Companies Act, 1994

Chapter 388

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Zambia

Companies Act, 1994

Chapter 388

[26 of 1994; 6 of 1995]An Act to provide for the formation, management, administration and winding-up of companies; to provide for the registration of charges over the undertakings or properties of companies; to provide for the registration of foreign companies doing business in Zambia; and to provide for matters connected with or incidental to the foregoing.

Part I – Preliminary

1. Short title

This Act may be cited as the Companies Act.

2. Interpretation

In this Act, unless the context otherwise requires—"accounting records" includes—(a)invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry; and(b)such working papers and other documents as are necessary to explain the methods and calculations by which the accounts are made up;"accounts" means profit and loss accounts and balance sheets together with any statements, reports and notes attached to or intended to be read with any of those profit and loss accounts or balance sheets, but, subject to section one hundred and seventy-four, does not include the auditors' reports or directors' reports;"alternate director" means an alternate director of a company referred to in section two hundred and thirteen;"annual accounts" means the annual accounts referred to in section one hundred and sixty-four;"annual general meeting" means an annual general meeting of a company referred to in section one hundred and thirty-eight;"annual return" means the return referred to in section one hundred and eighty-four, together with any document required by this Act to accompany the return;"articles" means the articles of a company described in section seven;"auditors' report" means the report of the auditors of a company referred to in section one hundred and seventy-three;"body corporate" means a company or corporation incorporated under or by virtue of the laws of Zambia or of any other country, other than a corporation sole;"book" includes accounts, deed, writing, register, document, accounting record, and any clear record of information, however compiled and whether recorded or stored in written or printed form or by electronic or photographic process or otherwise;"branch register" means a branch register of a company established under section fifty-one;"capital redemption reserve" means the reserve referred to in section sixty;"certificate of incorporation" means a certificate of incorporation of a company issued by the Registrar under section ten, or a replacement of such a certificate issued under this Act;"certificate of share capital" means a certificate of share capital of a company issued by the Registrar under section ten, or a replacement of such a certificate issued under this Act;"certified copy" means a copy of a document of a company which has endorsed thereon or annexed thereto—(a)a certificate by a notary public; or(b)a declaration made and signed by an officer of the company or by some person interested therein otherwise than on behalf of the company;to the effect that it is a true and complete copy of the original, together with, in the case of an original in a language other than English, an English translation similarly certified to the effect that it is an accurate translation of the original;"charge" means a charge created in any way and includes—(a)mortgage;(b)an agreement to give or execute a charge or mortgage whether on demand or otherwise; and(c)until such time as the whole of the purchase price is paid, an agreement for sale and purchase of land under which the seller remains in occupation;"class meeting" means a meeting of those members of a company who, under the articles, belong to a particular class;"committee of inspection" means a committee of inspection appointed in the course of a winding-up under section two hundred and ninety-five or three hundred and fifteen;"company" means—(a)a company incorporated under this Act; or(b)subject to section four and Division 14.3, an existing company;"company limited by guarantee" means a company incorporated as such, being a company satisfying section nineteen;"company with share capital" means a public company, a private company limited by shares or an unlimited company;"court" means the High Court for Zambia;"creditors' voluntary winding-up of" means a voluntary winding-up with respect to which no declaration of solvency was made in accordance with section three hundred and eight;"current liability", means a liability that would in the ordinary course of events be payable within twelve months after the end of the financial year to which the accounts or group accounts concerned relate;"debenture" means a document issued by a body corporate that evidences or acknowledges a debt of the body corporate, whether or not it constitutes a charge on property of the body corporate, in respect of money that is or may be deposited with or lent to the body corporate, other than a document of the following kinds—(a)a document acknowledging a debt incurred by the body corporate in respect of money that is or may be deposited with or lent to the body corporate by a person—(i)in the ordinary course of a business carried on by the person; and(ii)in the ordinary course of such business of the body corporate as is not part of a business of borrowing money and providing finance;(b)a document issued by a bank in the ordinary course of its banking business that evidences or acknowledges indebtedness of the bank arising in the ordinary course of that business;(c)a cheque, order for the payment of money or bill of exchange;(d)a document of a kind prescribed, and in the circumstances prescribed in the regulations for the purposes of this paragraph;and includes—(a)a unit of a debenture;(b)debenture stock; and(c)bonds and any other securities issued by a company, whether constituting a charge on the assets of the company or not;"debenture holder" includes a debenture stockholder;"declaration of guarantee" means a declaration of guarantee made under section nineteen;"declaration of solvency" means a declaration made in accordance with section three hundred and eight;"default" means, in reference to a person who is "in default," that the person wilfully authorised or permitted an act or omission that constitutes a contravention by a body corporate of the provision of this Act in which the expression appears;"designating number" means the number assigned to a company or foreign company by the Registrar for the purposes of identification;"director" means a person appointed as a director of a company under section two hundred and six; and "the directors" means the directors acting collectively as described in section two hundred and three;"director-report" means the report by the directors of a company referred to in section one hundred and seventy-six;"document" includes—(a)any paper or other material on which there is writing or printing or on which there are marks, figures, symbols or perforations having a meaning for persons qualified to interpret them;(b)a disc or tape or other article, or any material, from which sounds, images, writings or messages are capable of being reproduced with or without the aid of any other article or device;and without limiting the generality of the foregoing, includes any summons, order and other legal process and any notice;"equity share" means a share comprised in the equity share capital of a body corporate;"equity share capital" means the issued share capital of a body corporate, excluding any part thereof which neither as respects dividends nor as respects capital carries any right to participate beyond a specified amount in a distribution;"executive director" means a director to whom has been delegated any of the powers of the directors to direct and administer the business and affairs of the company;"executive officer" means a person, by whatever name called and whether or not a director of a body corporate, who is concerned, or takes part, in the management of the body corporate;"existing company" means a body corporate which immediately prior to the commencement of this Act was a company under the former Act;"expert" includes an engineer, valuer, accountant, assayer, and any other person whose profession or calling gives authority to a statement by the person on the subject matter concerned;"extraordinary general meeting" means a general meeting of a company that is not an annual general meeting;"extraordinary resolution" means an extraordinary resolution for the purposes of section one hundred and fifty-six;"financial year"(a)in relation to a company, means the financial year of the company under section forty-two;(b)in relation to a foreign company, means the financial year of the foreign company under section two hundred and forty-two; and(c)in relation to any other body corporate, means a period in relation to which the body corporate, in conformity with the law of the place of its incorporation, produces accounts;"former Act" means the Companies Act repealed by section four hundred and two;[Cap. 686 of the 1971 Edition]"former name" does not include—(a)a name changed or disused before the person bearing the name attained the age of eighteen years;(b)a name changed or ceased to be used more than twenty years previously; or(c)the name by which a married woman was known prior to her marriage;"general meeting" means an annual general meeting or an extraordinary general meeting;"general accounts" means the accounts of a group of companies referred to in section one hundred and sixty-five;"group of companies" means a company that is a holding company together with all its subsidiaries;"holding company" means a body corporate that is a holding company under section forty-three;"invitation to the public" means an invitation described in section one hundred and nineteen;"limited company" means a company limited by shares or a company limited by guarantee;"liquidator" includes a provisional liquidator;"managing director" means the managing director of a company appointed under section two hundred and fourteen;"member" means a member of a company under section forty-five;"members voluntary winding-up" means a voluntary winding-up with respect to which a declaration of solvency was made in accordance with section three hundred and eight;"monetary unit" means an amount of one thousand kwacha;"non-current liability" means a liability that is not a current liability;"number", in relation to shares, includes an amount of stock;"officer" includes—(a)a director, secretary or executive officer of a body corporate;(b)a local director of a foreign company;(c)a receiver of any part of the undertaking of a body corporate appointed under a power contained in any instrument; and(d)a liquidator of a body corporate appointed by the members in a voluntary winding-up;but does not include—(i)a receiver of any part of the undertaking of a body corporate appointed by the court;(ii)a liquidator of a body corporate appointed by the court or by the creditors of the body corporate; or(iii)an auditor of a body corporate;"official receiver" means—(a)an official receiver appointed under the Bankruptcy Act; or[Cap. 82](b)an officer appointed for the purpose by the Minister, if no such official receiver is appointed;"ordinary resolution" means an ordinary resolution for the purposes of section one hundred and fifty-six;"prescribed" means prescribed in the regulations made under this Act;"private company" means a private company limited by shares, a company limited by guarantee or an unlimited company;"private company limited by shares" means a company incorporated as such, being a company satisfying section seventeen;"profit and loss account" includes income and expenditure account, revenue account or any other account showing the results of the business of a company for a period;"public company" means a company incorporated as such, being a company satisfying section fourteen;"receiver" includes an official receiver and a receiver and manager; and any reference to a receiver of the property of a company includes a reference to a receiver of part only of that property and to a receiver only of the income arising from that property, or from part thereof;"register of foreign companies" means the register referred to in section two hundred and forty-four;"registered accountant" means a registered accountant for the purposes of the Accountants Act;[Cap. 390]"registered member" means a person registered as a member of a company under section forty-eight;"registered office" means—(a)in relation to a company, the registered office of the company under section one hundred and ninety; and(b)in relation to a foreign company, the registered office of the company under section two hundred and forty-five;"registered records office" means the registered records office of a company referred to in section one hundred and ninety-one;"Registrar" means the Registrar of Companies established by section three hundred and sixty-six;"related" means related for the purposes of section forty-three;"resolution for reducing share capital" means a resolution described in section seventy-six;"seal" means the common seal of a company or other body corporate;"secretary"—(a)in relation to a company, means a person appointed as the secretary pursuant to section two hundred and five;(b)in relation to a body corporate other than a company, means a person occupying the position of secretary, by whatever name called;"share" includes stock;"shareholder" includes a stockholder;"share premium account" means the share premium account referred to in section sixty-one;"share warrant" means a share warrant issued pursuant to section sixty-nine;"special resolution" means a special resolution for the purposes of section one hundred and fifty-six;"Standard Articles" means the Standard Articles in the First Schedule;"subsidiary" means a body corporate that is a subsidiary of another body corporate for the purposes of section forty-three;"unlimited company" means a company incorporated as such, being a company satisfying section twenty;"waiting period" means the period of seven days after the first publication of a prospectus which has been registered, or such longer period after that date as may be stated in the prospectus as the period before the expiration of which applications, offers, or acceptances in response to the prospectus will not be accepted or treated as binding;"wholly owned subsidiary" means a body corporate that is the wholly owned subsidiary of another body corporate for the purposes of section forty-three.

3. Effect of declaration in certified copy

A declaration made for the purposes of paragraph (b) of the definition of certified copy in section two shall be deemed to be a statutory declaration.

4. Application of Act to existing companies

Subject to this Act, this Act applies to an existing company as if it had been duly incorporated under this Act as—
(a)a public company, if it was a public company under the former Act;
(b)a private company limited by shares, if it was a private company limited by shares under the former Act; or
(c)a company limited by guarantee, if it was a private company limited by guarantee under the former Act.

5. Prohibition of large partnerships

(1)Subject to this section, an association or partnership that—
(a)consists of more that twenty persons; and
(b)is not a body corporate;
shall not carry on any business for gain by the association or partnership or individual members of the association or partnership.
(2)Subsection (1) shall not apply to a partnership—
(a)formed for the purpose of carrying on a prescribed profession or calling; and
(b)having not more than the number of partners prescribed for the purposes of that profession.
(3)If an association or partnership contravenes this section, each member of the association or partnership shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units.

Part II – Incorporation and modification of companies

Division 2.1 - Incorporation

6. Application for incorporation

(1)Subject to this Act, any two or more persons associated for any purpose may form an incorporated company by subscribing their names to an application for incorporation that satisfies this section and lodging it with the Registrar, together with—
(a)any proposed articles of the company;
(b)a statutory declaration in accordance with section nine;
(c)a signed consent from each person named in the application as a director or secretary of the company to act in the relevant capacity; and
(d)a declaration of guarantee by each subscriber, if the company is to be limited by guarantee.
(2)An application for incorporation shall be in the prescribed form, shall be signed by each subscriber and shall specify—
(a)the proposed name of the company;
(b)the physical address of the office to be the registered office of the company;
(c)a postal address to be the registered postal address of the company;
(d)the type of company to be formed;
(e)if the company is to have share capital—
(i)the amount of share capital of the company;
(ii)the division of the share capital into shares of fixed amount; and
(iii)the number of shares each subscriber agrees to take;
(f)the particulars referred to in subsection (2) of section two hundred and twenty-four of at least two persons who are to be the first directors of the company;
(g)the particulars referred to in subsection (3) of section two hundred and twenty-four of the person or persons who are to be the first secretary or joint secretaries of the company;
(h)the name and address of the individual lodging the application; and
(i)such other information respecting the application, the company and the nature of its proposed business as the prescribed form may require.
(3)The application for incorporation may also specify a date, being a date not more than fifteen months after the date of lodgement of the application, on which the second financial year of the company will begin.
(4)The application for incorporation and the documents lodged with it shall be printed or typewritten.
(5)The application for incorporation shall be signed by each subscriber in the presence of at least one witness who attests to the signature.
(6)An individual shall not subscribe to an application for incorporation if he—
(a)is under eighteen years of age;
(b)is an undischarged bankrupt under the laws of Zambia;
(c)subject to an order by the court, is an undischarged bankrupt under the laws of another country; or
(d)is of unsound mind and has been declared to be so by the court or a court of competent jurisdiction of another country.
(7)The incorporation of a company shall not be invalid by reason only that an individual or individuals subscribed to the application for incorporation in contravention of subsection (6).

7. The articles of a company

(1)A company may have articles regulating the conduct of the company.
(2)The articles may contain restrictions on the business that the company may carry on.
(3)Where a provision in the articles is inconsistent with this Act or any other written law, the provision is invalid to the extent of the inconsistency.
(4)The articles of a company may adopt the regulations of the Standard Articles, or any specified regulations thereof.
(5)The articles of a public company or a private company limited by shares shall be deemed to have adopted the regulations of the Standard Articles except insofar as the articles exclude or modify those regulations.
(6)The articles of a company shall be divided into paragraphs numbered consecutively.

8. Amendment of articles

(1)Subject to this Act, and to its articles, a company may amend its articles if it passes a special resolution approving the amendment.
(2)If a company passes a special resolution approving the amendment of its articles, it shall within twenty-one days after the date of the resolution lodge a copy of the resolution with the Registrar together with a copy of each paragraph of the articles affected by the amendment, in its amended form.
(3)The articles have effect in their amended form on and from the day of their lodgment with the Registrar or such later date as may be specified in the resolution.
(4)If a company fails to comply with subsection (2), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

9. Statutory declaration as to compliance with the Act

(1)An application for incorporation shall be accompanied by a statutory declaration that the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with, made by—
(a)a legal practitioner having a practising certificate who was engaged in the formation of the company; or
(b)a person named in the application as a first director or secretary of the company.
(2)The Registrar may accept the declaration as prima facie evidence of compliance.

10. Certificates of incorporation and of share capital

(1)Where an application for incorporation and the documents referred to in section six have been duly lodged, the Registrar shall, subject to this Act, issue a certificate in the prescribed form stating that the company is, on and from the date specified in the certificate, incorporated and that the company is the type of company specified in the application for incorporation.
(2)If the company has share capital, the Registrar shall, at the same time, issue a certificate stating—
(a)the amount of share capital of the company; and
(b)the division of the share capital into shares of a fixed amount.
(3)The Registrar shall keep a copy of each certificate issued under this section, and this Act shall apply to the copies as if they were documents lodged with the Registrar.

11. Incorporation of the company

On and from the date of incorporation specified in the certificate of incorporation, but subject to this Act, there shall be constituted an incorporated company by the name set out in the certificate.

12. Register of companies

(1)The Registrar shall maintain a register of companies in which is entered, in respect of each company
(a)a chronological record of the prescribed particulars, and of any other particulars which the Registrar thinks fit, in relation to the company; and
(b)a record of the documents lodged under this Act in respect of the company, other than documents whose only effect is to change particulars recorded under paragraph (a).

Division 2.2 - Types of company

13. Types of company

A company incorporated under this Act shall be—
(a)a public company; or
(b)a private company being—
(i)a private company limited by shares;
(ii)a company limited by guarantee; or
(iii)an unlimited company

14. Public companies

(1)A public company shall have share capital.
(2)The articles of a public company shall state—
(a)the rights, privileges, restrictions and conditions attaching to each class of shares, if there are two or more classes; and
(b)the authority given to the directors to determine the number of shares in, the designation of, and the rights, privileges, restrictions and conditions attaching to each series in a class of shares, if the class of shares may be issued in series.
(3)All shares shall rank equally apart from differences due to their being in different classes or series.
(4)Where a public company is wound-up, a member shall be liable to contribute, in accordance with Part XIII, an amount not exceeding the amount, if any, unpaid on the shares held by him.
(5)The articles of a public company shall not impose any restriction on the right to transfer any shares of the company other than—
(a)a restriction on the right to transfer any shares on which there is unpaid liability; or
(b)a restriction on the right to transfer shares issued to directors or other officers or employees exercising any rights or options granted under section seventy-three, or issued in pursuance of any scheme adopted under that section; or
(c)a provision for the compulsory acquisition, or rights of first refusal, of shares referred to in paragraph (b), in favour of other members of the company or trustees appointed under any scheme adopted under section seventy-three.

15. Public company may not operate until certificate issued that minimum capital requirements are satisfied

(1)A public company shall not transact any business, exercise any borrowing powers or incur any indebtedness, except for a purpose incidental to its incorporation or to the obtaining of subscription to, or payment for, its shares, unless the Registrar has issued it with a certificate under this section.
(2)The Registrar shall issue a company with a certificate for the purposes of this section if, on an application made to him in the prescribed form by the company and accompanied by a statutory declaration complying with subsection (3), he is satisfied that the nominal value of the company's allotted share capital is not less than the authorised minimum.
(3)The statutory declaration shall be in the prescribed form and signed by a director or secretary of the company and shall state—
(a)that the nominal value of the company's allotted share capital is not less than the authorised minimum;
(b)the amount paid up at the time of the application on the allotted share capital of the company; and
(c)the amount, or estimated amount of the preliminary expenses that have been paid or are payable.
(4)For the purposes of this section, a share allotted in pursuance of an employee's share scheme shall be disregarded in determining the nominal value of the company's allotted share capital unless it is paid up at least as to one-quarter of the nominal value of the share and the whole of any premium on the share.
(5)The Registrar may accept the statutory declaration as prima facie evidence of the matters stated therein.
(6)A certificate under this section in respect of a company is conclusive evidence that the company is entitled to do business and exercise any borrowing powers.
(7)If a company does business or exercises borrowing powers in contravention of this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding thirty monetary units for each day that the company does business or remains indebted.
(8)If a company enters into a transaction in contravention of this section and fails to comply with its obligations in connection therewith within thirty days after being called upon to do so, the directors of the company shall be jointly and severally liable to indemnify the other party to the transaction in respect of any loss or damage suffered by him by reason of the failure of the company to comply with those obligations.
(9)The liability imposed by subsection (8) shall be in addition to any liability of the company.
(10)In this section "the authorised minimum" means one million kwacha or such larger or smaller amount as may be prescribed instead.
(11)A regulation which increases the authorised minimum may specify a period within which any public company having an allotted share capital of which the nominal value is less than new authorised minimum shall be required to increase that value to not less than the new authorised minimum or apply to be converted into a private company.
(12)Where a regulation is made increasing the authorised minimum and specifying a period under subsection (11), the authorised minimum that applied immediately before the entry into effect of the regulation shall continue to apply in relation to a company which, at that time, had an allotted share capital less than the new authorised minimum until—
(a)the company increases its allotted share capital above the new authorised minimum; or
(b)the end of the specified period;
whichever is earlier.
(13)Where a regulation is made increasing the authorised minimum and specifying a period under subsection (11), the authorised minimum that applied immediately before the entry into effect of the regulation shall continue to apply in relation to a company which, at that time, had an allotted share capital less than the new authorised minimum until the company increases its allotted share capital above the new authorised minimum.

16. Private companies

(1)Subject to this section, the articles of a private company shall limit the number of its members to a specified number, being a number not more than fifty.
(2)The regulations may provide that the articles of an unlimited company may, subject to any specified conditions, limit the number of its members to a number larger than fifty.
(3)The articles of a private company shall not impose any restriction on the transferability of shares after they have been issued unless all the shareholders have agreed in writing.
(4)For the purposes of subsection (1)—
(a)joint holders of shares are counted as one person; and
(b)a member is not counted if he is in the employment of the company or of a related body corporate, or if he was a member while previously in the employment of the company or a related body corporate and has been a member continuously since that time.
(5)If a private company
(a)has more members than permitted by its articles; or
(b)invites the public to acquire shares or debentures in the company in contravention of section one hundred and twenty-two;
the Registrar may give notice to the company requiring the company to give reasons why the company should not be converted into a public company.
(6)If, one month after the issue of the notice, the contravention concerned has not been rectified, the court may, on the application of the Registrar, if not satisfied that the contravention was inadvertent and not likely to be repeated, order—
(a)that the company shall be deemed to have made an application for conversion to a public company, or conversion to a private company followed by conversion to a public company, as appropriate, and to have passed any resolutions necessary for such an application or applications in the form specified in the order; and
(b)that the directors, or any of them, shall be liable for the costs of the application of the Registrar and the conversion of the company.

17. Private companies limited by shares

(1)The articles of a private company limited by shares shall state—
(a)the rights, privileges, restrictions and conditions attaching to each class of shares, if there are two of more classes; and
(b)the authority given to the directors to determine the number of shares in, the designation of, and the rights, privileges, restrictions and conditions attaching to each series, if a class of shares may be issued in series.
(2)All shares shall rank equally apart from differences due to their being in different classes or series.
(3)Where a private company limited by shares is wound-up, a member shall be liable to contribute, in accordance with Part XIII, an amount not exceeding the amount, if any, unpaid on the shares held by him.

18. Minimum capital for private company limited by shares

(1)A private company limited by shares shall not transact any business, exercise any borrowing powers or incur any indebtedness, except for a purpose incidental to its incorporation or to the obtaining of subscription to, or payment for, its shares, unless—
(a)consideration (whether in cash or otherwise) to the value of not less than fifty thousand kwacha, or such larger or smaller amount as may be prescribed instead, has been paid to it for the issue of its shares; and
(b)it has furnished to the Registrar a declaration signed by one of the directors or by the secretary, stating that the requirement of paragraph (a) has been compiled with.
(2)For the purposes of subsection (1), the value of—
(a)the goodwill of a business; or
(b)services rendered or to be rendered to the company;
shall not be counted.
(3)Where a new amount is prescribed for the purposes of subsection (1), a private company that satisfied this section immediately before the new amount was prescribed shall be deemed to continue to satisfy it.

19. Companies limited by guarantee

(1)Each subscriber to an application for incorporation as a company limited by guarantee shall sign a declaration of guarantee specifying the amount that he undertakes to contribute to the assets of the company in the event of its being wound-up.
(2)Each subscriber to the application for incorporation shall, on the incorporation of the company, be a member of the company.
(3)Subject to any additional requirements imposed by the articles of the company
(a)a person shall become a member of the company, on approval by a resolution of the company, by signing a declaration of guarantee and delivering it to the company; and
(b)a person shall cease to be a member on delivering to the company a signed notice in writing to that effect.
(4)Within seven days after a person becomes a member or ceases to be a member of the company, the company shall lodge with the Registrar a notice in the prescribed form, together with, in the case of a person's becoming a member, the declaration of guarantee by the person.
(5)The company shall not carry on business for the purpose of making profits for its members or for anyone concerned in its promotion or management.
(6)Where a company limited by guarantee is wound-up, a member shall be liable to contribute, in accordance with Part XIII, an amount not exceeding the amount specified in the declaration of guarantee made by him.
(7)If the company carries on business for the purpose of making profits for its members or for anyone concerned in its promotion or management—
(a)those officers and members of the company who wilfully authorise or permit the business to be carried on for that purpose shall be jointly and severally liable for the payment and discharge of all debts and liabilities of the company incurred in carrying on the business so authorised or permitted; and
(b)each of the officers and members referred to in paragraph (a) shall be guilty of an office, and shall be liable on conviction to a fine of not more than thirty monetary units for each day on which that business is carried on.
(8)If the company fails to comply with subsection (4), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

20. Unlimited companies

(1)An unlimited company shall have share capital and its articles shall state—
(a)the rights, privileges, restrictions and conditions attaching to each class of shares, if there are two or more classes; and
(b)the authority given to the directors to determine the number of shares in, the designation of, and the rights, privileges, restrictions and conditions attaching to each series, if a class of shares may be issued in series.
(2)All shares shall rank equally apart from differences due to their being in different classes or series.
(3)Where an unlimited company is wound-up, a member shall be liable to contribute, in accordance with Part XIII, without limitation of liability.

Division 2.3 - General provisions

21. Contractual effect of indorporation

Subject to this Act, the incorporation of a company shall have the same effect as a contract under seal between the company and its members from time to time and between those members themselves, in which they agree to form a company whose business will be conducted in accordance with the application for incorporation, the certificate of share capital from time to time, the articles of the company from time to time, and this Act.

22. Capacity and powers of a company

(1)A company shall have, subject to this Act and to such limitations as are inherent in its corporate nature, the capacity, rights, powers and privileges of an individual.
(2)A company shall have the capacity to carry on its business and exercise its powers in any jurisdiction outside Zambia to the extent that the laws of Zambia and of that jurisdiction permit.
(3)A company shall not carry on any business or exercise any power that it is restricted by its articles from carrying on or exercising, nor exercise any of its powers in a manner contrary to its articles.

23. Validity of acts

No act of a company, including any transfer of property to or by a company, shall be invalid by reason only that the act or transfer is contrary to its articles or this Act.

24. Notice not presumed

No person dealing with a company shall be affected by, or presumed to have notice or knowledge of, the contents of a document concerning the company by reason only that the document has been lodged with the Registrar or is held by the company available for inspection.

25. No disclaimer allowed

A company or a guarantor of an obligation of the company may not assert against a person dealing with the company or with any person who has acquired rights from the company that—
(a)any of the articles of the company has not been complied with;
(b)a shareholder agreement has not been complied with;
(c)the persons named in the most recent annual return or notice under section two hundred and twenty-six are not the directors of the company;
(d)the registered office of the company is not an office of the company;
(e)a person held out by a company as a director, an officer or an agent of the company has no authority to exercise the powers and perform the duties that are customary in the business of the company or usual for such a director, officer or agent;
(f)a document issued by any director, officer or agent of the company with actual or usual authority to issue the document is not valid or genuine; or
(g)the financial assistance referred to in section eighty-three or the sale or disposal of property referred to in section two hundred and sixteen was not authorised; except where that person has, or ought to have had by virtue of his position with or relationship to the company, knowledge of the fact asserted.

26. Companies ceasing to have at least two members

(1)If at any time the number of members of a company is reduced below two and it carries on business for more than six months without at least two members, a member or director of the company who was aware that the business was being carried on with fewer than two members shall be severally liable for the payment of all the debts and liabilities of the company incurred after the end of that period of six months.
(2)The court, in any proceeding against the member or director or on application being made to it by any person interested, may relieve the member or director either wholly or partly from liability undersubsection(1) on such terms as it thinks fit, if it is satisfied that the member or director had made reasonable efforts to prevent the business from being continued, or that it is otherwise just and reasonable to do so.
(3)The liability imposed under subsection (1) shall be in addition to any liability of the company.

27. No increase in a member's liability or contribution without consent

A member of a company shall be bound by an alteration made in the articles on a date (in this section called the "alteration date") after the date on which he became a member only to the extent that the alteration does not require him—
(a)to take or subscribe for more shares than the number held by him on the alteration date;
(b)in any way to increase his liability as at the alteration date; or
(c)to contribute to the share capital of the company or otherwise to pay money to it;
unless he agrees in writing, either before or after the alteration date, to be bound thereby.

28. Pre-incorporation contracts

(1)If a person purports to enter into a contract not evidenced in writing in the name of or on behalf of a company before it comes into existence, the person shall be bound by the contract and entitled to the benefits thereof.
(2)If a person purports to enter into a contract evidenced in writing in the name of or on behalf of a company before it comes into existence, the person shall be bound by the contract (in this section called "the relevant contract") and entitled to the benefits thereof except as provided in this section.
(3)The company may, not later than fifteen months after its incorporation, adopt the contract by an ordinary resolution, and upon the adoption, subject to subsection (4)—
(a)the company shall for all purposes be bound by the contract and entitled to the benefits thereof as if the company had been in existence at the date of the contract and had been a party thereto; and
(b)the person who purported to act in the name of or on behalf of the company shall cease to be bound by or entitled to the benefits of the contract.
(4)Subject to subsection (5), whether or not the relevant contract is adopted by the company, the other party to the contract may apply to the court for an order fixing obligations under the contract as joint or joint and several, or apportioning liability between or among the company and the person who purported to act in the name of or on behalf of the company, and upon such application the court may make any order it thinks just and equitable.
(5)Subsection (4) does not apply if the relevant contract expressly provides that the person who purported to act in the name of or on behalf of the company before it came into existence shall not in any event be bound by the contract nor entitled to the benefits thereof.

29. Copies of certificate of incorporation, certificate of share capital and articles to be given to members

(1)A company shall supply to any member on request copies of—
(a)the certificate of incorporation;
(b)the certificate of share capital, in the case of a company with share capital; and
(c)The articles of the company;
within seven days after receiving payment of the sum of one monetary unit, or such lesser sum as may be prescribed by the company, for each set of copies.
(2)A company limited by guarantee shall supply to any member on request a list of the members with the amounts guaranteed by each in the declaration of guarantee.
(3)A copy of the articles supplied under subsection (1) shall have endorsed on it the registered address, the postal address and the address of the registered records office of the company.
(4)If a company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

Division 2.4 - Conversion of a company from one type to another

30. Conversion of a private company limited by shares to company limited by guarantee

(1)A private company limited by shares may be converted into a company limited by guarantee if—
(a)there is no unpaid liability on any of its shares;
(b)all its members agree in writing to such a conversion;
(c)a special resolution amending the articles to satisfy section nineteen is passed, if the articles do not satisfy that section; and
(d)each member makes a declaration of guarantee.

31. Conversion of private company limited by shares to unlimited company

A private company limited by shares may be converted into an unlimited company if all its members agree in writing to its conversion.

32. Conversion of company limited by guarantee to company limited by shares or unlimited company

A company limited by guarantee may be converted into a company limited by shares or an unlimited company if—
(a)all the members agree in writing—
(i)to convert the company into such a company; and
(ii)to a share capital for the company and the division thereof into shares of fixed amounts; and
(b)each member agrees in writing to take up a specified number of shares.

33. Conversion of unlimited company to private limited company

(1)An unlimited company may be converted into a private company limited by shares or a company limited by guarantee if—
(a)all its members agree in writing to its conversion;
(b)a special resolution amending the articles to satisfy section seventeen or nineteen, as appropriate, is passed, if the articles do not satisfy section seventeen and nineteen, as appropriate; and
(c)each member makes a declaration of guarantee, in the case of conversion to a company limited by guarantee.
(2)In the case of a conversion to company limited by shares, the special resolution may—
(a)increase the nominal amount of the company's share capital by increasing the nominal amount of each of its shares, subject to the condition that no part of the increased capital shall be capable of being called up except in the event and for the purposes of the company's being wound-up; or
(b)provide that a specified portion of its uncalled share capital shall not be capable of being called up except in the event and for the purpose of the company's being wound-up.

34. Conversion of public company to private company limited by shares

A public company may be converted into a private company limited by shares if a special resolution is passed that—
(a)approves the conversion; and
(b)amends the articles to satisfy sections sixteen and seventeen, if the company's articles do not satisfy those sections.

35. Conversion of private company limited by shares to public company

(1)A private company limited by shares may be converted into a public company if a special resolution is passed that—
(a)approves the conversion; and
(b)amends the articles to satisfy section fourteen, if the company's articles do not satisfy that section.

36. Method of conversion

(1)If the requirements of section thirty, thirty-one, thirty-two, thirty-three, thirty-four or thirty-five (in this section called "the conversion section") are satisfied with respect to a company, the company shall, within twenty-one days after the conversion section's becoming satisfied, lodge with the Registrar an application in the prescribed form for conversion of the company in accordance with the resolution or agreement, together with the documents referred to in subsection (4).
(2)On receiving the application the Registrar shall—
(a)issue a replacement certificate of incorporation in the prescribed form worded to meet the circumstances of the case and stating the date of conversion of the company; and
(b)make such entries in such registers as he considers appropriate.
(3)On and from the date stated in the certificate as the date of conversion.
(a)the company shall be converted into a company of the status sought;
(b)if the company is being converted from a company with share capital to a company limited by guarantee, the shares therein shall be validly surrendered and cancelled notwithstanding section seventy-six;
(c)the articles of the company shall be amended in accordance with the documents lodged with the application; and
(d)where this Act requires different words to be the last words of the name of a company of the new status, the name of the company shall be changed accordingly.
(4)The documents to be delivered to the Registrar are the following:
(a)the company's certificate of incorporation;
(b)a copy of each paragraph in the articles affected by any amendment, in its amended form;
(c)a copy of the special resolution or written agreement by the members referred to in the conversion section;
(d)the declarations of guarantee by each member, if the company is being converted to a company limited by guarantee;
(e)a statutory declaration by a director and the secretary of the company stating—
(i)that the conditions of the conversion section have been complied with; and
(ii)that in their opinion the company is solvent;
(f)a certificate by the auditors of the company, made not more than three months before the date of the application, that they have investigated the affairs of the company and that the company is solvent at the date of the certificate;
(g)certified copies, certified by a director and the secretary of the company, of every balance sheet, profit and loss account, group accounts, directors' report and auditors' report sent to the members of the company in the preceding twelve months, if the company is being converted from a public company to a private company and has been incorporated as a public company for more than fifteen months.
(5)The conversion of the company under this section shall not alter the identity of the company, nor affect any rights or obligations of the company except as mentioned in this section, nor render defective any legal proceedings by or against the company.
(6)Where an unlimited company is converted to a limited company and is wound-up within three years after the conversion, a member of the company who was a member immediately before the conversion shall not be entitled to a limitation of liability under section two hundred and sixty-six.
(7)If the company fails to comply with subsection (1), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.
(8)If a director, secretary or auditor of a company makes a declaration or certificate for the purposes of subsection (4) that in his opinion the company is solvent, without having reasonable grounds for the opinion, he shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units.

Division 2.5 - The name of a company

37. Name of company

(1)A public company shall have a name the last word of which is "PLC".
(2)Subject to this Division, a private company limited by shares or a company limited by guarantee shall have a name the last word of which is "Limited".
(3)The Registrar shall not register as the name of a company a name which in his opinion is likely to cause confusion with the name of another company or is otherwise undesirable.
(4)The Registrar shall not, without the written consent of the Minister, register as the name of a company a name which in the Registrar's opinion suggests that the company enjoys the patronage of the President.
(5)The Registrar may, at the request of persons who intend to form an incorporated company, give an opinion on the acceptability of a proposed name.

38. Reservation of name

(1)A person or persons who propose to form a company may, subject to this section, reserve a name for the company by lodging with the Registrar an application in the prescribed form specifying the name proposed to be reserved (in this section called "the reserved name").
(2)If the reserved named is acceptable to the Registrar and the Registrar is satisfied that—
(a)the reserved name is a registered business name of the person or persons;
(b)the reserved name is the name of an unincorporated association consisting of or represented by the person or persons;
(c)the reserved name is a name under which the person or persons are trading or conducting business, or is such a name with minor modifications or additions; or
(d)the person is a body corporate other than a company and the reserved name is the name of the body corporate or that name with minor modifications or additions;
the Registrar shall register the name as reserved by the person or persons for a period of three months.
(3)While the name is so registered—
(a)subject to this Act, the person or persons shall be entitled to incorporate a company under the name; and
(b)the Registrar shall treat the proposed name as the name of a company incorporated by the person or persons for the purposes of determining the acceptability of any other name as the name of a company.

39. Registrar may allow company to dispense with "Limited" in its name

(1)The Registrar may, on the application of a company limited by guarantee, grant the company written permission to omit the word "Limited" from its name for the purposes of this Act apart from this Part.
(2)The Registrar may grant the permission on such conditions as he thinks fit, and those conditions shall be binding on the company and shall, if the Registrar so directs, be inserted in the articles of the company.
(3)The Registrar may revoke the permission at any time, after giving written notice to the company of his intention to do so and considering any objections of the company.

40. Change of name

(1)A company may pass a special resolution to change its name.
(2)Within twenty-one days after the date of the resolution, the company shall notify the Registrar in the prescribed form that the company intends to change its name to the name specified in the resolution (in this section called the "new name").
(3)The Registrar, after considering the new name, shall notify the company that—
(a)the new name is acceptable; or
(b)in the opinion of the Registrar, the new name of a company would be likely to cause confusion with the name of another company or is otherwise undesirable, and that the Registrar will not register the new name.
(4)If the new name is acceptable, the company shall, within twenty-one days after receiving the notice of the fact, lodge with the Registrar
(a)the company's certificate of incorporation; and
(b)a copy of the resolution.
(5)On receiving the documents referred to in subsection (4), the Registrar shall enter the new name on the Register in place of the former name, and shall issue a replacement certificate of incorporation worded to meet the circumstances of the case.
(6)A certificate under this section shall be conclusive evidence of the alteration to which it relates.
(7)A change of name by a company shall not affect any rights or obligations of the company nor render defective any legal proceedings that could have been continued or commenced against it by its former name, and any such legal proceedings may be continued or commenced against it by its new name.

41. Registrar may require change of name

(1)If, in the opinion of the Registrar, the name of a company is likely to cause confusion with the name of another company or is otherwise undesirable, the Registrar may direct that the company shall change its name in accordance with this Division.
(2)If the company does not change its name within fifty days, or such longer period as the Registrar may allow in writing, after receiving a direction under subsection (1), the Registrar shall register the designating number of the company, together with the word "Limited" or "PLC" if required by section thirty-seven, as the name of the company, and shall issue a new certificate of incorporation for the company worded to meet the circumstances of the case.
(3)A change of name under subsection (2) shall not affect any rights or obligations of the company nor render defective any legal proceedings that could have been continued or commenced against it by its former name, and any such legal proceedings may be continued or commenced against it by its new name.

Division 2.6 - Miscellaneous

42. Financial year of a company

(1)For the purposes of this Act, the "financial year" of a company is the period, whether or not a period of twelve months, that begins on one accounting date of the company and ends on the day before the next.
(2)The first "accounting date" of a company is the date of its incorporation.
(3)Subject to this section, the subsequent accounting dates of a company are—
(a)the date specified in the application for its incorporation as the date on which the second financial year of the company will begin, and anniversaries of that date, if the application for incorporation specified such a date; or
(b)the anniversaries of the date of its incorporation, if the application for incorporation did not specify such a date.
(4)A company may change an accounting date by lodging a notice of the change in the prescribed form with the Registrar, provided that—
(a)the notice is lodged with the Registrar and notice of the change is given to each registered member and to the auditors (if any) of the company not later than the accounting date previous to the one to be changed; and
(b)the change does not result in a financial year's being longer than fifteen months.
(5)Where a company changes an accounting date under this section, the subsequent accounting dates of the company are, unless changed under this section, the anniversaries of that changed date.

43. Holding companies, subsidiaries and related companies

(1)For the purposes of this section, "company" means a body corporate, whether or not a company for other purposes of this Act and whether or not incorporated in Zambia.
(2)For the purposes of this Act, a company is a "holding company" of another company if the other company is a subsidiary of it under subsection (3).
(3)For the purposes of this Act, the "subsidiaries" of a company (in this subsection called "the holding company") are the following companies:
(a)any company in which the holding company holds—
(i)more than half in nominal value of the equity share capital, if the company is incorporated in a jurisdiction that has nominal value of share capital; or
(ii)more than half in value of the equity share capital, if the company is incorporated in a jurisdiction that does not have nominal value of share capital;
(b)any company of which the holding company is a member and the composition of whose board of directors is controlled by the holding company;
(c)any subsidiary under paragraph (a) or (b) of a company which is itself a subsidiary of the holding company under paragraph (a) or (b) or by the repeated application of this paragraph.
(4)For the purposes of this Act, the "wholly owned subsidiaries" of a holding company are the following companies:
(a)any company with no members other than the holding company and its nominees;
(b)any company with no members other than—
(i)the holding company;
(ii)nominees of the holding company;
(iii)companies which are themselves wholly owned subsidiaries of the holding company under paragraph (a) or the repeated application of this paragraph;
(iv)nominees of companies referred to in subparagraph (iii).
(5)For the purposes of this Act, a company is "related" to a second company if—
(i)the first company is a subsidiary of the second;
(ii)the first company is a holding company of the second; or
(iii)both companies are subsidiaries of a third company.
(6)For the purposes of this section, the composition of a company's board of directors is controlled by another company if, and only if, in relation to each of more than half of the directorships—
(a)the other company is able, without the consent or concurrence of any other person, to appoint or remove the holder of the directorship; or
(b)a person's appointment to the directorship follows necessarily from his appointment as director of the other company.
(7)In determining whether the composition of a company's board of directors is controlled by another company
(a)subject to this subsection, any shares held or power exercisable by a person who is the effective nominee of the other company shall be deemed to be held or exercisable by the other company;
(b)any shares held or power exercisable in a fiduciary capacity shall be disregarded;
(c)any shares held or power exercisable by any persons by virtue of the provisions of any debentures of the company or of a trust deed for securing any issue of such debentures shall be disregarded; and
(d)any shares held or power exercisable by a person only by way of security for the purposes of a transaction entered into in the ordinary course of business shall be disregarded if the ordinary business of the person includes the lending of money.
(8)For the purposes of this section, a member of a company is the effective nominee of another company if he is—
(a)a nominee of the other company;
(b)a subsidiary of the other company;
(c)a person who is the effective nominee under paragraph (a) or (b) of a person who is himself an effective nominee of the other company under paragraph (a) or (b) or by the repeated application of this paragraph.

44. Registration of related bodies corporate

(1)A company shall, within one month after another body corporate has become related to it, lodge with the Registrar a notice of that fact together with particulars identifying the body corporate.
(2)If a company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

Part III – Membership and registers

45. Membership of company

(1)The members of a company with a share capital shall be the shareholders and stockholders of the company.
(2)On the incorporation of a company with share capital and until the first allotment of shares by the company, the members shall be those subscribers to the application for incorporation who have not given the company written notice of their ceasing to be members.
(3)The members of a company limited by gurantee shall be the persons who are members in accordance with section nineteen.

46. Membership by company of itself or of holding company

(1)Except as provided in this section, a company shall not be a member of itself or of a body corporate which is its holding company.
(2)A company may, in the capacity of personal representative or trustee, be a member of itself or a body corporate which is its holding company unless it or the holding company or a subsidiary of either of them has a beneficial interest in the membership.
(3)A company may be a member of itself or a body corporate which is its holding company by way of security for the purposes of a transaction entered into in the ordinary course of a business which includes the lending of money, but in that case shall have no right to vote at meetings of the holding company or of any class of members thereof.
(4)This section shall not prevent a subsidiary which was a member of a body corporate before it became a subsidiary of the body corporate from continuing to be a member.
(5)This section shall not prevent a subsidiary which was, immediately before the commencement of this Act, a member of its holding company from continuing to be a member.
(6)A subsidiary that continues to be a member of its holding company under subsection (4) or (5)—
(a)shall have no right to vote at meetings of the holding company or any class of members thereof;
(b)shall not acquire further shares in the holding company except upon a general issue of fully-paid bonus shares, if the holding company is a company with share capital; and
(c)shall not, as a member, increase any interest in, or liability in relation to, the holding company, if the holding company is a company limited by guarantee.
(7)For the purposes of this section, a company is deemed to be a member of a body corporate if a nominee of the company is a member.

47. Offence if membership of private company exceeds number specified in articles

If a private company fails to comply with the provisions of its articles on the number of its members, the company, and each officer and member in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units.

48. Register of members

(1)A company shall maintain a register of its members and enter therein the following particulars:
(a)the full name and address of each member of which it has received notice;
(b)the occupation of the member, if the member is an individual;
(c)the fact that the member is a body corporate or an unincorporated association, as the case may be, if the member is not an individual;
(d)the date on which the company received the notice;
(e)if the company has share capital—
(i)the shares held by each member with the share numbers (if any); and
(ii)the amount paid or agreed to be considered as paid on the shares of each member;
(f)the amount that each member has guaranteed in his declaration of guarantee, if the company is limited by guarantee;
(g)the date on which the company received notice of any person's ceasing to be a member.
(2)If the company has more than fifty members, the register shall contain an index of the names of the members in a form that enables the account of each member to be found readily.
(3)If the company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.
(4)If the company fails to comply with this section because of the default of an agent charged with maintaining the register, the agent shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.

49. Inspection of register

(1)Subject to this Part, the register and index of the names of the members of the company shall be available for inspection by any member of the company or other person in accordance with section one hundred and ninety-three.
(2)A company may, on giving notice by advertisement in a newspaper circulating generally throughout Zambia, close for any time or times not exceeding in total thirty days in each year the register of members of the company or the part thereof relating to members holding shares of any class.

50. Power of court to rectify register

(1)If—
(a)a company fails to correct an error in its register of members; or
(b)an error in the register causes a loss to a person;
the person aggrieved or any member of the company may apply to the court for an order that the register be rectified and the person aggrieved may apply for an order that the company pay compensation for the loss.
(2)If an application is made under this section, the court may make such orders as it thinks fit.
(3)On an application under this section, the court may decide any question relating to the title of any person who is a party to the application to have his name entered in or removed from the register, whether the question arises between members or alleged members, or between members or alleged members on the one hand and the company on the other hand, and generally may decide any question necessary or convenient to be decided for rectification of the register.
(4)If an order is made under this section, the company shall, within twenty-one days after the making of the order, lodge a certified copy of the order with the Registrar.
(5)If the company fails to comply with subsection (4), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

51. Company may keep branch register

(1)A company with share capital may, subject to its articles, keep a part of its register of members (in this Act called a "branch register"), being the part relating to members resident in a specified foreign country or countries, at a place in the foreign country, or one of the foreign countries.
(2)The shares registered in a branch register shall be distinguished from the other shares of the company while they are held by members resident in a country to which the branch register applies.
(3)The company shall arrange for the information as to any entry in a branch register to be transmitted to its registered records office as quickly as practicable, and shall maintain there, as part of its register of members, a duplicate of the branch register.
(4)The company shall lodge with the Registrar notice of the physical address of the office where any branch register is kept, and of any change in that address and, if it is discontinued, of its discontinuance, and any such notice shall be given within twenty-one days after the initial keeping of the register in that office or of the change or discontinuance, as the case may be.
(5)A branch register shall be maintained and shall be open for inspection in the manner required in sections forty-eight and forty-nine, or as nearly as is practicable, except that the advertisement before closing the register shall be inserted in some newspaper circulating generally in the country where the branch register is kept.
(6)If a company fails to comply with subsection (3), (4) or (5), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.

52. Duties in case of securities registered in branch register

An instrument of transfer of any share registered in a branch register shall be deemed to transfer property situated outside Zambia, and, unless executed in any part of Zambia, shall be exempt from any duty chargeable in Zambia.

53. Branch registers of foreign companies kept in Zambia

The regulations may provide that sections forty-eight and forty-nine shall, subject to any modifications and adaptations specified in the regulation, apply to a register of members kept in Zambia by a specified body corporate, or class of bodies corporate, incorporated under the law of a foreign country or countries.

54. No notice of trust

(1)Subject to section seventy, no notice of any trust, express, implied or constructive, need be entered on the register of members of a company, or be received by the company or the Registrar.
(2)A company shall not be bound to see to the execution of any trust, whether express, implied or constructive in respect of any of its shares.
(3)A receipt given by a member in whose name a share stands in the register of members shall be a valid and binding discharge of the company for any dividend or other money payable in respect of such share, whether or not notice of any trust relating to the share has been given to or received by the company.

55. Register to be evidence

The register of members shall be prima facie evidence of any matter by this Act directed or authorised to be inserted therein.

Part IV – Shares and share capital

Division 4.1 - Interpretation

56. Interpretation

In this Part, unless the context otherwise requires, "company" means a company with share capital.

Division 4.2 - Issue and transfer of shares

57. Nature and transferability of shares

(1)The shares or other interest of a member in a company shall be personal estate and movable property, transferable by a written transfer in a manner provided by the articles of the company or by this Act.
(2)If an instrument of transfer of fully paid shares in a company is in the prescribed form, executed by both the transferor and the transferee, or by persons duly authorised on behalf of the transferor or the transferee, the company shall not refuse registration of the transfer on the ground of form.
(3)Subsection (2) shall not affect—
(a)the validity of any instrument which would be effective to transfer shares apart from that subsection;
(b)any powers of the directors to accept in their discretion an instrument in any other form which may seem to them sufficient; or
(c)any right of the directors to refuse to register a person as the holder of shares on any ground other than the form in which those shares purport to be transferred to him.

58. Numbering of shares

(1)Subject to this section, each issued share in a company shall be assigned a distinguished number.
(2)If at any time all the issued shares in a company, or all the issued shares therein of a particular class, are fully paid up, none of those shares need thereafter have a distinguishing number so long as the shares, or the shares in that class, remain fully paid up.

59. Redeemable shares

(1)The articles of a company may provide for the issue of shares which are to be redeemed, or are liable to be redeemed at the option of—
(a)the company;
(b)the share-holder, or
(c)either the company or the shareholder.
(2)No redeemable shares may be issued at a time when there are no issued shares of the company which are not redeemable.
(3)Redeemable shares shall not be redeemed unless they are fully paid.
(4)The terms of redemption shall provide for payment on redemption.
(5)Redeemable shares may be redeemed only out of distributable profits of the company or out of the proceeds of a fresh issue of shares made for the purposes of the redemption.
(6)Any premium payable on redemption shall be paid either—
(a)out of distributable profits of the company; or
(b)out of the company's share premium account (including any sum transferred to that account in respect of premiums on a fresh issue made for the purposes of the redemption).
(7)The manner and terms of the redemption shall be as provided by the articles.
(8)Where shares are redeemed
(a)the shares shall be deemed to be cancelled on redemption;
(b)the amount of the company's issued share capital shall be diminished by the nominal value of the shares redeemed; and
(c)the amount of the company's authorised share capital shall not be affected.
(9)Without prejudice to subsection (8), where a company is about to redeem any shares under this section, it may issue shares up to the nominal amount of the shares to be redeemed as if those shares had never been issued.
(10)Subject to subsection (11), for the purposes of this Act, shares issued by a company
(a)up to the nominal amount of any shares which the company has redeemed under this section; or
(b)in pursuance of subsection (9), before the redemption of shares which the company is about to redeem under this section;
shall be regarded as issued in place of the shares redeemed, or about to be redeemed, under this section.
(11)Shares issued under subsection (9) shall not be regarded as issued in place of the shares about to be redeemed unless those shares are redeemed within one month after the issue of the new shares.
(12)If a company redeems any redeemable shares, it shall, within fourteen days after doing so, lodge a notice of the redemption in the prescribed form with the Registrar.
(13)If a company fails to comply with subsection (12), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

60. Capital redemption reserve

(1)Where under section fifty-nine any shares of a company are redeemed wholly out of the profits of the company, the amount by which the company's issued share capital is diminished in accordance with subsection (8) of that section on cancellation of the shares redeemed or purchased shall be transferred to a reserve, to be called "the capital redemption reserve".
(2)Where any shares of a company are redeemed wholly or partly out of the proceeds of a fresh issue of shares and the aggregate nominal value of the shares redeemed or purchased is greater than that of the shares issued, the amount of the difference shall be transferred to the capital redemption reserve.
(3)The provisions of this Act relating to the reduction of the share capital of a company shall apply to a reduction in the capital redemption reserve as if that reserve were paid up share capital of the company, except that the reserve may be applied by the company in paying up unissued shares of the company to be allotted to members of the company as fully paid bonus shares.

61. Share premium account

(1)Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of value of the premiums on these shares shall be transferred to an account, to be called "the share premium account", and the provisions of this Act relating to the reduction of share capital of a company shall, except as provided in this section, apply as if the share premium account were paid up share capital of the company.
(2)The share premium account may be applied by the company
(a)in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares;
(b)in writing off—
(i)the preliminary expenses of the company; or
(ii)the expenses of, the commission paid or the discount allowed on any issue of shares or debentures of the company; or
(c)in providing for the premium payable on redemption of any redeemable preference shares or of any debenture of the company.

62. Variation of class rights

(1)For the purposes of this section—
(a)the abrogation of any rights attached to a class of shares; and
(b)any resolution of a company, other than a resolution for the creation or issue of further shares, the implementation of which would have the effect of—
(i)diminishing the proportion of the total votes exercisable at a general meeting of the company by the holders of the existing shares of a class; or
(ii)reducing the proportion of the dividends or other distributions payable at any time to the holders of the existing shares of a class;
shall be deemed to be a variation of the rights of that class.
(2)If at any time the shares of a company are divided into different classes, the rights attached to any class may not be varied except to the extent and in the manner provided by the section.
(3)If the articles expressly forbid any variation of the rights of a class, or contain provision for such a variation and expressly forbid any alteration of the provision, the rights or the provision for variation may not be varied except in accordance with the provision, or with the written consent of all the members of that class, or with the sanction of the court under a scheme of arrangement in accordance with section two hundred and thirty-four.
(4)If subsection (3) does not apply, the rights attached to any class of shares may be varied with the written consent of the holders of three fourths of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of shares of that class.
(5)An application for the resolution to be cancelled may be made to the court within twenty-one days after the date of the resolution by the holders of not less in the aggregate than fifteen per centum of the issued shares of that class, and on such an application the court may confirm or cancel the resolution.
(6)An application under subsection (5) may be made on behalf of the persons referred to in that subsection or by such of their number as they may appoint in writing for the purpose.
(7)If no application is made under subsection (5) the company shall, within fourteen days after the end of the period for making such an application, lodge with the Registrar a copy of each paragraph of the articles affected by the variation, in its amended form.
(8)If an application is made under subsection (5) and the court makes an order, the company shall, within fourteen days after the date of the order, lodge with the Registrar
(a)a copy of the order; and
(b)a copy of each paragraph of the articles affected by the variation, in its amended form, if the order confirms the resolution.
(9)The articles shall have effect as amended on and from the date of their lodgement.
(10)If a company fails to comply with subsection (7) or (8), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.
(11)Nothing in this section shall affect or derogate from the powers of the court under sections two hundred and thirty-four and two hundred and thirty-nine.

63. Return as to allotment of shares

(1)Whenever a company makes an allotment of its shares, the company shall within one month thereafter lodge with the Registrar
(a)a return of the allotments in the prescribed form, stating the number and the nominal amount of the shares comprised in the allotment, the names and addresses of each allottee, whether each allottee is an individual, a body corporate or an unincorporated association, and the amount (if any) paid or due and payable on each share; and
(b)subject to subsection (3), in the case of shares allotted as fully or partly paid up otherwise than in cash—
(i)any contract constituting the tile of the allottee to the allotment;
(ii)any contract of sale, or for services or other consideration in respect of which that allotment was made; and
(iii)a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid-up and the consideration for which they have been allotted.
(2)Where a contract referred to in subsection (1) is not in writing, the company shall lodge with the Registrar particulars of the contract.
(3)If a company fails to comply with subsection (1), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.

64. Transfer of shares

(1)Subject to section sixty-nine, a company shall not register a transfer of shares unless—
(a)a proper instrument of transfer has been delivered to the company; or
(b)the right to the shares has been transmitted by operation of law.
(2)Transfers may be lodged with the company by either the transfer or transferee.
(3)If a company refuses to register a transfer, the company shall, within two months after the date on which the transfer was lodged with the company, send to the transferee and transferor notice in writing of the refusal, together with a statement of the facts which are considered to justify refusal.
(4)If a company fails to comply with subsection (1), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding two hundred and fifty monetary units.
(5)If a company fails to comply with subsection (3)—
(a)the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues; and
(b)the transfer shall be deemed to have been registered on the day on which the transfer was lodged with the company.

65. Restrictions on transferability

(1)Save as expressly provided in a company's articles and in this Act, shares shall be transferable without restriction by a written transfer in accordance with section fifty-seven.
(2)The articles of a private company shall not impose any restriction on the transferability of shares after they have been issued unless all the shareholders have agreed in writing.
(3)A company may refuse to register a transfer of shares to any person who—
(a)is under eighteen years of age; or
(b)is of unsound mind and has been declared to be so by the court or a court of competent jurisdiction of another country.

66. Issue of share certificates

(1)A company shall, within two months after the allotment of any of its shares or after the registration of the transfer of any shares, deliver to the registered holder thereof a certificate under the common seal of the company stating—
(a)the number and classes of shares held by him, and the distinguishing numbers thereof (if any);
(b)the amount paid on such shares and the amount (if any) remaining unpaid; and
(c)the full name and address of the registered holder and whether the holder is an individual, a body corporate or an unincorporated association.
(2)If a share certificate is defaced, lost or destroyed, the company, at the request of the registered holder of the shares, shall renew the same on payment of a fee not exceeding one monetary unit and on such terms as to evidence and indemnity and the payment of the company's expenses of investigation evidence as the company may reasonably require.
(3)If a company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

67. Endorsement of transfer

(1)If the holder of any shares wishes to transfer to any person part only of the shares represented by one or more certificates, the instrument of transfer together with the relevant certificates may be delivered to the company with a request to endorse the instrument of transfer.
(2)If a company endorses on an instrument of transfer the words "certificate lodged", or words to the like effect, this shall be a representation to anyone acting on the faith of the endorsement that there has been produced to and retained by the company such certificates as show a prima facie title to the shares in the transferor named in the instrument of transfer, but not a representation that the certificates are genuine or that the transferor has any title to the shares.
(3)If a person acts on the faith of a false representation made by the company under subsection (2), the company shall be liable to compensate the person for any loss suffered as a result of so acting.
(4)For the purposes of this section, an endorsement under this section shall be deemed to be made by a company if it is made or signed by the secretary or any other person apparently authorised to endorse instruments of transfer on the company's behalf.

68. Share certificates as evidence

A share certificate shall be prima facie evidence of the title to the shares of the person named therein as the registered holder and of the amounts paid and payable thereon.

69. Share warrants to bearer

(1)A company may, with respect to any fully paid-up shares (or stock) issue a warrant (in this Act called a "share warrant") stating that the bearer of the warrant is entitled to the shares therein specified, and may provide by coupons or otherwise for the payment of the future dividends on the shares included in the warrant.
(2)A share warrant shall entitle the bearer to the shares therein specified, and the shares may be transferred by the delivery of the share warrant.
(3)The bearer of a share warrant shall be entitled, on surrendering it for cancellation, to have his name entered as a member in the register of members, and the company shall be responsible for any loss incurred by any person by reason of the company entering in its register the name of a bearer of a share warrant in respect of the shares therein specified without the share warrant being surrendered and cancelled.
(4)The articles of the company may provide that the bearer of a share warrant shall have any or all of the rights of a registered member of the company for the purposes of this Act (other than the right to receive notices).
(5)The company shall record the issue of a share warrant in its register of members as if the shareholder had ceased to hold those shares together with—
(a)the fact of the issue of the warrant;
(b)a statement of the shares included in the warrant, distinguishing the shares by their share numbers (if any); and
(c)the date of the issue of the warrant.
(6)Until the warrant is surrendered, the particulars referred to in subsection (5) shall be deemed to be the particulars required by this Act to be entered in the register of members in relation to the shares.
(7)On the surrender of the share warrant, the date of the surrender shall be entered as if it were the date on which the company received notice of the transfer of the shares to the bearer.

70. Transmission of shares by operation of law

(1)In the case of the death of a shareholder of a company, the survivor or survivors where the deceased was a joint holder, and the legal personal or representative of the deceased where he was a sole holder or last survivor of joint holders, shall be the only persons recognised by the company as shareholders.
(2)A person (in this section called "the representative") upon whom the ownership of a share devolves by reason of his being the legal personal representative, receiver, or trustee in bankruptcy of the holder, or by operation of law may, upon such evidence being produced as the company may reasonably require—
(a)be registered himself as the holder of the share; or
(b)transfer the share to some other person without first registering himself as the holder of the share.
(3)A company shall have the same right, if any, to decline registration of a transfer by the representative as it would have had in the case of a transfer by the registered holder, but shall have no right to refuse registration of the representative himself.
(4)The representative shall, prior to registration of himself or a transferee, be entitled to the same dividends and other advantages as if he were the registered holder and to the same rights and remedies as if he were a member of the company, except that he shall not, subject to any order by the court under section one hundred and forty-four, before being registered as a member in respect of the share, be entitled to vote at any meeting of the company.
(5)The company may at any time give notice requiring the representative to elect either to be registered himself or to transfer the share, and, if the notice is not complied with within three months, the company may thereafter suspend payment of all dividends or other moneys payable in respect of the share until the notice has been complied with.

71. Evidence of transmission of shares by operation of law

The production to a company of any document which is by law sufficient evidence that the ownership of a share has been transmitted by the operation of law shall be accepted by the company as sufficient evidence of the transmission of ownership.

72. Company's lien on shares

A company shall not have or claim a lien on shares on which there is no unpaid liability, nor shall any such lien extend to any sums due from the shareholder except in respect of the unpaid liability on the shares.

73. Rights and options to subscribe for share issue to directors, officers and employees

(1)Subject to this section and to its articles, a company may create and issue, whether in connection with the issue of any of its shares or otherwise, rights or options in favour of any directors, officers or employees of the company or of any subsidiary of the company, being rights or options that entitle the holders to acquire from the company, upon such consideration, terms and conditions as may be fixed by the board of directors, shares of any class.
(2)The terms and conditions of such rights or options, including the time or times at or within which and the price or prices at which they may be exercised and any limitations on transferability, shall be set forth or incorporated by reference in the instrument or instruments evidencing the rights or options.
(3)Where a company proposes to issue such rights or options to one or more of the persons referred to in subsection (1) as an incentive to service or continued service with the company or any related company, or where it proposes to issue such rights or options to a trustee on behalf of such persons, the issue shall be authorised at a general meeting by special resolution, or shall be authorised by and be consistent with a scheme adopted at a general meeting by special resolution.
(4)If there are any pre-emptive rights in any of the shares proposed under subsection (3) to be subject to rights or options, the issue or scheme, as the case may be, shall also be approved by the vote or written consent of the holders of a majority of the shares entitled to exercise pre-emptive rights with respect to such shares, and the vote or written consent shall release the pre-emptive rights.
(5)The special resolution authorising the issue such rights or options, or the scheme adopted by special resolution, shall include—
(a)the material terms and conditions upon which the rights or options are to be issued, including any restrictions on the number of shares that eligible individuals may have the right or option to acquire;
(b)the method of administering the scheme, in the case of a scheme;
(c)the terms and conditions of payment for shares in full or by instalments;
(d)any limitations on the transferability of the shares; and
(e)the voting and dividend rights to which the holders of the shares may be entitled.
(6)The terms and conditions shall not provide for any share certificate to be delivered to a shareholder, or confer any right to vote in respect of such shares, prior to full payment therefor.
(7)In the absence of fraud in the transaction, the decision of the directors (or, where the directors or a sufficient quorum thereof are not themselves disinterested in the issue or scheme, the decision of the general meeting) shall be conclusive as to the adequacy of the consideration, tangible or intangible, received or to be received by the company for the issue of rights or options and for the acquisition pursuant thereto of shares in the company.
(8)This section shall not apply to the right of holders of convertible debentures to acquire shares upon the exercise of a conversion option.

Division 4.3 - Alteration of share capital

74. Alteration of share capital

(1)A company may, unless its articles provide otherwise, by special resolution alter its share capital as stated in the certificate of share capital by doing any of the following:
(a)increasing its share capital by new shares of such an amount as it thinks expedient;
(b)consolidating and dividing all or any of its share capital into shares of a larger amount than its existing shares;
(c)converting all or any of its paid up shares into stock, and re-converting that stock into paid up shares of any denomination;
(d)subdividing its shares, or any of them, into shares of smaller amounts than is stated in the certificate of share capital;
(e)cancelling shares which, at the date of the passing of the resolution, have not been allotted to any person, and diminishing the amount of its share capital by the amount of the shares so cancelled.
(2)Where shares are subdivided under this section, the proportion between the amount paid and the amount, if any, 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.
(3)A cancellation of un-allotted shares under this section shall be deemed not to be a reduction of share capital for the purposes of this Act.
(4)Where a company has made any alteration referred to in subsection (1), it shall within one month after so doing lodge with the Registrar
(a)a notice in the prescribed form specifying, as the case may be, the shares increased, consolidated, divided, subdivided, converted, redeemed or cancelled or the stock reconverted; and
(b)a copy of the resolution authorising the alteration.
(5)Where an alteration under this section alters a particular stated in the company's certificate of share capital, the Registrar shall issue a replacement certificate of share capital worded to meet the circumstances of the case.
(6)If a company fails to comply with subsection (4), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.

75. Power to return accumulated profits in reduction of paid up share capital

(1)If a company has accumulated a sum of undivided profits, which with the approval of the shareholders may be distributed among the shareholders in the form of a dividend or bonus, the company may, by special resolution, return the same, or any part thereof, to the shareholders in reduction of the paid up capital of the company, the unpaid capital being thereby increased by a similar amount.
(2)Within twenty-one days after making a special resolution under subsection (1), the company shall lodge with the Registrar a return in the prescribed form giving the details required in the case of a special resolution reducing share capital.
(3)The resolution shall take effect as from the date of lodgement.
(4)The provisions of this Act with respect to reduction of share capital shall not apply to a reduction of paid up share capital under this section, except as provided in subsection (2).

76. Special resolution for reduction of share capital

(1)Subject to confirmation by the court, a company may, if so authorised by its articles, 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;
(b)either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is in excess of the wants of the company; 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, if and so far as is necessary, reduce the amount of its shares accordingly.
(2)A special resolution under this section is in this Act referred to as "a resolution for reducing share capital".

77. Creditors may object to reduction in capital

(1)If a company has passed a resolution for reducing share capital, it shall, within twenty-one days after the making of the resolution, apply to the court for an order confirming the reduction.
(2)If the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, subsections (5) and (6) shall apply to the reduction unless the court directs otherwise.
(3)In giving a direction under subsection (2), the court may direct that subsections (5) and (6) shall not apply to a specified class or classes of creditors.
(4)If subsection (2) does not apply, subsections (5) and (6) shall not apply unless the court directs that they shall apply.
(5)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 entitle the creditor to benefit from the distribution under the winding-up, shall be entitled to object to the reduction.
(6)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 day or days after which creditors not yet entered on the list will lose their right to object if they have not presented a claim to be entered on the list.
(7)If 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's securing payment of his debt or claim by appropriating—
(a)the full amount of the debt or claim, if the company admits the full amount of the debt, or claim, or, though not admitting it, is willing to provide for it; or
(b)an amount fixed by the court after the like inquiry and adjudication as if the company were being wound-up by the court, 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.

78. Order confirming reduction and powers of court in making such order

(1)The court, if satisfied with respect to every creditor of the company who is entitled to object to the reduction, that—
(a)his consent to the reduction has been obtained;
(b)his debt or claim has been discharged or determined; or
(c)his debt or claim has been secured;
may make an order confirming the reduction on such terms and conditions as it thinks fit.
(2)The order may require the publication of a notice of the reduction in capital on the issue of the replacement certificate of share capital under section seventy-nine.
(3)Where the court makes any such order it may, if for any special reason it thinks it proper so to do, make an order—
(a)directing that the company shall, during a period specified in the order, add to its name as the last words thereof the words "and reduced"; or
(b)requiring the company to publish as the court directs the reasons for the reduction or such other information in regard thereto as the court may think expedient with a view to giving proper information to the public.
(4)Where a company is ordered to add to its name the words "and reduced", those words shall, until the expiration of the period specified in the order, be deemed to be part of the name of the company.

79. Lodgement of order and issue of replacement certificate of share capital

(1)The Registrar, on the lodgement of an order of the court confirming the reduction of the share capital of a company and of a minute approved by the court showing, with respect to the share capital of the company as altered by the order—
(a)the amount of the share capital;
(b)the number of shares into which it is to be divided;
(c)the amount of each share; and
(d)the amount, if any, at the date of lodgement deemed to be paid up on each share;
shall issue a replacement certificate of share capital of the company, worded to meet the circumstances of the case.
(2)On the issue of the certificate, the resolution for reducing share capital as confirmed by the order shall take effect.
(3)The issue of the certificate of share reduction shall be conclusive evidence that all the requirements of this Act with respect to reduction of share capital have been complied with, and that the share capital of the company is as stated in the certificate.

80. Liability of members in respect of reduced shares

(1)Subject to this section, where the share capital of a company is reduced, a member of the company, past or present, shall not be liable in respect of any share to any call or contribution exceeding in amount the difference, if any, between the amount of the share fixed by the reduction and the amount paid, or the reduced amount, if any, which is to be deemed to have been paid, on the share, as the case may be.
(2)If any creditor, entitled in respect of any debt or claim to object to the reduction of share capital, is, by reason of his ignorance of the proceedings for reduction, or of their nature and effect with respect to his claim, not entered on the list of creditors, and, after the reduction, the company is unable within the meaning of the provisions of this Act with respect to the winding-up by the court to pay the amount of his debt or claim, then—
(a)every person who was a member of the company at the date of issue of the replacement certificate of share capital shall be liable to contribute as if the company had commenced to be wound-up on that date; and
(b)if the company is wound-up, the court, on the application of any such creditor and proof of his ignorance, may if it thinks fit settle accordingly a list of persons so liable to contribute, and make and enforce calls and orders on the persons on the list as if they were ordinary contributories in a winding-up.
(3)Nothing in this section shall affect the rights of the members amongs themselves.

81. Offence of concealing name of creditor

(1)Where a company has passed a resolution for reducing share capital, an officer of a company who—
(a)wilfully conceals the name of any creditor entitled to object to the reduction;
(b)wilfully misrepresents the nature or amount of the debt or claim of any creditor; or
(c)aids, abets or is privy to any such concealment or misrepresentation;
shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units.
(2)An officer referred to in subsection (1) shall be personally liable to pay to the creditor the amount of his debt or claim to the extent that it is not paid by the company, whether or not he has been convicted of an offence under subsection (1).

Division 4.4 - Restrictions on financial assistance

82. Restrictions on financial assistance in acquisition of shares

(1)Subject to this Part, where a person is acquiring or is proposing to acquire any shares in a company, the company or any of its subsidiaries shall not give financial assistance directly for the purpose of that acquisition.
(2)Subject to this Part, where a person has acquired any shares in a company and any liability has been incurred (by that or any other person) for the purpose of that acquisition, the company and its subsidiaries shall not give any financial assistance directly or indirectly for the purpose of reducing or discharging the liability so incurred.
(3)This section shall not prohibit a company from giving any financial assistance for the purpose of any acquisition of shares in the company or its holding company if—
(a)the giving of the assistance is an incidental part of some larger purpose of the company, and the principal purpose of the company in giving that assistance is not to reduce or discharge any liability incurred by a person for the purpose of any such acquisition; and
(b)the assistance is given in good faith in the interest of the company.
(4)This section shall not prohibit—
(a)any distribution of a company's assets by way of dividend lawfully made or any distribution made in the course of winding-up of the company;
(b)the allotment of any bonus shares;
(c)anything done in pursuance of an order of the court made under this Act;
(d)anything done under an arrangement made in pursuance of section two hundred and thirty-four;
(e)anything done under an arrangement made between a company and its creditors which is binding on the creditors under section three hundred and twenty-five;
(f)any reduction of capital confirmed by order of the court under this Part; or
(g)a redemption of any share in accordance with this Part.
(5)This section shall not prohibit—
(a)the lending of money by the company in the ordinary course of its business, if the lending of money is part of the ordinary business of the company;
(b)the provision by a company, in accordance with an employee's share scheme, of money for acquisition of fully paid shares in the company to be held by or for the benefit of employees of the company (including any director holding a salaried position in the company); or
(c)the making by a company of loans to persons, other than directors, employed in good faith by the company, with a view to enabling those persons to acquire fully paid shares otherwise than as nominees of the company.
(6)In giving financial assistance to any person under subsection (5), a public company shall not reduce its net assets, other than distributable profits.
(7)A reference in this section to a person incurring any liability includes a reference to his changing his financial position by making any agreement or arrangement (whether enforceable or unenforceable and whether made on his own account or with any other person) or by any other means.
(8)If a company fails to comply with subsection (1) or (2), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding two thousand monetary units or to imprisonment for a period not exceeding two years, or to both.
(9)In this section—"financial assistance" means:
(a)financial assistance given by way of gift;
(b)financial assistance given by way of guarantee, security or indemnity, other than an indemnity in respect of the indemnifier's own neglect or default, or by way of release or waiver;
(c)financial assistance given by way of—
(i)a loan;
(ii)any other agreement under which any of the obligations of any other party to the agreement remains unfulfilled; or
(iii)inovation of, or the assignment of, any rights arising under any such loan or agreement; or
(d)any other financial assistance given by a company which has no net assets, or whereby the net assets of the company are reduced to a material extent;
"net assets", in relation to the giving of financial assistance by a company, means the amount by which the aggregate amount of the company's assets exceeds the aggregate amount of its liabilities taking the amount of both assets and liabilities to be stated in the company's accounting records immediately before the financial assistance is given;"liabilities" includes any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

83. Relaxation of restrictions for private companies

(1)A private company may give financial assistance for the acquisition of shares in itself in accordance with this section.
(2)A private company may give financial assistance for the acquisition of shares in a private company that is its holding company in accordance with this section unless it is the subsidiary of—
(a)a body corporate not incorporated in Zambia; or
(b)a public company;
that is also a subsidiary of the holding company concerned.
(3)Financial assistance shall not be given under this section unless—
(a)the company proposing to give the financial assistance is a wholly owned subsidiary; or
(b)the giving of the assistance is approved by special resolution of the company.
(4)Where the financial assistance to be given by a company is for the acquisition of shares in its holding company, financial assistance shall not be given unless approved by special resolutions of—
(a)that holding company; and
(b)any other company which is both the company's holding company and a subsidiary of that holding company, other than a wholly owned subsidiary.
(5)The directors of the company proposing to give the financial assistance and, where the shares to be acquired are shares in its holding company, the directors of the companies referred to in paragraphs (a) and (b) of subsection (4), shall, not more than seven days before the special resolution is put to a meeting, make a statutory declaration in the prescribed form complying with subsection (6) and make it available, together with the auditors' report annexed thereto, for inspection by members of the company at the meeting at which the resolution is to be voted on.
(6)A statutory declaration for the purposes of subsection (5) shall—
(a)contain such particulars of the assistance to be given and of the business of the company of which they are directors as may be prescribed;
(b)identify the person to whom the assistance is to be given;
(c)state that, to the best of the directors' knowledge and belief, the company will be able to pay its debts—
(i)in full within twelve months of the commencement of the winding-up of the company, if it is intended to commence the winding-up of the company within twelve months of the date of the declaration; or
(ii)as they fall due during the year immediately following that date, in any other case.
(7)In forming their views for the purposes of the statutory declaration, the directors shall take into account any liabilities of the company which the court would be required by section two hundred and seventy-two to take into account in determining for the purposes of that section whether the company was unable to pay its debts.
(8)The statutory declaration shall have annexed to it a report by the auditors of the company, addressed to the directors who made the declaration, stating that the auditors have enquired into the state of affairs of that company and are not aware of any thing to indicate that the opinion expressed by the directors in the declaration is unreasonable in all the circumstances.
(9)Where a special resolution is required under this section to be passed approving the giving of financial assistance, financial assistance shall not be given less than one month after the date on which—
(a)the special resolution is passed; or
(b)the last of the resolutions is passed, where more than one such resolution is passed;
unless each member of the company who was entitled to vote on the resolution, or any of the resolutions, voted in favour of the resolution concerned.
(10)Where an application for the cancellation of any such resolution is made under this section, financial assistance shall not be given before the final determination of the application unless the court otherwise orders.
(11)Financial assistance shall not be given under this section more than two months after—
(a)the date on which the directors of the company proposing to give the financial assistance made the statutory declaration under subsection (5); or
(b)the date on which the earliest of the declarations under subsection (5) is made, where the company is a subsidiary and both its directors and the directors of any of its holding companies made such a declaration;
unless the court, on an application for the cancellation of any of the resolutions, otherwise orders.
(12)Where a special resolution under this section is passed by a company, an application may be made to the court for the cancellation of that resolution by not fewer than one fifth of the members, being persons who did not consent to or vote in favour of the resolution, within twenty-one days after the making of the resolution.
(13)Within twenty-one days after—
(a)the passing of a special resolution under this section, if there was no application under subsection (12); or
(b)the decision by the court, if there was an application made under subsection (12) but the court rejected the application;
the company shall lodge with the Registrar
(i)the statutory declaration together with any auditors' report annexed thereto; and
(ii)a copy of the special resolution.
(14)If a company fails to comply with subsection (13), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.
(15)A director of a company who makes a statutory declaration for the purposes of this section without having reasonable grounds for the opinion expressed in that declaration shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units or to imprisonment for a period not exceeding six months, or to both.
(16)In this section, "financial assistance" and "net assets" have the same meaning as in section eighty-two.

Division 4.5 - Miscellaneous

84. Dividends may be paid only out of profits

No dividend shall be payable to the shareholders of a company except out of the profits arising or accumulated from the business of the company.

85. Exemption from Property Transfer Tax Act

Company shares that are listed on any stock exchange in Zambia shall be exempt from the provisions of the Property Transfer Tax Act, 1984.[Cap. 422 ]

Part V – Debentures and charges

Division 5.1 - Debentures

86. Issue of debentures

(1)A company may raise loans by the issue of a debenture or of a series of debentures.
(2)Debentures may either be secured by a charge over property of the company or be unsecured by any charge.
(3)All debentures which by their terms, or by the terms of any resolution authorising their creation, or by the terms of any trust deed, are declared to be of the same series shall rank equally in all respects notwithstanding that they may be issued on different dates.
(4)Any debenture stock shall be created—
(a)by deed under the common seal of the company in favour of trustees for the debenture stockholders; and
(b)as stock of a specified total amount, parts of which, represented by debenture stock certificates, are issued to separate holders.
(5)A contract with a company to take up and pay for any debenture of the company may be enforced by an order for specific performance.
(6)A condition contained in a debenture or in a trust deed for securing a debenture shall not be invalid by reason only of the fact that the debenture is hereby made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

87. Documents of title to debentures

(1)A company shall, within two months after the allotment of any of its debentures or after the registration of the transfer of any debentures, deliver to the registered holder thereof the debentures or a certificate of the debenture stock under the common seal of the company.
(2)Sections sixty-four and sixty-six to seventy-one shall apply, with the necessary modifications, in relation to debentures and debenture holders.
(3)If any restriction is imposed on the right to transfer any debentures, notice of the restriction shall be endorsed on the face of the debenture or debenture stock certificate and, in the absence of such endorsement, the restriction shall be ineffective as regards any transferee for value whether or not he has notice of the restriction.
(4)If a company fails to comply with subsection (1), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

88. Trustees for debenture holders

(1)A company shall not—
(a)idemnify a person who is a trustee for debenture holders of the company or a related company against any liability which under law would otherwise attach to him in respect of any breach of trust or failure to show the degree of care and diligence required of him as trustee having regard to the powers, authorities or discretion conferred on him by the trust deed; or
(b)compensate such a person for the cost of meeting any such liability.
(2)A provision of a contract between the company and such a trustee shall be void if it purports to indemnify or compensate him in contravention of subsection (1).
(3)A release in respect of anything done or omitted to be done by a trustee may be made by a special resolution of the debenture holders.
(4)The court may remove a trustee for the holders of any debentures and appoint another in his place if, on the application of any debenture holder, it is satisfied that the trustee has interests which conflict or may conflict with those of the debenture holders or that for any other reason it is undesirable that the trustee should continue to act.
(5)Upon such an application the court may order the applicant to give security for the payment of the costs of the trustee.

89. Eligibility for appointment as trustee for debenture holders

(1)The following persons shall not be eligible for appointment or competent to act as trustee for the holders of debentures of a company:
(a)an individual under the age of eighteen years;
(b)a person under any legal disability;
(c)a person prohibited or disqualified from so acting by order of a court of competent jurisdiction;
(d)an undischarged bankrupt;
(e)a person who is an officer or auditor of the company or a related company or who has been such an officer or auditor within the preceding two years, save with the leave of the court;
(f)a person who has been convicted within the preceding five years of an offence involving fraud or dishonesty;
(g)a person who has been removed within the preceding five years from an offence of trust by order of a court of competent jurisdiction.
(2)A person who, in contravention of this section, acts or continues to act as a trustee for debenture holders shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the contravention continues.

90. Right to copies of trust deed

(1)A copy of any trust deed for securing an issue of debentures shall be provided to a holder of those debentures at his request and on payment of the sum of one monetary unit, or such lesser sum as may be required by the company, within seven days after the receipt of the request.
(2)If the company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units for each day that the failure continues.

91. Unsecured debentures to be so described

(1)No unsecured debenture or debenture stock certificate, or prospectus relating to unsecured debentures, shall be issued by a company unless the term "debenture", or such other term as is used to denote the debenture, is qualified by the word " unsecured".
(2)If the company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units.

92. Register of debenture holders

(1)A company which issues or has issued debentures shall maintain a register of debenture holders.
(2)Sections forty-eight to fifty-five shall apply, with the necessary modifications, in relation to the register.
(3)A company shall, on the demand of any trustee for its debenture holders, within seven days furnish to him the names, addresses and other registered particulars of the debenture holders for which he is a trustee.
(4)If the company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day for which the failure continues.

93. Meetings of holders of debentures secured by a trust deed

(1)Subject to this section, sections one hundred and thirty-nine to one hundred and fifty-five shall apply, with the necessary modifications, in relation to the holders of debentures of a company that are secured by a trust deed.
(2)Unless the trust deed provides otherwise, the registered debenture holders shall have votes in proportion to the value of the debentures they hold.

94. Meetings of other debenture holders

(1)The terms of any debentures not secured by a trust deed may provide for the convening of general meetings of the debenture holders or of classes of debenture holders, and for the passing at such meetings of resolutions binding on all the debenture holders or on all the debenture holders of those classes.
(2)Whether or not provision for meetings is made under the debentures, the court may at any time direct a meeting of the debenture holders of any class to be held and conducted in such manner as it thinks fit to consider such matters as it may direct, and may give such ancillary or consequential directions as it thinks fit.
(3)Subject to subsection (4) and unless the debentures provide otherwise, sections one hundred and forty-six to one hundred and fifty-two shall apply, with the necessary modifications, to a meeting held in accordance with this section.
(4)Unless the terms of the debentures provide otherwise, the registered debenture holders shall have votes in proportion to the value of the debentures they hold.

95. Re-issue of redeemed debentures

(1)A company shall not re-issue any debenture which has been redeemed.
(2)A company shall not issue a new debenture in place of a redeemed debenture on terms that the new debenture shall have the same priorities as the redeemed debenture.
(3)The issue of a new debenture in place of a redeemed debenture shall not be treated as the issue of a new debenture for the purposes of any provision limiting the amount or number of debentures which may be issued.
(4)A purported issue or re-issue of debentures that contravenes this section shall be void.

Division 5.2 - Charges

96. Charge to secure fluctuating amount

Where a charge is expressed to be made to secure an indeterminate amount, or a fluctuating amount advanced on current account by, or due and owing to, the person entitled to the charge, the charge shall not be considered to be redeemed by reason only that the current account ceases to be in debit or by reason only that no amount is due or owing, as the case may be.

97. Company's register of charges

(1)This section applies to any charge on property of the company, whether or not it is required to be registered under section ninety-eight.
(2)A company which has any property subject to a charge shall open and maintain a register of charges over its property in which it shall, on the creation of a charge over property of the company, or on the acquisition of property subject to a charge, enter the following particulars of each charge:
(a)the date of creation of the charge or the date of acquisition of the property, as the case may be;
(b)a short description of the liability (whether present or prospective) secured by the charge;
(c)a short description of the property charged;
(d)the name of the trustee, if the charge secures debentures under a trust deed;
(e)if the charge does not secure debentures under a trust deed—
(i)the name of the chargee; and
(ii)the name of the person whom the company believes to be the holder of the charge.
(3)The register shall be open for inspection—
(a)by any member or creditor of the company or by the Registrar or his agent, without charge; and
(b)by any other person on payment of an amount required by the company, not exceeding ten monetary units or such higher amount as may be prescribed.
(4)If the company fails to comply with this section, the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units.

98. Registrar's register of charges

(1)The Registrar shall maintain a register containing, with respect to each company, the particulars of the charges of the company that are lodged in accordance with this Part.
(2)The register shall include, with respect to each company, a chronological index of the charges of the company.

99. Registration of charges by companies

(1)This section applies to the following charges over the property or undertaking of a company:
(a)a charge for the purpose of securing any issue of a series of debentures;
(b)a charge on uncalled share capital of the company;
(c)a charge to which the Trade Charges Act applies;[Cap. 415]
(d)a floating charge on the whole or part of the undertaking or property of the company;
(e)a charge on land, wherever situated, or any interest therein;
(f)a charge on any present or future book debts of a company;
(g)a charge on calls made but not paid;
(h)a charge on a ship or aircraft or any share in a ship or aircraft;
(i)charge on goodwill, on a patent or a licence under a patent, on a trade mark, or on a copyright or a licence under a copyright;
(j)a charge overshares in another body corporate, not being—
(i)a charge in favour of a broker who has paid for a share purchased or applied for on behalf of the company; or
(ii)a charge created by or accompanied by delivery of the certificates for such shares.
(2)Subject to this section, if a company
(a)creates any charge to which this section applies; or
(b)acquires property that is subject to a charge to which this section applies;
the company shall, within twenty-one days after the date of the creation of the charge, or after the acquisition of the property, as the case may be, lodge with the Registrar in the prescribed form the particulars referred to in subsection (3) together with—
(i)particulars of the instrument by which the charge is created or evidenced sufficient to identify the instrument, if the charge is created or evidenced by an instrument by which it is already registered under this or any other Act; or
(ii)a certified copy of the instrument, if any, by which the charge is created or evidenced, in any other case.
(3)The particulars required for the purposes of subsection (2) are—
(a)the date of creation of the charge;
(b)the date of acquisition of the property by the company, where the property was subject to the charge when acquired by the company;
(c)the amount secured by the charge;
(d)short particulars of the property charged;
(e)the names of the charges; and
(f)any other prescribed particulars of the charge.
(4)Where the property subject to a charge includes property outside Zambia, this section applies in relation to any instrument creating or evidencing or purporting to create or evidence the charge, notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situated.
(5)Where a negotiable instrument has been given to a company to secure the payment of any debts owed to the company, the deposit of the instrument for the purposes of securing an advance to the company shall for the purposes of this section be deemed not to be a charge on those debts owed to the company.
(6)Debentures entitling the holder to a charge on land shall for the purposes of this section be deemed not to be an interest in land.
(7)Where a series of debentures is created by a company and contains, or gives by reference to any other instrument, any charge to the benefit of which the debenture holders of that series are entitled in all respects equally, subsection (3) shall be satisfied by the lodgement of the following particulars:
(a)the total amount secured by the whole series;
(b)the date of the resolution authorising the issue of the series and the date of the document, if any, by which the security is created or defined;
(c)a general description of the property charged; and
(d)the names of the trustees, if any, for the debenture holders, together with a certified copy of the document containing the charge, or, if there is no such document, a certified copy of one of the debentures of the series;
together with, where more than one issue is made of debentures in the series, the lodgement, within twenty-one days after any issue, of particulars of the date and amount of the issue.
(8)Where any commission, allowance, or discount has been paid or made either directly or indirectly by a company to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any such debentures, the particulars required to be lodged under this section shall include particulars as to the amount or rate per centum of the commission, discount, or allowance to be paid or made.
(9)The deposit of any debentures as security for any debt of the company shall not for the purposes of this section be regarded as the issue of such debentures at a discount.
(10)Lodgement of documents for the purposes of this section may be effected on the application of any person interested in the charge concerned, and if lodgement is effected by a person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar on the lodgement.
(11)If the particulars and documents relating to a charge that are required by this section to be lodged with the Registrar are not lodged within the time required—
(a)the charge shall be void against the liquidator and any creditor of the company; and
(b)the full debt secured by the charge shall become payable immediately by the company.
(12)Nothing in this section shall affect the provisions of any other written law relating to the registration of charges.

100. Certificate to be issued by Registrar

If the particulars and documents relating to a charge that are required by this Part to be lodged with the Registrar are lodged within the time required, the Registrar shall issue a certificate of the registration of the charge stating the date of lodgement and, if applicable, the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this Part as to registration have been complied with.

101. Priorities

(1)Subject to any consent (express or implied) given by the person who would otherwise be entitled to priority, charges required by this Part to be registered shall have priority in relation to one another in accordance with the times at which they were lodged.
(2)Where another written law by its terms accords priority as between successive charges affecting the same property, subsection (1) shall not affect the priorities between those charges set by that written law.
(3)Subject to subsection (2), where a charge (other than a floating charge) gives security over property of such a kind that this Part would require its registration, and also over other property, subsection (1) shall apply in respect of the first-mentioned property, but not in respect of the other property.

102. Entries of satisfaction and release of property from charge

(1)If there is lodged with the Registrar a statement in the prescribed form, signed on behalf of a company and by the person entitled to charge, to the effect that—
(a)the debt for which the charge was given has been paid or satisfied in whole or in part; or
(b)part of the property or undertaking charged has been released from the charge or has ceased to form part of the company's property or undertaking;
then—
(i)the Registrar shall enter the fact in the register of charges;
(ii)the statement shall, in favour of the liquidator and any creditor of the company, be binding on the person entitled to the charge who signed the statement and on any other person claiming through him.

103. Variation of registered charge

(1)If a variation is made in the terms of a charge registered under this Part, other than a satisfaction or release to which section one hundred and two applies, particulars after the variation in the prescribed form shall be lodged with the Registrar within twenty-one days of the making of the variation.
(2)The particulars shall identify the terms of the original charge that have been varied and shall indicate the nature of the variation made in each such term.
(3)Where the effect of the variation is to increase the extent of the security or the amount for which security is available, the increase shall, for the purposes of priorities, be treated as if it were a charge, being a charge for an amount which is the amount of the increase and whose particulars were lodged at the time that the particulars of the variation were lodged.
(4)Where by its terms a registered charge secures a fluctuating amount, or an initial sum together with the words "further advances", the making of a further advance to the company shall not, for the purposes of this section, constitute a variation in the terms of the charge.
(5)Lodgement of documents for the purposes of this section may be effected on the application of any person interested in the charge concerned, and if lodgement is effected by a person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar on the lodgement.
(6)If the particulars and documents relating to a charge that are required by this section to be lodged with the Registrar are not lodged within the time required—
(a)the charge shall be void against the liquidator and any creditor of the company; and
(b)the full debt secured by the charge shall become payable immediately by the company.

104. Registration of enforcement of security by mortgagee

(1)If a person enters into possession of any of the property of a company as mortgagee under any powers contained in a charge, he shall, within seven days after so doing, lodge a notice to that effect in the prescribed form with the Registrar.
(2)Where a person who is in possession as mortgagee of property of a company goes out of possession, he shall, within fourteen days thereafter, lodge a notice to that effect in the prescribed form with the Registrar.
(3)A person who fails to comply with this section shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.

105. Endorsement of registration on debentures of a series

(1)Where a company issues a debentures forming one of a series of debentures, or a certificate of debenture stock, and the payment of the debenture is secured by a charge registered under this Part, the company shall endorse on the debenture or certificate of debenture stock a statement that registration has been effected and the date of registration.
(2)If the company fails to comply with subsection (1), the company, and each officer in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding two hundred and fifty monetary units.
(3)A person who—
(a)causes to be endorsed on any debenture or certificate of debenture stock a statement that registration has been effected, which he knows to be false in any particular, or
(b)authorises or permits the delivery of any debenture or certificate of debenture stock bearing an endorsed statement that registration has been effected, which he knows to be false in any particular;
shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding two hundred and fifty monetary units or to imprisonment for a period not exceeding three months, or to both.

106. Charges in favour of the State

This Division shall bind the State in respect of all charges to which the State is entitled.

Division 5.3 - Receivers

107. Application of Division

This Division shall apply in relation to a receiver of property of a company who is appointed after the commencement of this Act, even if the appointment arose out of a transaction entered into before that commencement.

108. Appointment of receiver by court

(1)When a charge over property of a company has become enforceable, the court may, on the application of the chargee, appoint—
(a)a receiver who is not also a manager; or
(b)a receiver and manager;
of the property.
(2)In the case of floating charge, the court may, whether or not the charge has become enforceable, on the application of the chargee, appoint—
(a)a receiver who is not also a manager; or
(b)a receiver and manager;
of the property and undertaking of the company if it is satisfied that events have occurred or are about to occur which render it unjust to the chargee that the company should retain power to dispose of its assets.
(3)A receiver shall not be appointed as a means of enforcing debentures not secured by any charge.

109. Notification of appointment of receiver

(1)A person who obtains an order for the appointment of a receiver of property of a company, or who appoints such a receiver under a power contained in an instrument, shall, within seven days after obtaining the order or making the appointment, lodge a notice with the Registrar of the order or appointment.
(2)A person who is appointed as a receiver of property of a company shall, within fourteen days after the appointment, lodge with the Registrar a notice in the prescribed form of the physical address of the person's office, and a postal address.
(3)Where a person who has been appointed receiver of property of a company ceases to act as receiver, he shall, within seven days after so ceasing to act as receiver, lodge with the Registrar a notice that he has ceased to act as receiver.
(4)On lodgement of a notice under subsection (1) or (3), the Registrar shall cause a notice of the appointment of the person as receiver, or that the person has ceased to act as receiver, as the case may be, to be published in the Gazette.

110. Payment of preferential creditors

(1)Where—
(a)a receiver is appointed, on behalf of the holder or trustee of any debenture of a company that is secured by a floating charge; or
(b)possession is taken by or on behalf of such a person;
of property comprised in or subject to the charge, then, if the company is not at the time in the course of being wound-up, the debts which in every winding-up are, under section three hundred and forty-six (relating to preferential payments), to be paid in priority to all other debts shall be paid out of any assets coming to the hands of the receiver or the person taking possession in priority to any claim for principal or interest in respect of the debentures.
(2)For the purpose of applying section three hundred and forty-six, the date of the appointment of the receiver or of possession being taken, as the case may be, shall be deemed to be the date of commencement of the winding-up.

111. Eligibility for appointment as receiver

(1)A body corporate shall not be appointed as a receiver of the property or undertaking of a company.
(2)An individual shall not be appointed, act or continue to act as a receiver of the property or undertaking of a company if he is—
(a)under the age of eighteen years;
(b)under any legal disability;
(c)prohibited or disqualified from so acting by any order of a court of competent jurisdiction;
(d)a mortgagee or chargee of the company;
(e)an undischarged bankrupt;
(f)a person who is, or has been within the previous two years, a director or officer of the company or any related body corporate, save with the leave of the court;
(g)a trustee under any trust deed for the benefit of debenture holders of the company, save with the leave of the court;
(h)a person who has been convicted, within the previous five years, of an offence involving fraud or dishonesty; or
(i)a person who has been removed, within the previous five years, from an office of trust by order of a court of competent jurisdiction.
(3)Where a company is being wound-up, the liquidator may not be appointed receiver.
(4)Any person who in contravention of this section acts or continues to act as a receiver shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding five hundred monetary units or to imprisonment for a period not exceeding six months, or to both.

112. Receivers appointed by the court

A receiver of any property or undertaking of a company appointed by the court shall be an officer of the court and shall be deemed, in relation to the property or undertaking, not to be an officer of the company, and shall act in accordance with the directions and instructions of the court.

113. Receivers appointed otherwise than by the court

(1)A receiver of any property or undertaking of a company appointed, otherwise than by a court, under a power contained in any instrument shall, subject to section one hundred and fourteen, be deemed in relation to the property or undertaking to be an agent and officer of the company and not an agent of the persons by or on behalf of whom he is appointed, and he shall act in accordance with the instrument under which he is appointed and with any directions of the court made under this section.
(2)The court may, on the application of such a receiver, make any order it thinks fit giving directions in relation to any matter arising in connection with the performance of the receiver's functions or declaring the rights of persons before the court or otherwise.
(3)The court may, on the application of the company or any liquidator of the company, by order fix the amount to be paid by way of remuneration to any such receiver and may from time to time, on application made by the company or liquidator or by the receiver, vary or amend the order.
(4)The power of the court under subsection (3) shall—
(a)extend to fixing the remuneration for any period before the making of the order or the application therefor, if the court is satisfied that there are special circumstances making it proper to do so;
(b)be exercisable notwithstanding that the receiver had died or ceased to act before the making of the order or the application therefor; and
(c)extend to requiring the receiver or his personal representatives to account for any amount that the receiver may have been paid or retained for his remuneration, before the making of the order, that is in excess of the remuneration so fixed for that period.

114. Liabilities of receivers on contracts

(1)A receiver of any property or undertaking of a company shall be personally liable on any contract entered into by him as receiver except insofar as the contract expressly provides otherwise.
(2)Where the contract was entered into by the receiver in the proper performance of his functions, he shall have, subject to the rights of any prior encumbrances, an indemnity in respect of liability thereon out of the property in respect of which he has been appointed to act as receiver.
(3)Where the receiver was appointed, otherwise than by a court, under a power contained in any instrument, and the contract was entered into by him with the express or implied authority of those appointing him, he shall also have an indemnity in respect of liability thereon from those appointing him to the extent to which he is unable to recover in accordance with subsection (2).

115. Fact that receiver has been appointed to appear on correspondence

(1)Where a receiver of any property or undertaking of a company has been appointed, every invoice, order or business letter issued by or on behalf of the company, the receiver or the liquidator, being a document on or in which the name of the company appears, shall contain a statement that a receiver has been appointed.
(2)If the company fails to comply with this section, the company, and each officer, liquidator and receiver in default, shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding three monetary units in respect of each document not containing the statement.

116. Statement of affairs and accounts where receiver of undertaking appointed

Where a receiver is appointed of the whole or substantially the whole of the undertaking of any company on behalf of the holders of any debentures secured by a floating charge, section two hundred and eighty-eight and three hundred and thirty-eight shall apply as regards the submission of a statement of affairs and of periodical accounts by the receiver as if the company had been ordered to be wound-up under this Act and as if the receiver had been appointed liquidator.

117. Accounts of receivers

(1)Except where section one hundred and sixteen applies, a receiver of any property of a company shall—
(a)within one month, or such longer period as the Registrar may allow, after the end of the period of twelve months from the date of his appointment and of every subsequent period of twelve months until he ceases to act, lodge with the Registrar an abstract showing the receiver's receipts and payments during that period of twelve months; and
(b)within one month, or such longer period as the Registrar may allow, after he ceases to act as receiver, lodge with the Registrar an abstract showing the receiver's receipts and payments during the period from the end of the twelve months to which the last abstract (if any) related, and the total of those receipts and payments during the whole period of his appointment.
(2)A receiver who fails to comply with this section shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding ten monetary units for each day that the failure continues.

118. Reports by receivers

(1)If a receiver, in the course of the performance of his duties as receiver of property or undertaking of a company, is satisfied that—
(a)there has been a contravention of, or failure to comply with, any of the provisions of this Act; and
(b)the circumstances are such that in his opinion the matter has not been or will not be adequately dealt with by bringing the matter to the notice of the directors of the company or, if the company is a subsidiary, of the directors of any holding company of the company;
he shall as soon as is practicable report the matter to the Registrar in writing.
(2)The court may, on its own motion or on the application of the Registrar or of any person interested in the appointment of a receiver of the property of a company, require the receiver to submit a report to the Registrar on any matter relating to the company on which the receiver may have information.

Part VI – Public issue of shares, etc.

Division 6.1 - Interpretation

119. Meaning of "invitation to the public"

(1)In this Part, an "invitation to the public" to acquire shares or debentures of a company means an offer of, or invitation to make an offer for, shares or debentures of a company other than one—
(a)made to fifteen or fewer persons; or