GOVERNMENT OF ZAMBIA ACT No.

9 of 2017 2017; “ beneficial owner ” has the meaning maximises the likelihood of the company
assigned to the word in the Companies Act, 2017; “ continuing in existence on a solvent basis or, if it is
I hereby signify my assent to the Bill
body corporate ” has the meaning assigned to the not possible for the company to so continue in
Date of Assent: 17th November, 2017 word in the Companies Act, 2017; “ book ” has the existence, results in a better return for the
meaning assigned to the word in the Companies company’s creditors or shareholders than would
Corporate Insolvency Act, 2017; result if the company was to be liquidated; “ charge
[No. 9 of 2017 287 ” has the meaning assigned to the word in the
Act No. 15 of 2010
“ account fairly stated ” means the annual accounts Companies Act, 2017; “ committee of inspection ”
stated in a manner that ensures sufficient disclosure, Act No.13 of 2008 means a committee of inspection appointed in the
reasonable detail and absence of bias; “ accounting course of a winding up in accordance with this Act;
Cap. 37 “ company ” has the meaning assigned to the word
records ” include— (a) invoices, receipts, orders for
the payment of money, bills of exchange, cheques, Act No. 7 of 2017 in the Companies Act, 2017; “ contingent creditor ”
promissory notes, vouchers and other documents of means a prospective or anticipated creditor; “
prime entry; and (b) such working papers and other
Act No. 10 of 2017 control ” means the control of a company by a
documents as are necessary to explain the methods person who— (a) beneficially owns more than
Act No. 10 of 2017
and calculations by which the accounts are made twenty-five percent of the issued share capital of the
up; “ affected person ” includes a regulator, Act No. 10 of 2017 company; (b) is entitled to vote a majority of the
shareholder, member, director, creditor or an votes that may be cast at a general meeting of the
288 No. 9 of 2017] Corporate Insolvency company, or has the ability to control the voting of
employee, a former employee of a company,
registered trade union representing employees of “ board of directors ” means the board of directors a majority of those votes, either directly or through
the company and the Registrar; “ Agency ” means of a company and “ board ” shall be construed a controlled entity of that person;
the Patents and Companies Registration Agency accordingly; “ business ” includes a trade or Act No. 10 of 2017
established in accordance with the Patents and profession; “ business rescue administrator ” means
Companies Registration Agency Act, 2010; “ agent a person qualified in accordance with section 30 Act No. 10 of 2017
of the company ” includes any banker or legal and appointed as an administrator for purposes of
Corporate Insolvency
practitioner of the company and any person business rescue proceedings; “ business rescue plan
[No. 9 of 2017 289
appointed by the company as auditor; “ annual ” means a plan provided for in accordance with
accounts ” means the annual financial statements of section 41; “ business rescue proceedings ” means (c) is able to appoint or to veto the appointment of a
a company that give a true and fair view of the the process of facilitating the rehabilitation of a majority of the directors of the company; (d) is a
financial performance, financial position and cash company that is financially distressed by providing holding company and the company is a subsidiary
flows of the company, including the consolidated for — (a) the temporary supervision of the company of that company as provided for in the Companies
financial statements for a group of companies that and management of its affairs, business and Act, 2017; (e) in the case of a company that is a
give a true and fair view of the group of companies’ property; (b) a temporary moratorium on the rights trust, has the ability to control the majority of the
financial performance, financial position and cash of claimants against the company or in respect of votes of the trustees, to appoint the majority of the
flows; “ auditor ” has the meaning assigned to the property in its possession; or (c) the development trustees or to appoint or change the majority of the
word in the Accountants Act, 2008; “ bailiff ” and implementation, if approved in accordance with beneficiaries of the trust; or (f) has the ability to
means an officer appointed in accordance with the this Act, of a plan to rescue the company by materially influence the policy of the company in a
Sheriffs Act; “ bank ” has the meaning assigned to restructuring its affairs, business, property, debt and manner comparable to a person who, in ordinary
the word in the Banking and Financial Services Act, other liabilities and equity in a manner that commercial practice, can exercise an element of
control referred to in paragraphs (a) to (e); “ and includes— (i) a unit of a debenture; (ii) proceeding ” means foreign proceedings, other than
corporate ” means an entity, including a company debenture stock; (iii) a bond; and (iv) any other a foreign main proceeding, taking place in a State
or body corporate, that is separate and distinct from security issued by a company, whether constituting where the debtor has an establishment; “ foreign
its owners and which is recognised as such by law a charge on the assets of the company or not; “ proceeding ” means a judicial or administrative
and acts as a single entity; “ Court ” means the High debenture holder ” includes a debenture proceeding in a foreign State, including an interim
Court for Zambia; “ creditor ” means a person who stockholder; “ declaration ” means a declaration of proceeding, pursuant to a law relating to insolvency
is entitled to claim that debt is owing to that person insolvency made by the Official Receiver; “ in which the assets and affairs of the debtor are
by a company and includes a person entitled to declaration of solvency ” means a declaration made subject to determination by a foreign Court, for the
enforce a final judgment or order of the Court; “ in accordance with section 91; “ deed of purpose of re- organisation or liquidation; “ foreign
creditors ’ voluntary winding up” means a appointment ” means the instrument by which the representative ” means a person or body, including
voluntary winding up of a company by the creditors holder of a charge appoints a receiver; “ dissolution one appointed on an interim basis, authorised in a
where no declaration of insolvency was made; “ ” means the termination of a company’s legal foreign proceeding to administer the re-organisation
current liability ” means a liability that would, in existence by liquidation in accordance with this or the liquidation of the debtor’s assets or affairs or
the ordinary course of events, be payable within Act; “ director ” means a person appointed as a to act as a representative for the foreign
twelve months after the end of the financial year to director of a company in accordance with the proceedings; “ general meeting ” means an annual
which the accounts of a company or group of Companies Act, 2017 and the words “the directors” general meeting or an extraordinary general
companies relate; “ debenture ” means a document means the directors acting collectively; “ meeting; “ goods ” includes personal property; “
issued by a corporate that evidences or establishment ” means any place of operations liquidator ” means a person appointed to wind up
acknowledges a debt of the corporate, whether or where a debtor carries out non-transitory economic the affairs of a company; “ judgment receiver”
not it constitutes a charge on property of the activity; “ financial institution ” has the meaning means a receiver who collects or diverts funds from
corporate, in respect of money that is or may be assigned to the word in the Banking and Financial a judgment debtor to the creditor; “ independent
deposited with or lent to the corporate, other than a Services Act, 2017; “ financially distressed ” means creditor ” means a person who is— (a) a creditor of
document of the following kinds: (a) a document a company is likely to be insolvent within the the company, including an employee of the
acknowledging a debt incurred by the corporate in immediately ensuing six months; “ financial year ” company; and (b) not related to the company, a
respect of money that is or may be deposited with has the meaning assigned to the word in the director, or the business rescue administrator; “
or lent to the corporate by a person— Companies Act; insolvency practitioner ” means the Official
Receiver or a person who is qualified to be
Act No. 10 of 2017 Act No. 10 of 2017
appointed— (a) a receiver, receiver manager or
290 No. 9 of 2017] Corporate Insolvency Act No. 10 of 2017 judgment receiver; (b) a liquidator; or (c) business
rescue administrator; of a company, as specified in
(i) in the ordinary course of a business carried on by Act No. 7 of 2017 sections 139 and 142; “ insolvency proceeding ”
the person; and (ii) in the ordinary course of such means a judicial or administrative proceeding
Corporate Insolvency
business of the corporate as is not part of a business relating to bankruptcy, liquidation, receivership,
[No. 9 of 2017 291
of borrowing money and providing finance; (b) a judicial or statutory management or voluntary
document issued by a bank in the ordinary course of “ foreign Court ” means a judicial or other authority administration; 292 No. 9 of 2017]
its banking business that evidences or competent to determine foreign proceedings; “ Corporate Insolvency
acknowledges indebtedness of the bank arising in foreign main proceeding ” means proceedings
the ordinary course of that business; (c) a cheque or taking place in the State where the debtor’s main “ insolvent ” means having liabilities that exceed
order for the payment of money or bill of exchange; interests are situated; “ foreign non-main the value of assets, having stopped paying debts in
the ordinary course of business or being unable to
pay them as they fall due; “ liquidation ” means the arising from the property of the corporate or other debt securities; (d) derivatives; (e) any rights,
process of converting the property of a company person, and includes the Official Receiver; options or derivatives in respect of any such shares,
into cash in order to settle the company’s’ debt and debt securities or public debt securities; (f) any
Cap. 82
other liabilities; “ member ” means a shareholder or rights under a contract to secure a profit or avoid a
stockholder of a company or a subscriber to a Cap. 1 loss by reference to fluctuations in—
company limited by guarantee; “ members
Act No. 10 of 2017 Act No. 15 of 2010
voluntary winding-up ” means the termination of a
corporation, initiated by the board of directors and Corporate Insolvency 294 No. 9 of 2017] Corporate Insolvency
approved by the shareholders; “ officer ” includes [No. 9 of 2017 293
a— (a) director, secretary or executive officer of a (i) the value or price of any shares, debt securities
body corporate; and (b) local director of a foreign “ recognised professional body ” means a or public debt securities; (ii) the value or price of a
company; “ Official Receiver ” means the person professional body recognised by the Minister as a group of shares, debt securities or public debt
appointed as official receiver under the professional body, in accordance with this Act; “ securities; or (iii) an index of shares, debt securities
Bankcruptcy Act; “ Oath ” has the meaning record ’’ includes a computer record and any other or public debt securities; (g) unit trusts and interests
assigned to the word in the Constitution; “ ordinary non- documentary record; “ Register of Liquidators under collective investment schemes; (h)
resolution ” has the meaning as assigned to the ” means a Register of liquidators kept by the commercial paper; (i) depository receipts; (j)
word in the Companies Act, 2017; “ property ” Registrar in accordance with this Act; “ Register of warehouse receipts; or (k) any other instrument
means the assets of the company, including money, Insolvency Practitioners ” means the Register kept commonly known as securities or which are
goods, choses in action and land, whether real or by the Registrar in accordance with section 143; “ prescribed by a relevant authority; excluding bills
personal, legal or equitable and situated in Zambia Register of receivers ” means a Register of of exchange, promissory notes, certificates of
or elsewhere, and obligations, easements and every receivers kept by the Registrar in accordance with deposit issued by a bank; “security agreement”
description of estate, interest and profit, present or this Act; “ Registrar ” means the Registrar means an agreement under which property becomes
future, vested or contingent and arising out of, or appointed under the Patents and Companies subject to a security for the performance of an
incidental to the property; “ proposal ” means a Registration Agency Act, 2010; “ relative ” in obligation; “ service provider ” means an entity or
proposal for a voluntary arrangement or for relation to an individual means— (a) a parent, person who supplies water and sanitation services,
extension of time; “ provable claim ” includes any spouse, son, daughter, brother, sister, nephew, electricity, telecommunications or such other
claim or liability provable in proceedings niece, uncle, aunt, grandparent or cousin of the services as may be prescribed; “ shares ” means an
commenced or lodged in accordance with this Act individual; (b) a parent, child, brother or sister of ownership interest or stocks issued or proposed to
by a creditor; “ provisional liquidator ” means the the spouse of the individual; or (c) a nominee or be issued by a company in the capital of the
Official Receiver or any person appointed trustee of any of the persons specified in paragraph company; “ shareholder ” has the meaning assigned
provisionally by the Court after the presentation of (a) or (b); “ secured creditor ” means a person to the word in the Companies Act, 2017, and
a winding up petition but before the making of a holding a mortgage, pledge, charge or lien on, or includes a person who is the beneficial owner of,
winding up order; “ receiver ” means a disinterested against, the property of the debtor or any part holds shares in, or is in a position to exert control
individual appointed as a receiver, receiver manager thereof as security for a debt due or accruing to that over more than fifteen percent of the shares of a
or judgment receiver, in accordance with this Act, person from a debtor, or a person whose claim is company or body corporate; “ solvency test ” means
for a corporate or other person, for the protection or based on, or secured by, a negotiable instrument a test to determine that— (a) a company is able to
collection of property that is the subject of diverse held as collateral security and on which the debtor pay its debts as they become due in the normal
claims, is litigated or has been litigated or income is only indirectly or secondarily liable; “ securities ” course of business; and (b) the value of the
means— (a) shares; (b) debt securities; (c) public company’s assets is greater than the value of its
liabilities, including contingent liabilities; “ special any law, are implied in, and have effect as if, vested ceases to be a receiver, the person shall, within
manager ” means a person appointed in accordance in that instrument. 4. (1) Where a charge over seven days after ceasing to be a receiver, lodge with
with section 81 to manage an estate or business of a property of a company has become enforceable, the the Registrar a notice that the person has ceased to
company, or the interests of the creditors or Court may, on the application of the chargee, be a receiver. (4) The Registrar shall, on the
members generally, where the liquidator is satisfied appoint a receiver of the property. (2) The Court lodgment of a notice as specified in subsection (1)
of the necessity of such an appointment due to the may, in the case of a floating charge, whether or not or (3), cause a notice of the appointment of the
nature of the estate or business; the charge has become enforceable, on the person as receiver or the cessation of the person as
Corporate Insolvency [No. 9 of 2017 295 application of the chargee, appoint a receiver of the receiver, to be published in the Gazette. 6. (1)
property and undertaking of the Where a receiver is appointed over all or a part of
“ special resolution ” has the meaning assigned to
the assets of a company, unless the Court otherwise
the word in the Companies Act, 2017; “ successor Act No. 10 of 2017
directs, the directors of a company shall, within
in title ” means the successor of a person and
Act No. 10 of 2017 Act No. 41 of 2016 Act No. 7 three months of the appointment of the receiver,
includes an heir, executor, liquidator, administrator
of 2017 prepare and submit to the receiver a statement as to
or other legal representative of a person, as the case
the affairs of the company as at the date of the
may be; “ supervision ” means the oversight Reference to receiver under enabling instrument appointment of the receiver, showing— (a) the
imposed on a company during that company’s
Appointment of receiver particulars of the company’s assets and liabilities;
business rescue proceedings; “ transaction ’’
(b) the names and addresses of the company’s
includes a gift, agreement or arrangement, and 296 No. 9 of 2017] Corporate Insolvency creditors; (c) the securities held by each of the
“entering into a transaction” shall be construed
creditors; (d) the dates when the securities were
accordingly; “ trustee ” means a trustee in company if the charge is satisfied that events have
respectively given; and (e) such further information
bankruptcy of a member, as provided in section 54; occurred or are about to occur which render it
as may be prescribed or as the receiver may require.
“ voluntary arrangement ” means an arrangement unjust to the chargee that the company should retain
(2) The statement, referred to in subsection (1),
entered into by a company and that company’s power to dispose of the company’s assets. (3) A
shall be verified by a statutory declaration of at
creditors by way of— (a) a composition for the person may appoint a receiver under deed of
least one director or the secretary of the company
satisfaction of the company’s debts; (b) a scheme; appointment. (4) An individual shall not be
not later than seven days after the preparation of the
or (c) arrangement of the company’s affairs. “ appointed as a receiver unless the individual is
statement.
voting interest ” means an interest that is appraised eligible for appointment as provided in section 9.
and valued in accordance with section 39; and “ (5) A person shall not be appointed as receiver as a Notification of appointment of receiver
winding up ” means the process of settling accounts means of enforcing a debenture where there is no
secured interest. 5. (1) A person who obtains an Statement of company’s affairs
and liquidating assets in anticipation of a
company’s dissolution. (2) A word or term used in order for the appointment of a receiver, or who Corporate Insolvency
this Act which is not defined but is defined in the appoints a receiver under a deed of appointment, as [No. 9 of 2017 297
Companies Act, Securities Act, 2016, or the specified in section 4, shall, within fourteen days
Banking and Financial Services Act, 2017, shall after obtaining the order or making the (3) Where the directors of a company fail or neglect
have the meaning assigned to it in those Acts. appointment, lodge a notice of the order or to prepare the statement referred to in subsection
appointment with the Registrar, in the prescribed (1), the receiver shall, not more than three months
PART II RECEIVERSHIP 3. A reference in this form. (2) A person who is appointed as a receiver after the expiry of the period referred to in
Act to the appointment of a receiver under powers shall, within fourteen days after the appointment, subsection (1), prepare a statement of the affairs of
vested in any instrument, includes a reference to an lodge with the Registrar and the Official Receiver a the company, from the available information. (4) A
appointment made under powers which, by virtue of notice in the prescribed form. (3) Where a person receiver may, subject to the direction of the Court,
by notice in the prescribed manner and form, (b) comply with the notice issued by the Registrar practicing as a chartered accountant or a legal
require a person to verify, by statutory declaration, under paragraph (a), cause the receiver to be practitioner for a period of at least seven years and
such part of the statement, specified in subsection disqualified from acting as a receiver under this is accredited by the Registrar as an insolvency
(1), as that person is in a position to verify, if that Act. (9) A statement made in accordance with this practitioner. (2) An individual who wishes to
person — (a) is, or was, within two years before the section may be used as evidence in any proceedings perform the function of a receiver shall apply for
date of the appointment of the receiver, an officer of against a person making it. 7. (1) Where a person or accreditation in the prescribed manner and form and
the company; or (b) took part in the formation of an officer contravenes section 6, the person or pay the prescribed fee.
the company, if the company was formed less than officer commits an offence and is liable, on
Offences relating to statement of affairs
two years before the date of the appointment of the conviction- (a) to a fine not exceeding one hundred
receiver. (5) A person required to verify a thousand penalty units or to imprisonment for a Payment of preferential creditors
statement, in accordance with subsection (4), shall, period not exceeding one year, or to both; and (b) in
within fourteen days after receiving the notice the case of a continuing offence, to a fine not Eligibility for appointment as receiver
referred to in that subsection, or within such exceeding fifty thousand penalty units for each day Corporate Insolvency
extended period as the receiver or the Court may that the failure continues or to imprisonment for a [No. 9 of 2017 299
specify, submit a statutory declaration verifying the period not exceeding eighteen months, or to both.
statement specified in subsection (3) or such part of (2) Despite the generality of subsection (1), a (3) An individual shall not be appointed, act or
the statement as that person is in a position to person that provides false or misleading information continue to act as a receiver of the property or
verify. (6) A receiver shall, within twenty-one days with respect to a statement of affairs made in undertaking of a company if the individual is— (a)
after receiving the statement submitted in accordance with section 6 commits an offence and by reason of a mental disability incapable of
accordance with subsection (1) or a statutory is liable, on conviction, to a fine not exceeding two performing the functions; (b) prohibited or
declaration submitted in accordance with subsection hundred thousand penalty units or to imprisonment disqualified from so acting by any order of a court
(5), cause copies to be— (a) filed with the Court, if for a period not exceeding two years, or to both. 8. of competent jurisdiction; (c) a mortgagee or
the receiver is appointed by the Court; (b) lodged Where a receiver is appointed on behalf of the chargee of the company; (d) an undischarged
with the Registrar; (c) delivered to the Official holder or trustee of any debenture of a company bankrupt; (e) a person who is, or has been within
Receiver, if the Official Receiver is not the that is secured by a floating charge, or possession is the previous two years, a director or officer of the
receiver; and (d) lodged with the holder of the taken by or on behalf of the holder or trustee of the company or any related body corporate, except with
charge by virtue of which the receiver was debenture of property comprised in or subject to the the leave of the court; (f) a trustee under any trust
appointed. (7) A person required under this section charge, if the company is not at the time in the deed for the benefit of debenture holders of the
to verify a statement shall be paid, out of the assets course of being wound-up, the debts which in every company, except with the leave of the court; (g) a
of the company, such costs and expenses incurred winding-up are to be paid in priority to all other person who has been convicted, within the previous
in and relating to the verification of information, as debts, as provided in this Act, shall— (a) be paid five years, of an offence involving fraud or
the receiver considers reasonable, subject to an out of any assets coming into the hands of the dishonesty; or (h) a person who has been removed,
appeal to the Court. (8) The Registrar may, where a receiver or the person taking possession in priority within the previous five years, from an office of
receiver does not— (a) submit a statement of to any claim for principal or interest in respect of trust by order of a court of competent jurisdiction.
affairs, in accordance with subsection (1), issue a the debentures; and (b) the date of the appointment (4) Accreditation as a receiver is valid for a period
reminder to the receiver to submit the statement of the receiver or of possession being taken, shall be of one year from the date of accreditation and is
within fourteen days; and 298 No. 9 of 2017] considered to be the date of commencement of the subject to renewal in the prescribed manner and
Corporate Insolvency winding-up. 9. (1) An individual is eligible for form and upon payment of the prescribed fees. (5)
appointment as a receiver if that individual has been Accreditation that is not renewed in accordance
with subsection (4) is void. (6) A person who acts receiver to account for any amount that the receiver receiver with the express or implied authority of the
or continues to act as a receiver, contrary to this may have been paid or retained for remuneration, person appointing the receiver, the receiver is
Act, commits an offence and is liable, on before the making of the order, that is in excess of indemnified from liability, to the extent to which
conviction, to a fine not exceeding two hundred the remuneration fixed for that period. (5) A the receiver is unable to recover on any assets under
thousand penalty units or to imprisonment for a receiver who collects a fee in excess of the a charge, in accordance with the deed of
period not exceeding two years, or to both. 10. (1) prescribed fees, shall be personally liable, to appointment. (3) A receiver is personally liable on
Subject to subsection (2), a body corporate or firm reimburse the amount of the excess fees so any contract entered into by the receiver in
is not qualified for appointment as a receiver and a collected or to a fine not exceeding one hundred contravention of this Act. 15. (1) Where a receiver
body corporate or firm which acts as such is liable thousand penalty units or to imprisonment for a has been appointed, every invoice, order or business
to a fine not exceeding two hundred thousand period not exceeding one year, or to both. 12. A letter issued by or on behalf of the company or
penalty units. (2) This section does not apply to the receiver appointed by the Court shall be an officer receiver, being a document on or in which the name
Official Receiver. 11. (1) Subject to subsection (2), of the Court and shall be considered, in relation to of the company appears, shall contain a statement
a receiver is entitled to the payment of a fee which the property or undertaking, not to be an officer of that a receiver has been appointed. (2) If the
shall be a percentage of the proceeds of the the company, and shall act in accordance with the company fails to comply with this section, the
receivership. directions and instructions of the Court. 13. (1) A company, receiver or any officer concerned,
receiver appointed under a deed of appointment commits an offence and is liable, on conviction, to a
Disqualification of body corporate or firm from
shall, subject to section 14, be considered to be an fine not exceeding three thousand penalty units for
appointment as receiver
agent and officer of the company, and not an agent each document not containing the statement. 16. (1)
Remuneration of receiver of the persons by or on behalf of whom the receiver A receiver shall, before disposing of any asset
is appointed, and the receiver shall act in under a charge, manage the asset so as to realise the
300 No. 9 of 2017] Corporate Insolvency accordance with the deed of appointment under monies owed to the secured creditor without
(2) Despite the generality of subsection (1), the fee which the receiver is appointed, and with any disposing the asset by sale, unless the management
payable to a receiver shall not exceed an amount directions of the Court specified in an order of the of the asset shall be further depleted or not satisfy
that may be prescribed by statutory instrument. (3) Court. (2) The Court may, on the application of a the debts owed to the secured creditor. (2) Subject
Despite subsections (1) and (2), the Court may, on receiver, make such order as it considers necessary to subsection (1), a receiver shall, where the
the application of a company, liquidator or receiver to provide direction, in any matter relating to the receiver decides to dispose of an asset under a
by order, fix the amount to be paid by way of performance of the receiver’s functions or declaring charge by sale, dispose of the asset at the highest
remuneration to a receiver and may, on application the rights of persons before the Court or otherwise. possible amount and shall, after satisfying the
made by the company, or liquidator or receiver, secured creditor’s debt and the receiver’s fees, pay
Receivers appointed by Court
vary or amend the order. (4) The power of the Court the difference to the company. (3) A receiver shall,
as specified in subsection (3) shall — (a) extend to Receivers appointed under deed of appointment unless directed by the Court or by a resolution of
fixing the remuneration for any period before the creditors or members passed at a general meeting or
14. (1) Where a contract was entered into by a by a committee of inspection— (a) dispose of an
making of the order or the application therefor,
receiver in the proper performance of the receiver’s asset under a charge by public tender or by the most
where the Court is satisfied that there are special
functions, the receiver has, subject to the rights of transparent manner in the circumstances; and (b)
circumstances making it proper to do so; (b) be
any prior encumbrances, an indemnity in respect of not less than 21 days before the disposal, notify the
exercisable despite the receiver dying or ceasing to
any liability relating to the property. (2) Where the Registrar in the prescribed manner and form, of the
be the receiver before the making of the order or the
receiver was appointed under a deed of intention to dispose of the asset. (4) A receiver who
application therefor; and (c) extend to requiring the
appointment, and a contract was entered into by the contravenes this section commits an offence and is
receiver or the personal representatives of the
liable, on conviction, to a fine not exceeding fifty as soon as is practicable, report the matter, in appointed, or by revocation of the deed of
thousand penalty units. writing, to the Registrar or official Receiver, where appointment. (4) Where a receiver vacates office—
the receiver, in the course of performing the (a) the receiver’s remuneration and any expenses
Liabilities of receivers on contracts
functions and duties of a receiver determines that— properly incurred by the receiver; and (b) any
Statement of appointment of receivership on (a) there is a contravention of, or failure to comply indemnity to which the receiver is entitled out of
stationery with, any of the provisions of this Act by any the property of the company; shall be paid out of
person; and (b) the circumstances are such that the the property of the company which is subject to a
Management of assets before disposal matter has not been or will not be adequately dealt charge and such remuneration shall have priority in
302 No. 9 of 2017] Corporate Insolvency with by bringing the matter to the notice of the accordance with this Act as a secured creditor. (5)
directors of the company or, if the company is a Where a receiver ceases to be receiver or is
17. Where a receiver is appointed of the whole, or subsidiary, of the directors of the holding company. removed by the Court, the holder of the charge by
substantially the whole of the undertaking of a (2) The Court may, on its own motion, or on the virtue of which the receiver was appointed shall,
company, on behalf of the holders of any application of the Registrar or Official Receiver, or within fourteen days of the cessation of the
debentures secured by a floating charge, sections of any person interested in the appointment of the receivership or removal of the receiver, notify the
73, 118 and 126 apply as if the company had been receiver, require the receiver to submit a report, to Registrar and Official Receiver in the prescribed
ordered to be wound-up and the receiver had been the Registrar or Official Receiver, on any matter form and manner of the cessation or removal and
appointed liquidator. 18. (1) Except where section relating to the company in which the receiver has the Registrar shall enter the notice in the Register of
17 applies, a receiver shall within thirty days, or information. Receivers. (6) If, by the expiry of a period of thirty
such longer period as the Registrar may allow— (a) days following the removal of a receiver or the
after the end of the period of six months from the Statement of affairs and accounts where receiver
cessation of a receivership and no other receiver is
date of the receiver’s appointment, and of every appointed
appointed, the deed by virtue of which the receiver
subsequent period of three months until the receiver Accounts of receivers was appointed shall cease to attach to the property.
ceases to act, lodge simultaneously with the (7) A person who contravenes this section commits
Registrar and Official Receiver an abstract showing Report by receiver an offence and is liable, upon conviction, to a fine
the receiver’s receipts and payments during that not exceeding one hundred thousand penalty units
Corporate Insolvency
period of three months; and (b) within thirty days, or to imprisonment for a period not exceeding one
[No. 9 of 2017 303
or such longer period as the Registrar may allow, year, or to both.
after ceasing to be receiver, lodge with the Registrar 20. (1) The office of a receiver becomes vacant
an abstract showing the receiver’s receipts and where the receiver— (a) dies; (b) becomes Vacation of office by receiver
payments during the twelve month period from the ineligible for appointment as specified in section 9; 304 No. 9 of 2017] Corporate Insolvency
last abstract, if any, and the total of the receipts and (c) is removed by order of the Court; or (d) is
payments during the whole period of the receiver’s removed from the Register of Insolvency PART III BUSINESS RESCUE PROCEEDINGS
appointment. (2) The Registrar may require a Practitioners in accordance with section 143. (2) A 21. (1) Subject to subsection (2) (a), the member
receiver to produce any document, or information receiver may resign from office by giving one may by special resolutions, resolve that the
concerning the affairs of the company. (3) A month’s notice, in writing, to the appointing company voluntarily begins business rescue
receiver who contravenes this section commits an authority or the Court, of the receiver’s intention to proceedings and place the company under
offence and is liable, on conviction, to a fine not resign. (3) A receiver may be removed by the supervision, if the board has reasonable grounds to
exceeding one thousand penalty units for each day Court, on application to the Court by the holder of a believe that— (a) the company is financially
that the failure continues. 19. (1) A receiver shall, charge by virtue of which the receiver was distressed; and (b) there appears to be a reasonable
prospect of rescuing the company; and there is need the resolution lapsed unless the Court approves the set aside the resolution or the appointment of the
to— (i) maintain the company as a going concern; company filing a further resolution. (6) A company business rescue administrator,
(ii) achieve a better outcome for the company’s that adopts a resolution to begin business rescue
Objections to resolution to begin business rescue
creditors as a whole than is likely to be the case if proceedings shall not adopt a resolution to begin
proceedings
the company were to be liquidated; or (iii) realise liquidation proceedings, unless the resolution has
the property of the company in order to make a lapsed as specified in subsection (5), or until the 306 No. 9 of 2017] Corporate Insolvency
distribution to one or more secured or preferential business rescue proceedings have ended as provided
creditors. (2) A resolution made in accordance with in section 24 (2). (7) Where the board has unless the director satisfies the Court that in
subsection (1)— (a) shall not be adopted if reasonable grounds to believe that the company is supporting the resolution, the director acted in good
liquidation proceedings have been initiated by or financially distressed but does not adopt the faith, on the basis of information that was
against the company; and (b) becomes effective resolution to begin business rescue proceedings, the subsequently found to be false or misleading. (3)
after it has been filed with the Registrar. (3) Within board shall deliver a notice to each affected person An affected person making an application, in terms
thirty days after the board has filed the resolution, and its reasons for not adopting such a resolution. of subsection (1), shall— (a) serve a copy of the
referred to in subsection (1), or such longer time as 22. (1) Subject to subsection (2), at any time after application on the company and the Official
the Registrar, on application by the company, may the adoption of a resolution as specified in section Receiver; and (b) notify each affected person of the
allow, the company shall— (a) give notice of the 21 and until the adoption of a business rescue plan application in the prescribed manner. (4) An
resolution and its effective date, to every affected in accordance with section 43, an affected person affected person may participate in the hearing of an
person in the prescribed manner; and (b) appoint a may apply to a Court for an order— (a) setting application made in terms of this section. (5) The
business rescue administrator. (4) The company aside the resolution on the grounds that— (i) there Court may, when determining an application made
shall, after appointing a business rescue is no reasonable basis for believing that the in accordance with paragraph (a) of subsection
administrator— (a) file a notice with the Registrar company is financially distressed; (ii) there is no (1)— (a) set aside the resolution— (i) on any
of the appointment of the business rescue reasonable prospect for rescuing the company; or ground set out in that subsection; or (ii) if, having
administrator, within seven business days after (iii) the company has failed to satisfy the procedural regard to all of the evidence, the Court determines
making the appointment; and (b) publish a copy of requirements set out in section 21; (b) setting aside that it is otherwise just and equitable to do so; and
the notice of appointment of the business rescue the appointment of the business rescue (b) afford the business rescue administrator
administrator to each affected person, within administrator, on the grounds that the business sufficient time to form an opinion whether— (i) the
twenty-one business days after the notice is filed. rescue administrator— (i) is not qualified as company appears to be financially distressed; or (ii)
(5) If a company fails to comply with subsection (3) provided in section 30; (ii) is not independent of the there is a reasonable prospect of rescuing the
or (4)— (a) the company’s resolution to begin company or its management; or (iii) lacks the company; and after receiving a report from the
business rescue proceedings and place the company necessary skills, having regard to the company’s business rescue administrator, may set aside the
under supervision shall lapse after a period of sixty circumstances; or (c) requiring the business rescue company’s resolution, if the Court determines that
days from the adoption of the resolution; and administrator to provide security in an amount and the company is not financially distressed or there is
on terms and conditions that the Court considers no reasonable prospect of rescuing the company. (6)
Resolution to begin business rescue proceedings The Court may, where it makes an order under
necessary, to secure the interest of the company and
any affected person. (2) A director who voted in paragraph (a) or (b) of subsection (5) make any
Corporate Insolvency
favour of a resolution to begin business rescue further appropriate order, including— (a) an order
[No. 9 of 2017 305
proceedings as provided in section 21 shall not placing the company under liquidation; or (b) if the
(b) the company shall not file a further resolution apply to the Court, as specified in subsection (1), to Court finds that there were no reasonable grounds
for a period of three months after the date on which for believing that the company is insolvent, make
an order for costs against any director who voted in it is otherwise just and equitable to do so for proceedings; (b) a business rescue administrator
favour of the resolution to begin business rescue financial reasons, and there is a reasonable prospect files with the Registrar and the Official Receiver a
proceedings, unless the Court is satisfied that the of rescuing the company; or (b) dismiss the notice of the termination of the business rescue
director acted in good faith. (7) If, after considering application and make a further appropriate order, proceedings; or (c) a business rescue plan is— (i)
an application made in accordance with paragraph including an order placing the company under proposed and rejected in accordance with this Part,
(b) of subsection (1), the Court makes an order liquidation. (5) The Court shall, where an and no affected person applies to revise the plan in
setting aside the appointment of the business rescue application is made in accordance with subsection accordance with section 44; or (ii) adopted in
administrator — (1), appoint the Official Receiver as the interim accordance with this Part, and the business rescue
business rescue administrator pending an administrator subsequently files a notice of
Corporate Insolvency
appointment of a business rescue administrator by substantial implementation of the plan. (3) If a
[No. 9 of 2017 307
an affected person or the creditors. (6) An affected company’s business rescue proceedings have not
(a) the Court shall appoint another business rescue person or the creditors shall, where the Court makes terminated within twelve months after the start of
administrator who is qualified as specified in an order as specified in subsection (4)(a), appoint a those proceedings, or such longer time as the Court,
section 30, recommended by, or accepted by, the business rescue administrator. on application by the business rescue administrator,
holders of a majority of the independent creditors’ may allow, the business rescue administrator
Court order to commence business rescue
voting interests who were represented in the hearing shall— (a) prepare a report on the progress of the
proceedings
before the Court; and (b) the provisions of business rescue proceedings and update the report
paragraph (b) of subsection (5), if relevant, shall 308 No. 9 of 2017] Corporate Insolvency at the end of each subsequent month until the end of
apply to the business rescue administrator. 23. (1) the business rescue proceedings; and
(7) If liquidation proceedings have been
An affected person may apply to the Court for an
commenced by or against a company at the time an Duration of business rescue proceedings
order to place the company under supervision and
application is made as provided in subsection (1),
begin business rescue proceedings, unless a Corporate Insolvency
the liquidation proceedings shall be suspended
company has adopted a resolution to commence [No. 9 of 2017 309
until- (a) the Court has adjudicated upon the
business rescue proceedings in accordance with
application; or (b) the business rescue proceedings (b) deliver the report and each update, in the
section 21. (2) An applicant referred to in
terminate, if the Court makes the order applied for. prescribed manner, to each affected person and to
subsection (1) shall— (a) serve a copy of the
(8) A company that has been placed under the— (i) Court, if the proceedings have been the
application on the company and the Registrar and
supervision in accordance with this section shall— subject of a Court order; and (ii) Registrar and
the Official Receiver; and (b) notify each affected
(a) not adopt a resolution placing itself in Official Receiver, in all cases. 25. (1) A legal
person of the application in the prescribed manner.
liquidation until the termination of the business proceeding shall not be brought, against a company
(3) An affected person has a right to participate in
rescue proceedings; and (b) notify each affected or in relation to any property belonging to the
the hearing of an application under this section. (4)
person of the order within five days after the date of company or lawfully in its possession, during
The Court may after considering an application
the order. 24. (1) Business rescue proceedings shall business rescue proceedings, except— (a) with the
made in accordance with subsection (1)— (a) make
commence when the Court makes an order placing written consent of the business rescue
an order placing the company under supervision
the company under supervision in accordance with administrator; (b) with the leave of the Court and in
and begin business rescue proceedings, if the Court
this Act. (2) Business rescue proceedings shall accordance with any terms and conditions the Court
determines that— (i) the company is financially
terminate when— (a) the Court— (i) sets aside the considers suitable in any particular matter related to
distressed; (ii) the company has failed to pay any
resolution or order that began the proceedings; or the business rescue proceedings; (c) as a set-off
amount in terms of an obligation under a contract
(ii) converts the proceedings to liquidation against any claim made by the company in any
with respect to employment-related matters; or (iii)
other legal proceedings, irrespective of whether and (c) a person shall not exercise any right in encumbered; and (b) shall be paid in the order of
those proceedings commenced before or after the respect of any property in the lawful possession of preference set out in subsection (3) (a). (3) After the
business rescue proceedings began; (d) criminal the company, irrespective of whether the property is payment of the business rescue administrator
proceedings against any of the company’s directors owned by the company, except to the extent that the remuneration and expenses, referred to in section
or officers; or (e) proceedings concerning any business rescue administrator consents in writing. 35, and other costs arising out of the business
property or right over which the company exercises (2) A business rescue administrator shall not rescue proceedings, all claims specified in— (a)
the powers of a trustee. (2) A guarantee or surety by unreasonably withhold consent as specified in subsection (1) shall be treated equally, but shall
a company in favour of any other person may not be subsection (1) (c), having regard to— (a) the have preference overall— (i) claims specified in
enforced by any person against the company during purposes of this Part; (b) the circumstances of the subsection (2), irrespective of whether they are
business rescue proceedings, except with leave of company; and (c) the nature of the property and the secured or unsecured; and (ii) unsecured claims
the Court and in accordance with any terms and rights claimed in respect of it. (3) Where the against the company; and (b) subsection (2) shall
conditions the Court considers just and equitable in company, during business rescue proceedings, have preference in the order in which they were
the circumstances. (3) If any right to commence wishes to dispose of any property over which incurred over all unsecured claims against the
proceedings or otherwise assert a claim against a another person has a security or title interest, the company. (4) Where business rescue proceedings
company is subject to a time limit, the measurement company shall — (a) obtain the prior consent of are superseded by a liquidation order, the
of that time shall be suspended during business that person, unless the proceeds of the disposal is preference conferred in terms of this section shall
rescue proceedings. 26. (1) Subject to subsections sufficient to fully discharge the indebtedness remain in force, except to the extent of any claims
(2) and (3), during business rescue proceedings— protected by the person’s security or title interest; arising out of the costs of liquidation. 28. (1)
(a) a company may dispose, or agree to dispose, of and (b) promptly— (i) pay to the person an Despite a provision of an agreement to the
property only— (i) in the ordinary course of its amount, from the proceeds of the sale of the contrary— (a) the employees of the company
business; (ii) in a bona fide transaction at arm’s property, that the company owes the person; or (ii) immediately before the beginning of business
length for fair value and approved in advance, in provide security for the amount the company owes rescue proceedings shall, during a company’s
writing by the business rescue administrator; or the person. 27. (1) Where a company is required to business rescue proceedings, continue in
pay any remuneration, reimbursement for expenses employment on the same terms and conditions,
General moratorium on legal proceedings against
or other amount of money, relating to an employee, unless— (i) changes occur in the ordinary course of
company
during business rescue proceedings, and the attrition; or (ii) the employees and the company, in
Protection of property interests company fails to pay, the money shall be— (a) accordance with applicable labour laws, agree to
regarded as post-commencement financing; and different terms and conditions; and (b) any
310 No. 9 of 2017] Corporate Insolvency redundancy or retrenchment of such an employee as
Post- commencement finance
(iii) in a transaction specified within, and specified in the business rescue plan shall be subject
undertaken as part of the implementation of, a Corporate Insolvency to the Constitution, Employment Act and other
business rescue plan that has been approved as [No. 9 of 2017 311 applicable employment legislation. (2) Despite a
provided in section 43; (b) a person who, as a result provision of an agreement to the contrary, a
(b) paid in the order of preference set out in business rescue administrator may, with leave of the
of an agreement made in the ordinary course of the
subsection (3) (a). (2) The company may, during Court during business rescue proceedings, cancel
company’s business before the business rescue
business rescue proceedings, obtain financing, other entirely or partially or
proceedings began, is in lawful possession of any
than as specified in subsection (1), which— (a) may
property owned by the company, may continue to Effect of business rescue on employees and
be secured to the lender by an asset of the company
exercise any right in respect of that property as contracts
to the extent that the asset is not otherwise
specified in that agreement, subject to section 29;
Cap. 1 Cap. 268 on behalf of the company without obtaining the person who was part of the board or management of
approval of the business rescue administrator. (5) A the company; (c) the power to— (i) remove any
312 No. 9 of 2017] Corporate Insolvency
business rescue administrator may, during the person from office who was part of the management
conditionally suspend a provision of an agreement business rescue proceedings, remove a director of the company; or (ii) appoint a person as part of
to which the company was a party at the beginning from office on the grounds that the director has— the management of a company, subject to
of business rescue proceedings, other than an (a) failed to comply with a requirement of this Part; subsection (2); and (d) the responsibility to— (i)
agreement of employment. (3) A party to an or (b) by act or omission impeded or is impeding develop a business rescue plan to be considered by
agreement that has been suspended or cancelled, or the— (i) business rescue administrator in the affected persons, in accordance with this Part; (ii)
a provision which has been suspended or cancelled, performance of the administrators powers and implement a business rescue plan that is adopted in
in terms of subsection (2), may assert a claim functions; accordance with this Part; and (iii) issue any notices
against the company only for damages. (4) Where required to be issued in relation to the business
Invalidation of transfer of securities other than by
liquidation proceedings are converted into business rescue proceedings.
ordinary course of business
rescue proceedings, the liquidator shall be a creditor
Qualifications of business rescue administrators
of the company to the extent of any outstanding Corporate Insolvency
claim by the liquidator for any remuneration due for [No. 9 of 2017 313 Removal and replacement of business rescue
work performed or compensation for expenses administrator
(ii) business rescue administrator’s management of
incurred before the business rescue proceedings
the company; or (iii) development or General powers and duties of business rescue
began. 29. (1) An alteration in the classification or
implementation of a business rescue plan in administrator
status of any issued securities of a company, during
accordance with this Part . 30. (1) A person may be
business rescue proceedings, other than by a 314 No. 9 of 2017] Corporate Insolvency
appointed as a business rescue administrator if that
transfer of securities in the ordinary course of
person qualifies to be appointed as a receiver or has (2) A business rescue administrator shall not, except
business, shall be invalid unless— (a) the Court
other qualification as prescribed. (2) Accreditation with the approval of the Court, appoint a person as
otherwise directs; or (b) it is specified in an
as a business rescue administrator is valid for a part of the management of the company or an
approved business rescue plan. (2) A director of the
period of one year from the date of accreditation advisor to the company or business rescue
company shall during business rescue
and shall be subject to renewal annually. 31. (1) A administrator, if that person— (a) has any
proceedings— (a) continue to exercise the functions
business rescue administrator may be removed from relationship with the company that would lead a
of a director, subject to the authority of the business
office— (a) by a Court order as provided in section reasonable and informed third party to conclude
rescue administrator; (b) exercise any management
22; or (b) as provided in section 143. (2) If a that the integrity, impartiality or objectivity of that
function within the company, in accordance with
business rescue administrator dies, resigns or is person is compromised by that relationship; or (b) is
the express instructions or direction of the business
removed from office, the company or creditor who related to a person who has a relationship with the
rescue administrator, to the extent that it is
appointed the business rescue administrator shall, company as provided in paragraph (a). (3) A
reasonable so to do; and (c) remain bound by the
within twenty-one days, appoint another business business rescue administrator, during business
common law and statutory duties of a director. (3)
rescue administrator. 32. (1) A business rescue rescue proceedings— (a) is an officer of the Court
A director shall, during business rescue
administrator, during business rescue proceedings, and shall report to the Court in accordance with any
proceedings, attend to the requests of the business
has, in addition to any other powers and duties set rules of, or orders made by, the Court with respect
rescue administrator and provide the business
out in this Part— (a) full management control of the to the proceedings; (b) shall have the
rescue administrator with any information about the
company without the board and management; (b) responsibilities, duties and liabilities of a director of
company’s affairs. (4) A board or director shall not,
the power to delegate any power or function to a the company; and (c) is not liable for any act or
during business rescue proceedings, take any action
omission done in good faith in the exercise of the business rescue proceedings; or (ii) file a notice of proceedings, involving the company; (c) the assets
powers and performance of the functions of the termination of the business rescue proceedings with and liabilities of the company, and the company’s
administrator, except— (i) as provided in paragraph the Registrar. (3) A business rescue administrator income and disbursements within the immediately
(b); and (ii) in accordance with any relevant law for shall forward evidence to an appropriate authority preceding twelve months; (d) the number of
the consequences of any act or omission amounting for further investigation and direct the management employees and any collective agreements or other
to gross negligence in the exercise of the powers to take any necessary steps to rectify the matter, agreements relating to the rights of employees; (e)
and performance of the functions of the business including recovering any misappropriated assets of any debtors and their obligations to the company;
rescue administrator. (4) A business rescue the company where there is evidence, before the and (f) any creditors and their rights or claims
administrator shall not, where the business rescue business rescue proceedings began, of— (a) against the company. (4) A person is not entitled to
process terminates with an order placing the voidable transactions or a failure by a company or retain possession of any book or record of the
company in liquidation, be appointed as liquidator any director in the performance of any material company, or to claim or enforce a lien over such
of the company. 33. (1) A business rescue obligation relating to the company; or (b) reckless book or record as against the business rescue
administrator shall, as soon as practicable after trading, fraud or other contravention of any law administrator. (5) A director who contravenes this
being appointed, investigate the affairs, business, relating to the company. 34. (1) A director shall, section, commits an offence and is liable, on
property and financial situation of the company, and within fourteen days after business rescue conviction, to a fine not exceeding one hundred
consider whether there is any reasonable prospect proceedings commence, deliver to the business thousand penalty units or to imprisonment for a
of the company being rescued. (2) If, during rescue administrator books and records relating to period not exceeding one year, or to both. 35. (1) A
business rescue proceedings, the business rescue the affairs of the company and are in the director’s business rescue administrator shall be entitled to
administrator concludes that— (a) there is no possession. (2) A director who knows where the payment of a fee as shall be prescribed by the
reasonable prospect of the company being rescued, books and records relating to the company are kept Minister, by statutory instrument. (2) A business
the business rescue administrator shall— (i) inform, shall, within fourteen days after business rescue rescue administrator who knowingly collects
in the prescribed manner the Court, the company proceedings commence, inform the business rescue remuneration in excess of the prescribed amount is
and all affected persons; and administrator of such locations. (3) A board shall, personally liable to reimburse the amount of the
within thirty days after business rescue proceedings excess remuneration so collected and commits an
Investigation of affairs of company
commence, or such longer period as the business offence and is liable, on conviction, to a fine, not
Corporate Insolvency rescue administrator allows, provide the exceeding three hundred thousand penalty units or
[No. 9 of 2017 315 administrator with a statement of affairs containing, to a term of imprisonment not exceeding three years
at a minimum, particulars of— (a) any material or both. (3) A business rescue administrator’s claim
(ii) apply to the Court for an order to discontinue transaction involving the company or the assets of for remuneration shall, to the extent that the claim
the business rescue proceedings and place the the company, and occurring within twelve months remains unpaid, rank in priority to the claims of all
company into liquidation; (b) there are no immediately before the business rescue proceedings other secured and unsecured creditors. 36. (1) A
reasonable grounds to believe that the company is commenced; creditor is entitled to— (a) notice of every Court
financially distressed, the business rescue proceeding, decision, meeting or other event
administrator shall inform, in the prescribed Directors to co-operate with and assist business
concerning the business rescue proceedings; (b)
manner, the Court, company and all affected rescue administrator
participate in any Court proceedings arising during
persons and— (i) if the business rescue process was the business rescue proceedings; and (c) participate
316 No. 9 of 2017] Corporate Insolvency
confirmed by Court order or initiated by an in business rescue proceedings to the extent
application to the Court, as provided in this Part, (b) all Court, arbitration or administrative provided in this Part. (2)In addition to the rights set
apply to the Court for an order terminating the proceedings, including pending enforcement out in subsection (1), a creditor has— (a) the right
to vote to amend, approve or reject a proposed subsection (5), may, within fourteen days after with the class of shares held by that person; (e)
business rescue plan, as provided in this Part; and receiving a notice of a determination, apply to the where the business rescue plan is rejected – (i)
Court to— (a) review the business rescue propose the development of an alternative plan, as
Remuneration of business rescue administrator
administrator’s determination that the person is, or provided in this Part, or (ii) present an offer to
Participation by creditors is not, an independent creditor; or (b) review, re- acquire the interests of any or all of the creditors or
appraise and re-value that person’s voting interest, other holders of the company’s securities as
Corporate Insolvency as specified in subsection (5). 37. A holder of any provided for in this Part. 39. (1) A business rescue
[No. 9 of 2017 317 issued security of the company is, during the administrator shall, within thirty days, after being
(b) a further right, if the proposed business rescue business rescue proceedings, entitled to— (a) a appointed, convene and preside over a first meeting
plan is rejected, to— (i) propose the development notice of each Court proceeding, decision, meeting of creditors, at which— (a) the business rescue
of an alternative plan as provided in this Part, or other relevant event concerning the business administrator— (i) shall inform the creditors on
within thirty days; or (ii) present an offer to acquire rescue proceedings; whether a reasonable prospect of rescuing the
the interests of any or all of the other creditors as company exists; and (ii) may receive proof of
Participation by holders of company’s securities
provided in this Part, within thirty days. (3) The claims by creditors; and (b) the creditors may
creditors of a company are entitled to form a 318 No. 9 of 2017] Corporate Insolvency appoint a committee of creditors.
creditors’ committee through which the creditors Participation by shareholders
(b) participate in any Court proceedings arising
are entitled to be consulted, by the business rescue
during the business rescue proceedings; (c)
administrator, during the development of the First meeting of creditors
participate in the business rescue proceedings to the
business rescue plan. (4) In making a decision
extent provided for in this Part; (d) vote to approve Corporate Insolvency
under this Part— (a) a secured or unsecured creditor
or reject a proposed business rescue plan as [No. 9 of 2017 319
shall have a voting interest equal to the value of the
provided in this Part, if the plan would alter the
amount owed to that creditor by the company; and (2) A business rescue administrator shall give seven
rights associated with the class of securities held by
(b) a concurrent creditor who would be days’ notice of the convening of the first meeting of
that person; and (e) where the business rescue plan
subordinated in a liquidation shall have a voting creditors to every creditor whose name and address
is rejected— (i) propose the development of an
interest, as independently and expertly appraised is known or can reasonably be obtained setting out
alternative plan, as provided in this Part; or (ii)
and valued at the request of the business rescue the— (a) date, time and place of the meeting; and
present an offer to acquire the interests of any or all
administrator, equal to the amount that the creditor (b) agenda for the meeting. (3) At a meeting of
of the creditors or other holders of the company’s
could reasonably expect to receive in a liquidation creditors, other than a meeting convened in
securities as provided in this Part. 38. A shareholder
of the company. (5) A business rescue administrator accordance with section 42, a decision shall be
is during the business rescue proceedings, entitled
shall— (a) determine whether a creditor is passed by a simple majority vote of the independent
to— (a) a notice of each Court proceeding,
independent for the purposes of this Part; (b) creditors’ voting on a matter. 40. (1) A committee
decision, meeting or other relevant event
request a suitably qualified person to independently of creditors, appointed in accordance with this
concerning the business rescue proceedings; (b)
and expertly appraise and value an interest referred Part— (a) may consult with the business rescue
participate in any Court proceedings arising during
to in subsection (4) (b); and (c) give a written notice administrator on any matter relating to the business
the business rescue proceedings; (c) participate in
of the appraisal and valuation to the person rescue proceedings, but shall not direct or instruct
business rescue proceedings to the extent provided
concerned, at least fifteen days before the date of the business rescue administrator on any matter
for in this Part; (d) vote to approve or reject a
the meeting to be convened under section 42. (6) A related to the proceedings; (b) shall, on behalf of the
proposed business rescue plan as provided in this
person aggrieved with the business rescue general body of creditors receive and consider
Part, if the plan would alter the rights associated
administrator’s determination, as provided in reports relating to the business rescue proceedings;
and (c) shall act independently of the business remuneration; (vi) a statement as to whether the making a decision under this Part— (a) a secured or
rescue administrator to ensure fair and unbiased business rescue plan includes a proposal made unsecured creditor shall have a voting interest equal
representation of creditors’ interests. (2) A person informally by a creditor; and (vii) a statement as to to the value of the amount owed to that creditor by
may be a member of a committee of creditors if that the basis for the business rescue administrator’s the company; and (b) a concurrent creditor who
person is— (a) an independent creditor of the remuneration; (b) Part B shall include the following would be subordinated in a liquidation shall have a
company; (b) an agent, proxy or attorney of an proposals: (i) the nature and duration of any voting interest, as independently and expertly
independent creditor or other person acting under a moratorium for which the business rescue plan appraised and valued at the request of the business
general power of attorney; or (c) authorised in makes provision; (ii) the extent to which the rescue administrator, equal to the amount that the
writing by an independent creditor to be a member. company is to be released from the payment of its creditor could reasonably expect to receive in a
41. (1) A business rescue administrator shall, after debts, and the extent to which any debt is proposed liquidation of the company. (5) A business rescue
consulting the creditors, the management of the to be converted to equity in the company or another administrator shall— (a) determine whether a
company, and where applicable, shareholders, company; (iii) the ongoing role of the company, and creditor is independent for the purposes of this Part;
prepare a business rescue plan for consideration and the treatment of any existing agreements; (iv) the (b) request a suitably qualified person to
possible adoption at a meeting held in accordance property of the company that is to be available to independently and expertly appraise and value an
with section 42. (2) A business rescue plan shall pay creditors’ claims in terms of the business rescue interest referred to in subsection (4) (b); and (c)
contain all the information reasonably required to plan; (v) the order of preference in which the give a written notice of the appraisal and valuation
assist the affected persons in making the decision to proceeds of the property of the company shall be to the person concerned, at least fifteen days before
accept or reject the plan, which plan shall be applied to pay creditors if the business rescue plan the date of the meeting to be convened under
divided into three Parts as follows: (a) Part A shall is adopted; (vi) the benefits of adopting the business section 42. (6) A person aggrieved with the
contain background information and shall include— rescue plan as opposed to the benefits that would be business rescue administrator’s determination, as
received by creditors if the company were to be provided in subsection (5), may, within fourteen
Functions, duties and membership of committees of
placed in liquidation; and (vii) the effect that the days after receiving a notice of a determination,
creditors and employees
business rescue plan shall have on the holders of apply to the Court to— (a) review the business
Proposal of business rescue plan each class of the company’s issued securities; (c) rescue administrator’s determination that the person
Part C shall contain assumptions and conditions, is, or is not, an independent creditor; or (b) review,
320 No. 9 of 2017] Corporate Insolvency including the following: (i) a statement of the re-appraise and re-value that person’s voting
(i) a complete list of all the material assets of the conditions that need to be satisfied for the business interest, as specified in subsection (5). 37. A holder
company, indicating which assets were held as rescue plan to come into operation and be fully of any issued security of the company is, during the
security at the commencement of the business implemented. Corporate business rescue proceedings, entitled to— (a) a
rescue proceedings; (ii) a complete list of creditors Insolvency [No. 9 of 2017 321 notice of each Court proceeding, decision, meeting
at the commencement of the business rescue or other relevant event concerning the business
(i) propose the development of an alternative plan
proceedings and a categorisation of creditors as rescue proceedings;
as provided in this Part, within thirty days; or (ii)
secured, statutory preferential creditors, concurrent present an offer to acquire the interests of any or all Participation by holders of company’s securities
or unsecured; (iii) the probable dividend that would of the other creditors as provided in this Part, within
be received by creditors, in their specific classes, if 318 No. 9 of 2017] Corporate Insolvency
thirty days. (3) The creditors of a company are
the company were to be placed in liquidation; (iv) a entitled to form a creditors’ committee through (b) participate in any Court proceedings arising
complete list of the holders of the company’s issued which the creditors are entitled to be consulted, by during the business rescue proceedings; (c)
securities; (v) a copy of the written agreement the business rescue administrator, during the participate in the business rescue proceedings to the
relating to the business rescue administrator’s development of the business rescue plan. (4) In
extent provided for in this Part; (d) vote to approve Corporate Insolvency divided into three Parts as follows: (a) Part A shall
or reject a proposed business rescue plan as [No. 9 of 2017 319 contain background information and shall include—
provided in this Part, if the plan would alter the
(2) A business rescue administrator shall give seven Functions, duties and membership of committees of
rights associated with the class of securities held by
days’ notice of the convening of the first meeting of creditors and employees
that person; and (e) where the business rescue plan
creditors to every creditor whose name and address
is rejected— (i) propose the development of an Proposal of business rescue plan
is known or can reasonably be obtained setting out
alternative plan, as provided in this Part; or (ii)
the— (a) date, time and place of the meeting; and 320 No. 9 of 2017] Corporate Insolvency
present an offer to acquire the interests of any or all
(b) agenda for the meeting. (3) At a meeting of
of the creditors or other holders of the company’s (i) a complete list of all the material assets of the
creditors, other than a meeting convened in
securities as provided in this Part. 38. A shareholder company, indicating which assets were held as
accordance with section 42, a decision shall be
is during the business rescue proceedings, entitled security at the commencement of the business
passed by a simple majority vote of the independent
to— (a) a notice of each Court proceeding, rescue proceedings; (ii) a complete list of creditors
creditors’ voting on a matter. 40. (1) A committee
decision, meeting or other relevant event at the commencement of the business rescue
of creditors, appointed in accordance with this
concerning the business rescue proceedings; (b) proceedings and a categorisation of creditors as
Part— (a) may consult with the business rescue
participate in any Court proceedings arising during secured, statutory preferential creditors, concurrent
administrator on any matter relating to the business
the business rescue proceedings; (c) participate in or unsecured; (iii) the probable dividend that would
rescue proceedings, but shall not direct or instruct
business rescue proceedings to the extent provided be received by creditors, in their specific classes, if
the business rescue administrator on any matter
for in this Part; (d) vote to approve or reject a the company were to be placed in liquidation; (iv) a
related to the proceedings; (b) shall, on behalf of the
proposed business rescue plan as provided in this complete list of the holders of the company’s issued
general body of creditors receive and consider
Part, if the plan would alter the rights associated securities; (v) a copy of the written agreement
reports relating to the business rescue proceedings;
with the class of shares held by that person; (e) relating to the business rescue administrator’s
and (c) shall act independently of the business
where the business rescue plan is rejected – (i) remuneration; (vi) a statement as to whether the
rescue administrator to ensure fair and unbiased
propose the development of an alternative plan, as business rescue plan includes a proposal made
representation of creditors’ interests. (2) A person
provided in this Part, or (ii) present an offer to informally by a creditor; and (vii) a statement as to
may be a member of a committee of creditors if that
acquire the interests of any or all of the creditors or the basis for the business rescue administrator’s
person is— (a) an independent creditor of the
other holders of the company’s securities as remuneration; (b) Part B shall include the following
company; (b) an agent, proxy or attorney of an
provided for in this Part. 39. (1) A business rescue proposals: (i) the nature and duration of any
independent creditor or other person acting under a
administrator shall, within thirty days, after being moratorium for which the business rescue plan
general power of attorney; or (c) authorised in
appointed, convene and preside over a first meeting makes provision; (ii) the extent to which the
writing by an independent creditor to be a member.
of creditors, at which— (a) the business rescue company is to be released from the payment of its
41. (1) A business rescue administrator shall, after
administrator— (i) shall inform the creditors on debts, and the extent to which any debt is proposed
consulting the creditors, the management of the
whether a reasonable prospect of rescuing the to be converted to equity in the company or another
company, and where applicable, shareholders,
company exists; and (ii) may receive proof of company; (iii) the ongoing role of the company, and
prepare a business rescue plan for consideration and
claims by creditors; and (b) the creditors may the treatment of any existing agreements; (iv) the
possible adoption at a meeting held in accordance
appoint a committee of creditors. property of the company that is to be available to
with section 42. (2) A business rescue plan shall
Participation by shareholders contain all the information reasonably required to pay creditors’ claims in terms of the business rescue
assist the affected persons in making the decision to plan; (v) the order of preference in which the
First meeting of creditors proceeds of the property of the company shall be
accept or reject the plan, which plan shall be
applied to pay creditors if the business rescue plan
is adopted; (vi) the benefits of adopting the business the business rescue plan, convene and preside over accordance with subsection (1) (d)— (a) it is
rescue plan as opposed to the benefits that would be a meeting of affected persons called for the supported by the holders of more than seventy-five
received by creditors if the company were to be consideration of the plan. (2) A business rescue percent of the affected persons’ voting interests;
placed in liquidation; and (vii) the effect that the administrator shall, at least ten days before the and (b) the votes in support of the proposed plan
business rescue plan shall have on the holders of meeting convened in accordance with subsection include at least fifty percent of the independent
each class of the company’s issued securities; (c) (1), deliver a notice of the meeting to all affected creditors’ voting interests, if any. (3) Where a
Part C shall contain assumptions and conditions, persons setting out— (a) the date, time and place of proposed business rescue plan— (a) is not approved
including the following: (i) a statement of the the meeting; (b) the agenda of the meeting; and (c) on a preliminary basis, as provided in subsection
conditions that need to be satisfied for the business a summary of the rights of affected persons to (2), the plan shall be considered as having been
rescue plan to come into operation and be fully participate in and vote at the meeting. (3) A meeting rejected and may be considered further as provided
implemented. Corporate convened in accordance with this section may be in section 44; (b) does not alter the rights of the
Insolvency [No. 9 of 2017 321 adjourned, as necessary or expedient, but for a holders of any class of the company’s securities, the
period not exceeding sixty days, until a decision approval of the plan on a preliminary basis as
(ii) the effect, if any, that the business rescue plan
regarding the company’s future has been taken in provided in subsection (2) shall constitute the final
shall have on the number of employees and their
accordance with this Part. adoption of the plan, subject to satisfaction of any
terms and conditions of employment; (iii) the
conditions on which that plan is contingent; or (c)
circumstances in which the business rescue plan Meeting to determine future of company
alters the rights of any class of holders of the
will terminate; and (iv) a projected financial
322 No. 9 of 2017] Corporate Insolvency company’s securities— (i) the business rescue
statement for the next three years, prepared on the
administrator shall immediately hold a meeting of
assumption that the proposed business plan is 43. (1) A business rescue administrator shall, at a the holders of the class or classes of securities
adopted. (3) The financial statements referred to in meeting convened in accordance with section 42— whose rights would be
subsection (2) (c) (iv)— (a) shall include a notice of (a) introduce a proposed business rescue plan for
any material assumptions on which the projections consideration by the affected persons and, where Consideration and approval of business rescue plan
are based; and (b) may include alternative applicable, by the shareholders; (b) inform the Corporate Insolvency [No. 9 of 2017 323
projections based on varying assumptions and meeting on whether a reasonable prospect of the
altered by the plan and require them to vote on the
contingencies. (4) A business rescue administrator company being rescued continues to exist; (c) invite
adoption of the proposed business rescue plan; and
shall conclude a proposed business rescue plan with discussion and conduct a vote on any motions to—
(ii) if, in a vote referred to in subparagraph (i), a
a declaration stating that— (a) information provided (i) amend the proposed plan as proposed and
majority of the holders support the adoption of the
appears to be accurate, complete and up to date; and seconded by the affected person which have a
plan, the plan shall be adopted, subject to any
(b) projections provided are based on estimates positive effect on the business rescue plan; or (ii)
conditions imposed or reject the plan, the plan may
made in good faith and on factual information and adjourn the meeting in order to revise the plan for
be considered further as provided in section 44. (4)
assumptions as set out in the statement. (5) A further consideration; and (d) call for a vote for
A business rescue plan that has been adopted shall
company shall publish the business rescue plan preliminary approval of the proposed business
bind the company, every creditor, affected person
within thirty days after the date on which the rescue plan or the plan as amended, if applicable,
and holder of the company’s securities, whether or
business rescue administrator was appointed, or unless the meeting has first been adjourned in
not that person— (a) was present at the meeting;
such longer time as may be allowed by— (a) the accordance with subsection (2) (c) (ii). (2) A
(b) voted in favour of adoption of the plan; or (c)
Court, on application by the company; or (b) the proposed business rescue plan shall be approved, at
had proven their claims against the company. (5) A
holders of a majority of the creditors’ voting a meeting convened in accordance with section 42,
company, under the direction of the business rescue
interests. 42. (1) A business rescue administrator on a preliminary basis if in a vote called in
administrator, shall take all necessary steps to— (a)
shall, within twenty one days after publication of
satisfy any conditions that have been imposed may where a business rescue plan has been rejected Corporate Insolvency
relating to a business rescue plan; and (b) as provided in this Part— (a) seek a vote of [No. 9 of 2017 325
implement the business rescue plan as adopted. (6) approval from the holders of voting interests to
(a) conclude the meeting after that vote and prepare
A business rescue administrator may, in order to prepare and publish a revised plan as prescribed; or
and publish a new or revised business rescue plan
implement a business rescue plan that has been (b) advise the meeting that the company shall apply
within ten days; and (b) the provisions of this Part
adopted— (a) determine the consideration for, and to the Court to set aside the result of the vote on the
shall apply afresh to the publication and
issue, any authorised securities of the company, grounds that it was inappropriate. (2) Where a
consideration of that new or revised plan. (5) A
despite the Companies Act, 2017 or Securities Act, business rescue administrator does not take any
business rescue administrator shall, where an
2016 relating to the procedures to be followed for action under subsection (1) (a), any affected person
affected person makes an offer under subsection
the issuance of shares and for the determination of present at the meeting may— (a) call for a vote of
(2)(c)— (a) adjourn the meeting for not more than
consideration to be received for the issued shares; approval from the holders of voting interests
ten days, as may be necessary to afford the business
and (b) amend the company’s articles of association requiring the business rescue administrator to
rescue administrator an opportunity to make
to authorise and determine the preferences, rights, prepare and publish a revised plan; (b) apply to the
necessary revisions to the business rescue plan to
limitations and other terms of any securities that are Court to set aside the result of the vote on the
appropriately reflect the results of the offer; and (b)
not otherwise authorised, but may be issued in grounds that the vote was inappropriate; or (c) make
set a date for resumption of the meeting, without
terms of the business rescue plan, notwithstanding a binding offer, either as an individual or as a
further notice. (6) A business rescue administrator
the provisions of the Companies Act, 2017, or the combination of affected persons, to purchase the
shall, where no person takes any action in
Securities Act, 2016, relating to amendment of the voting interests of one or more persons who
accordance with subsection (1), promptly file a
articles of association, the authorisation of shares to opposed adoption of the business rescue plan, at a
notice of the termination of the business rescue
be issued and the preferences, rights, limitations value independently and expertly determined, on
proceedings. (7) A holder of a voting interest, or a
and other terms that apply to those shares. the request of the business rescue administrator, to
person acquiring that interest in terms of a binding
be a fair and reasonable estimate of the return to
Act No. 41 of 2016 offer, may apply to the Court to review, re-appraise
that person, or those persons, if the company were
and re-value a determination by an independent
Act No. 10 of 2017 Act No. 41 of 2016 to be liquidated. (3) A business rescue administrator
expert in terms of subsection (1) (b). 45. (1) A
shall, where the business rescue administrator, or an
324 No. 9 of 2017] Corporate Insolvency business rescue plan may provide that, where the
affected person, informs the meeting that an
plan is implemented in accordance with the
Act No. 10 of 2017 application shall be made to the Court, as provided
approved terms and conditions, a creditor who has
in subsections (1) and (2), adjourn the meeting—
(7) Except to the extent that an approved business acceded to the discharge of the whole or part of a
(a) for ten days, unless that application is made to
rescue plan provides otherwise, a pre-emptive right debt owing to that creditor shall lose the right to
the Court during that time; or (b) until the Court has
of any shareholder of the company, as provided in enforce the relevant debt or part of it. (2) Where a
disposed of the application. (4) A business rescue
the Companies Act, 2017, or Securities Act, 2016, business rescue plan has been approved and
administrator shall, when directed by the meeting to
shall not apply to an issue of shares by the company implemented in accordance with this Part, a creditor
prepare and publish a revised business rescue
in terms of the business rescue plan. (8) A business shall not be entitled to enforce any debt owed by the
plan—
rescue administrator shall, when the business rescue company immediately before the beginning of the
plan has been substantially implemented, file a Act No. 10 of 2017 Act No. 41 of 2016 business rescue proceedings, except to the extent
notice of the substantial implementation of the provided for in the business rescue plan.
Failure to adopt business rescue plan
business rescue plan with the Registrar and official PART IV SCHEMES OF ARRANGEMENTS
Receiver. 44. (1) A business rescue administrator AND COMPROMISE 46. (1) In this section,
“arrangement” includes a re- organisation of the creditors in proportion to the amount of the debt to or incorporated in every copy of the articles
share capital of the company by the consolidation of outstanding from the company to each creditor. (8) issued after the order was made. (13) Where an
shares of different classes, or by the division of Where a meeting, by extraordinary resolution, order, made under this section, has the effect of
shares in shares of different classes or by both agrees to a compromise or arrangement, the altering the share capital of the company, the
methods. (2) This section applies to a company, compromise or arrangement— (a) shall be binding Registrar, on lodgment of the copy of the order,
irrespective of whether or not it is financially on all the creditors or class of creditors or on the shall issue a replacement certificate of the share
distressed. members or class of members, as the case may be; capital of the company, worded to meet the
and (b) shall be binding on the company if and circumstances of the case. (14) If a company fails to
Discharge of debts and claims
when— (i) it has been approved by order of the comply with subsection (11) (a), the company, and
Compromise between company, creditors and Court; and (ii) a copy of the order of the Court has each officer in default, commits an offence and is
members been lodged with the Registrar. (9) Where an liable, on conviction, to a fine not exceeding three
extraordinary resolution agreeing to a compromise thousand penalty units for each day that the failure
326 No. 9 of 2017] Corporate Insolvency or arrangement has been passed at a meeting continues. (15) If a company issues a copy of its
(3) A company, creditor or member of a company convened as specified in this section, the company articles that does not comply with subsection (11)
may apply to the Court for an order that a meeting or any person who was entitled to vote at the (b), the company and each officer in default
of the creditors or members or class of members, as meeting may apply to the Court for approval of the commits an offence and is liable, on conviction, to
the case may be, be convened and conducted to compromise or arrangement. (10) At a hearing by a fine not exceeding three thousand penalty units in
consider the compromise or arrangement. (4) the Court of the application for approval of the respect of each copy issued. 47. (1) Where a
Where a compromise or arrangement is proposed compromise or arrangement, a member or creditor meeting of creditors or any class of creditors or of
between— (a) a company and its creditors or any of the company claiming to be affected thereby is members or any class of members is convened in
class of its creditors; or (b) a company and its entitled to be represented and to object. accordance with this Part, the company shall
members or any class of its members; the Court prepare a statement explaining the effect of the
Act No. 10 of 2017
may, on the application referred to in subsection compromise or arrangement and in particular
(3), or, in the case of a company being wound-up, Act No. 10 of 2017 stating any material interests of the directors in the
of the liquidator, order a meeting of the creditors, company or a related body corporate, whether as
Corporate Insolvency directors or as members or as creditors of the
class of creditors, members or class of members, as
[No. 9 of 2017 327 company or otherwise, and the effect of the
the case may be, to be convened and conducted to
consider the compromise or arrangement. (5) (11) The Court may prescribe such terms, as it compromise or arrangement, in so far as it is
Subject to an order of the Court, the Companies considers appropriate, as a condition of its approval, different from the effect on the like interests of
Act, 2017 shall apply to a meeting of members or a including a condition that a member shall have the other persons. (2) Where a compromise or
class of members ordered to be convened as right to require the company to purchase shares at a arrangement affects the rights of debenture holders
specified in this section. (6) Subject to an order of price fixed by the Court or to be determined in a of the company, the statement, prepared in
the Court, the Companies Act, 2017 shall apply, manner provided in the order, and, in that case, for accordance with subsection (1), shall apply to
with the necessary modifications, to a meeting of the reduction of the company’s capital accordingly. debenture holders of a company or trustee related
creditors or class of creditors ordered to be (12) Where an order is made approving the thereto.
convened as specified in this section. (7) Unless the compromise or arrangement— (a) the company Effect of compromise or arrangement with creditors
Court orders otherwise, the voting power at a shall lodge a copy of the order with the Registrar and members
meeting of creditors ordered to be convened as within twenty-one days after the making of the
specified in this section shall be assigned to the order; and (b) a copy of the order shall be annexed 328 No. 9 of 2017] Corporate Insolvency
(3) A copy of the statement specified in subsection allotment or appropriation by the transferee exceeding ten thousand penalty units for each day
(1) shall be sent to every creditor or member with company of any shares, debentures, policies or that the failure continues.
the notice of the meeting to be convened in other like interests in the transferor company which
PART V WINDING-UP OF COMPANIES
accordance with this Part. (4) A notice of a meeting, under the compromise or arrangement
GENERALLY 49. For the purposes of this Part, a
to be convened in accordance with this Part, shall
Reconstruction and amalgamation of companies reference to a “member” includes, unless the
be issued by advertisement in a newspaper of
context otherwise requires, a reference to a person
general circulation in Zambia and in any other Corporate Insolvency
claiming or alleged to be liable to contribute to the
media and shall include a copy of the statement or [No. 9 of 2017 329
assets of the company in a winding up for the
specify where the members or creditors entitled to
are to be allotted or appropriated by the transferor purpose of any proceedings for determining, and
attend the meeting may obtain copies of the
company to or for any person; (iii) the continuation proceedings prior to the final determination of, the
statement, which statement shall be given free of
by or against the transferee company of any legal persons who are so liable, including the
charge to any creditor or member. (5) If a company
proceedings pending by or against the transferor presentation of a winding-up petition.
fails to comply with this section, the company, and
each officer in default, commits an offence and company; (iv) the dissolution, without winding-up,
References to member of company
shall be liable, on conviction, to a fine not of the transferor company; (v) the provision to be
exceeding fifteen thousand penalty units. (6) It is a made for any persons who, within such time and in 330 No. 9 of 2017] Corporate Insolvency
defence to a prosecution under subsection (5) to such manner as the Court directs, dissent to the
50. The winding-up of a company in accordance
show that failure was due to the refusal of another compromise or arrangement; or (vi) such incidental,
with this Part shall be by any of the following
person to supply the necessary particulars relating consequential and supplementary matters as are
modes: (a) winding-up by the Court; or (b)
to an interest in the company or related body necessary to secure that the reconstruction or
voluntary winding-up, being a— (i) members’
corporate. 48. (1) Where an application is made to amalgamation is fully and effectively carried out.
voluntary winding-up; or (ii) creditors’ voluntary
the Court, as specified in this Part, to approve a (2) Where an order, made in accordance with this
winding-up. 51. (1) This section applies to a
compromise or arrangement and it is shown to the section, provides for the transfer of property or
company limited by guarantee, an unlimited
Court that— (a) the compromise or arrangement liabilities— (a) the property shall, by virtue of the
company and a company having shares which are
has been proposed for the purposes of, or in order, be transferred to, and vest in, the transferee
not fully paid up. (2) Where a company is wound-
connection with, a scheme for- (i) the company and shall, if the order so directs, be freed
up, every member at the time of the commencement
reconstruction of any company or group of from any charge which is under compromise or
of the winding-up shall, subject to section 40, be
companies; or (ii) the amalgamation of any two or arrangement to cease to have effect; and (b) the
liable to contribute to the assets of the company an
more companies; and (b) under the scheme, the liabilities shall, by virtue of the order, be transferred
amount sufficient for payment of its debts and
whole or any part of the undertaking or property of to, and become the liabilities of, the transferee
liabilities and the costs, charges and expenses of the
a company, in this section referred to as “ the company. (3) Where an order is made, in
winding-up and for the adjustment of the rights of
transferor company ”, is to be transferred to another accordance with this section, every company in
the members among themselves. (3) A sum due to a
company, in this section referred to as “ the relation to which the order is made shall cause a
member by way of dividends or otherwise— (a)
transferee company ”; the Court may, by order copy of the order to be lodged with the Registrar
shall not be regarded as a debt of the company
approving the compromise or arrangement or by a within fifteen days after the making of the order. (4)
payable to that member in a case of competition
subsequent order, provide for any of the following: If a company fails to comply with subsection (3),
between the member and any other creditor who is
(i) the transfer to the transferee company of the the company, and each officer in default, commit an
not a member; and (b) may be taken into account
whole or any part of the undertaking and property offence and are liable, on conviction, to a fine not
for the purpose of the final adjustment of the rights
or liabilities of the transferor company; (ii) the of the members among themselves. 52. (1) Despite
any other provision in this Act, in the case of a in bankruptcy shall represent that member for prima facie case for winding-up has been
public company or a private company limited by purposes of the winding-up and is liable to established to the satisfaction of the Court. (4)
shares, a member is not required to make a contribute accordingly; and (b) there may be Where a company is being wound-up voluntarily,
contribution exceeding the amount, if any, unpaid proved against the estate of the bankrupt the the Court shall not make a winding-up order, if it
on the shares in respect of which the person is liable estimated value of the member’s liability to future determines that the voluntary winding-up cannot be
as a member. (2) Despite any other provision in this calls as well as to calls already made. continued with due respect to the interests of the
Act, in the case of a company limited by guarantee, creditors or members. 57. (1) The Court may order
PART VI WINDING-UP BY COURT 55. The
a member is not required to make a contribution the winding-up of a company on the petition of a
Court has jurisdiction to wind-up in accordance
exceeding the amount that the member undertook, person other than the Official Receiver if— (a) the
with this Act, a body corporate incorporated in—
in the declaration of guarantee, to contribute to the company has by special resolution resolved that it
(a) Zambia; and (b) a foreign country and— (i)
assets of the company in the event of its being be wound-up by the Court ; (b) the company is
registered as a foreign company in Zambia; or (ii)
wound-up. 53. The liability of a member shall unable to pay its debts; (c) the period, if any, fixed
having any business, undertaking or assets in
create a specially accruing debt due from that for the duration of the company by the articles
Zambia. 56. (1) Subject to this section, a company
member at the time when the member’s liability expires, or an event occurs in respect of which the
may be wound-up by the Court on the petition of—
commenced, but payable at the times when calls are articles provide that the company is to be dissolved;
(a) the company; (b) a creditor, including a
made for enforcing the liability. 54. (1) Where a (d) the number of members is reduced below two;
contingent or prospective creditor of the company;
member dies, whether before or after the member is (e) the company was formed for an unlawful
(c) a member; (d) a person who is the personal
placed on the list of persons liable to contribute to purpose; (f) the incorporation of the company was
representative of a deceased member; (e) the
the assets of a company, that member’s personal obtained fraudulently; or (g) in the opinion of the
trustee in bankruptcy of a bankrupt member; (f) a
representative is liable in the due course of Court, it is just and equitable that the company
liquidator of the company appointed in a voluntary
administration and, if that representative fails should be wound-up. (2) The Court may order the
liquidation; or (g) the Registrar or Official
winding-up of a company on the petition of the
Modes of winding-up Receiver. (2) In the case of a public company or a
Registrar or the Official Receiver on the grounds
private company limited by shares, a member is not
Liability of members on winding-up specified in subsection (1) (b), (d), (e) or (f) or on
entitled to present a winding-up petition unless the
the ground that the company has persistently failed
Limitation of liability member’s shares, or some of them— (a) were
to comply with any of the provisions of this Act. (3)
originally allotted to the member; (b) have been
Nature of liability of member For purposes of this section, a company is unable to
held by the member and registered in that member’s
pay its debts if— (a) there is due, from the company
Liability on death or bankruptcy of member name for at least six months; or
to any creditor, including a creditor by assignment,
Jurisdiction over winding up proceedings a prescribed fee, and— (i) the creditor has, more
Corporate Insolvency
than thirty days previously, served on the company
[No. 9 of 2017 331 Petition to wind-up company a written demand requiring the company to pay the
to pay any money ordered to be paid, proceedings 332 No. 9 of 2017] Corporate Insolvency amount due; and
may be taken for administering the estate of the
(c) have devolved on the member by operation of Circumstances for winding- up by Court
deceased member and for compelling payment from
the estate of the money due. (2) If a member law. (3) The Court shall not hear a winding-up Corporate Insolvency
becomes bankrupt, before or after the member is petition presented by a contingent or prospective [No. 9 of 2017 333
placed on the list of persons liable to contribute to creditor until- (a) the creditor gives security for
the assets of a company— (a) the member’s trustee costs as the Court considers reasonable; and (b) a
(ii) the company has failed to pay the sum or to make any interim order or other order as it wound-up instead of pursuing the other remedy. 61.
secure or compound it to the reasonable satisfaction considers appropriate in the circumstances. (2) The A person referred to in section 56 (1) may, after the
of the creditor; (b) execution or other process issued Court shall not refuse to make a winding-up order presentation of a winding-up petition of a company
on a judgment, decree or order of any Court in on the ground only that the assets of the company and before a winding-up order is made, where an
favour of a creditor of the company is returned have been mortgaged to an amount equal to or in action or proceeding against the company is
unsatisfied in whole or in part; or (c) the company excess of those assets, the company pending, apply to the Court to stay or restrain
is unable to pay its debts as they fall due. (4) The further proceedings in the action or proceeding, and
Commencement of winding- up by Court
Court shall, in determining whether a company is the Court may stay or restrain the proceedings on
unable to pay its debts, take into account the Payment of preliminary costs such terms as it considers appropriate in the matter.
contingent and prospective liabilities of the 62. A disposition of the property of a company,
company. 58. (1) Where, before the presentation of Powers of Court on hearing petition including things in action, and any transfer of
the petition for the winding-up of a company by the 334 No. 9 of 2017] Corporate Insolvency shares or alteration in the status of members of the
Court, a “special” resolution is passed by the company, made after the commencement of a
company for voluntary winding-up, the winding-up has no assets or, in the case of a petition by a winding-up by the Court, is void unless the Court
of the company shall be considered to have member, there will be no assets available for otherwise orders. 63. An attachment, sequestration,
commenced at the time of the passing of the distribution amongst the members. (3) The Court distress or execution put in force against the estate
resolution, and, unless the Court otherwise directs, may, on the hearing of a petition or at any time on or assets of a company after the commencement of
all proceedings taken in the voluntary winding-up the application of the petitioner, a company or a winding-up by the Court is void. 64. (1) A
shall have been validly taken. (2) In any other case, person who has given notice of the intention to petitioner shall, within fourteen days after the
the winding-up of a company shall be considered to appear on the hearing of the petition— (a) direct making of a winding-up order— (a) lodge a copy of
have commenced at the time of the presentation of that any notice be given or steps taken before or the order with the Registrar;
the petition for the winding-up by the Court. 59. (1) after the hearing of the petition; (b) dispense with
any notice being given or steps being taken which Power to stay or restrain proceedings against
A person, other than the company or the liquidator
are required by or in accordance with this Act or by company
on whose petition a winding-up order is made shall,
at that person’s own cost, prosecute all proceedings any prior order of the Court; (c) direct that oral Avoidance of dispositions
in the winding-up until a liquidator is appointed. (2) evidence be taken on the petition or any matter
A liquidator shall, unless the Court otherwise relating to it; (d) direct a speedy hearing or trial of Avoidance of attachments
orders, reimburse the petitioner out of the assets of the petition or any issue or matter; (e) allow the
Registration of copy of order
the company, and the taxed costs incurred by the petition to be amended or withdrawn; and (f) give
petitioner in the proceedings referred to in such directions as to the proceedings as the Court Corporate Insolvency
subsection (1). (3) Where a winding-up order is considers appropriate in the case. (4) Where a [No. 9 of 2017 335
made on the petition of the company or the petition is presented by members on the ground that
(b) cause a copy of the order to be served on the
liquidator the costs incurred shall, subject to an it is just and equitable that a company should be
secretary of the company or on such other person,
order of the Court, be paid out of the assets of the wound-up and the Court determines that the
in such manner as the Court directs; (c) deliver a
company as if they were the costs of any other petitioners are entitled to relief by winding-up the
copy of the order to the Official Receiver, if the
petitioner. 60. (1) The Court may, on hearing a company or by some other means, it shall make a
Official Receiver has not been appointed as
winding-up petition— (a) grant the petition; (b) winding-up order, unless some other remedy is
liquidator or if no liquidator has been appointed;
dismiss it with or without costs; (c) adjourn the available to the petitioners who are acting
and (d) deliver a copy to the liquidator, if any, with
hearing conditionally or unconditionally; or (d) unreasonably in seeking to have the company
a statement that the requirements of this subsection
have been complied with. (2) The Registrar shall, Stay of actions matter, and take such action as the Official Receiver
on receipt of a copy of a winding-up order lodged in considers appropriate— (a) if the liquidator is not
Appointment of liquidator by Court and
accordance with subsection (1), as soon as it is faithfully performing the functions of liquidator; or
performance of functions in absence of liquidator
reasonably practicable, cause a notice of the order (b) where a complaint has been made to the Official
to be published in the Gazette. (3) A petitioner who 336 No. 9 of 2017] Corporate Insolvency Receiver by a creditor or member of the company
fails to comply with subsection (1) commits an relating to the winding-up. (2) The Official
offence and is liable, on conviction, to a fine not (4) Where a provisional liquidator is not appointed, Receiver may, require a liquidator appointed by the
exceeding three hundred and fifty penalty units for the Official Receiver shall be the provisional Court to answer any inquiry in relation to the
each day that the failure continues. 65. (1) The liquidator until the appointment of a liquidator. (5) winding-up
Court may provisionally appoint the Official The Official Receiver shall be the liquidator during
any vacancy in the office of liquidator. (6) A Lodging of notice of appointment with Official
Receiver or any other person to be the liquidator
vacancy in the office of liquidator may be filled by Receiver and access to company
after the presentation of a winding-up petition and
before the making of a winding-up order. (2) A the Court. (7) A liquidator may resign or, on cause
Control of liquidators by Official Receiver
provisional liquidator shall have and may exercise shown, be removed by the Court. (8) A liquidator
all the powers and perform the function of a shall be described, except the Official Receiver, as Corporate Insolvency
liquidator subject to such limitations and “the Liquidator” and not by individual name. (9) [No. 9 of 2017 337
restrictions as may be prescribed, or as the Court The Official Receiver when appointed liquidator
and may apply to the Court to examine the
specifies in the appointing order. (3) A provisional may be described as “ the Official Receiver and
liquidator or any other person on oath concerning
liquidator, except the Official Receiver, shall be a Liquidator ”. (10) Where more than one liquidator
the winding-up. (3) An Official Receiver may, for
person accredited by the Registrar in accordance is appointed by the Court, the Court shall declare
purposes of this section— (a) direct an investigation
with this Act. 66. Where a winding-up order is whether anything by this Act required or authorised
to be made of the books and vouchers of a
made or a provisional liquidator is appointed, an to be done by the liquidator is to be done by all or
liquidator; (b) recommend the prosecution of a
action or proceeding shall not be proceeded with, or any one or more of the persons appointed. (11) The
liquidator, where the Official Receiver reasonably
commenced against, a company except by leave of Registrar shall cause the name, business address
believes that the liquidator has committed an
the Court and subject to such terms and conditions and details of the appointment or release of the
offence under this Act; or (c) recommend the
as the Court may impose. 67. (1) The Court may, in liquidator to be notified in the Gazette. 68. (1)
disqualification of the liquidator. 70. (1) Subject to
a winding-up order, appoint an individual who is Where a person, other than the Official Receiver, is
this Act, a liquidator, may receive such salary or
accredited by the Registrar, in accordance with this appointed liquidator by the Court, that person
remuneration by way of commission or otherwise
Act, as liquidator or may give directions as to the shall— (a) act as liquidator if the person lodges a
as is determined— (a) by agreement between the
appointment of a liquidator by the members or notice of the appointment with the Official Receiver
liquidator and the committee of inspection, if any;
creditors of a company. (2) Where a winding-up and gives security as may be directed by the Court
(b) by an extraordinary resolution passed at a
order makes no direction as to the appointment of a or by Official Receiver; and (b) give the Official
meeting of creditors convened by the liquidator, by
liquidator, the Official Receiver shall be the Receiver information and access to facilities of the
a notice to each creditor to which was attached a
liquidator of the company. (3) A provisional company for the inspection of the books and
statement of all receipts and expenditure by the
liquidator shall continue to exercise the powers and documents of the company, and generally give such
liquidator and the amount of remuneration sought
perform the functions of a liquidator until the aid as may be requisite to enable the Official
failing an agreement or where there is no committee
appointment of a liquidator. Receiver to perform the functions specified in this
of inspection; or (c) by the Court, failing a
Act. 69. (1) In a winding-up of a company by the
Provisional liquidator determination under paragraph (a) or (b). (2) Where
Court, the Official Receiver shall inquire into the
the salary or remuneration of a liquidator is
determined, as specified in subsection (1) (a), the or held by trustees, on behalf of the company, be Corporate Insolvency
Court may, on the application of one or more vested in the liquidator or provisional liquidator, [No. 9 of 2017 339
members whose shareholdings represent, in total, and the property to which the order relates shall
(a) the particulars of its assets, debts and liabilities;
not less than five percent of the issued capital of the vest accordingly. (3) A liquidator or provisional
(b) the names and addresses of its creditors; (c) the
company, or who, in the case of a company having liquidator may, after giving such indemnity, if any,
securities held by each of the creditors; (d) the dates
no share capital, constitute not less than five percent as the Court directs, bring or defend any action or
when the securities were respectively given; and (e)
of the members, confirm or vary the determination. other legal proceedings which relate to any property
such further information as may be prescribed or
(3) Where the salary or remuneration of a liquidator vested in the liquidator or provisional liquidator or
as the liquidator requires. (2) The statement,
is determined, as specified in subsection (1) (b), the which it is necessary to bring or defend for
referred to in subsection (1), shall be verified by a
Court may, on the application of the liquidator or effectively winding-up of the company and
statutory declaration as at the date of the winding-
one or more members, as provided in subsection recovering its property. (4) Where an order is made
up order, of at least one director and the secretary of
(2), confirm or vary the determination. (4) Subject in accordance with this section, the liquidator or
the company. (3) A liquidator may, subject to the
to an order of the Court, the Official Receiver, provisional liquidator shall, within fourteen days
direction of the Court, by notice in writing, require
when liquidator or provisional liquidator, may after the making of the order— (a) lodge a copy of
a person to verify, by statutory declaration, such
receive such remuneration by way of commission the order with the Registrar and the Official
parts of the statement as that person is in a position
or otherwise as may be prescribed. (5) Despite the Receiver; and (b) in the case of property vested in
to verify, who— (a) is, or was within two years
generality of this section, the rate payable to the the liquidator or provisional liquidator relating to
before the date of the winding- up order, an officer
liquidator shall not exceed such amount as may be the transfer of the property which by any other law
of the company; or (b) took part in the formation of
prescribed. (6) A liquidator who knowingly collects requires to be registered, deliver a copy of the
the company, if the company was formed less than
remuneration in excess of the prescribed amount is order to the appropriate authority for registration
two years before the date of the winding-up order.
personally liable to reimburse the amount of the together with a written application. (5) A liquidator
(4) A liquidator may serve a notice on a person,
excess remuneration so collected and commits an or provisional liquidator who fails to comply with
specified in subsection (3), either personally or by
offence subsection (4) commits an offence and is liable, on
sending it by post to the last known address of the
conviction, to a fine not exceeding three hundred
Remuneration of liquidators person or through a daily newspaper of general
and fifty thousand penalty units for each day that
circulation in Zambia or by other media. (5) A
338 No. 9 of 2017] Corporate Insolvency the failure continues. (6) A vesting order, referred
person required to verify a statement on the affairs
to in this section, shall not have any effect or
and is liable, on conviction, to a fine not exceeding of a company shall, within twenty one days after
operation in transferring or otherwise vesting the
three hundred thousand penalty units or to a term of receiving a notice, as specified in subsection (4), or
property referred to in subsection (3) (b) until
imprisonment not exceeding three years, or both. within such extended time as the liquidator or the
delivered to the Registrar and the Official Receiver.
71. (1) Where a winding-up order is made or a Court may specify, submit a statutory declaration
72. (1) A company shall, within three months of
provisional liquidator is appointed, the liquidator or verifying those matters in the statement which the
the appointment of a liquidator, prepare and
provisional liquidator as the case may be, shall take person is in a position to verify and specifying any
submit to the liquidator a statement on the affairs
into custody or under control the property and matters in the statement which are incorrect. (6) A
of the company as at the date of the winding-up
things in action to which the company is or appears liquidator shall, within fourteen days after receiving
order, unless the Court otherwise directs,
to be entitled. (2) The Court may by order, on the the statement on the affairs of a company or any
showing—
application of a liquidator or provisional liquidator, statutory declaration, as specified in subsection (3),
direct that all or any part of the property of Custody and vesting of company’s property cause copies of the statement to be —
whatsoever description belonging to the company
Statement on company’s affairs
(a) filed with the Court; and (b) delivered to the (c) whether, in the opinion of the liquidator, further liquidator’s opinion, is desirable to bring to the
Registrar and the Official Receiver, if the Official inquiry is desirable as to any matter relating to the notice of the Court. (3) The Registrar may, where a
Receiver is not the liquidator. (7) A person required promotion, formation or failure of the company or liquidator— (a) does not submit a report as
to verify a statement on the affairs of a company, as the conduct of its business; (d) particulars of assets specified in subsection (1), issue a reminder to the
provided in this section, may be allowed, and be comprising the property in liquidation; (e) liquidator to submit the report within twenty one
paid out of the assets of the company, such costs particulars of the debts and liabilities to be satisfied days of the receipt of the reminder; or (b) does not
and expenses incurred in, and relating to, doing so, from the property in liquidation; (f) the names and comply with the notice issued in accordance with
as the liquidator considers reasonable, subject to an addresses of the creditors with an interest in the paragraph (a), remove the liquidator from the
appeal to the Court. property in liquidation; (g) particulars of any Register of Insolvency Practitioners, disqualify the
encumbrance over the property in liquidation held person from being appointed as a liquidator and
340 No. 9 of 2017] Corporate Insolvency
by a creditor, including the date on which it was inform the Official Receiver of such removal and
(8) A company which fails to comply with created; (h) particulars of any default by the disqualification as prescribed. 74. (1) A liquidator
subsection (1), and an officer in default, commits an grantor in making relevant information available; may, during the four weeks following the date of a
offence and is liable, on conviction, to a fine not (i) the events leading up to the liquidator’s winding-up order, carry on the business of the
exceeding fifteen thousand penalty units for each appointment, so far as the liquidator is aware of company so far as is necessary for the satisfactory
week that the failure continues. (9) A person who them; winding-up of the company. (2) A liquidator may,
fails to comply with subsection (5), commits an with the authority of the Court or committee of
Report by liquidator
offence, and is liable, on conviction, to a fine not inspection— (a) pay any class of creditors in full,
exceeding two hundred thousand penalty units or to Corporate Insolvency subject to this Act;
imprisonment for a period not exceeding two years, [No. 9 of 2017 341
Powers of liquidator
or to both. (10) A statement on the affairs of a
(j) the disposal or proposed disposal, by the
company, made in accordance with this section may 342 No. 9 of 2017] Corporate Insolvency
liquidator, of any property of the company and the
be used as evidence in any proceedings against any
carrying on or proposed carrying on, by the (b) make any compromise or arrangement with
person making it. (11) A liquidator who fails to
liquidator, of any business of the company; (k) the creditors, persons claiming to be creditors or
comply with subsection (6) commits an offence and
amount of the principal and interest payable to persons having or alleging themselves to have a
shall be liable, on conviction, to a fine not
preferential creditors; (1) the amount, if any, likely claim against the company, whether present or
exceeding three hundred and fifty penalty units for
to be available for the payment of other creditors; future, certain or contingent, ascertained or
each day that the failure continues. 73. (1) A
and (m) such other information as may be sounding only in damages or through which the
liquidator shall, not later than three months or such
prescribed by the Minister by statutory instrument. company may be rendered liable; (c) compromise
longer period as the Court may allow after receipt
(2) A liquidator may make further reports stating— any debts and liabilities capable of resulting in
of a statement on the affairs of a company, submit
(a) the manner in which the company was formed; debts and any claims of any kind, whether present
to the Court, Registrar, holder of a charge by virtue
(b) whether any fraud has been committed or any or future, certain or contingent, ascertained or
of which the liquidator was appointed and any
material fact has been concealed by— (i) a person sounding only in damages, that subsist or are
trustee of the secured creditors of the company a
in its promotion or formation; or (ii) an officer in supposed to subsist between the company on the
report on the state of affairs relating to the property
relation to the company since its formation; (c) one hand and a member, debtor or person
in liquidation, including— (a) the amount of capital
whether an officer of the company has contravened apprehending liability on the other; (d) make
issued, subscribed and paid up and the estimated
or failed to comply with any of the provisions of agreements on questions relating to or affecting the
amount of assets and liabilities; (b) the cause of the
this Act; and (d) any other matter which, in the assets or winding-up of a company; (e) dispose of
failure of the company, if the company has failed;
assets by public tender or the most transparent which cannot be conveniently done in the name of company, in the case of a company with share
manner under the circumstances and, not less than the company, in which case, for the purposes of capital; (b) not less than one tenth of the
twenty-one days before such disposal, furnish the enabling the liquidator to take out the letters of members, in the case of a company limited by
Registrar with a notice of intention to dispose of the administration or recover the money and money guarantee; or (c) creditors representing, in the
asset; and (f) take security for the discharge of a shall be due and payable to the liquidator; (i) aggregate, not less than five percent of the
debt, liability or claim and give a complete appoint a legal practitioner to assist the liquidator; value of the creditors of the company. (3) A
discharge in respect of that debt. (3) A liquidator (j) appoint an agent to undertake any functions liquidator may, under the winding-up, apply to the
may, for the purpose of a winding-up and which the liquidator is unable to perform Court for directions on any matter. (4) Subject to
distributing the assets of the company— (a) bring or personally; (k) give notice of the winding-up to this Act, the liquidator shall use sound judgment in
defend an action or other legal proceeding in the affected persons by notice published in a daily the management of the affairs and property of the
name and on behalf of the company; (b) newspaper of general circulation in Zambia and in company and the distribution of its assets. 76. (1) A
compromise any debt due to the company, other any jurisdiction where the company undertakes liquidator may, and if requested by a creditor or
than a debt due from a member, where the amount business; and (l) do such things as are necessary for member shall, summon separate meetings of the
claimed by the company to be due to it does not the winding-up and distributing the assets of the creditors and members for the purpose of— (a)
exceed an amount prescribed by the Minister by company. (4) The performance by the liquidator determining whether or not the creditors or
statutory instrument; (c) sell the real and personal specified in this section shall be subject to the members require a committee of inspection to act
property and things in action of the company by control of the Registrar, and any creditor or member with the liquidator; and (b) appointing members of
public auction, public tender or private contract; (d) may apply to the Court on the performance or the committee, if a committee is required. (2) A
execute, in the name and on behalf of the company, proposed performance of any of the functions. 75. committee of inspection shall be appointed by the
all deeds, receipts and other documents, and for that (1) Subject to this Act, a liquidator shall, in the meetings of creditors and members in such
purpose, use, where necessary, the company’s seal; administration of the assets of the company and in proportions as agreed, and if there is no agreement,
(e) prove, rank and claim in the bankruptcy of any the distribution of the assets, among its creditors, as determined by the Court. (3) If there is a
member or debtor for any balance against the have regard to directions given by resolution of the difference between the determinations of the
member’s estate and receive dividends in the creditors or members at a general meeting or the meetings of the creditors and members, the Court
bankruptcy in respect of the balance as a separate committee of inspection; and directions given by shall decide the matter and make such order as it
debt due from the bankrupt and rateable with other the creditors or members shall, in case of conflict, considers appropriate in the matter. 77. (1) A
separate creditors; Corporate override any direction given by the committee of committee of inspection shall consist of creditors
Insolvency [No. 9 of 2017 343 inspection. (2) A liquidator may summon and members of the company or persons holding—
meetings of creditors or members for various (a) general powers of attorney from creditors or
(f) draw, accept, make and endorse any bill of
purposes related to the winding up or summon members; or (b) special authority from the
exchange or promissory note in the name and on
meetings at such times as the creditors or members creditors or members of the company. (2) A
behalf of the company as if the bill or note had been
by resolution direct or whenever requested in committee of inspection shall meet at such times
drawn, accepted, made or endorsed by or on behalf
writing to do so by— and places as the committee may determine. (3) A
of the company in the course of its business; (g)
liquidator or any member of a committee of
raise on the security of the assets of the company Exercise and control of liquidator’s powers
inspection may call a meeting of the committee as
any money necessary; (h) take out letters of
344 No. 9 of 2017] Corporate Insolvency the liquidator or member considers necessary. (4) A
administration of the estate of any deceased
committee of inspection may act by a majority of
member or debtor, and do any act necessary for (a) members whose shareholding represent not less members present at a meeting, but shall not act
obtaining payment of any money due from a than one twentieth of the issued capital of the
member, debtor or the member’s or debtor’s estate
unless a majority of the members of the committee (a) confirm the appointment; or (b) revoke the and equitable, make an order that the liquidator be
are present. appointment and make another appointment. (10) liable to the person concerned for damages for an
The continuing members of a committee of act or omission by the liquidator which is contrary
Committee of inspection
inspection, if not less than two, may act despite any to the functions of a liquidator under this Act or any
Constitution and proceedings of committee of vacancy in the committee. 78. A liquidator may other law. (4) An order of the Court releasing a
inspection apply to the Court for an order of release and liquidator shall discharge the liquidator from
dissolution of the company, where the liquidator— liability in respect of any act done or default made
Corporate Insolvency (a) has realised the property of the company or so by the liquidator in the administration of the affairs
[No. 9 of 2017 345 much of the property as can be realised without of the company or otherwise in relation to the
(5) A member of the committee of inspection may needlessly protracting the liquidation, distributed a conduct of the person as liquidator, but the order
resign by notice, in writing, signed by the member final dividend, if any, to the creditors, adjusted the may be revoked on proof that it was obtained by
and delivered to the liquidator. (6) The office of a rights of the members and made a final return, if fraud or by suppression or concealment of any
member of a committee of inspection falls vacant if any, to the members and creditors; or (b) resigns or material fact. (5) Where a liquidator has not
the member— (a) dies (b) is subject to a legal has been removed from office. previously resigned or been removed, the
disability; (c) becomes bankrupt; (d) assigns the liquidator’s release shall operate as a removal from
Application for order of release of liquidator and
member’s estate for the benefit of the creditors or office. (6) Where the Court makes— (a) an order
dissolution of company
makes an arrangement with creditors in terms of that the liquidator be released; or (b) an order that
any law relating to bankruptcy; or (e) is absent from 346 No. 9 of 2017] Corporate Insolvency the liquidator be released and that the company be
three consecutive meetings of the committee of dissolved; a copy of the order shall, within twenty-
79. (1) In deciding whether to grant an one days after the making of it, be lodged by the
inspection without the prior leave or subsequent
application, made in accordance with section 78, liquidator with the Registrar and the Official
consent of a majority of those members who
the Court— (a) may cause a report on the accounts Receiver.
together with that member represent the creditors or
of a liquidator, to be prepared by the Official
members, as the case may be. (7) A member of the Order for release and dissolution
Receiver or an auditor appointed by the Court; and
committee of inspection may be removed by an
(b) shall take into consideration— (i) the report; (ii)
ordinary resolution at a meeting of creditors, if the Corporate Insolvency
any objection which is made against the release
member represents creditors, or of members, if the [No. 9 of 2017 347
of the liquidator by the Official Receiver, auditor,
member represents members, of which twenty one
any creditor or member or other interested person; (7) A liquidator who fails to comply with
days’ notice in writing has been given stating the
and (iii) whether the liquidator has complied with subsection (6) commits an offence and is liable, on
object of the meeting. (8) A vacancy in a committee
the requirements of the Court relating to the conviction, to a fine not exceeding three thousand
of inspection may be filled by the appointment by
winding-up. (2) Where the Court is satisfied that all penalty units for each day that the failure continues.
the committee of the same or another creditor or
necessary requirements relating to the winding-up (8) Where the Court makes an order that a company
member or person holding a general power or
and the accounts and report are made in accordance be dissolved, the Registrar shall, on lodgment of a
special authority, as referred to in subsection (1).
with subsection (1), the Court may by order, release copy of the order, strike the name of the company
(9) A liquidator may, on the liquidator’s own
the liquidator and dissolve the company. (3) The off the register and put a notification of the striking
motion, and shall, within twenty one days after the
Court may, where it does not grant the release of a out in the Gazette, and the company shall be
request, in writing, of a creditor or member,
liquidator as applied for in accordance with section dissolved as at the date of the Court Order. 80. (1)
summon a meeting of creditors or members, as the
78, on the application of any creditor or member or The Court may, after an order for winding-up is
case requires, to consider any appointment made as
other interested person, if the Court considers it just made, on the application of the liquidator, a creditor
specified in subsection (8), and the meeting may—
or member, make an order staying the proceedings, 348 No. 9 of 2017] Corporate Insolvency that person’s own cost, engage a legal practitioner.
on such terms and conditions as the Court considers (6) Where a person who is summoned as provided
(3) The Court may, in the event of the assets being
appropriate in the matter. (2) The Court may, before in this section and after being provided with a
insufficient to satisfy the liabilities, make an order
making an order as specified in this section, order reasonable sum for that person’s expenses, refuses
as to the payment out of the assets of the costs,
the liquidator to furnish a report with respect to any to appear before the Court at the time appointed, not
charges and expenses incurred in the winding- up in
relevant facts or matters. (3) A copy of an order, having a lawful excuse made known to the Court at
such order of priority as the Court thinks fit. 83.
made under this section, shall be lodged by the the time of the sitting as approved by the Court, the
The Court may, after making a winding-up order,
person receiving the order with the Registrar and Court may cause that person to be apprehended and
make any order for inspection of the records of the
Official Receiver within twenty-one days after the brought before the Court for examination.
company by creditors and members that the Court
making of the order and the Registrar shall cause
considers necessary in the circumstances of the Inspection of books by creditors and members
the order to be published, within fourteen days, in a
matter, and any records in the possession of the
daily newspaper of general circulation in Zambia Power to summon persons connected with company
company may be inspected by creditors or members
and other media. (4) A person, referred to in
in accordance with the order. 84. (1) The Court may Corporate Insolvency
subsection (3), who fails to comply with that
cause appearance by summons, of an officer of a [No. 9 of 2017 349
subsection commits an offence and is liable, on
company or person known or suspected to be in
conviction, to a fine not exceeding three hundred 85. (1) Where a liquidator makes a report stating
possession of any property of the company, or
and fifty penalty units for each day that the failure that— (a) a fraud has been committed in the
indebted to the company or of any other person
continues. 81. (1) A Court may, on application by a company; (b) any material fact has been suppressed
whom the Court considers capable of giving
liquidator, appoint a special manager to act during or concealed by any person in the promotion or
information concerning the promotion, formation,
such time as the Court directs, with such powers, formation of the company or by any officer in
trade, dealings, affairs or property of the company.
including any of the powers of a receiver as the relation to the company; (c) any officer of the
(2) The Court may examine an officer of a company
Court may vest in the manager. (2) A special company has acted dishonestly or has been guilty of
or other person, on oath, concerning the matters
manager appointed under subsection (1)— (a) shall any impropriety or recklessness in relation to the
referred to in subsection (1), orally or by written
give such security as the Court may direct; (b) shall affairs of the company; the Court may, after
interrogatories, and may reduce the oral answers in
receive such remuneration as approved by the considering the report, direct that— (i) the person
writing and require the officer or other person to
Court; (c) may resign after giving not less than one or officer of the company; (ii) any other person who
sign them and which may be used in evidence in
month’s notice in writing to the liquidator; and (d) was previously an officer of the company, is
any legal proceedings against the officer or person.
may be removed by the Court. 82. (1) The Court known or suspected to be in possession of any
(3) The Court may require an officer of a company
may fix a date on or before which creditors are to property of the company, or is or is supposed to be
or other person to produce any books and papers in
prove their debts or claims and after which they will indebted to the company; or (iii) any person whom
the officer’s or person’s custody or power relating
be excluded from the benefit of any distribution the Court considers capable of giving
to the company, except that where the officer or
made. (2) The Court may adjust the rights of the information concerning the promotion, formation,
other person claims a lien on any book or paper, the
members among themselves and distribute any trade, dealings, affairs or property of the company;
production shall be without prejudice to the lien,
surplus among the persons entitled. attend before the Court on a day appointed and be
and the Court shall have jurisdiction to determine
Power to stay winding-up questions relating to the lien. (4) An examination examined and, in the case of an officer or former
made in accordance with this section may, if the officer of the company, as to that officer’s conduct
Appointment of special manager and dealings related or relating to the company. (2)
Court so directs, be held before the Registrar of the
High Court. (5) A person summoned for A liquidator, creditor or member may take part in
Claims of creditors and distribution of assets
examination in accordance with this section may, at the examination, specified in this section,
personally or represented by a legal practitioner. (3) the High Court. (10) For purposes of this section, “ passing of the resolution lodge a copy of the
The Court may put or allow to be put such officer ” includes a banker, legal practitioner or resolution with the Registrar and the Registrar shall,
questions to the person examined as the Court auditor of the company. 86. (1) The Court may, within seven days after the lodgment, cause notice
considers appropriate in the matter. (4) A person before or after the making of a winding-up order, of the resolution to be published in the Gazette. (4)
examined, in accordance with this section, shall be order the arrest and detention of the member, If a company fails to comply with subsection (3),
examined on oath and shall answer questions put by officer, former member or officer until such time as the company, and each officer in default, commits
the Court or otherwise put to the person during the the Court orders that any book, paper or movable an offence and shall be liable, on conviction, to a
proceedings. (5) Where a person is ordered to or personal property be seized on proof of probable fine not exceeding three hundred penalty units for
attend before the Court, as provided in this section, cause for believing that a member or officer or each day that the failure continues. 89. For the
applies to the Court from any charge made or former member or officer of the company is about purposes of this Act, a voluntary winding-up
suggested against that person to be dropped, the to - (a) leave Zambia; (b) abscond from Zambia; or commences at the time of the passing of the special
liquidator shall appear on the hearing of the (c) remove or conceal any property for the purpose resolution for voluntary winding-up, made in
application and call the attention of the Court to any of evading payment of any money due to the accordance with section 88. 90. (1) A company
matter which appears to the liquidator to be company or avoiding examination in respect of the shall from the commencement of winding- up, as
relevant, and if the Court, after hearing any affairs of the company. (2) For purposes of this provided in section 89, cease to carry on its
evidence given or witnesses called by the liquidator, section, “ officer ” includes a banker, legal business, except as the liquidator considers
grants the application, the Court may allow the practitioner or auditor of the company. 87. Any necessary for the effective and efficient winding-up
applicant such costs as it considers appropriate in power conferred on the Court, by this Act shall be of the company. (2) After the commencement of the
the case. (6) A person ordered to be examined, as in addition to, and not in derogation of, any power winding-up, the shares of members shall not be
specified in this section— of instituting proceedings against any member or transferred or altered without the approval of the
debtor of a company or estate of a member or liquidator. (3) A transfer or alteration of shares in
Power to order public examination
debtor for the recovery of any debt or other sum. contravention of subsection (3) is void. 91. (1) The
350 No. 9 of 2017] Corporate Insolvency directors may declare in writing that a full inquiry
Power to arrest absconding member or officer
has been made into the affairs of the company and
(a) shall, before the examination, be furnished that they are satisfied that the company meets the
Cumulative powers of court
with a copy of the liquidator’s report; and (b) may, solvency test before issuing a notice for a meeting
at that person’s own cost, engage a legal Corporate Insolvency to wind up the company voluntarily as provided in
practitioner. (7) An examination undertaken in [No. 9 of 2017 351 section 88. (2) The directors shall attach to a
accordance with this section— (a) shall be recorded declaration made in accordance with subsection (1),
PART VII VOLUNTARY WINDING-UP 88. (1)
and reduced in writing; (b) shall be read over to and a statement relating to the affairs of the company
Subject to subsection (2), a company may be
signed by the person being examined; and (c) may showing the— (a) assets of the company and the
wound- up voluntarily by special resolution of the
be used in evidence in any legal proceedings total amount expected to be realised from the assets,
members or creditors. (2) Where the period fixed by
relating to the winding-up or against the person. (8) therefrom; (b) liabilities of the company; and
the articles of association for the duration of the
The written transcript of the examination,
company has expired, or an event for the Voluntarily winding-up
undertaken in accordance with this section, shall at
dissolution of the company has occurred, the
all reasonable times, be open to inspection by a
company shall stand dissolved. (3) Where a special Commencement of voluntary winding-up
creditor or member. (9) An examination,
resolution for a voluntary winding-up has been
undertaken in accordance with this section, may, if Effect of voluntary winding-up
passed in accordance with subsection (1), the
the Court so directs, be held before the Registrar of
company shall, within fourteen days after the Declaration of solvency
352 No. 9 of 2017] Corporate Insolvency from office or otherwise vacates the office, the subsection (1) or (2) commits an offence and is
company may, by ordinary resolution, passed at a liable on conviction to a fine not exceeding seven
(c) the estimated expenses of winding-up, as of
general meeting, fill the vacancy. (6) The company hundred penalty units for each day that the failure
the date before the making of the declaration. (3) A
shall, within fourteen days of filling the vacancy continues. 94. (1) The company may, during the
declaration, made in accordance with subsection
specified in subsection (4), lodge a certified copy of course of a voluntary winding-up prior to the
(1), shall only have effect for the purposes of this
the ordinary resolution with the Registrar upon dissolution of the company, by special resolution,
Act if it is— (a) made at a meeting of directors
payment of the prescribed fee, and the Registrar resolve that the winding-up proceedings be stayed.
referred to in subsection (1); (b) made at least thirty
shall cause a notice to be published in a daily (2) After the passing of the special resolution
days before the passing of the resolution for
newspaper of general circulation in Zambia. specified in subsection (1), the liquidator or any
voluntary winding-up, as specified in subsection
member of the company may make an application
(1); and (c) lodged with the Registrar on or before Appointment and remuneration of liquidator
to the Court for an order that the winding-up be
the date on which the notice, referred to in
Corporate Insolvency stayed, that the liquidator be discharged and that the
subsection (1), is issued. (4) A director who makes
[No. 9 of 2017 353 directors resume the management of the company.
a written declaration, in accordance with this
(3) The applicant shall give not less than twenty-
section, knowing that the company does not satisfy 93. (1) If a liquidator is satisfied that the company eight days written notice of the hearing of the
the solvency test commits an offence and is liable, is not able to pay or provide for the payment of its application to the Official Receiver, Registrar,
on conviction, to a fine not exceeding fifty thousand debts in full within the period stated in the every director of the company, and to the liquidator
penalty units or to imprisonment for a period not declaration of solvency, the liquidator shall of the company and the Official Receiver shall
exceeding six months, or to both. 92. (1) After the immediately convene a meeting of the creditors and cause a copy of the notice to be published in the
commencement of the winding-up of the company, lay before the meeting a statement of the assets and Gazette not later than seven days after receipt of the
the company shall, by special resolution, appoint liabilities of the company. (2) Within twenty-one notice. (4) A director, liquidator, creditor or
one or more liquidators and fix the remuneration to days after a meeting has been held, in accordance member may appear on the hearing of the
be paid to the liquidator. (2) Where a liquidator has with subsection (1), the liquidator shall lodge with application made in accordance with subsection (2)
been appointed, the powers of the directors shall the Registrar and the Official Receiver a statement and to call witnesses and give evidence.
cease, unless the liquidator, or the members, by that the meeting was held in accordance with
ordinary resolution, with the consent of the subsection (1) and stating the decisions, if any, Duty of liquidator to call creditors
liquidator, appropriate continued exercise of the taken at the meeting. (3) Where a meeting was held
Staying of members’ voluntary winding-up
powers in specified circumstances approved by the in accordance with subsection (1), the winding-up
liquidator. (3) The company shall, within fourteen shall proceed as if it was a creditors’ voluntary 354 No. 9 of 2017] Corporate Insolvency
days of appointing the liquidator, lodge a certified winding-up, except that the liquidator shall not
copy of the ordinary resolution with the Registrar (5) A company shall within twenty-one days of the
summon an annual meeting of creditors at the end
upon payment of the prescribed fee and the Court making an order pursuant to an application
of the first year from the commencement of the
Registrar shall cause a notice to be published in a made in accordance with subsection (2), lodge a
winding-up if the meeting was held less than three
daily newspaper of general circulation in Zambia. copy of the order, with the Registrar, who shall
months before the end of that year. (4) The creditors
(4) The company may, by special resolution, of cause a copy of the order to be published in the
may, at a meeting convened in accordance with
which the requisite notice has been given to the Gazette. (6) On the publication of the order, the
subsection (1) and where the winding-up becomes a
members, creditors and liquidators, remove the winding-up shall cease and the company shall
creditors voluntary winding-up, appoint another
liquidator, subject to any direction of the Court on resume operations as a going concern subject to
liquidator in place of the liquidator appointed by the
the application of a member, creditor or liquidator. terms and conditions stated in the order. (7) If a
company. (5) A liquidator who fails to comply with
(5) Where a liquidator dies, resigns, is removed company fails to comply with subsection (5), the
company, and each officer in default, commits an Corporate Insolvency distress or execution in force before the
offence, and shall be liable, on conviction, to a fine [No. 9 of 2017 355 commencement of a creditors’ voluntary winding-
not exceeding five hundred penalty units for each up against the estate of a member or assets of a
(9) The creditors may by resolution at a meeting
day that the failure continues. 95. (1) Where a company shall be stayed. (2) After the
convened in accordance with subsection (1) appoint
resolution for the voluntary winding-up of a commencement of a winding-up, no action or
a liquidator nominated by the company in
company has been proposed, and no declaration of proceeding shall be proceeded with or commenced
accordance with subsection (8) or another person as
solvency was made, the company shall convene a against the company, except by leave of the Court
liquidator. (10) If the creditors and the company
meeting of the creditors at which the resolution for and subject to such terms and conditions as the
nominate different persons, the person nominated
a creditor’s voluntary winding-up shall be put, and Court directs.
by the creditors shall be liquidator. (12) If no
passed by the creditors. (2) A company shall issue a
liquidator is nominated by the creditors, the Appointment of committee of inspection
notice of a meeting convened in accordance with
company shall proceed to appoint the liquidator.
subsection (1) to each creditor not less than seven Fixing of liquidators’ remuneration and vesting of
(13) If a liquidator resigns or otherwise vacates
days before the date set for the meeting. (3) A directors’ powers in liquidator
office, the creditors may fill the vacancy and shall,
notice referred to in subsection (2) shall be
within 7 days of filling the vacancy, notify the Stay of proceedings after commencement of
accompanied by a statement showing the names of
Registrar in the prescribed manner and form. (14) If creditor’s voluntary winding up
all creditors and the amounts of their claims. (4) A
a company fails to comply with subsection (1), (2),
company shall publish, in the Gazette and in any 356 No. 9 of 2017] Corporate Insolvency
(3), (4) or (5), the company, and each officer in
newspaper of general circulation in Zambia, a
default, commits an offence and is liable, on PART VIII MISCELLANEOUS PROVISIONS ON
notice issued in accordance with subsection (2), at
conviction, to a fine not exceeding five hundred WINDING-UP 99. Subject to this Act and any
least twenty-one days before the date of the
thousand penalty units. (15) A director appointed to other law relating to preferential payments, the
meeting. (5) A company shall— (a) at a meeting
attend a meeting as specified in subsection (5) (a), assets of a company shall, on its voluntary winding-
convened in accordance with subsection (1),
or the secretary of the company who fails to comply
produce a full statement of the company’s affairs up, be distributed in equal priority in satisfaction of
with subsection (6), commits an offence and is the Company’s liabilities, and shall be distributed
showing the method and manner in which valuation
liable, on conviction, to a fine not exceeding five
of the company’s assets was arrived at, a list of the among the members according to their rights and
hundred thousand penalty units. 96. The creditors interests in the company as specified in the articles.
creditors and the estimated amount of their claims;
shall, by resolution, appoint a committee of 100. (1) If for any reason, there is no liquidator in a
and (b) appoint a director. (6) A director appointed,
inspection for the winding-up of a company and voluntary winding-up, the Court may appoint a
as specified in subsection (5) (b), and the secretary
appoint such number of creditors and members of liquidator. (2) The Court may, on cause shown,
shall attend the meeting and disclose to the meeting
the company or other persons in accordance with
the company’s affairs and the circumstances leading during a voluntary winding- up, remove a liquidator
section 77, to be members of the committee. 97. (1) and appoint another liquidator. 101. A member,
to the proposed winding-up. (7) The creditors at a
A committee of inspection, appointed as specified creditor or liquidator may, during a voluntary
meeting held in accordance with this section, may
in section 96, shall fix the remuneration to be paid winding-up, apply to the Court to review the
appoint one of their number or the director
to the liquidator in an amount not exceeding the remuneration of the liquidator.
appointed under subsection (5) to preside at the
amounts prescribed by regulations by the Minister.
meeting. (8) The company shall nominate a
(2) On the appointment of a liquidator, the powers 102. (1) A liquidator may, during a voluntary
liquidator for the winding- up.
of the directors shall vest in the liquidator, and the winding-up— (a) in the case of a members’
Creditors’ voluntary winding-up powers and authority of every director shall cease, voluntary winding-up approved by a resolution of
except so far as the committee of inspection shall the company exercise the liquidator’s powers
authorise. 98. (1) Any attachment, sequestration, under this Act in a winding-up by the Court’; (b) in
the case of a creditors’ voluntary winding-up, by
leave of the Court or approval of the committee of
inspection exercise the powers given by this Act to
a liquidator in a winding-up by the Court; and (c)
convene meetings of the company for the purpose
of obtaining the sanction of the company in respect
of any matter or for any other purpose the liquidator
considers necessary. (2) When several liquidators
are appointed during a voluntary winding-up, a
power given by this Act may be exercised by one or
more of the liquidators as determined at the time of
appointment, or in default of such determination, by
any number of liquidators being not less than two.
103. (1) Where a liquidator determines that the
whole or part of the business or property of a
company be transferred or sold to another
corporate, the liquidator may with the— (a) special
resolution of the company, in the case of a
members’ voluntary winding-up; (b) leave of the
Court; or (c) approval of the committee of
inspection, in the case of a creditors’ voluntary
winding-up;
Distribution of assets of company
Court appointed liquidator
Reviewing remuneration during voluntary winding-
up
Powers and duties of liquidators during voluntary
winding-up
Liquidator to accept shares, etc., as consideration
for sale of property of company
Corporate Insolvency
[No. 9 of