Commonwealth Numbered Acts

COMPANIES ACT 1981 No. 89 of 1981 - SECT 316

316. (1) Where a meeting is convened under section 315, the company shall-

   (a)  with every notice convening the meeting that is sent to a creditor or
member, send a statement (in this section referred to as the ''explanatory
statement'')-

        (i)    explaining the effect of the compromise or arrangement and, in
               particular, stating any material interests of the directors,
               whether as directors, as members or creditors of the company or
               otherwise, and the effect on those interests of the compromise
               or arrangement in so far as that effect is different from the
               effect on the like interests of other persons; and

        (ii)   setting out such information as is prescribed and any other
               information that is material to the making of a decision by a
               creditor or member whether or not to agree to the compromise or
               arrangement, being information that is within the knowledge of
               the directors and has not previously been disclosed to the
               creditors or members; and

   (b)  in every notice convening the meeting that is given by advertisement,
        include either a copy of the explanatory statement or a notification
        of the place at which and the manner in which creditors or members
        entitled to attend the meeting may obtain copies of the
        explanatory statement.

(2) In the case of a creditor whose debt does not exceed $200, paragraph (1)
(a) does not apply unless the Court otherwise orders but the notice convening
the meeting that is sent to such a creditor shall specify a place at which a
copy of the explanatory statement can be obtained on request and, where the
creditor makes such a request, the company shall forthwith comply with the
request.

(3) Where the compromise or arrangement affects the rights of debenture
holders, the explanatory statement shall specify any material interests of the
trustees for the debenture holders, whether as such trustees, as members or
creditors of the company or otherwise, and the effect on those interests of
the compromise or arrangement in so far as that effect is different from the
effect on the like interests of other persons.

(4) Where a notice given by advertisement includes a notification that copies
of the explanatory statement can be obtained in a particular manner, every
creditor or member entitled to attend the meeting shall, on making application
in that manner, be furnished by the company free of charge with a copy of the
explanatory statement.

(5) Each director and each trustee for debenture holders shall give notice to
the company of such matters relating to himself as are required to be included
in the explanatory statement.

(6) In the case of a compromise or arrangement that is not, or does not
include, a compromise or arrangement between a company and its creditors or
any class of them, the company shall not send out an explanatory statement
pursuant to sub-section (1) unless a copy of that statement has been
registered by the Commission.

(7) Where an explanatory statement sent out pursuant to sub-section (1) is not
required by sub-section (6) to be registered by the Commission, the Court
shall not make an order approving the compromise or arrangement unless it is
satisfied that the Commission has had a reasonable opportunity to examine the
explanatory statement and to make submissions to the Court in relation to that
statement.

(8) Where a copy of an explanatory statement is lodged with the Commission for
registration under sub-section (6), the Commission shall not register the copy
of the statement unless the statement appears to comply with the requirements
of this Act and the Commission is of the opinion that the statement does not
contain any matter that is false in a material particular or materially
misleading in the form or context in which it appears.

(9) Subject to sub-section (11), where a company contravenes or fails to
comply with a requirement of this section, the company and any officer of the
company who is in default are each guilty of an offence.

(10) For the purposes of sub-section (9), the liquidator of a company and any
trustee for debenture holders shall be deemed to be officers of the company.

(11) It is a defence to a prosecution for an offence against sub-section (9)
if the defendant proves that the default in complying with a requirement of
this section was due to the refusal of any other person, being a director or
trustee for debenture holders, to supply particulars of his interests for the
purposes of the explanatory statement.