New Zealand Companies Act 1993 - Qualifications of liquidators

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

Qualifications and supervision of liquidators

280 Qualifications of liquidators

  • (1) Unless the court orders otherwise, none of the following persons may be appointed or act as a liquidator of a company:

    • (a) a person less than 18 years old:

    • (b) a creditor of the company in liquidation:

    • (c) a person who has, within the 2 years immediately preceding the commencement of the liquidation, been a shareholder, director, auditor, or receiver of the company or of a related company:

    • (ca) a person who has, or whose firm has, within the 2 years immediately before the commencement of the liquidation, provided professional services to the company, unless, within 20 working days before the appointment of the liquidator, the board of the company resolves that the company will, on the appointment of the liquidator, be able to pay its debts and a copy of the resolution is delivered to the Registrar for registration:

    • (cb) a person who has, or whose firm has, within the 2 years immediately before the commencement of the liquidation, had a continuing business relationship (other than through the provision of banking or financial services) with the company, its majority shareholder, any of its directors, or any of its secured creditors, unless, within 20 working days before the appointment of the liquidator, the board of the company resolves that the company will, on the appointment of the liquidator, be able to pay its debts and a copy of the resolution is delivered to the Registrar for registration:

    • (d) an undischarged bankrupt:

    • (e) a person who is, or is deemed to be, subject to a compulsory treatment order made under Part 2 of the Mental Health (Compulsory Assessment and Treatment) Act 1992:

    • (f) a person in respect of whom an order has been made under section 30 or section 31 of the Protection of Personal and Property Rights Act 1988:

    • (g) a person in respect of whom an order has been made under section 286(5):

    • (h) a person in respect of whom an order has been made under section 37(6) of the Receiverships Act 1993:

    • (ha)>[Repealed]

    • (i) [Repealed]

    • (j) [Repealed]

    • (k) a person who is prohibited from being a director or promoter of or being concerned or taking part in the management of a company under section 382 or section 383 or section 385:

    • (ka) a person who is prohibited from being a director or promoter of, or being concerned or taking part in the management of, an incorporated or unincorporated body under the Securities Act 1978, or the Securities Markets Act 1988, or the Takeovers Act 1993:

    • (l) a person who is prohibited under section 299(1)(c) of the Insolvency Act 2006 from acting as a director or taking part directly or indirectly in the management of any company or class of company:

    • (m) a person who is prohibited from being administrator or deed administrator under section 239ADV.

    (1A) Subsection (1)(ca) or (cb) does not apply if all the creditors consent to the appointment of the person in question.

    (2) A body corporate must not be appointed or act as a liquidator.

    (3) A person who contravenes subsection (1) or subsection (2) commits an offence and is liable on conviction to the penalty set out in section 373(2).

    (4) A person other than the Official Assignee must not be appointed a liquidator unless he or she has first certified in writing that he or she is not disqualified under subsection (1).

    Section 280(1)(ca): inserted, on 1 November 2007, by section 24(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 280(1)(cb): inserted, on 1 November 2007, by section 24(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 280(1)(ha): repealed, on 5 December 2013, by section 8 of the Companies Amendment Act 2013 (2013 No 111).

    Section 280(1)(i): repealed, on 5 December 2013, by section 8 of the Companies Amendment Act 2013 (2013 No 111).

    Section 280(1)(j): repealed, on 5 December 2013, by section 8 of the Companies Amendment Act 2013 (2013 No 111).

    Section 280(1)(ka): inserted, on 25 October 2006, by section 25 of the Securities Amendment Act 2006 (2006 No 46).

    Section 280(1)(l): amended, on 3 December 2007, by section 445 of the Insolvency Act 2006 (2006 No 55).

    Section 280(1)(m): inserted, on 1 November 2007, by section 24(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 280(1A): inserted, on 1 November 2007, by section 24(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 280(4): inserted, on 1 November 2007, by section 24(4) of the Companies Amendment Act 2006 (2006 No 56).

281 Validity of acts of liquidators

  • The acts of a person as a liquidator are valid even though that person is not qualified to act as a liquidator.

282 Consent to appointment

  • The appointment of a person, other than an Official Assignee, as liquidator is of no effect unless that person has consented in writing to the appointment.

283 Vacancies in office of liquidator

  • (1) The office of liquidator becomes vacant if the person holding office resigns, dies, or becomes disqualified under section 280.

    (2) A person, other than an Official Assignee, may resign from the office of liquidator by appointing another such person as his or her successor and sending or delivering notice in writing of the appointment of his or her successor to the Registrar for registration.

    (3) With the approval of the Official Assignee for New Zealand, an Official Assignee may resign from the office of liquidator by appointing another Official Assignee as his or her successor.

    (4) The court may, on the application of the company, or a shareholder or other entitled person, or a director or creditor of the company, review the appointment of a successor to a liquidator and may appoint any person who could be appointed as liquidator under paragraph (a) or paragraph (b) or paragraph (c), as the case may be, of subsection (2) of section 241 to be the liquidator of the company.

    (5) If, for any reason other than resignation, a vacancy occurs in the office of liquidator, written notice of the vacancy must forthwith be sent or delivered to the Official Assignee for New Zealand by the person vacating office or, if that person is unable to act, by his or her personal representative.

    (6) If, as the result of the vacation of office by a liquidator, other than an Official Assignee, no person is acting as liquidator, the Official Assignee for New Zealand may appoint a person to act as liquidator until a successor is appointed under this section.

    (7) If a vacancy occurs in the office of the liquidator, or a liquidator has been appointed under subsection (6), as the case may be, the court may, on the application of the company, or a shareholder or other entitled person, or a director or creditor of the company, or the Official Assignee for New Zealand, appoint any person who could be appointed as liquidator under paragraph (a) or paragraph (b) or paragraph (c), as the case may be, of subsection (2) of section 241 to be the liquidator of the company.

    (8) A liquidator appointed under subsection (7) must, within 10 working days of being appointed or being notified of his or her appointment, deliver a notice of his or her appointment to the Registrar for registration.

    (9) A person vacating the office of liquidator must, where practicable, provide such information and give such assistance to that person's successor as he or she reasonably requires in taking over the duties of liquidator.

284 Court supervision of liquidation

  • (1) On the application of the liquidator, a liquidation committee, or, with the leave of the court, a creditor, shareholder, other entitled person, or director of a company in liquidation, the court may—

    • (a) give directions in relation to any matter arising in connection with the liquidation:

    • (b) confirm, reverse, or modify an act or decision of the liquidator:

    • (c) order an audit of the accounts of the liquidation:

    • (d) order the liquidator to produce the accounts and records of the liquidation for audit and to provide the auditor with such information concerning the conduct of the liquidation as the auditor requests:

    • (e) in respect of any period, review or fix the remuneration of the liquidator at a level which is reasonable in the circumstances:

    • (f) to the extent that an amount retained by the liquidator as remuneration is found by the court to be unreasonable in the circumstances, order the liquidator to refund the amount:

    • (g) declare whether or not the liquidator was validly appointed or validly assumed custody or control of property:

    • (h) make an order concerning the retention or the disposition of the accounts and records of the liquidation or of the company.

    (2) The powers given by subsection (1) are in addition to any other powers a court may exercise in its jurisdiction relating to liquidators under this Part, and may be exercised in relation to a matter occurring either before or after the commencement of the liquidation, or the removal of the company from the New Zealand register, and whether or not the liquidator has ceased to act as liquidator when the application or the order is made.

    (3) Subject to subsection (4), a liquidator who has—

    • (a) obtained a direction of a court with respect to a matter connected with the exercise of the powers or functions of liquidator; and

    • (b) acted in accordance with the direction—

    is entitled to rely on having so acted as a defence to a claim in relation to anything done or not done in accordance with the direction.

    (4) A court may, on the application of any person, order that, by reason of the circumstances in which a direction was obtained under subsection (1), the liquidator does not have the protection given by subsection (3).

285 Meaning of failure to comply

  • (1) In section 286 unless the context otherwise requires, failure to comply means a failure of a liquidator to comply with a relevant duty arising—

    • (a) under this or any other Act or rule of law or rules of court; or

    • (b) under any order or direction of a court other than an order to comply made under that section;—

    and comply, compliance, and failed to comply have corresponding meanings.

    (2) In subsection (1), relevant duty includes the duty of a person in his or her capacity as administrator or deed administrator of a company.

    Section 285(2): inserted, on 1 November 2007, by section 25 of the Companies Amendment Act 2006 (2006 No 56).

286 Orders to enforce liquidator's duties

  • (1) An application for an order under this section may be made by—

    • (a) a liquidator:

    • (b) a person seeking appointment as a liquidator:

    • (c) a liquidation committee:

    • (d) a creditor, shareholder, other entitled person, or a director of the company in liquidation:

    • (e) a receiver appointed in relation to property of the company in liquidation:

    • (f) if the liquidator is a chartered accountant, the President of the New Zealand Institute of Chartered Accountants:

    • (g) if the liquidator is a barrister and solicitor or a solicitor, the President of the New Zealand Law Society:

    • (h) an Official Assignee.

    (2) No application may be made to a court by a person other than a liquidator in relation to a failure to comply unless notice of the failure to comply has been served on the liquidator not less than 5 working days before the date of the application and, as at the date of the application, there is a continuing failure to comply.

    (3) If the court is satisfied that there is, or has been, a failure to comply, the court may—

    • (a) relieve the liquidator of the duty to comply wholly or in part; or

    • (b) without prejudice to any other remedy which may be available in relation to a breach of duty by the liquidator, order the liquidator to comply to the extent specified in the order.

    (4) A court may, in relation to a person who fails to comply with an order made under subsection (3), or is or becomes disqualified under section 280 to become or remain a liquidator,—

    • (a) remove the liquidator from office; or

    • (b) order that the person may be appointed and act, or may continue to act, as liquidator, notwithstanding the provisions of section 280.

    (5) If the court is satisfied that a person is unfit to act as a liquidator by reason of persistent failures to comply or the seriousness of a failure to comply,—

    • (a) the court must make a prohibition order; and

    • (b) the period of the order is a matter for the discretion of the court but the court may make a prohibition period for an indefinite period.

    (6) A person to whom a prohibition order applies must not—

    • (a) act as a liquidator in a current or other liquidation; or

    • (b) act as a receiver in a current or other receivership.

    (7) Evidence that, on 2 or more occasions,—

    • (a) a court has made an order to comply under this section in respect of the same person; or

    • (b) an application for an order to comply under this section has been made in respect of the same person and that in each case the person has complied after the making of the application and before the hearing,—

    is, in the absence of special reasons to the contrary, evidence of persistent failures to comply for the purposes of this section.

    (8) In making an order under this section a court may, if it thinks fit,—

    • (a) make an order extending the time for compliance; or

    • (b) impose a term or condition; or

    • (c) make an ancillary order.

    (9) A copy of every order made under subsection (5) must, within 10 working days of the order being made, be delivered by the applicant to the Official Assignee for New Zealand who must keep it on a file indexed by reference to the name of the liquidator concerned.

    Section 286(1)(f): amended, on 7 July 2010, by section 10 of the New Zealand Institute of Chartered Accountants Amendment Act 2010 (2010 No 74).

    Section 286(5): replaced, on 1 November 2007, by section 26(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 286(7): amended, on 1 November 2007, by section 26(2) of the Companies Amendment Act 2006 (2006 No 56).

Company unable to pay its debts

287 Meaning of inability to pay debts

  • Unless the contrary is proved, and subject to section 288, a company is presumed to be unable to pay its debts if—

    • (a) the company has failed to comply with a statutory demand; or

    • (b) execution issued against the company in respect of a judgment debt has been returned unsatisfied in whole or in part; or

    • (c) a person entitled to a charge over all or substantially all of the property of the company has appointed a receiver under the instrument creating the charge; or

    • (d) a compromise between a company and its creditors has been put to a vote in accordance with Part 14 but has not been approved.

288 Evidence and other matters

  • (1) On an application to the court for an order that a company be put into liquidation, evidence of failure to comply with a statutory demand is not admissible as evidence that a company is unable to pay its debts unless the application is made within 30 working days after the last date for compliance with the demand.

    (2) Section 287 does not prevent proof by other means that a company is unable to pay its debts.

    (3) Information or records acquired under section 178 or, if the court so orders, under section 179, may be received as evidence that a company is unable to pay its debts.

    (4) In determining whether a company is unable to pay its debts, its contingent or prospective liabilities may be taken into account.

    (5) An application to the court for an order that a company be put into liquidation on the ground that it is unable to pay its debts may be made by a contingent or prospective creditor only with the leave of the court; and the court may give such leave, with or without conditions, only if it is satisfied that a prima facie case has been made out that the company is unable to pay its debts.

289 Statutory demand

  • (1) A statutory demand is a demand by a creditor in respect of a debt owing by a company made in accordance with this section.

    (2) A statutory demand must—

    • (a) be in respect of a debt that is due and is not less than the prescribed amount; and

    • (b) be in writing; and

    • (c) be served on the company; and

    • (d) require the company to pay the debt, or enter into a compromise under Part 14, or otherwise compound with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within 15 working days of the date of service, or such longer period as the court may order.

290 Court may set aside statutory demand

  • (1) The court may, on the application of the company, set aside a statutory demand.

    (2) The application must be—

    • (a) made within 10 working days of the date of service of the demand; and

    • (b) served on the creditor within 10 working days of the date of service of the demand.

    (3) No extension of time may be given for making or serving an application to have a statutory demand set aside, but, at the hearing of the application, the court may extend the time for compliance with the statutory demand.

    (4) The court may grant an application to set aside a statutory demand if it is satisfied that—

    • (a) there is a substantial dispute whether or not the debt is owing or is due; or

    • (b) the company appears to have a counterclaim, set-off, or cross-demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or

    • (c) the demand ought to be set aside on other grounds.

    (5) A demand must not be set aside by reason only of a defect or irregularity unless the court considers that substantial injustice would be caused if it were not set aside.

    (6) In subsection (5),defect includes a material misstatement of the amount due to the creditor and a material misdescription of the debt referred to in the demand.

    (7) An order under this section may be made subject to conditions.

291 Additional powers of court on application to set aside statutory demand

  • (1) If, on the hearing of an application under section 290, the court is satisfied that there is a debt due by the company to the creditor that is not the subject of a substantial dispute, or is not subject to a counterclaim, set-off, or cross-demand, the court may—

    • (a) order the company to pay the debt within a specified period and that, in default of payment, the creditor may make an application to put the company into liquidation; or

    • (b) dismiss the application and forthwith make an order under section 241(4) putting the company into liquidation,—

    on the ground that the company is unable to pay its debts.

    (2) For the purposes of the hearing of an application to put the company into liquidation pursuant to an order made under subsection (1)(a), the company is presumed to be unable to pay its debts if it failed to pay the debt within the specified period.

Voidable transactions

292 Insolvent transaction voidable

  • (1) A transaction by a company is voidable by the liquidator if it—

    • (a) is an insolvent transaction; and

    • (b) is entered into within the specified period.

    (2) An insolvent transaction is a transaction by a company that—

    • (a) is entered into at a time when the company is unable to pay its due debts; and

    • (b) enables another person to receive more towards satisfaction of a debt owed by the company than the person would receive, or would be likely to receive, in the company's liquidation.

    (3) In this section, transaction means any of the following steps by the company:

    • (a) conveying or transferring the company's property:

    • (b) creating a charge over the company's property:

    • (c) incurring an obligation:

    • (d) undergoing an execution process:

    • (e) paying money (including paying money in accordance with a judgment or an order of a court):

    • (f) anything done or omitted to be done for the purpose of entering into the transaction or giving effect to it.

    (4) In this section, transaction includes a transaction by a receiver, except a transaction that discharges, whether in part or in full, a liability for which the receiver is personally liable under section 32(1) or (5) of the Receiverships Act 1993 or otherwise personally liable under a contract entered into by the receiver.

    (4A) A transaction that is entered into within the restricted period is presumed, unless the contrary is proved, to be entered into at a time when the company is unable to pay its due debts.

    (4B) Where—

    • (a) a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including a relationship to which other persons are parties); and

    • (b) in the course of the relationship, the level of the company's net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship;

    then—

    • (c) subsection (1) applies in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and

    • (d) the transaction referred to in paragraph (a) may only be taken to be an insolvent transaction voidable by the liquidator if the effect of applying subsection (1) in accordance with paragraph (c) is that the single transaction referred to in paragraph (c) is taken to be an insolvent transaction voidable by the liquidator.

    (5) For the purposes of subsections (1) and (4B), specified period means—

    • (a) the period of 2 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

    • (b) in the case of a company that was put into liquidation by the court, the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order was made; and

    • (c) if—

      • (i) an application was made to the court to put a company into liquidation; and

      • (ii) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

      the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    (6) For the purposes of subsection (4A), restricted period means—

    • (a) the period of 6 months before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

    • (b) in the case of a company that was put into liquidation by the court, the period of 6 months before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order of the court was made; and

    • (c) if—

      • (i) an application was made to the court to put a company into liquidation; and

      • (ii) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

      the period of 6 months before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    Compare: 1955 No 63 s 309; 1980 No 43 s 24(1); 1982 No 152 s 18

    Section 292 heading: replaced, on 1 November 2007, by section 27(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(1): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(2): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(3): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(4): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(4): amended, on 31 August 2012, by section 7 of the Companies Amendment Act (No 2) 2012 (2012 No 60).

    Section 292(4A): inserted, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(4B): inserted, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(5): amended, on 1 November 2007, by section 27(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(5)(a): replaced, on 26 April 1999, by section 8(1) of the Companies Amendment Act 1999 (1999 No 19).

    Section 292(5)(b): amended, on 26 April 1999, by section 8(2)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 292(5)(b): amended, on 3 June 1998, by section 12(1) of the Companies Amendment Act 1998 (1998 No 31).

    Section 292(5)(c): inserted, on 3 June 1998, by section 12(1) of the Companies Amendment Act 1998 (1998 No 31).

    Section 292(5)(c): amended, on 26 April 1999, by section 8(2)(b) of the Companies Amendment Act 1999 (1999 No 19).

    Section 292(6): amended, on 1 November 2007, by section 27(4) of the Companies Amendment Act 2006 (2006 No 56).

    Section 292(6)(a): replaced, on 26 April 1999, by section 8(3) of the Companies Amendment Act 1999 (1999 No 19).

    Section 292(6)(b): amended, on 26 April 1999, by section 8(4)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 292(6)(b): amended, on 3 June 1998, by section 12(2) of the Companies Amendment Act 1998 (1998 No 31).

    Section 292(6)(c): inserted, on 3 June 1998, by section 12(2) of the Companies Amendment Act 1998 (1998 No 31).

    Section 292(6)(c): amended, on 26 April 1999, by section 8(4)(b) of the Companies Amendment Act 1999 (1999 No 19).

293 Voidable charges

  • (1) A charge over any property or undertaking of a company is voidable by the liquidator if—

    • (a) the charge was given within the specified period; and

    • (b) immediately after the charge was given, the company was unable to pay its due debts.

    (1A) Subsection (1) does not apply if—

    • (a) the charge secures money actually advanced or paid, or the actual price or value of property sold or supplied to the company, or any other valuable consideration given in good faith by the grantee of the charge at the time of, or at any time after, the giving of the charge; or

    • (b) the charge is in substitution for a charge given before the specified period.

    (2) Unless the contrary is proved, a company giving a charge within the restricted period is presumed to have been unable to pay its due debts immediately after giving the charge.

    (3) Subsection (1A)(b) does not apply to the extent that—

    • (a) the amount secured by the substituted charge exceeds the amount secured by the existing charge; or

    • (b) the value of the property subject to the substituted charge at the date of the substitution exceeds the value of the property subject to the existing charge at that date.

    (4) Nothing in subsection (1) applies to a charge given by a company that secures the unpaid purchase price of property, whether or not the charge is given over that property, if the instrument creating the charge is executed not later than 30 days after the sale of the property or, in the case of the sale of an estate or interest in land, not later than 30 days after the final settlement of the sale.

    (5) For the purposes of subsection (1A)(a) and subsection (4), where any charge was given by the company within the period specified in subsection (1), all payments received by the grantee of the charge after it was given shall be deemed to have been appropriated so far as may be necessary—

    • (a) towards repayment of money actually advanced or paid by the grantee to the company on or after the giving of the charge; or

    • (b) towards payment of the actual price or value of property sold by the grantee to the company on or after the giving of the charge; or

    • (c) towards payment of any other liability of the company to the grantee in respect of any other valuable consideration given in good faith on or after the giving of the charge.

    (6) For the purposes of subsection (1), specified period means—

    • (a) the period of 2 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

    • (b) in the case of a company that was put into liquidation by the court, the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of the application and ending on the date on which, and at the time at which, the order of the court was made; and

    • (c) if—

      • (i) an application was made to the court to put a company into liquidation; and

      • (ii) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

      the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    (7) For the purposes of subsection (2), restricted period means—

    • (a) the period of 6 months before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

    • (b) in the case of a company that was put into liquidation by the court, the period of 6 months before the making of the application to the court together with the period commencing on the date of the making of the application and ending on the date on which, and at the time at which, the order of the court was made; and

    • (c) if—

      • (i) an application was made to the court to put a company into liquidation; and

      • (ii) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

      the period of 6 months before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    Section 293(1): replaced, on 1 November 2007, by section 28(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(1A): inserted, on 1 November 2007, by section 28(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(3): amended, on 1 November 2007, by section 28(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(5): amended, on 1 November 2007, by section 28(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(6)(a): replaced, on 26 April 1999, by section 9(1) of the Companies Amendment Act 1999 (1999 No 19).

    Section 293(6)(a): amended, on 1 November 2007, by section 28(4) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(6)(b): amended, on 1 November 2007, by section 28(4) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(6)(b): amended, on 26 April 1999, by section 9(2)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 293(6)(b): amended, on 3 June 1998, by section 13(1) of the Companies Amendment Act 1998 (1998 No 31).

    Section 293(6)(c): inserted, on 3 June 1998, by section 13(1) of the Companies Amendment Act 1998 (1998 No 31).

    Section 293(6)(c): amended, on 1 November 2007, by section 28(4) of the Companies Amendment Act 2006 (2006 No 56).

    Section 293(6)(c): amended, on 26 April 1999, by section 9(2)(b) of the Companies Amendment Act 1999 (1999 No 19).

    Section 293(7)(a): replaced, on 26 April 1999, by section 9(3) of the Companies Amendment Act 1999 (1999 No 19).

    Section 293(7)(b): amended, on 26 April 1999, by section 9(4)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 293(7)(b): amended, on 3 June 1998, by section 13(2) of the Companies Amendment Act 1998 (1998 No 31).

    Section 293(7)(c): inserted, on 3 June 1998, by section 13(2) of the Companies Amendment Act 1998 (1998 No 31).

    Section 293(7)(c): amended, on 26 April 1999, by section 9(4)(b) of the Companies Amendment Act 1999 (1999 No 19).

294 Procedure for setting aside transactions and charges

  • (1) A liquidator who wishes to set aside a transaction or charge that is voidable under section 292 or 293 must—

    • (a) file a notice with the court that meets the requirements set out in subsection (2); and

    • (b) serve the notice as soon as practicable on—

      • (i) the other party to the transaction or the charge holder, as the case may be; and

      • (ii) any other party from whom the liquidator intends to recover.

    (2) The liquidator's notice must—

    • (a) be in writing; and

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

    • (c) specify the transaction or charge to be set aside; and

    • (d) describe the property or state the amount that the liquidator wishes to recover; and

    • (e) state that the person named in the notice may object to the transaction or charge being set aside by sending to the liquidator a written notice of objection that is received by the liquidator at his or her postal, email, or street address within 20 working days after the liquidator's notice has been served on that person; and

    • (f) state that the written notice of objection must contain full particulars of the reasons for objecting and must identify any documents that evidence or substantiate the reasons for objecting; and

    • (g) state that the transaction or charge will be set aside as against the person named in the notice if that person does not object; and

    • (h) state that if the person named in the notice does object, the liquidator may apply to the court for the transaction or charge to be set aside.

    (3) The transaction or charge is automatically set aside as against the person on whom the liquidator has served the liquidator's notice, if that person has not objected by sending to the liquidator a written notice of objection that is received by the liquidator at his or her postal, email, or street address within 20 working days after the liquidator's notice has been served on that person.

    (4) The notice of objection must contain full particulars of the reasons for objecting and must identify documents that evidence or substantiate the reasons for objecting.

    (5) A transaction or charge that is not automatically set aside may still be set aside by the court on the liquidator's application.

    Section 294: replaced, on 1 November 2007, by section 29 of the Companies Amendment Act 2006 (2006 No 56).

295 Other orders

  • If a transaction or charge is set aside under section 294, the court may make 1 or more of the following orders:

    • (a) an order that a person pay to the company an amount equal to some or all of the money that the company has paid under the transaction:

    • (b) an order that a person transfer to the company property that the company has transferred under the transaction:

    • (c) an order that a person pay to the company an amount that, in the court's opinion, fairly represents some or all of the benefits that the person has received because of the transaction:

    • (d) an order that a person transfer to the company property that, in the court's opinion, fairly represents the application of either or both of the following:

      • (i) money that the company has paid under the transaction:

      • (ii) proceeds of property that the company has transferred under the transaction:

    • (e) an order releasing, in whole or in part, a charge given by the company:

    • (f) an order requiring security to be given for the discharge of an order made under this section:

    • (g) an order specifying the extent to which a person affected by the setting aside of a transaction or by an order made under this section is entitled to claim as a creditor in the liquidation.

    Compare: Corporations Act 2001 s 588FF(1)(a)–(d) (Aust)

    Section 295: replaced, on 1 November 2007, by section 30 of the Companies Amendment Act 2006 (2006 No 56).

296 Additional provisions relating to setting aside transactions and charges

  • (1) The setting aside of a transaction or an order made under section 295 does not affect the title or interest of a person in property which that person has acquired—

    • (a) from a person other than the company; and

    • (b) for valuable consideration; and

    • (c) without knowledge of the circumstances under which the property was acquired from the company.

    (2) The setting aside of a charge or an order made under section 295 does not affect the title or interest of a person in property which that person has acquired—

    • (a) as the result of the exercise of a power of sale by the grantee of the charge; and

    • (b) for valuable consideration; and

    • (c) without knowledge of the circumstances relating to the giving of the charge.

    (3) A court must not order the recovery of property of a company (or its equivalent value) by a liquidator, whether under this Act, any other enactment, or in law or in equity, if the person from whom recovery is sought (A) proves that when A received the property—

    • (a) A acted in good faith; and

    • (b) a reasonable person in A's position would not have suspected, and A did not have reasonable grounds for suspecting, that the company was, or would become, insolvent; and

    • (c) A gave value for the property or altered A's position in the reasonably held belief that the transfer of the property to A was valid and would not be set aside.

    (4) Nothing in the Land Transfer Act 1952 restricts the operation of this section or sections 292 to 295.

    Section 296(3): replaced, on 1 November 2007, by section 31 of the Companies Amendment Act 2006 (2006 No 56).

Recovery in other cases

297 Transactions at undervalue

  • (1) Under subsection (2) the liquidator may recover from a person (X) the amount C in the formula A - B = C, where—

    • (a) A is the value that X received from a company under a transaction to which the company was or is a party; and

    • (b) B is the value (if any) that the company received from X under the transaction.

    (2) The liquidator may recover the difference in value (that is, C in the formula in subsection (1)) from X if—

    • (a) the company entered into the transaction within the specified period; and

    • (b) either—

      • (i) the company was unable to pay its due debts when it entered into the transaction; or

      • (ii) the company became unable to pay its due debts as a result of entering into the transaction.

    (3) For the purposes of this section,—

    • (a) transaction has the same meaning as in section 292(3):

    • (b) specified period means—

      • (i) the period of 2 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

      • (ii) in the case of a company that was put into liquidation by the court, the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order of the court was made; and

      • (iii) if—

        • (A) an application was made to the court to put a company into liquidation; and

        • (B) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

        the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    Section 297(1): replaced, on 1 November 2007, by section 32(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 297(2): replaced, on 1 November 2007, by section 32(1) of the Companies Amendment Act 2006 (2006 No 56).

    Section 297(3)(a): replaced, on 1 November 2007, by section 32(2) of the Companies Amendment Act 2006 (2006 No 56).

    Section 297(3)(b)(i): replaced, on 26 April 1999, by section 10(1) of the Companies Amendment Act 1999 (1999 No 19).

    Section 297(3)(b)(i): amended, on 1 November 2007, by section 32(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 297(3)(b)(ii): amended, on 1 November 2007, by section 32(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 297(3)(b)(ii): amended, on 26 April 1999, by section 10(2)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 297(3)(b)(ii): amended, on 3 June 1998, by section 14 of the Companies Amendment Act 1998 (1998 No 31).

    Section 297(3)(b)(iii): inserted, on 3 June 1998, by section 14 of the Companies Amendment Act 1998 (1998 No 31).

    Section 297(3)(b)(iii): amended, on 1 November 2007, by section 32(3) of the Companies Amendment Act 2006 (2006 No 56).

    Section 297(3)(b)(iii): amended, on 26 April 1999, by section 10(2)(b) of the Companies Amendment Act 1999 (1999 No 19).

298 Transactions for inadequate or excessive consideration with directors and certain other persons

  • (1) Where, within the specified period, a company has acquired a business or property from, or the services of,—

    • (a) a person who was, at the time of the acquisition, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

    • (b) a person, or a relative of a person, who, at the time of the acquisition, had control of the company; or

    • (c) another company that was, at the time of the acquisition, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

    • (d) another company that was, at the time of the acquisition, a related company,—

    the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the consideration given for the acquisition of the business, property, or services exceeded the value of the business, property, or services at the time of the acquisition.

    (2) Where, within the specified period, a company has disposed of a business or property, or provided services, or issued shares, to—

    • (a) a person who was, at the time of the disposition, provision, or issue, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

    • (b) a person, or a relative of a person, who, at the time of the disposition, provision, or issue, had control of the company; or

    • (c) another company that was, at the time of the disposition, provision, or issue, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

    • (d) another company that, at the time of the disposition, provision, or issue, was a related company,—

    the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the business, property, or services, or the value of the shares, at the time of the disposition, provision, or issue exceeded the value of any consideration received by the company.

    (3) For the purposes of this section,—

    • (a) the value of a business or property includes the value of any goodwill attaching to the business or property;

    • (b) the provisions of section 7 apply with such modifications as may be necessary to determine control of a company.

    (4) For the purposes of subsections (1) and (2), specified period means—

    • (a) the period of 3 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

    • (b) in the case of a company that was put into liquidation by the court, the period of 3 years before the making of the application to the court together with the period commencing on the date of the making of the application and ending on the date on which, and at the time at which, the order of the court was made; and

    • (c) if—

      • (i) an application was made to the court to put a company into liquidation; and

      • (ii) after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

      the period of 3 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

    Compare: 1955 No 63 s 311C; 1980 No 43 s 28

    Section 298(4)(a): replaced, on 26 April 1999, by section 11(1) of the Companies Amendment Act 1999 (1999 No 19).

    Section 298(4)(b): amended, on 26 April 1999, by section 11(2)(a) of the Companies Amendment Act 1999 (1999 No 19).

    Section 298(4)(b): amended, on 3 June 1998, by section 15 of the Companies Amendment Act 1998 (1998 No 31).

    Section 298(4)(c): inserted, on 3 June 1998, by section 15 of the Companies Amendment Act 1998 (1998 No 31).

    Section 298(4)(c): amended, on 26 April 1999, by section 11(2)(b) of the Companies Amendment Act 1999 (1999 No 19).

299 Court may set aside certain securities and charges

  • (1) Subject to subsection (2), if a company that is in liquidation is unable to meet all its debts, the court, on the application of the liquidator, may order that a security or charge, or part of it, created by the company over any of its property or undertaking in favour of—

    • (a) a person who was, at the time the security or charge was created, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

    • (b) a person, or a relative of a person, who, at the time when the security or charge was created, had control of the company; or

    • (c) another company that was, when the security or charge was created, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

    • (d) another company, that at the time when the security or charge was created, was a related company,—

    shall, so far as any security on the property or undertaking is conferred, be set aside as against the liquidator of the company, if the court considers that, having regard to the circumstances in which the security or charge was created, the conduct of the person, relative, company, or related company, as the case may be, in relation to the affairs of the company, and any other relevant circumstances, it is just and equitable to make the order.

    (2) Subsection (1) does not apply to a security or charge that has been transferred by the person in whose favour it was originally created and has been purchased by another person (whether or not from the first-mentioned person) if,—

    • (a) at the time of the purchase, the purchaser was not a person specified in any of paragraphs (a) to (d) of that subsection; and

    • (b) the purchase was made in good faith and for valuable consideration.

    (3) The court may make such other orders as it thinks proper for the purpose of giving effect to an order under this section.

    (4) Nothing in the Land Transfer Act 1952 restricts the operation of this section.

    (5) The provisions of section 7 apply with such modifications as may be necessary to determine control of a company.

    Compare: 1955 No 63 s 311B; 1980 No 43 s 27

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