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Companies Act, 1973 (Act No. 61 of 1973)

Chapter XII: Compromise, Amalgamation, Arrangement and Take-overs

311. Compromise and arrangement between company, its members and creditors

 

 

1) Where any compromise or arrangement is proposed between a company and its creditors or any class of them or between a company and its members or any class of them, the Court may, on the application of the company or any creditor or member of the company or, in the case of a company being wound up, of the liquidator, or if the company is subject to a judicial management order, of the judicial manager, order a meeting of the creditors or class of creditors, or of the members of the company or class of members (as the case may be), to be summoned in such manner as the Court may direct.

 

2) If the compromise or arrangement is agreed to by-
a) a majority in number representing three-fourths in value of the creditors or class of creditors; or
b) a majority representing three-fourths of the votes exercisable by the members or class of members, (as the case may be) present and voting either in person or by proxy at the meeting, such compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors, or on the members or class of members (as the case may be) and also on the company or on the liquidator if the company is being wound up or on the judicial manager if the company is subject to a judicial management order.

 

3) No such compromise or arrangement shall affect the liability of any person who is a surety for the company.

 

4) If the compromise or arrangement is in respect of a company being wound up and provides for the discharge of the winding-up order or for the dissolution of the company without winding up, the liquidator of the company shall lodge with the Master a report in terms of section 400(2) and a report as to whether or not any director or officer or past director or officer of the company is or appears to be personally liable for damages or compensation to the company or for any debts or liabilities of the company under any provision of this Act, and the Master shall report thereon to the Court.

 

5) The Court, in determining whether the compromise or arrangement should be sanctioned or not, shall have regard to the number of members or members of a class present or represented at the meeting referred to in subsection (2) voting in favour of the compromise or arrangement and to the report of the Master referred to in subsection (4).

 

6)
a) An order by the Court sanctioning a compromise or arrangement shall have no effect until a certified copy thereof has been lodged with the Registrar under cover of the prescribed form and registered by him.
b) A copy of such order of court shall be annexed to every copy of the memorandum of the company issued after the date of the order.

 

7) If a company fails to comply with the provisions of subsection (6)(b), the company and every director and officer of the company who is a patty to the failure, shall be guilty of an offence.

 

8) In this section "company" means any company liable to be wound up under this Act and the expression "arrangement" includes a reorganisation of the share capital of the company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both these methods.