New Zealand Companies Act 1993 - Powers of Liquidator

New Zealand New Zealand Companies Act 1993 New Zealand Companies Act 1993

Schedule 6 Powers of liquidators

s 260(2)

A liquidator of a company has power to—

  • (a) commence, continue, discontinue, and defend legal proceedings:

  • (b) the extent necessary for the liquidation carry on the business of the company:

  • (c) appoint a solicitor:

  • (d) pay any class of creditors in full:

  • (e) make a compromise or an arrangement with creditors or persons claiming to be creditors or who have or allege the existence of a claim against the company, whether present or future, actual or contingent, or ascertained or not:

  • (f) compromise calls and liabilities for calls, debts, and liabilities capable of resulting in debts, and claims, present or future, actual or contingent, or ascertained or not, subsisting or supposed to subsist between the company and any person and all questions relating to or affecting the assets or the liquidation of the company, on such terms as may be agreed, and take security for the discharge of any such call, debt, liability, or claim, and give a complete discharge:

  • (g) sell or otherwise dispose of the property of the company:

  • (h) act in the name and on behalf of the company and enter into deeds, contracts, and arrangements in the name and on behalf of the company:

  • (i) prove, rank, and claim in the bankruptcy or insolvency of a shareholder for any balance against that person's estate, and to receive dividends in the bankruptcy or insolvency, as a separate debt due from the bankrupt or insolvent, and rateably with the other separate creditors:

  • (j) draw, accept, make, and endorse a bill of exchange or promissory note in the name and on behalf of the company, with the same effect as if the bill or note had been drawn, accepted, made, or endorsed by or on behalf of the company in the course of its business:

  • (k) borrow money on the security of the company's assets:

  • (l) take out, in his or her name as liquidator, letters of administration to a deceased shareholder, and to do in that name any other act necessary for obtaining payment of money due from a shareholder or his or her estate which cannot be conveniently done in the name of the company, and in all such cases the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator:

  • (m) call a meeting of creditors or shareholders for—

    • (i) the purpose of informing creditors or shareholders of progress in the liquidation:

    • (ii) the purpose of ascertaining the views of creditors or shareholders on any matter arising in the liquidation:

    • (iii) such other purpose connected with the liquidation as the liquidator thinks fit:

  • (n) appoint an agent to do anything which the liquidator is unable to do:

  • (o) change the registered office or address for service of the company.

  • Schedule 6 paragraph (o): inserted, on 15 April 2004, by section 24 of the Companies Amendment Act (No 2) 2004 (2004 No 24).

Schedule 7 Preferential claims

s 312

  • Schedule 7: replaced, on 1 November 2007, by section 40(1) of the Companies Amendment Act 2006 (2006 No 56).

1 Priority of payments to preferential creditors

  • (1) The liquidator must first pay, in the order of priority in which they are listed,—

    • (a) the fees and expenses properly incurred by the liquidator in carrying out the duties and exercising the powers of the liquidator, and the remuneration of the liquidator; and

    • (b) the fees and expenses properly incurred by the administrator in carrying out the duties and exercising the powers of the administrator and the remuneration of the administrator; and

    • (c) the reasonable costs of a person who applied to the court for an order that the company be put into liquidation, including the reasonable costs incurred between lawyer and client in procuring the order; and

    • (d) the actual out-of-pocket expenses necessarily incurred by a liquidation committee; and

    • (e) to any creditor who protects, preserves the value of, or recovers assets of the company for the benefit of the company's creditors by the payment of money or the giving of an indemnity,—

      • (i) the amount received by the liquidator by the realisation of those assets, up to the value of that creditor's unsecured debt; and

      • (ii) the amount of the costs incurred by that creditor in protecting, preserving the value of, or recovering those assets.

    (2) After paying the claims referred to in subclause (1), the liquidator must next pay, to the extent that they remain unpaid, the following claims:

    • (a) subject to clause 3(1), all wages or salary of any employee, whether or not earned wholly or in part by way of commission, and whether payable for time or for piece work, in respect of services provided to the company during the 4 months before the commencement of the liquidation:

    • (aa) subject to clause 3(1), all untransferred amounts of an employee's payroll donations by an employer or PAYE intermediary under section 24Q of the Tax Administration Act 1994 during the 4 months before the commencement of the liquidation:

    • (b) subject to clause 3(1), any holiday pay payable to an employee on the termination of his or her employment before, or because of, the commencement of the liquidation:

    • (c) subject to clause 3(1), any compensation for redundancy owed to an employee that accrues before, or because of, the commencement of the liquidation:

    • (d) subject to clause 3(1), amounts deducted by the company from the wages or salary of an employee in order to satisfy obligations of the employee (including amounts payable to the Commissioner of Inland Revenue in accordance with section 163(1) of the Child Support Act 1991 and section 167(2) of the Tax Administration Act 1994 as applied by section 70 of the Student Loan Scheme Act 2011):

    • (e) subject to clause 3(1), any reimbursement or payment provided for, or ordered by, the Employment Relations Authority, the Employment Court, or the Court of Appeal under section 123(1)(b) or section 128 of the Employment Relations Act 2000, to the extent that the reimbursement or payment does not relate to any matter set out in section 123(1)(c) of the Employment Relations Act 2000, in respect of wages or other money or remuneration lost during the 4 months before the commencement of the liquidation:

    • (f) amounts that are preferential claims under section 263(2):

    • (g) all amounts payable to the Commissioner of Inland Revenue in accordance with section 167(2) of the Tax Administration Act 1994 as applied by section 67 of the KiwiSaver Act 2006:

    • (h) all sums that, by any other enactment, are required to be paid in accordance with the priority established by this subclause.

    (3) After paying the claims referred to in subclause (2), the liquidator must next pay all sums, for which a buyer is a creditor in the liquidation of the company under section 11 of the Layby Sales Act 1971,—

    • (a) paid by the buyer to a seller on account of the purchase price of goods; or

    • (b) to which the buyer is or becomes entitled to receive from a seller under section 9 of the Layby Sales Act 1971.

    (4) After paying the claims referred to in subclause (3), the liquidator must next pay the amount of any costs referred to in section 234(c).

    (5) After paying the claims referred to in subclause (4), the liquidator must next pay, to the extent that it remains unpaid to the Commissioner of Inland Revenue or to the Collector of Customs, as the case may require, the amount of—

    • (a) tax payable by the company in the manner required by Part 3 of the Goods and Services Tax Act 1985; and

    • (b) tax deductions made by the company under the PAYE rules of the Income Tax Act 2004; and

    • (c) non-resident withholding tax deducted by the company under the NRWT rules of the Income Tax Act 2004; and

    • (d) resident withholding tax deducted by the company under the RWT rules of the Income Tax Act 2004; and

    • (e) duty payable within the meaning of section 2(1) of the Customs and Excise Act 1996.

    Schedule 7 clause 1(2)(aa): inserted, on 6 January 2010, by section 862 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

    Schedule 7 clause 1(2)(d): amended, on 1 April 2012, by section 223 of the Student Loan Scheme Act 2011 (2011 No 62).

2 Conditions to priority of payments to preferential creditors

  • (1) The claims listed in each of subclauses (2), (3), (4), and (5) of clause 1—

    • (a) rank equally among themselves and, subject to any maximum payment level specified in any Act or regulations, must be paid in full, unless the assets of the company are insufficient to meet them, in which case they abate in equal proportions; and

    • (b) in so far as the assets of the company available for payment of those claims are insufficient to meet them,—

      • (i) have priority over the claims of any person under a security interest to the extent that the security interest—

        • (A) is over all or any part of the company's accounts receivable and inventory or all or any part of either of them; and

        • (B) is not a purchase money security interest that has been perfected at the time specified in section 74 of the Personal Property Securities Act 1999; and

        • (C) is not a security interest that has been perfected under the Personal Property Securities Act 1999 at the commencement of the liquidation and that arises from the transfer of an account receivable for which new value is provided by the transferee for the acquisition of that account receivable (whether or not the transfer of the account receivable secures payment or performance of an obligation); and

      • (ii) must be paid accordingly out of any accounts receivable or inventory subject to that security interest (or their proceeds).

    (2) For the purposes of subclause (1)(b), the terms account receivable, inventory, new value, proceeds, purchase money security interest, and security interest have the same meanings as in the Personal Property Securities Act 1999.

    (3) To the extent that the claims to which subclause (1) applies are paid out of assets referred to in paragraph (b) of that subclause, the amount so paid is an unsecured debt due by the company to the secured party.

    (4) Clause 9 of this schedule, as was in force immediately before the commencement of the Personal Property Securities Act 1999, continues to apply in respect of a company whose property was subject to a floating charge that, before the commencement of that Act, became a fixed or specific charge.

3 Provisions concerning preferential payments to employees

  • (1) The total sum to which priority is to be given under any, or all, of paragraphs (a) to (e) of clause 1(2) must not, in the case of any one employee, exceed $20,340 or any greater amount that is prescribed under subclause (2) at the commencement of the liquidation.

    (2) The sum stated in subclause (1) must be adjusted as follows:

    • (a) subject to paragraph (d), an adjustment must be made, by the Governor-General by Order in Council, after the 3-year period starting on 1 July 2006 and ending on 30 June 2009 and after every 3-year period following that (an adjustment period):

    • (b) subject to paragraph (d), the Order in Council must be made within 3 months of the end of an adjustment period:

    • (c) each adjustment must reflect any overall percentage increase, over the relevant adjustment period, in average weekly earnings (total, private sector), calculated by reference to the last Quarterly Employment Survey published by Statistics New Zealand (or, if that survey ceases to be published, a survey certified by the Government Statistician as an equivalent to that survey) within the relevant adjustment period:

    • (d) if, in an adjustment period, there is no change, or an overall decrease, in the percentage movement in average weekly earnings (total, private sector), as so calculated, no adjustment may be made for that adjustment period:

    • (e) if, in accordance with paragraph (d), no adjustment is made, the next adjustment made for any succeeding adjustment period must reflect any overall percentage increase in average weekly earnings (total, private sector) between the date of the last adjustment and the end of the relevant adjustment period for which the adjustment is to be made:

    • (f) all adjustments are cumulative and must be rounded to the nearest $20:

    • (g) any correction to the Quarterly Employment Survey on which an adjustment is based must be disregarded until the adjustment that takes effect in the following adjustment period, which must reflect the corrected information in the calculation of that adjustment and must otherwise be made in accordance with this subclause.

    (3) The sum stated in subclause (1), or any greater amount prescribed under subclause (2) that applies on the date of commencement of a liquidation, continues to apply to that liquidation regardless of any change to that sum that is prescribed after the date of commencement of the liquidation.

    (4) For the purposes of this clause and clause 1,—

    • (a) remuneration in respect of a period of holiday or of absence from work through sickness or other good cause is to be treated as wages in respect of services rendered to the company during that period:

    • (b) employee means any person of any age employed by an employer to do any work for hire or reward under a contract of service (including a homeworker as defined in section 5 of the Employment Relations Act 2000); but does not include a person who is, or was at any time during the 12 months before the commencement of the liquidation, a director of the company in liquidation, or a nominee or relative of, or a trustee for, a director of the company:

    • (c) holiday pay, in relation to a person, means all sums payable to that person by the company under subpart 1 of Part 2 of the Holidays Act 2003, and includes all sums that by or under any other enactment or any award, agreement, or contract of service are payable to that person by the company as holiday pay.

    Schedule 7 clause 3(1): amended, on 28 September 2012, by clause 3 of the Companies (Maximum Priority Amount) Order 2012 (SR 2012/252).

4 Subrogation of persons if payment has been made

  • If a payment has been made to a person (A) on account of any preferential claim set out in this schedule out of money advanced by another person (B) for that purpose, then B has, in a liquidation, the same right of priority in respect of the money so advanced as A would have if the payment had not been made.

5 Priority given to person who distrains on goods

  • If a person has distrained on goods or effects of the company during the 20 working days before the commencement of the liquidation, the preferential claims set out in this schedule are a first charge on the goods or effects so distrained, or the proceeds from their sale; but if any money is paid to a claimant under that charge, the person has the same rights of priority as that claimant.

    Schedule 7 clause 5: amended, on 1 January 2008, by section 370(2) of the Property Law Act 2007 (2007 No 91).

6 Saving provision for liquidation that has commenced

  • If a liquidation of a company commenced before the Companies Amendment Act 2006 came into force, that company's property must be applied in accordance with the priorities stated in this schedule on the date the liquidation commenced as if the Companies Amendment Act 2006 had not come into force.

Schedule 8 Proceedings at meetings of liquidation committees

s 315(3)

1 Frequency of meetings

  • The committee must meet at such times as it from time to time appoints, and the liquidator or a member of the committee may also call a meeting of the committee as and when necessary.

2 Majorities

  • The committee may act by a majority of its members present at a meeting, but may not act unless a majority of the committee are present.

3 Resignation

  • A member of the committee may resign by notice in writing signed by him or her and delivered to the liquidator.

4 Office becoming vacant

  • If a member of the committee becomes bankrupt, or compounds or arranges with his or her creditors, or is absent from 3 consecutive meetings of the committee without the leave of those members who together with that member represent the creditors or shareholders, as the case may be, the office of that member becomes vacant.

5 Removal of a member

  • A member of the committee may be removed by a resolution carried at a meeting of creditors if the member represents creditors, or of shareholders if the member represents shareholders, of which 5 working days' notice has been given, stating the object of the meeting.

6 Vacancy filled

  • A vacancy in the committee may be filled by the appointment by the committee of—

    • (a) the same or another creditor or shareholder, as the case may be; or

    • (b) a person holding a general power of attorney from, or being an authorised director or representative of, a company which is a creditor or shareholder, as the case may be.

    Schedule 8 clause 6(b): amended, on 1 July 1994, by section 50 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

7 Committee with vacancy may act

  • The continuing members of the committee, if not less than 2, may act even though a vacancy exists in the committee.

Schedule 9 Liquidation of overseas companies

ss 341(2), 342(1)

  • Schedule 9 heading: amended, on 24 July 2008, by section 13 of the Insolvency (Cross-border) Act 2006 (2006 No 57).

1 Modified application of Part 16

  • Part 16 applies to the liquidation of an overseas company, with the following modifications and exclusions:

    • (a) [Repealed]

    • (b) references to a company are to be taken as references to an overseas company:

    • (c) references to removal from the New Zealand register are to be taken as references to ceasing to carry on business in New Zealand:

    • (d) the following provisions of that Part do not apply to such a liquidation:

      • (i) section 248(1)(d), (e), (f), and (g):

      • (ii) section 268:

    • (e) [Repealed]

    • (f) section 257 applies to such a liquidation, but instead of making the statement required by subsection (1)(a)(ii)(C) of that section, the liquidator must state that the company has ceased to carry on business in New Zealand and is ready to be removed from the overseas register.

    Schedule 9 clause 1: amended, on 24 July 2008, by section 13 of the Insolvency (Cross-border) Act 2006 (2006 No 57).

    Schedule 9 clause 1(a): repealed, on 24 July 2008, by section 13 of the Insolvency (Cross-border) Act 2006 (2006 No 57).

    Schedule 9 clause 1(e): repealed, on 24 July 2008, by section 13 of the Insolvency (Cross-border) Act 2006 (2006 No 57).

2 Rights of action not affected

  • Nothing in this Act excludes the right of a creditor of an overseas company in relation to which a liquidator has been appointed—

    • (a) to bring proceedings outside New Zealand against the overseas company in relation to a debt not claimed in the liquidation or the balance of a debt remaining unpaid after the completion of a liquidation; or

    • (b) to bring an action in New Zealand in relation to the balance of a debt remaining unpaid after the completion of a liquidation.

    Schedule 9 clause 2: amended, on 24 July 2008, by section 13 of the Insolvency (Cross-border) Act 2006 (2006 No 57).

Companies Amendment Act 2006

Public Act - 2006 No 56

Date of assent - 7 November 2006

Commencement see section 2

1 Title

  • This Act is the Companies Amendment Act 2006.

2 Commencement

  • This Act comes into force on a date to be appointed by the Governor-General by Order in Council; and 1 or more orders may be made bringing different provisions into force on different dates.

    Section 2: Companies Amendment Act 2006 brought into force, on 1 November 2007, by the Companies Amendment Act 2006 Commencement Order 2007 (SR 2007/297).

3 Principal Act amended

  • This Act amends the Companies Act 1993.

Qualifications and supervision of liquidators

24 Qualifications of liquidators

  • (1)–(4) Amendment(s) incorporated in the Act(s).

    (5) Nothing in this section affects the qualification of a liquidator in office when this section came into force.

Voidable transactions

27 Transactions having preferential effect

  • (1)–(4) Amendment(s) incorporated in the Act(s).

    (5) Nothing in this section makes voidable a transaction that was completed before this section came into force, if that transaction would not have been voidable if this section had not come into force.

Schedule 7

40 Schedule 7 substituted

  • (1) Amendment(s) incorporated in the Act(s).

    (2) If a liquidator is appointed to a company before this section comes into force, the property of the company must be applied in accordance with the priorities stated in Schedule 7 as if this section had not come into force.

Companies Amendment Act (No 2) 2006

Public Act - 2006 No 62

Date of assent - 21 November 2006

Commencement - see section 2

1 Title

  • This Act is the Companies Amendment Act (No 2) 2006.

2 Commencement

  • (1) Sections 4(3), 5 to 13, 16, and 17, and the Schedule come into force on a date to be appointed by the Governor-General by Order in Council; and 1 or more orders may be made bringing different provisions into force on different dates.

    (2) The rest of this Act comes into force on the day after the date on which it receives the Royal assent.

    Section 2(1): sections 4(3), 5–10, 13, 16(1), (2), and 17, and the Schedule brought into force, on 18 June 2007, by clause 2(1) of the Companies Amendment Act (No 2) 2006 Commencement Order 2007 (SR 2007/108).

    Section 2(1): sections 11 and 12 brought into force, on 1 September 2007, by clause 2(2) of the Companies Amendment Act (No 2) 2006 Commencement Order 2007 (SR 2007/108).

    Section 2(1): section 16(3) brought into force, on 29 February 2008, by the Companies Amendment Act (No 2) 2006 Commencement Order (No 2) 2007 (SR 2007/370).

3 Principal Act amended

  • This Act amends the Companies Act 1993.

4 Interpretation

  • (1) Amendment(s) incorporated in the Act(s).

    (2) Subsection (1) applies in respect of—

    • (a) accounting periods that have not ended at the commencement of that subsection; and

    • (b) accounting periods that commence after the commencement of that subsection.

    (3) Amendment(s) incorporated in the Act(s).

5 Qualifications of directors

  • (1) Amendment(s) incorporated in the Act(s).

    (2) If, immediately before the commencement of this section, a person is a director of a company and is subject to an order or notice of a kind referred to in section 151(2)(eb) of the principal Act (as inserted by this section), the person is not disqualified from being a director of that company under that paragraph by reason of that order or notice.

Public Act - 2008 No 69

Date of assent - 16 September 2008

Commencement see section 2

1 Title

  • This Act is the Companies (Minority Buy-out Rights) Amendment Act 2008.

2 Commencement

  • This Act comes into force on the day after the date on which it receives the Royal assent.

Part 1 Amendments to Companies Act 1993

3 Principal Act amended

  • This Part amends the Companies Act 1993.

Part 2 Transitional provision and consequential amendments to other enactments

11 Application of amendments in Part 1

  • The amendments in Part 1 do not apply to any special resolution passed under section 106(1) of the Companies Act 1993 before this Act comes into force.

Reprints notes

1 General

  • This is a reprint of the Companies Act 1993 that incorporates all the amendments to that Act as at the date of the last amendment to it.

2 Legal status

  • Reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by any amendments to that enactment. Section 18 of the Legislation Act 2012 provides that this reprint, published in electronic form, will have the status of an official version once issued by the Chief Parliamentary Counsel under section 17(1) of that Act.

3 Editorial and format changes

  • Editorial and format changes to reprints are made using the powers under sections 24 to 26 of the Legislation Act 2012.

4 Amendments incorporated in this reprint

  • Companies Amendment Act 2013 (2013 No 111)

    Reserve Bank of New Zealand (Covered Bonds) Amendment Act 2013 (2013 No 103): section 12

    Holidays (Full Recognition of Waitangi Day and ANZAC Day) Amendment Act 2013 (2013 No 19): section 8

    Companies (Maximum Priority Amount) Order 2012 (SR 2012/252): clause 3

    Takeovers Amendment Act 2012 (2012 No 68): section 10

    Companies Amendment Act (No 2) 2012 (2012 No 60)

    Companies Amendment Act 2012 (2012 No 7)

    Criminal Procedure Act 2011 (2011 No 81): section 413

    Student Loan Scheme Act 2011 (2011 No 62): section 223

    Auditor Regulation Act 2011 (2011 No 21): section 82

    Financial Markets Authority Act 2011 (2011 No 5): section 82

    Insurance (Prudential Supervision) Act 2010 (2010 No 111): section 241(2)

    Takeovers Amendment Act 2010 (2010 No 88): section 20

    New Zealand Institute of Chartered Accountants Amendment Act 2010 (2010 No 74): section 10

    Companies Amendment Act (No 2) 2010 (2010 No 53)

    Civil Aviation (Cape Town Convention and Other Matters) Amendment Act 2010 (2010 No 42): section 14(1)

    Companies Amendment Act 2010 (2010 No 13)

    Securities Markets Amendment Act 2009 (2009 No 54): section 23(1)

    Reserve Bank of New Zealand Amendment Act 2009 (2009 No 53): sections 16–19

    Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34): section 862

    Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69)

    Limited Partnerships Act 2008 (2008 No 1): section 119

    Companies Amendment Act (No 2) 2006 Commencement Order (No 2) 2007 (SR 2007/370).

    Property Law Act 2007 (2007 No 91): sections 364(1), 370(2)

    Companies Amendment Act 2006 Commencement Order 2007 (SR 2007/297)

    Companies Amendment Act 2007 (2007 No 48)

    Taxation (KiwiSaver and Company Tax Rate Amendments) Act 2007 (2007 No 19): section 70

    Companies Amendment Act (No 2) 2006 Commencement Order 2007 (SR 2007/108).

    Taxation (Savings Investment and Miscellaneous Provisions) Act 2006 (2006 No 81): section 219

    Companies Amendment Act (No 2) 2006 (2006 No 62)

    Insolvency (Cross-border) Act 2006 (2006 No 57): section 13

    Companies Amendment Act 2006 (2006 No 56)

    Insolvency Act 2006 (2006 No 55): section 445

    Takeovers Amendment Act 2006 (2006 No 48): section 30(1)

    Securities Amendment Act 2006 (2006 No 46): section 25

    Lawyers and Conveyancers Act 2006 (2006 No 1): section 348

    Relationships (Statutory References) Act 2005 (2005 No 3): section 7

    Companies Amendment Act (No 2) 2004 (2004 No 24)

    Companies Amendment Act 2004 (2004 No 10)

    Reserve Bank of New Zealand Amendment Act 2003 (2003 No 46): section 48(1)

    Takeovers Amendment Act 2002 (2002 No 45): section 38

    Securities Markets Amendment Act 2002 (2002 No 44): section 30

    Public Trust Act 2001 (2001 No 100): section 170(1)

    Companies Act 1993 Amendment Act 2001 (2001 No 18)

    Public Audit Act 2001 (2001 No 10): section 53

    Personal Property Securities Act 1999 (1999 No 126): section 191(1)

    Companies Amendment Act 1999 (1999 No 19)

    Companies Amendment Act 1998 (1998 No 31)

    Companies Act 1993 Amendment Act 1997 (1997 No 27)

    Companies Act 1993 Amendment Act 1996 (1996 No 115)

    Institute of Chartered Accountants of New Zealand Act 1996 (1996 No 39): section 23

    Department of Justice (Restructuring) Act 1995 (1995 No 39): section 10(3)

    Income Tax Act 1994 (1994 No 164): section YB 1

    Companies Act 1993 Amendment Act (No 2) 1994 (1994 No 82)

    Public Finance Act 1989 (1989 No 44): section 65R(3)

New Zealand Companies Act 1993 New Zealand Companies Act 1993
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