the debentures into shares or other debentures of the company or any other company or corporation;
(d)the powers of the debenture holders to realise any security;

and debentures further belong to different classes if they do not rank equally for payment when any security vested in the debenture holders or the trustees of the covering trust deed (if any) is realised or when the company is wound up, that is to say, if in those circumstances the subject matter of any such security or the proceeds thereof, or any assets available to satisfy the debentures, are not to be applied in satisfying the debentures strictly in proportion to the amount of principal, premiums and arrears of interest to which the holders of them are respectively entitled.

(4)No debenture trust deed shall cover more than one class of debentures, whether the trust deed is required to be executed by this section or not.
(5)The directors of a company who are in default shall be guilty of an offence if the company issues debentures in circumstances in which this section requires a debenture trust deed to be executed without such a deed having been executed in compliance with this section, or if the company issues debentures under a trust deed which covers two or more classes of debentures.
(6)An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.
(7)If a trust deed should have been executed by a company in accordance with this section but has not been executed, the court may on an application made by a debenture holder of the class in question order the company to execute such a trust deed and direct that persons nominated by the court shall be appointed to be the trustees thereof, and the court may give such consequential directions as it thinks fit as to the contents of the trust deed and the execution of the trust deed by the trustees thereof.
(8)For the purposes of this Ordinance a debenture is covered by a debenture trust deed if the holder of the debenture is entitled to participate in any money payable by the company under the deed, or is entitled to the benefit of any mortgage, charge or security created by the deed, whether alone or together with other persons.
(9)This section shall not apply to debentures issued, or forming part of a class of debentures some of which were issued, before the coming into force of this Ordinance.

70. Contents of debenture trust deeds

(1)Every debenture trust deed, whether required by section 69 or not, shall state:
(a)the maximum sum which the company may raise by issuing debentures of the same class;
(b)the maximum discount which may be allowed on the issue or re-issue of the debentures, and the maximum premium at which the debentures may be made redeemable;
(c)if debenture stock is to be issued under the deed, that the company is indebted to the trustees for the amounts from time to time payable in respect of the debentures (whether for principal, interest, premiums, costs or otherwise) and that (except for their own remuneration and indemnity against expenses incurred by them) the trustees hold those amounts on behalf of the holders of debenture stock from time to time issued under the trust deed and remaining outstanding in accordance with their respective rights;
(d)the nature of any assets over which a hypothecation, mortgage, charge or security is created by the trust deed in favour of the trustees for the benefit of the debenture holders equally, and except where such a charge is a floating charge or a general floating charge, the identity of the assets subject to it;
(e)the nature of any assets over which a hypothecation mortgage, charge or security has been or will be created in favour of any person other than the trustees for the benefit of the debenture holders equally, and except where such a charge is a floating charge or a general floating charge, the identity of the assets subject to it;
(f)whether the company has created or will have power to create any hypothecation, mortgage, charge or security for the benefit of some, but not all, of the holders of debentures issued under the trust deed;
(g)any prohibition or restriction on the power of the company to issue debentures or to create hypothecations, mortgages, charges or any security on any of its assets ranking in priority to, or equally with, the debentures issued under the trust deed;
(h)whether the company will have power lo acquire debentures issued under the trust deed before the date for their redemption and to re-issue such debentures;
(i)the dates on which interest on the debentures issued under the trust deed will be paid and the manner in which payment will be made;
(j)the date or dates on which the principal of the debentures issued under the trust deed will be repaid, and unless the whole principal is to be repaid to all the debenture holders at the same time, the manner in which redemption will be effected (whether by the payment of equal instalments of principal in respect of each debenture, or by the selection of debentures for redemption by the company, or by drawing, ballot or otherwise);
(k)in the case of convertible debentures, the dates and terms on which the debentures may be converted into shares and the amounts which will be credited as paid up on such shares, and the dates and terms which the debenture holders may exercise any right to subscribe for shares in right of the debentures held by them;
(l)the circumstances in which the debenture holders will be entitled to realise any hypothecation, mortgage, charge or security vested in the trustees or any other person for their benefit (other than the circumstances in which they are entitled to do so by this Ordinance);
(m)the powers of the company and the trustees to call meetings of the debenture holders, and the rights of debenture holders to require the company or the trustees to call such meetings;
(n)whether the rights of debenture holders may be altered or abrogated, and if so, the conditions which must be fulfilled, and the procedure which must be followed to effect such an alteration or abrogation;
(o)the amount or rate of remuneration to be paid to the trustees and the period for which it will be paid, and whether it will be paid in priority to the principal, interest and costs in respect of debentures issued under the trust deed.
(2)If the debentures are issued without a covering debenture trust deed being executed, the statements required by subsection (1) (except paragraph (c) thereof) shall be included in each debenture or in a note forming part of the same document or indorsed thereon, and in applying that subsection references therein to the debenture trust deed shall be construed as references to all or any of the debentures of the same class.
(3)The last foregoing subsection shall not apply if the debenture is the only debenture of the class to which it belongs which has been or may be issued, and the rights of the debenture holder cannot be altered or abrogated without his consent.
(4)The directors of a company who are in default shall be guilty of an offence if they issue debentures under a trust deed which does not comply with subsection (1), or if they issue a debenture which should comply with subsection (2) but does not do so.
(5)An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.
(6)The matters specified in subsections (1) and (2) may be altered or added to by regulations made by the Governor in Council.
(7)This section shall not apply to a debenture trust deed executed or to debentures issued before the coming into force of this Ordinance.

71. Contents of debentures

(1)Every debenture which is covered by a debenture trust deed shall state either in the body thereof, or in a note forming part of the same document or endorsed thereon:
(a)the matters required to be stated in a debenture trust deed by paragraphs (a), (b), (g), (i), (j), (k), (m) and (n) of section 70(1) of this Ordinance;
(b)whether the trustees of the covering debenture hold the hypothecations, mortgages, charges and securities vested in them by the trust deed in trust for the debenture holders equally, or in trust for some only of the debenture holders, and if so, which debenture holders; and
(c)whether the debenture is secured by a general floating charge vested in the trustees of the covering debenture trust deed or in the debenture holders.
(2)A debenture issued by a company shall state on its face in clearly legible print that it is unsecured if no hypothecation, mortgage, charge or security is vested in the holder of the debenture or in any other person for his benefit as security for payment of principal or interest, but in the case of loan stock, this requirement shall be satisfied by the designation of the loan stock certificate as such on its face in clearly legible print.
(3)The directors of a company who are in default shall be guilty of an offence if the company issues a debenture which should comply with subsection (1) or (2) of this section but does not do so.
(4)An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.
(5)The matters specified in subsection (1) may be altered or added to by regulations made by the Governor in Council.
(6)This section shall not apply to debentures issued before the coming into force of this Ordinance.

72. Disqualification for appointment as trustee of debenture trust deed

(1)A person shall not be qualified for appointment as a trustee of a debenture trust deed if he is a director, officer, or employee of the company which issues debentures covered by the deed, or if he is a substantial shareholder of the company.
(2)If a trustee becomes subject to any of the disqualifications mentioned in subsection (1) after he has been appointed, he shall immediately cease to be qualified to act as a trustee of the debenture trust deed.
(3)Any person who acts as a trustee of a debenture trust deed shall be guilty of an offence if his appointment is invalid under subsection (1), or if he is disqualified so to act under subsection (2).
(4)An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

73. Realisation of debenture holders' security

(1)Debenture holders shall be entitled to realise any security vested in them or in any other person for their benefit if:
(a)the company fails to pay any instalment of interest, or the whole or part of the principal or any premium, owing under the debenture or the debenture trust deed covering the debentures within one month after it becomes due; or
(b)the company fails to fulfil any of the obligations imposed on it by the debentures or the debenture trust deed; or
(c)any circumstances occur which by the terms of the debentures or debenture trust deed entitle the holders of the debentures to realise their security; or
(d)the company is wound up.
(2)Debenture holders whose debentures are secured by a general floating charge vested in themselves or the trustees of the covering debenture trust deed or any other person shall additionally be entitled to realise their security if:
(a)any creditor of the company issues a process of execution against any of its assets, or commences proceedings for the winding up of the company by order of any court of competent jurisdiction;
(b)the company ceases to pay its debts as they fall due; or
(c)the company ceases to carry on business; or
(d)the company suffers, after the issue of debentures of the class concerned, losses or dimunitions in the value of its assets which in the aggregate amount to more than one half of the total amount owing in respect of debentures of the class held by the debenture holders who seek to enforce their security and debentures whose holders rank before them for payment of principal or interest; or
(e)any circumstances occur which entitle debenture holders who rank for payment of principal or interest in priority to the debentures secured by the general floating charge to realise their security.
(3)At any time after a class of debenture holders become entitled to realise their security, a receiver of any assets subject to a hypothecation, mortgage, charge or security in favour of the class of debenture holders or the trustees of the covering trust deed or any other person may be appointed
(a)by such trustees; or
(b)by the holders of debentures in respect of which there is owing more than half of the total amount owing in respect of all the debentures of the same class;
(c)by the court on the application of any trustee or debenture holder of the class concerned.
(4)A receiver appointed under this section shall, subject to any order made by the court, have power to take possession of the assets subject to the hypothecation, mortgage, charge or security, and to sell such assets and, if the hypothecation, mortgage, charge or security extends to such property, to collect debts owed to the company, to enforce claims vested in the company, to compromise, settle and enter into arrangements in respect of claims by or against the company, to carry on the company's business with a view to selling it on the most favourable terms, to grant or accept leases of land and licences in respect of patents, designs, copyright or trademarks, and to call up and recover capital unpaid on the company's issued shares.
(5)The remedies given by this section shall be in addition to, and not in substitution for, any other powers and remedies conferred on the trustees of the debenture trust deed or on the debenture holders by the debentures or the debenture trust deed, and any power or remedy which is expressed in any instrument to be exercisable if the debenture holders become entitled to realise their security shall be exercisable on the occurrence of any of the events specified in subsection (1), or in the case of a general floating charge, in subsections (1) and (2):Provided that a manager of the business or of any of the assets of a company may 'not be appointed for the benefit of debenture holders unless a receiver has also been appointed and has not ceased to act.
(6)This section shall apply to debentures issued before or after the commencement of this Ordinance.
(7)No provision in any instrument which purports to exclude or restrict the remedies given by this section shall be valid and effectual.

74. Disqualification for appointment as a receiver or manager

(1)A person may not be appointed to be a receiver or manager of any assets of a company, and may not act as such a receiver or manager, if
(a)it is a company or corporation; or
(b)he is an undischarged bankrupt;
(c)he is disqualified from being a trustee of a debenture trust deed executed by the company, or would be so disqualified if a debenture trust deed had been executed by it.
(2)If a person who was appointed to be a receiver or manager becomes disqualified from continuing to act under the foregoing subsection or under any provision contained in a debenture or a debenture trust deed, another person may be appointed in his place by the persons who are entitled to make the appointment or by the court, but a receivership shall not terminate or be interrupted by the occurrence of the disqualification.
(3)Any person who acts as a receiver or manager of any assets of a company while disqualified by subsection (1) shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees.
(4)This section applies to a person appointed to be a receiver or manager before or after the coming into force of this Ordinance.

75. Applications to the court

A receiver of assets of a company appointed under section 73(3) or under the powers contained in any instrument may apply to the court for directions in relation to any particular matter arising in connection with the performance of his functions, and on any such application the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, or may order any person to do or abstain from doing any thing, as the court thinks just or necessary in the circumstances.

76. Liability of receivers

(1)A receiver of assets of a company appointed under section 73(3) or under the powers contained in any instrument shall be personally liable on any contract entered into by him in the performance of his functions, except in so far as the contract otherwise provides, and shall be entitled in respect of that liability to an indemnity out of the assets of which he was appointed to be receiver:Provided that nothing in this subsection shall be taken as limiting any right to an indemnity which he would have apart from this subsection, or as limiting his liability on contracts entered into without authority, or as conferring any right to indemnity in respect of that liability.
(2)This section shall apply whether the receiver was appointed before or after the commencement of this Ordinance, but shall not apply to contracts entered into before the commencement of this Ordinance.

77. Notification of appointment of receiver or manager

(1)Where a receiver or manager of any assets of a Notification of company has been appointed for the benefit of debenture appointment holders, every invoice, order for goods or business letter issued by or on behalf of the company or the receiver or the liquidator of the company, being a document on or in which the name of the company appears, shall contain a statement that a receiver or manager has been appointed.
(2)If default is made in complying with the requirements of this section, any of the following persons who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver, shall be liable to a fine of one thousand rupees.

78. Power of court to fix remuneration of receiver or manager

(1)The court may, on an application made by the liquidator of a company, by order fix the amount to be paid by way of remuneration to any person who, under section 73(3) or under the powers contained in any instrument, has been appointed as receiver or manager of any assets of the company for the benefit of debenture holders.
(2)The power of the court under the foregoing subsection shall, where no previous order has been made with respect thereto under that subsection
(a)extend to fixing the remuneration for any period before the making of the order or the application therefor; and
(b)be exercisable notwithstanding that the receiver or manager has ceased to act before the making of the order; and
(c)where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount excess of that so fixed for that period, extend requiring him to account for the excess or such part thereof as may be specified in the order:

Provided that the power conferred by paragraph (c) of this subsection shall not be exercised as respects any period before the making of the application for the order unless in the opinion of the court there are special circumstances making it proper for the power to be so exercised.

(3)The court may from time to time on an application made either by the liquidator or by the receiver or manager, vary or amend an order made under subsection (1) of this section.
(4)This section shall apply whether the receiver was appointed before or after the commencement of this Ordinance, and to periods before, as well as to periods after, the commencement of this Ordinance.
(5)This section shall not apply if the receiver is appointed by the court, and the court fixes his remuneration by the order appointing him or by a subsequent order made on his application.

79. Statement of the company's affairs

(1)Where a receiver of the whole or substantially the whole of the assets of a company {hereafter in this section and in the next following section referred to as "the receiver") is appointed under section 73(3), or under the powers contained in any instrument, for the benefit of the holders of any debentures of the company secured by a general floating charge, then subject to the provisions of this and the next following section
(a)the receiver shall forthwith send notice to the company of his appointment; and
(b)there shall, within fourteen days after receipt of the notice, or such longer period as may be allowed by the receiver, be made out and submitted to the receiver in accordance with the next following section a statement in the prescribed form as to the affairs of the company; and
(c)the receiver shall within two months after receipt of the said statement send
(i)to the Registrar and (if he was appointed by the court) to the court, a copy of the statement and of any comments he sees fit to make thereon, and in the case of the Registrar also a summary of the statement and of his comments (if any) thereon; and
(ii)to the company, a copy of any such comments as aforesaid or, if he does not see fit to make any comments, a notice to that effect; and
(iii)to the trustees of the debenture trust deed covering the debentures in respect of which he was appointed, a copy of the statement and such comments; and
(iv)to the holders of all debentures belonging to the same class as the debentures in respect of which he was appointed, a copy of the said summary.
(2)The receiver shall within two months, or such longer period as the court may allow after the expiration of the period of twelve months from the date of his appointment and of every subsequent period of twelve months, and within two months or such longer period as the court may allow after he ceases to act as receiver of the assets of the company, send to the Registrar, to the trustees of the trust deed covering the debentures in respect of which he was appointed, and to the holders of all debentures belonging to the same class as the debentures in respect of which he was appointed, an abstract in the prescribed form showing his receipts and payments during that period of twelve months or, where he ceases to act as aforesaid, during the period from the end of the period to which the last preceding abstract related up to the date of his so ceasing, and the aggregate amounts of his receipts and of his payments during all preceding periods since his appointment.
(3)Subsection (1) of this section shall not apply in relation to the appointment of a receiver to act with an existing receiver, or in place of a receiver dying or ceasing to act, except that, where that subsection applies to a receiver who dies or ceases to act before it has been fully compiled -with, the references in paragraphs (b) and (c) thereof to the receiver shall (subject to the next following subsection) include references to his successor and to any continuing receiver.
(4)If the company is being wound up, this and the next following section shall apply notwithstanding that the receiver and the liquidator are the same person, but with any necessary modifications arising from that fact.
(5)Nothing in subsection (2) of this section shall be taken to prejudice the duty of the receiver to render proper accounts of his receipts and payments to the persons to whom, and at the times which, he may be required to do so apart from that subsection.
(6)If the receiver makes default in complying with the requirements of this section, he shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues.

80. Contents of statement of affairs etc.

(1)The statement as to the affairs of a company required by the last foregoing section to be submitted to the receiver (or his successor) shall show as at the date of the receiver's appointment the particulars of the company's assets, debts and liabilities, the names, residences and occupations of: its creditors, the securities held by them respectively, the dates when the securities where respectively given and such further or other information as may be prescribed.
(2)The statement of affairs shall be submitted by, and be verified by the signed declaration of, one or more persons who are at the date of the receiver's appointment the directors and by the person who is at that date the secretary of the company, or by such of the persons hereafter in this subsection mentioned as the receiver (or his successor), subject to the direction of the Registrar, may require to submit and verify the statement, that is to say, persons
(a)who are or have been officers of the company;
(b)who have taken part in the formation of the company at any time within one year before the date of the receiver's appointment;
(c)who are in the employment of the company, or have been in the employment of the company within the said year, and are in the opinion of the receiver capable of giving the information required;
(d)who are or have been within the said year officers of or in the employment of a company which is, or within the said year was, the holding company or a subsidiary of the company to which the statement relates.
(3)Any person making or verifying the statement of affairs or any part of it shall be allowed, and shall be paid by the receiver (or his successor) out of his receipts, such costs and expenses incurred in and about the making or verifying of the statement as the receiver (or his successor) may consider reasonable, subject to an appeal to the court.
(4)If any person without reasonable excuse makes default in complying with the requirements of this section, he shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues.

81. Enforcement of receivers’ duty to make returns

(1)If any receiver of any assets of a company
(a)having made default in filing, delivering or making any return, account or other document, or in giving any notice which a receiver is by law or by order of the court required to file, deliver, make or give, fails to make good the default within fourteen days after the service on him of a notice requiring him to do so; or
(b)having been appointed under section 73(3) or under the powers contained in any instrument, has, after being required at any time by the liquidator of the company so to do, failed to render proper accounts of his receipts and payments and to vouch the same and to pay over to the liquidator any amount shown by the accounts as payable to him,

the court may, on an application made for the purpose, make an order directing the receiver to make good the default within such time as may be specified in the order.

(2)In the case of any such default as is mentioned in paragraph (a) of subsection (1), an application for the purposes of this section may be made by any shareholder, member, creditor or debenture holder of the company or by the Registrar, and in the case of any such default as is mentioned in paragraph (b) of that subsection, the application shall be made by the liquidator, and in either case the order of3 the court made on the application may provide that all costs of and incidental to the application shall be borne by the receiver.

82. Rights of debenture holders

(1)The trustees of a debenture trust deed shall hold all contracts, stipulations and undertakings given to debenture them and all hypothecations, mortgages, charges and securities vested in them in connection with the debentures covered by the deed, or some of those debentures, exclusively for the benefit of the debenture holders concerned (except insofar as the deed otherwise provides), and the trustees shall owe the duties of a salaried commercial agent to those debenture holders in respect of the enforcement of those contracts, stipulations, undertakings, hypothecations, mortgages, charges and securities and the fulfilment of their functions generally.
(2)A debenture holder may sue:
(a)the