The Gazette 1982

CIA/E T N

JANUARY/FEBRUARY 1982

shall be deemed to surrender his security, unless the Court on application is satisfied that the omission to value the security has arisen from inadvertence". The Court is normally lenient in interpreting this proviso. It will usually make the Creditor pay for the costs of the application, but it is to be noted that a mistake as to value is not "inadvertence" nor can there be any "inadvertence" where there is a deliberate election (Re. Piers (1898) (1 QB 627) ). This, however, is not the end of the matter, as Rule 73 of the same Statutory Instrument provides that such a statement (as referred to in Rule 70) does not apply to a Meeting of Creditors held pursuant to Section 266, i.e. the first Creditors' Meeting. Therefore it would appear that a secured Creditor is entitled to vote. A solicitor claiming a lien for his costs is in a similar situation to a secured Creditor (Re. Safety Explosives [1904] 1 Ch. 266). (c) Rule 82 - No person, either as a general or a special proxy, can vote in favour of any resolution which directly or indirectly places either himself or his partner or employer in a position to receive remuneration out of the assets of the Company otherwise than as a Creditor rateable with the other Creditors of the Company - no further comment is necessory on this Rule. (d) Poll - There is no provision in Statutory Instrument No. 28 of 1966 entitling a person to call a Poll; Section 137 of the Companies Act, 1963 applies only to General Meetings of the members of the Company. If there are only a few people at the meeting, it is possible to count both the numbers and the value but otherwise the voting should be by ballot. Adjournment. There are three instances when adjournments may arise: (a) Under Rule 66 of Statutory Instrument No. 28, the Chairman may with the consent of the Meeting, adjourn it from time to time and from place to place. The adjourned Meeting should be held at the same place as the original Meeting unless the resolution for the adjournment provides otherwise, or unless the Court provides otherwise. (b) If within fifteen minutes from the time appointed for the Meeting a quorum (at least three Creditors entitled to vote) is not present, then the Meeting is adjourned to the same day in the following week at the same time and place or to such other day or time or place as the Chairman may appoint but so that the day he does appoint cannot be less than seven nor more than twenty one days from the date from which the Meeting was originally adjourned. (c) Section 266 of the Companies Act, 1963 - Sub- section (5) of this section provides that if the General Meeting of the Company at which the Resolution to wind up is being proposed is adjourned for any reason, then any resolution passed at the subsequent meeting of the Creditors held on the same day or the day after shall have effect as if it had been passed immediately after the passing of the members Resolution to wind up the Company. Committee of Inspection: Before the termination of the Creditors' Meeting the Committee of Inspection should be elected. Section 268 (1) provides that the Creditors may, if they think fit,

either at this meeting or a later Meeting, appoint a Committee of Inspection consisting of not more than 5 persons. The Company has the right to appoint a maximum of three persons, the appointment to take place either at the Meeting to wind up or at a subsequent general Meeting. The Creditors may resolve, again by a majority in number and value, not to accept the Company's nominees, in which case such nominees are not qualified to sit on the Committee of Inspection unless the Court otherwise orders. Solicitation: Attention is drawn to Rule 80 of Statutory Instrument No. 28 of 1966, which provides that if the Court is satisfied that solicitation has been used by or on behalf of a liquidator in obtaining proxies or procuring his own appointment as liquidator, the Court may order that no remuneration be allowed to the person by whom or on whose behalf the solicitation was expressed. The Liquidator 's Solicitor: It is not easy to decide whether a person who is a Solicitor for the Company should act for a liquidator when appointed. The general view is that he should not, as there may be a conflict of interest if the Directors have to be sued; there may however be exceptions to the general rule. In conclusion, it seems clear that it is time that Rule 63 was abolished and the true intention be given to Section 267 (2) of the Companies Act, 1963. Also it might be added that the penalties imposed by Section 266 (6) of the Act have, through inflation, become inadequate. A Company need not call a Creditors Meeting, though insolvent and the members can appoint their own liquidator. A creditor has fourteen days within which to object to the Liquidator so appointed but, if he does not do so, then the liquidation is valid even though no Creditors' Meeting was convened. This procedure is called "Centrebinding", being named after an English decision on the same point (Re. Centrebind Limited [1966] 3 A11ER. 889). The only penalty imposed on the Directors of the Company in this instance is a £100,000 fine. It may be noted that in the United Kingdom, since the coming into effect of the Companies Act 1980, the fines in that regard are, for conviction and indictment, unlimited and for summary conviction, up to £1,000. •

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