New Zealand Companies Act 1993 - Approval

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

Part 15 Approval of arrangements, amalgamations, and compromises by court

235 Interpretation

  • In this Part, unless the context otherwise requires,—

    arrangement includes a reorganisation of the share capital of a company by the consolidation of shares of different classes, or by the division of shares into shares of different classes, or by both those methods

    company means—

    • (a) a company within the meaning of section 2:

    • (b) an overseas company that is registered on the overseas register:

    • (c) an association that may be put into liquidation under section 17A of the Judicature Act 1908

    creditor includes—

    • (a) a person who, in a liquidation, would be entitled to claim in accordance with section 303 that a debt is owing to that person by the company; and

    • (b) a secured creditor.

    Section 235 creditor: replaced, on 1 July 1994, by section 29 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).

236 Approval of arrangements, amalgamations, and compromises

  • (1) Notwithstanding the provisions of this Act or the constitution of a company, the court may, on the application of a company or any shareholder or creditor of a company, order that an arrangement or amalgamation or compromise shall be binding on the company and on such other persons or classes of persons as the court may specify and any such order may be made on such terms and conditions as the court thinks fit.

    (2) Before making an order under subsection (1), the court may, on the application of the company or any shareholder or creditor or other person who appears to the court to be interested, or of its own motion, make any 1 or more of the following orders:

    • (a) an order that notice of the application, together with such information relating to it as the court thinks fit, be given in such form and in such manner and to such persons or classes of persons as the court may specify:

    • (b) an order directing the holding of a meeting or meetings of shareholders or any class of shareholders or creditors or any class of creditors of a company to consider and, if thought fit, to approve, in such manner as the court may specify, the proposed arrangement or amalgamation or compromise and, for that purpose, may determine the shareholders or creditors that constitute a class of shareholders or creditors of a company:

    • (c) an order requiring that a report on the proposed arrangement or amalgamation or compromise be prepared for the court by a person specified by the court and, if the court thinks fit, be supplied to the shareholders or any class of shareholders or creditors or any class of creditors of a company or to any other person who appears to the court to be interested:

    • (d) an order as to the payment of the costs incurred in the preparation of any such report:

    • (e) an order specifying the persons who shall be entitled to appear and be heard on the application to approve the arrangement or amalgamation or compromise.

    (2A) If the arrangement or amalgamation or compromise involves a transfer or amalgamation that requires the written approval of the Reserve Bank of New Zealand under section 44 of the Insurance (Prudential Supervision) Act 2010, the court may not make an order under this section unless that approval has been given.

    (3) An order made under this section has effect on and from the date specified in the order.

    (4) Within 10 working days of an order being made by the court, the board of the company must ensure that a copy of the order is delivered to the Registrar for registration.

    (5) If the board of a company fails to comply with subsection (4), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

    Section 236(2A): inserted, on 1 February 2011, by section 241(2) of the Insurance (Prudential Supervision) Act 2010 (2010 No 111).

237 Court may make additional orders

  • (1) Without limiting section 236, the court may, for the purpose of giving effect to any arrangement or amalgamation or compromise approved under that section, either by the order approving the arrangement or amalgamation or compromise, or by any subsequent order, provide for, and prescribe terms and conditions relating to,—

    • (a) the transfer or vesting of real or personal property, assets, rights, powers, interests, liabilities, contracts, and engagements:

    • (b) the issue of shares, securities, or policies of any kind:

    • (c) the continuation of legal proceedings:

    • (d) the liquidation of any company:

    • (e) the provisions to be made for persons who voted against the arrangement or amalgamation or compromise at any meeting called in accordance with any order made under subsection (2)(b) of that section or who appeared before the court in opposition to the application to approve the arrangement or amalgamation or compromise:

    • (f) such other matters that are necessary or desirable to give effect to the arrangement or amalgamation or compromise.

    (2) Within 10 working days of an order being made by the court, the board of the company must ensure that a copy of the order is delivered to the Registrar for registration.

    (3) If the board of a company fails to comply with subsection (2), every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(2).

238 Parts 13 and 14 not affected

  • The court may—

    • (a) approve an amalgamation under section 236 even though the amalgamation could be effected under Part 13:

    • (b) approve a compromise under section 236 even though the compromise could be approved under Part 14.

239 Application of section 233

  • The provisions of section 233 shall apply with such modifications as may be necessary in relation to any compromise approved under section 236.

Part 15A Voluntary administration

  • Part 15A: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 1—Preliminary

  • Subpart 1: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239A Objects of this Part

  • The objects of this Part are to provide for the business, property, and affairs of an insolvent company, or a company that may in the future become insolvent, to be administered in a way that—

    • (a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or

    • (b) if it is not possible for the company or its business to continue in existence, results in a better return for the company's creditors and shareholders than would result from an immediate liquidation of the company.

    Compare: Corporations Act 2001 s 435A (Aust)

    Section 239A: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239B Interpretation of some key terms

  • The following are some key terms used in this Part and their meanings:

    administrator means the person who is appointed the administrator of the company in administration

    deed administrator, who may or may not be the same person as the administrator, is the person who is appointed the administrator of the deed of company arrangement

    deed of company arrangement means the deed that is executed by the company and its creditors providing for payments towards the creditors' debts

    watershed meeting means the creditors' meeting called by the administrator to decide the future of the company and, in particular, whether the company and the deed administrator should execute a deed of company arrangement.

    Section 239B: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239C Interpretation of other terms

  • In this Part, unless the context otherwise requires,—

    company includes an overseas company

    convening period has the meaning given to it in section 239AT(2)

    creditor includes—

    • (a) a person who, in a liquidation, would be entitled to claim in accordance with section 303 that a debt is owing to that person by the company; and

    • (b) a secured creditor

    enforcement process, in relation to property, means—

    • (a) execution against that property; or

    • (b) any other enforcement process in relation to that property that involves a court or a sheriff

    insolvent means, in relation to a company, that the company is unable to pay its debts

    sheriff includes a person charged with the execution of a writ or other enforcement process.

    Section 239C: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239D When administration begins

  • The administration of a company begins when an administrator is appointed under this Part.

    Compare: Corporations Act 2001 s 435C(1) (Aust)

    Section 239D: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239E When administration ends

  • (1) The administration of a company ends when—

    • (a) a deed of company arrangement is executed by both the company and the deed administrator; or

    • (b) the company's creditors resolve that the administration should end; or

    • (c) the company's creditors appoint a liquidator by a resolution passed at the watershed meeting.

    (2) However, the administration of a company may also end in the following instances:

    • (a) if the court orders that the administration end, for example because the court is satisfied that the company is solvent, the administration ends on the date specified in the order or, if no date is specified, when the order is made; or

    • (b) if the convening period expires without the watershed meeting having been convened or without an application having been made to extend the convening period, the administration ends at the end of that period; or

    • (c) if an application has been made to extend the convening period, which has expired after the application was made, the administration ends when the application is refused or otherwise disposed of without the convening period being extended; or

    • (d) if the watershed meeting ends without a resolution that the company execute a deed of company arrangement, the administration ends at the end of that meeting; or

    • (e) if the company fails to execute a proposed deed of company arrangement within the time allowed by section 239ACO or 239ACP, the administration ends when that time expires; or

    • (f) if the court appoints a liquidator or an interim liquidator, the administration ends at the time when the order is made.

    Compare: Corporations Act 2001 s 435C(2), (3) (Aust)

    Section 239E: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239EA Voluntary administration of licensed insurers

  • If a company is a licensed insurer, this Part applies in respect of the insurer subject to subpart 3 of Part 4 of the Insurance (Prudential Supervision) Act 2010.

    Section 239EA: inserted, on 1 February 2011, by section 241(2) of the Insurance (Prudential Supervision) Act 2010 (2010 No 111).

Subpart 2—Appointment of administrator

  • Subpart 2: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239F Who may be appointed administrator

  • (1) A natural person who is not disqualified under subsection (2) may be appointed an administrator of a company.

    (2) Unless the court orders otherwise, a person is disqualified from appointment as an administrator if that person—

    • (a) is disqualified under section 280(1) from being appointed or acting as a liquidator of the company; or

    • (b) is prohibited from being an administrator by an order made under section 239ADV.

    Section 239F: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239G Administrator must consent in writing

  • A person must not be appointed the administrator of a company unless that person has consented in writing and has not withdrawn the consent at the time of appointment.

    Compare: Corporations Act 2001 s 448A (Aust)

    Section 239G: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239H Who may appoint administrator

  • (1) An administrator may be appointed to a company by—

    • (a) the company (see section 239I); or

    • (b) if the company is in liquidation, the liquidator (see section 239J); or

    • (c) if an interim liquidator has been appointed, the interim liquidator (see section 239J); or

    • (d) a secured creditor holding a charge over the whole, or substantially the whole, of the company's property (see section 239K); or

    • (e) the court (see section 239L).

    (2) If the company is already in administration, an administrator may be appointed only by—

    • (a) the court; or

    • (b) the creditors, as a replacement administrator for an administrator that the creditors have removed; or

    • (c) the appointor of the first administrator, if that administrator has died, resigned, or become disqualified.

    Compare: Corporations Act 2001 s 436D (Aust)

    Section 239H: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239I Appointment by company

  • (1) A company may appoint an administrator if the board of the company has resolved that,—

    • (a) in the opinion of the directors voting for the resolution, the company is insolvent or may become insolvent; and

    • (b) an administrator of the company should be appointed.

    (2) The appointment must be in writing and must state the date of the appointment.

    (3) The company must not appoint an administrator if the company is already in liquidation.

    (4) If an application has been filed for the appointment of a liquidator of the company by the court under section 241(2)(c), the company may only appoint an administrator if the administrator is appointed within 10 working days after service on the company of the application.

    (5) Subsection (4) does not apply once the application has been finally disposed of.

    Compare: Corporations Act 2001 s 436A (Aust)

    Section 239I: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239J Appointment by liquidator or interim liquidator

  • (1) The liquidator or interim liquidator of a company may appoint an administrator if he or she thinks that the company is insolvent or is likely to become insolvent.

    (2) The appointment must be in writing and must state the date of the appointment.

    (3) The liquidator or interim liquidator may appoint himself or herself administrator if he or she first obtains—

    • (a) the permission of the court; or

    • (b) in the case of a liquidator but not an interim liquidator, the approval of the company's creditors in the form of a resolution passed at a meeting of the creditors.

    (4) A liquidator or interim liquidator must not appoint as administrator a person who is the liquidator's or interim liquidator's business or professional partner, employer, or employee, unless the appointment has been approved by the company's creditors in the form of a resolution passed at a creditors' meeting.

    (5) An administrator who is appointed to a company already in liquidation may apply to the court for an order under section 250 terminating the liquidation.

    Compare: Corporations Act 2001 s 436B (Aust)

    Section 239J: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239K Appointment by secured creditor

  • (1) A person who holds a charge over the whole, or substantially the whole, of a company's property may appoint an administrator if the charge has become, and is still, enforceable.

    (2) The appointment must be in writing and must state the date of the appointment.

    (3) A secured creditor must not appoint an administrator if the company is already in liquidation.

    Compare: Corporations Act 2001 s 436C (Aust)

    Section 239K: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239L Appointment by court

  • (1) The court may appoint an administrator on the application of a creditor, the liquidator (if the company is in liquidation), the FMA (if the company is a financial markets participant), or the Registrar.

    (2) The court may appoint an administrator if—

    • (a) the court is satisfied that the company is or may become insolvent and that an administration is likely to result in a better return for the company's creditors and shareholders than would result from an immediate liquidation of the company; or

    • (b) it is just and equitable to do so.

    (3) In the case of a licensed insurer, the court may appoint an administrator on the application of the Reserve Bank of New Zealand or a person referred to in subsection (1) if—

    • (a) subsection (2)(a) or (b) apply; or

    • (b) the insurer is failing to maintain a solvency margin (within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2010).

    Section 239L: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

    Section 239L(1): amended, on 1 May 2011, by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).

    Section 239L(3): inserted, on 1 February 2011, by section 241(2) of the Insurance (Prudential Supervision) Act 2010 (2010 No 111).

239M Appointment must not be revoked

  • (1) The appointment of an administrator must not be revoked.

    (2) This does not apply to removal by the court or by the creditors.

    Compare: Corporations Act 2001 s 449A (Aust)

    Section 239M: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239N Appointment of 2 or more administrators

  • (1) Two or more persons may be appointed administrators in any case where this Act provides for the appointment of an administrator.

    (2) If 2 or more persons are appointed administrators of a company,—

    • (a) an administrator's function or power may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the order, instrument, or resolution appointing them provides otherwise; and

    • (b) a reference in this Act to an administrator or the administrator refers to whichever 1 or more of the administrators the case requires.

    Compare: Corporations Act 2001 s 451A (Aust)

    Section 239N: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239O Remuneration of administrator

  • (1) The administrator is entitled to charge reasonable remuneration for carrying out his or her duties and exercising his or her powers as administrator.

    (2) The court may, on the application of the administrator, a director or officer of the company, a creditor, or a shareholder, review or fix the administrator's remuneration at a level that is reasonable in the circumstances.

    (3) A creditor or shareholder may make an application under subsection (2) only with the leave of the court.

    Compare: 1993 No 105 ss 276(1), 284(1)(e)

    Section 239O: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 3—Resignation and removal of administrator

  • Subpart 3: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239P When office of administrator is vacant

  • The office of administrator is vacant if the administrator—

    • (a) resigns; or

    • (b) dies; or

    • (c) becomes disqualified from appointment as an administrator (see section 239F(2)); or

    • (d) is removed by the court.

    Compare: Corporations Act 2001 s 449C(1) (Aust)

    Section 239P: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239Q Administrator may resign

  • (1) The administrator may resign by giving written notice to the company and to his or her appointor.

    (2) The administrator must—

    • (a) give written notice of the resignation to as many of the company's creditors as practicable; and

    • (b) advertise the resignation in accordance with section 3(1)(b).

    Compare: Corporations Act 2001 s 449C(1)(c) (Aust)

    Section 239Q: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239R Removal of administrator

  • (1) The administrator may be removed—

    • (a) by the court, on the application of a creditor, the liquidator (if the company is in liquidation), the FMA (if the company is a financial markets participant), or the Registrar; or

    • (b) by a resolution of creditors passed at the first creditors' meeting; or

    • (c) by a resolution of creditors at a meeting convened under section 239T(1) to consider whether to remove a replacement administrator.

    (2) The creditors may not remove the administrator by a resolution passed at a creditors' meeting unless—

    • (a) the same resolution also appoints as administrator another person who is not disqualified; and

    • (b) the person named in the resolution as the new administrator has, before the resolution is considered, tabled at the meeting—

      • (i) a signed, written consent to act as administrator; and

      • (ii) an interests statement.

    Compare: Corporations Act 2001 ss 436E(4), 449B (Aust)

    Section 239R: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

    Section 239R(1)(a): amended, on 1 May 2011, by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).

239S Appointor may appoint new administrator to fill vacancy

  • (1) The appointor of an administrator may appoint a replacement to fill the vacancy that occurs if the administrator—

    • (a) resigns; or

    • (b) dies; or

    • (c) becomes disqualified.

    (2) The appointment of a replacement administrator by a company must be made by a resolution of the board of the company.

    Compare: Corporations Act 2001 s 449C (Aust)

    Section 239S: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239T Creditors must consider appointment of replacement administrator

  • (1) A replacement administrator, unless appointed by the court or by the creditors under section 239R(1)(b), must convene a meeting of the creditors at which the creditors may vote to remove the replacement administrator and appoint another person in his or her place.

    (2) The meeting must be held not more than 5 working days after the date on which the replacement administrator is appointed.

    (3) The replacement administrator must convene the meeting by—

    • (a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and

    • (b) advertising the meeting in accordance with section 3(1)(b).

    (4) The replacement administrator must take the steps in subsection (3) not less than 2 working days before the meeting.

    Compare: Corporations Act 2001 s 449C(4), (5) (Aust)

    Section 239T: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 4—Effect of appointment of administrator

  • Subpart 4: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239U Outline of administrator's role

  • While a company is in administration, the administrator—

    • (a) has control of the company's business, property, and affairs; and

    • (b) may carry on that business and manage that property and those affairs; and

    • (c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and

    • (d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not in administration.

    Compare: Corporations Act 2001 s 437A(1) (Aust)

    Section 239U: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239V Administrator's powers

  • (1) The administrator has the powers—

    • (a) to carry out the functions and duties of an administrator under this Act; and

    • (b) conferred on an administrator under this Act.

    (2) An administrator's powers include the powers to—

    • (a) begin, continue, discontinue, and defend legal proceedings; and

    • (b) carry on, to the extent necessary for the administration of the company, the business of the company; and

    • (c) appoint an agent to do anything that the administrator has power to do.

    Compare: 1993 No 105 s 260(1)

    Section 239V: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239W Administrator is company's agent

  • The administrator of a company, when performing a function or exercising a power in that capacity, is the company's agent.

    Compare: Corporations Act 2001 s 437B (Aust)

    Section 239W: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239X Effect on directors

  • (1) The appointment of an administrator does not remove the directors of the company from office.

    (2) However, a director of a company that is in administration must not exercise or perform, or purport to exercise or perform, a function or power as a director of the company except—

    • (a) with the prior, written approval of the administrator; or

    • (b) as expressly permitted by this Part.

    Compare: Corporations Act 2001 s 437C (Aust)

    Section 239X: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239Y Effect on employees

  • (1) The appointment of an administrator does not automatically terminate an employment agreement to which the company is a party.

    (2) The administrator is not personally liable for any obligation of the company under an employment agreement to which the company is a party, unless—

    • (a) the administrator expressly adopts the agreement in writing; or

    • (b) subsection (3) applies.

    (3) The administrator is personally liable for payment of wages or salary that, during the administration of the company, accrue under a contract of employment with the company that was entered into before the administrator's appointment, unless the administrator has lawfully given notice of the termination of the contract within 14 days of appointment.

    (4) The court may, on the administrator's application, extend the period of 14 days in subsection (3) within which notice of termination must be given, and may extend it on the terms and conditions, if any, that the court thinks appropriate.

    (5) From the date of the appointment of the administrator, the duty of good faith set out in section 4 of the Employment Relations Act 2000 continues to apply between each employee of the company and his or her employer (who may be the administrator if the administrator has adopted the employment agreement under subsection (2)).

    Section 239Y: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239Z Effect on dealing with company property

  • (1) A transaction or dealing by a company in administration, or by a person on behalf of the company, that affects the company's property is void unless the transaction or dealing was entered into—

    • (a) by the administrator, on the company's behalf; or

    • (b) with the administrator's prior written consent; or

    • (c) under an order of the court.

    (2) The court may validate a transaction or dealing that is void under subsection (1).

    (3) Subsection (1) does not apply to a payment made by a registered bank—

    • (a) out of an account kept by the company with the bank; and

    • (b) in good faith and in the ordinary course of the bank's banking business; and

    • (c) on or before the day on which the bank was notified in writing by the administrator that the administration had begun, or before the bank had reason to believe that the company was in administration, whichever was earlier.

    (4) A director or officer of the company commits an offence if he or she—

    • (a) purported, on the company's behalf, to enter into a transaction or dealing that is void under subsection (1); or

    • (b) was in any other way knowingly concerned in, or party to, the void transaction or dealing, whether—

      • (i) by act or omission; or

      • (ii) directly or indirectly.

    Compare: Corporations Act 2001 s 437D (Aust)

    Section 239Z: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AA Company officer's liability for compensation for void transaction or dealing

  • The court may order a director or officer of a company who is convicted of an offence under section 239Z(4) to compensate any person, including the company, who has suffered loss as a result of the act or omission constituting the offence.

    Compare: Corporations Act 2001 s 437E(1) (Aust)

    Section 239AA: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AB Effect on transfer of shares

  • (1) A share in a company in administration must not be transferred and the rights or liabilities of a shareholder of the company must not be altered.

    (2) However, the administrator may consent to the transfer of a share in a company in administration if the administrator is satisfied that the transfer is in the best interests of the company's creditors.

    (3) Also, despite subsection (1), the court may make an order—

    • (a) for the transfer of a share in a company in administration, but only after the administrator has been asked to consent to the transfer and has refused or failed to respond in a reasonable time; or

    • (b) altering the rights and liabilities of a shareholder in a company in administration.

    Compare: Corporations Act 2001 s 437F (Aust)

    Section 239AB: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AC Effect on liquidation

  • (1) The appointment of an administrator to a company in liquidation suspends the liquidation, including the powers of the liquidator to act on the company's behalf, but does not remove the liquidator from office.

    (2) The liquidator may apply to the court for any orders that may be necessary in relation to the suspension of the liquidation.

    (3) In this section,liquidator includes a liquidator or interim liquidator appointed before the administration began.

    Section 239AC: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AD Effect on receivership

  • The appointment of an administrator to a company in receivership does not remove the receiver from office.

    Section 239AD: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 5—Administrator's investigation of company's affairs

  • Subpart 5: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AE Administrator must investigate company's affairs and consider possible courses of action

  • As soon as practicable after the administration of a company begins, the administrator must—

    • (a) investigate the company's business, property, affairs, and financial circumstances; and

    • (b) form an opinion about each of the following matters:

      • (i) whether it would be in the creditors' interests for the company to execute a deed of company arrangement:

      • (ii) whether it would be in the creditors' interests for the administration to end:

      • (iii) whether it would be in the creditors' interests for a liquidator to be appointed.

    Compare: Corporations Act 2001 s 438A (Aust)

    Section 239AE: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AF Directors' statement of company's position

  • (1) Within 5 working days after the administration of a company begins, the directors must give to the administrator a statement about the company's business, property, affairs, and financial circumstances.

    (2) The administrator may extend the time for compliance with subsection (1).

    (3) The administrator must table the directors' statement—

    • (a) at the first creditors' meeting; or

    • (b) if the administrator has extended the time for compliance by the directors, at the watershed meeting.

    Compare: Corporations Act 2001 s 438B(2) (Aust)

    Section 239AF: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AG Administrator's right to documents, etc

  • Sections 261 and 263 to 267 apply with all necessary modifications as if every reference to liquidator and liquidation was a reference to administrator and administration.

    Section 239AG: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AH Administrator may lodge report with Registrar

  • The administrator may lodge a report with the Registrar specifying any matter that, in his or her opinion, should be brought to the Registrar's notice.

    Compare: Corporations Act 2001 s 438D(2) (Aust)

    Section 239AH: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AI Administrator must report misconduct

  • (1) The administrator must as soon as practicable report the matter to the Registrar if the administrator believes that—

    • (a) a past or present director, officer, or shareholder of the company has committed an offence in relation to the company; or

    • (b) an offence material to the administration has been committed by the company or any director, officer, or shareholder of the company under this Act or any of the following Acts:

      • (i) the Crimes Act 1961:

      • (ii) the Securities Act 1978:

      • (iii) the Securities Markets Act 1988:

      • (iv) the Financial Reporting Act 1993:

      • (v) the Takeovers Act 1993; or

    • (c) a person who has taken part in the formation, promotion, administration, management, or liquidation of the company—

      • (i) may have misapplied or retained or become liable or accountable for the company's money or property (whether in New Zealand or elsewhere); or

      • (ii) may have been guilty of negligence, default, or breach of duty or trust in relation to the company.

    (2) In any case where the administrator makes a report under subsection (1), the administrator must give the Registrar assistance that the Registrar may reasonably require by way of—

    • (a) provision of information; and

    • (b) access to documents; and

    • (c) facilities for inspecting and copying documents.

    (3) In any case where the court is satisfied that the administrator should make a report under subsection (1) and has not done so, the court may, on the application of an interested person, direct the administrator to make a report.

    Compare: Corporations Act 2001 s 438D (Aust)

    Section 239AI: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 6—Creditors' meetings generally

  • Subpart 6: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AJ Administrator must call creditors' meetings

  • The administrator must call—

    • (a) the first creditors' meeting, for the appointment (if any) of a committee of creditors; and

    • (b) the watershed meeting (see section 239AS); and

    • (c) other creditors' meetings as required (for example, because an administrator has been replaced).

    Section 239AJ: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AK Conduct of creditors' meetings

  • (1) The following clauses of Schedule 5 apply to creditors' meetings called under this Part as if references to the liquidator were references to the administrator:

    • (a) subject to section 239AZ, clause 4; and

    • (b) clauses 6 to 11.

    (2) At any meeting of creditors or class of creditors held under this Part, a resolution is adopted if a majority in number representing 75% in value of the creditors or class of creditors voting in person, or by proxy vote or by postal vote, vote in favour of the resolution.

    (3) The administrator or the administrator's nominee must chair a creditors' meeting, and has a casting vote.

    (4) For the purposes of voting at a creditors' meeting, the administrator may estimate the amount of a creditor's claim that is for any reason uncertain.

    (5) On the application of the administrator, or of a creditor who is aggrieved by an estimate made by the administrator, the court must determine the amount of the claim as it sees fit.

    Section 239AK: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AL Joint meetings of creditors of related companies in administration

  • (1) The administrators of related companies may call meetings of creditors of their respective companies to be held at the same time and place, but only with the consent of all the creditors.

    (2) In the case of a joint meeting, a creditor of a company in administration may vote only on a resolution that relates to the administration of the company of which that person is a creditor.

    (3) For the purposes of subsection (1), a creditor is taken to have consented to the joint meeting if—

    • (a) a written notice that complies with subsection (4) accompanies the notice of meeting; and

    • (b) the creditor has not objected to the joint meeting within the time, and in the manner, specified in the written notice.

    (4) The notice must—

    • (a) be in writing; and

    • (b) state the administrator's postal, email, and street addresses; and

    • (c) state the names of the related companies in respect of which the joint meeting is to be held; and

    • (d) state that the creditor to whom it is sent may object to the joint meeting by sending a written objection to the administrator at the administrator's postal, email, or street address for receipt by the administrator within the time specified in the notice; and

    • (e) state that, unless the creditor objects in accordance with the notice, the creditor will be taken to have agreed to the joint meeting.

    (5) For the purposes of subsection (4)(d), the administrator may in his or her discretion determine the time for receipt of an objection, but must specify a time that is reasonably practicable in the circumstances.

    Section 239AL: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AM Power of court where outcome of voting at creditors' meeting determined by related entity

  • (1) This section applies if the court is satisfied that—

    • (a) a resolution at a creditors' meeting under this Part was passed, defeated, or required to be decided by a casting vote; and

    • (b) the resolution would not have been passed, defeated, or required to be decided by a casting vote if the vote or votes cast by a particular related creditor or particular related creditors were disregarded; and

    • (c) the passing of the resolution, or the failure to pass it,—

      • (i) is contrary to the interests of the creditors, or a class of creditors, as a whole; and

      • (ii) has prejudiced, or is reasonably likely to prejudice, the interest of the creditors who voted against the resolution, or for it, as the case may be, to an extent that is unreasonable having regard to—

        • (A) the benefits accruing to the related creditor, or to some or all of the related creditors, from the resolution, or from the failure to pass the resolution; and

        • (B) the nature of the relationship between the related creditor and the company, or between the related creditors and the company; and

        • (C) any other related matter.

    (2) The court may, on the application of a creditor or the administrator,—

    • (a) order that the resolution be set aside:

    • (b) order that a new meeting be held to consider and vote on the resolution:

    • (c) order that a specified related creditor or creditors must not vote on the resolution or on a resolution to vary or amend it:

    • (d) make any other orders that the court thinks necessary.

    (3) In this section,—

    promoter has the same meaning as in section 2(1) of the Securities Act 1978

    related creditor means a creditor who is a related entity of the company in administration

    related entity means, in relation to the company in administration,—

    • (a) a promoter; or

    • (b) a relative or spouse of a promoter; or

    • (c) a relative of a spouse of a promoter; or

    • (d) a director or shareholder; or

    • (e) a relative or spouse of a director or shareholder; or

    • (f) a relative of a spouse of a director or shareholder; or

    • (g) a related company; or

    • (h) a beneficiary under a trust of which the company in administration is or has at any time been a trustee; or

    • (i) a relative or spouse of that beneficiary; or

    • (j) a relative of a spouse of that beneficiary; or

    • (k) a company one of whose directors is also a director of the company in administration; or

    • (l) a trustee of a trust under which a person (A) is a beneficiary, if A is a related entity of the company in administration under this subsection.

    Compare: Corporations Act 2001 s 600A (Aust)

    Section 239AM: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 7—First creditors' meeting to appoint creditors' committee

  • Subpart 7: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AN Administrator must call first creditors' meeting

  • (1) The administrator must call the first creditors' meeting to—

    • (a) decide whether to appoint a creditors' committee and, if so, to appoint its members; and

    • (b) decide whether to replace the administrator.

    (2) The meeting must be held within 8 working days after the date on which the administration began.

    Compare: Corporations Act 2001 s 436E(1), (2) (Aust)

    Section 239AN: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AO Notice of first and subsequent creditors' meetings

  • (1) The administrator must call the first and subsequent creditors' meetings by—

    • (a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and

    • (b) advertising the meeting in accordance with section 3(1)(b).

    (2) The administrator must take the steps in subsection (1) not less than 5 working days before the meeting.

    Compare: Corporations Act 2001 s 436E(3) (Aust)

    Section 239AO: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AP Administrator must table interests statement

  • (1) The administrator must table at the first creditors' meeting an interests statement that complies with subsection (2).

    (2) The interests statement must disclose whether the administrator, or a firm of which the administrator is a partner, has a relationship (whether professional, business, or personal) with the company in administration, or any of its officers, shareholders, or creditors.

    (3) The administrator must, before tabling the interests statement, make the inquiries that are reasonably necessary for ensuring that the interests statement is complete.

    Section 239AP: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AQ Functions of creditors' committee

  • (1) The functions of the creditors' committee of a company in administration are—

    • (a) to consult with the administrator about matters relating to the administration; and

    • (b) to receive and consider reports by the administrator.

    (2) The committee must not give directions to the administrator, but the administrator must report to the committee about matters relating to the administration as and when the committee reasonably requires.

    Compare: Corporations Act 2001 s 436F (Aust)

    Section 239AQ: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AR Membership of creditors' committee

  • A person may be a member of the creditors' committee only if he or she is—

    • (a) a creditor of the company; or

    • (b) the agent of a creditor under a general power of attorney; or

    • (c) authorised in writing by a creditor to be a member.

    Compare: Corporations Act 2001 s 436G (Aust)

    Section 239AR: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 8—Watershed meeting

  • Subpart 8: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AS What watershed meeting is

  • The watershed meeting is the meeting of creditors called by the administrator to decide the future of the company and, in particular, whether the company and the deed administrator should execute a deed of company arrangement.

    Section 239AS: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AT Administrator must convene watershed meeting

  • (1) The administrator must convene the watershed meeting within the convening period.

    (2) The convening period is the period of 20 working days after the date on which the administrator is appointed, and includes any period for which it is extended under subsection (3).

    (3) The court may, on the administrator's application, extend the convening period.

    (4) The application to extend may be made before or after the convening period has expired.

    Section 239AT: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AU Notice of watershed meeting

  • (1) The administrator must convene the watershed meeting by—

    • (a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and

    • (b) advertising the meeting in accordance with section 3(1)(b).

    (2) The administrator must take the steps in subsection (1) not less than 5 working days before the meeting.

    (3) The following documents must accompany the notice of the watershed meeting that is sent to the company's creditors:

    • (a) a report by the administrator about—

      • (i) the company's business, property, affairs, and financial circumstances; and

      • (ii) any other matter material to the creditors' decisions to be considered at the meeting; and

    • (b) a statement setting out the administrator's opinion, with reasons for that opinion, about each of the following matters:

      • (i) whether it would be in the creditors' interests for the company to execute a deed of company arrangement:

      • (ii) whether it would be in the creditors' interests for the administration to end:

      • (iii) whether it would be in the creditors' interests for the company to be placed in liquidation; and

    • (c) if a deed of company arrangement is proposed, a statement setting out the details of the proposed deed.

    Compare: Corporations Act 2001 s 439A(3), (4) (Aust)

    Section 239AU: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AV When watershed meeting must be held

  • The watershed meeting must be held within 5 working days after the end of the convening period or extended convening period, as the case may be.

    Compare: Corporations Act 2001 s 439A(2) (Aust)

    Section 239AV: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AW Directors must attend watershed meeting

  • (1) The directors of the company must attend the watershed meeting, including any occasion to which the meeting is adjourned, but cannot be required to answer questions at the meeting.

    (2) A director need not attend the watershed meeting if—

    • (a) the director has a valid reason for not attending; or

    • (b) the administrator or the creditors by resolution have excused the director from attending.

    (3) A director attending the watershed meeting must leave for all or part of the remainder of the meeting if required by a resolution of the creditors to do so.

    (4) A director who contravenes subsection (1) commits an offence, unless subsection (2) applies, and is liable on conviction to the penalty set out in section 373(1).

    Section 239AW: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AX Disclosure of voting arrangements

  • The administrator and the directors of the company under administration must, before the meeting votes on any resolution, inform the meeting of any voting arrangement of which the administrator or a director, as the case may be, is aware that requires 1 or more creditors to vote in a particular way on any resolution that will or may be voted on by the meeting.

    Section 239AX: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AY Court may order that pooled property owners are separate class

  • (1) On the application of the administrator, the court may order that, for the limited purposes of this section only, pooled property owners are a separate class.

    (2) In this section—

    pooled property owners means all the owners or lessors of property that is pooled in a single enterprise forming part of the business of a company in administration

    requisite majority means a majority in number representing 75% in value of the pooled property owners voting in person or by proxy vote or by postal vote

    resolution means a resolution that the company in administration execute the deed of company arrangement specified in the resolution.

    (3) Each pooled property owner is bound by the deed of company arrangement as if that person had voted in favour of the resolution at the watershed meeting if—

    • (a) the court has ordered that the pooled property owners are a separate class; and

    • (b) at the watershed meeting the creditors (including the pooled property owners) approved the resolution; and

    • (c) the requisite majority of the pooled property owners were included in the creditors who voted in favour of the resolution.

    (4) It is not necessary that a separate meeting of the pooled property owners be held for the purpose of voting on the resolution.

    (5) Subsection (3) applies no matter what sections 239ACS and 239ACT say.

    Section 239AY: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239AZ Adjournment of watershed meeting

  • (1) The watershed meeting may be adjourned, but only to a day that is not more than 30 working days after the first day on which the meeting was held.

    (2) However, the court may, on the administrator's application, order that the meeting be adjourned for more than 30 working days.

    Compare: Corporations Act 2001 s 439B(2) (Aust)

    Section 239AZ: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABA What creditors may decide at watershed meeting

  • At the watershed meeting, the creditors may—

    • (a) resolve that the company execute a deed of company arrangement specified in the resolution (and it does not matter that the deed to be executed differs from any proposed deed of which details were given in the notice of the meeting); or

    • (b) resolve that the administration should end; or

    • (c) unless the company is already in liquidation, by resolution appoint a liquidator.

    Compare: Corporations Act 2001 s 439C (Aust)

    Section 239ABA: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABB What happens if proposed deed not fully approved at watershed meeting

  • (1) If, at the watershed meeting, the creditors resolve that the company execute a deed of company arrangement, but the proposed deed is not fully approved at the meeting, then the administrator must take the steps set out in section 239ACP (briefly, the administrator must draft a deed and circulate it to creditors).

    (2) The administrator must inform the creditors at the watershed meeting that—

    • (a) they have the right to inspect and comment on the draft deed; and

    • (b) the administrator has the ultimate responsibility for drafting the deed and the executed deed may differ from the draft.

    Section 239ABB: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

Subpart 9—Protection of company's property during administration

  • Subpart 9: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABC Charge unenforceable

  • Subject to subpart 10, a person must not, during the administration of a company, enforce a charge over the property of the company, except—

    • (a) with the administrator's written consent; or

    • (b) with the permission of the court.

    Compare: Corporations Act 2001 s 440B (Aust)

    Section 239ABC: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABD Owner or lessor must not recover property used by company

  • During the administration of a company, the owner or lessor of property that was used or occupied by, or is in the possession of, the company must not take possession of the property or otherwise recover it, except—

    • (a) with the administrator's written consent; or

    • (b) with the permission of the court.

    Compare: Corporations Act 2001 s 440C (Aust)

    Section 239ABD: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABE Proceeding must not be begun or continued

  • During the administration of a company, a proceeding in a court against the company or in relation to any of its property must not be begun or continued, except—

    • (a) with the administrator's written consent; or

    • (b) with the permission of the court and in accordance with the terms that the court imposes.

    Compare: Corporations Act 2001 s 440D (Aust)

    Section 239ABE: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABF Administrator not liable in damages for refusing consent

  • An administrator is not liable in damages for a refusal to give an approval or consent for the purposes of this subpart.

    Compare: Corporations Act 2001 s 440E (Aust)

    Section 239ABF: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABG Enforcement process halted

  • During the administration of a company, an enforcement process in relation to the company's property must not be begun or continued except with the permission of the court and in accordance with the terms that the court imposes.

    Compare: Corporations Act 2001 s 440F (Aust)

    Section 239ABG: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABH Duties of court officer in relation to company's property

  • (1) This section applies to a court officer, that is, a sheriff or registrar or other appropriate officer of the court, who receives written notice that a company is in administration.

    (2) During the administration, the court officer must not—

    • (a) take action to sell property of the company under an execution process; or

    • (b) pay to a person (other than the administrator)—

      • (i) proceeds of the sale of the company's property (at any time) under an execution process; or

      • (ii) money of the company seized (at any time) under an execution process; or

      • (iii) money paid (at any time) to avoid seizure or sale of property of the company under an execution process; or

    • (c) take action in relation to the attachment of a debt due to the company; or

    • (d) pay to any person (other than the administrator) money received because of the attachment of a debt due to the company.

    (3) The court officer must deliver to the administrator any property of the company that is in the court officer's possession under an execution process (whenever begun).

    (4) The court officer must pay to the administrator all proceeds or money of a kind referred to in subsection (2)(b) or (d) that—

    • (a) are in the court officer's possession; or

    • (b) have been paid into the court and have not since been paid out.

    (5) The costs of the execution or attachment are a first charge over property delivered under subsection (3) or proceeds or money paid under subsection (4).

    (6) In order to give effect to a charge under subsection (5) on proceeds or money the court officer may retain, on behalf of the person entitled to the charge, so much of the proceeds as the court officer thinks necessary.

    (7) The court may, if it is satisfied that it is appropriate to do so, permit the court officer to take action, or make a payment, that subsection (2) would otherwise prevent.

    (8) A person who buys property in good faith under a sale under an execution process obtains a good title to the property as against the company and the administrator, despite anything else in this section.

    Compare: Corporations Act 2001 s 440G (Aust)

    Section 239ABH: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABI Lis pendens taken to exist

  • (1) This section has effect only for the purposes of a law about the effect of a lis pendens on purchasers or mortgagees.

    (2) During the administration of a company, an application for the appointment of a liquidator to the company is taken to be pending.

    (3) An application that is taken because of subsection (2) to be pending constitutes a lis pendens.

    Compare: Corporations Act 2001 s 440H (Aust)

    Section 239ABI: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

239ABJ Administration not to trigger enforcement of guarantee of liability of director or relative

  • (1) During the administration of a company, except with the court's permission and in accordance with the terms that the court may impose, a guarantee of a liability of the company must not be enforced against—

    • (a) a director of the company; or

    • (b) that person's spouse or relative.

    (2) In this section, liability means a debt, liability, or other obligation.

    Compare: Corporations Act 2001 s 440J(1) (Aust)

    Section 239ABJ: inserted, on 1 November 2007, by section 6 of the Companies Amendment Act 2006 (2006 No 56).

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