Companies Act Amendment Act of 1964 (Qld)

106 (Quent51MYAl: ANNO TERTIO DECIMO ELIZABETHAE SECUNDAE REGINAE No. 10 of 1964 An Act to Amend "The Companies Act of 1961 " in certain particulars [ASSENTED TO 3RD APRIL, 1964] BE IT ENACTED by the Queen's Most Excellent Majesty, by and with the advice and consent of the Legislative Assembly of Queensland in Parliament assembled, and by the authority of the same, as follows:- 1. (1) Short title . This Act may be cited as " The Companies Act Amendment Act of 1964." (2) Principal Act. " The Companies Act of 1961," is in this Act referred to as the Principal Act. (3) Collective title . The Principal Act and this Act may be collectively cited as " The Companies Acts, 1961 to 1964." 2. Commencement . Save as otherwise provided in section sixteen of this Act this Act shall come into operation on a day to be fixed by Proclamation of the Governor in Council published in the Gazette.

Companies Act Amendment Act of 1964, No. 10 107 3. Amendments of s. 5 . Section five of the Principal Act is amended by- (a) in subsection (1)- (i) inserting after the interpretation of the term " Books " the following interpretation:- " " Borrowing corporation " means a corporation that is or will be under a liability (whether or not such liability is present or future) to repay any money received or to be received by it in response to an invitation to the public to subscribe for or purchase debentures of the corporation;"; (ii) adding to the interpretation of the term " Debenture " the words ", and any document deemed by subsection (5) of this section to be a debenture "; (iii) inserting after the interpretation of the term " Foreign company " the following interpretation:- " " Guarantor corporation ", in relation to a borrowing corporation, means a corporation that has guaranteed or has agreed to guarantee the repayment of any money received or to be received by the borrowing corporation in response to an invitation to the public to subscribe for or purchase debentures of the borrowing corporation; "; and (b) inserting at the end of subsection (5) the following words:- and any document that is issued or intended or required to be issued by a corporation acknowledging or evidencing, or constituting an acknowledgement of, the indebtedness of the corporation in respect of any money that is or may be deposited with or lent to the corporation in response to such an invitation shall be deemed to be a debenture (but not including a document which merely acknowledges the receipt of the money in any case where, in respect of the money, the corporation issues in compliance with section thirty-eight of this Act the document prescribed by subsection (2) of that section and complies with the other requirements of that section) ". 4. Repeal of and new s. 38. (1) The Principal Act is amended by repealing section thirty-eight and inserting in its stead the following section:- 11 [38.] As to invitations to the public to lend money to or to deposit money with a corporation . (1) An invitation to the public to deposit money with or lend money to a corporation or proposed corporation shall not be issued circulated or distributed by the corporation or by any other person unless- (a) a prospectus in relation to the invitation has been registered by the Registrar; (b) the prospectus contains an undertaking by the corporation that it will within two months after the acceptance of any money as a deposit or loan from any person in response to the invitation issue to that person a document which acknowledges or evidences or constitutes an acknowledgement of the indebtedness of the corporation in respect of that deposit or loan; and

108 Companies Act Amendment Act of 1964, No. 10 (c) the document is described or referred to in the prospectus and in any other document whether constituting or relating to the invitation as- (i) an unsecured note or an unsecured deposit note; (ii) a mortgage debenture or certificate of mortgage debenture stock; or (iii) a debenture or certificate of debenture stock- in accordance with the provisions of this section. (2) Where pursuant to an invitation referred to in subsection (1) of this section a corporation has accepted from any person any money as a deposit or loan the corporation shall within two months after the acceptance of the money issue to that person a document which- (a) acknowledges or evidences or constitutes an acknowledgement of the indebtedness of the corporation in respect of that deposit or loan; and (b) complies with the other requirements of this section. (3) The document shall be described or referred to in the prospectus and in any other document whether constituting or relating to the invitation and in the document itself as an unsecured note or an unsecured deposit note unless pursuant to the provisions of either subsection (4) or subsection (5) of this section it is and may be otherwise described. (4) The document may be described or referred to in the prospectus or in such other document or in the document itself as a mortgage debenture or certificate of mortgage debenture stock if, and only if, there is included in the prospectus the statements and the valuation referred to in paragraph 32 of the Fifth Schedule. (5) The document may be described or referred to in the prospectus or in such other document or in the document itself as a debenture or certificate of debenture stock if, and only if- (a) pursuant to subsection (4) of this section it may be (but is not) described or referred to in that prospectus or document as a mortgage debenture or certificate of mortgage debenture stock; or (b) there is included in the prospectus the statement and the summary referred to in paragraph 33 of the Fifth Schedule. (6) Nothing in this section shall apply to a prescribed corporation and nothing in this Act shall require a prospectus to be issued in connection with any invitation to the public to deposit money with a prescribed corporation. (7) In subsection (6) of this section, " prescribed corporation " means- (a) a banking corporation; (b) a corporation that is declared by the Governor in Council by notice in the Government Gazette to be an authorized dealer in the short term money market; or (c) a corporation that- (i) is a pastoral company in respect of which an exemptio granted under section eleven of the Banking Act1959 of th Commonwealth, or that Act as amended from time to time, is in force; (ii) is registered under the law of the Commonwealth relating to life insurance or is a corporation the whole of the issued shares of which are held beneficially by a corporation so registered; or

Companies Act Amendment Act of 1964, No. 10 109 ( iii) is a subsidiary of a banking corporation or of a pastoral company referred to in subparagraph (i) of this paragraph, if the repayment of all existing and future deposits with and loans to the subsidiary are guaranteed by the banking corporation or pastoral company- and is declared by the Governor in Council by notice in the Government Gazette to be a prescribed corporation for the purposes of this section. (8) The Governor in Council may, by notice in the Government Gaze: te- (a) specify terms and conditions subject to which subsection (6) of this sect'an shall have effect in relation to a corporation specified in paragraph (c) of subsection (7) of this section; or (b) vary or revoke any declaration or specification made under this section. (9) Every corporation or other person that contravenes or fails to comply with any of the provisions of this section and every officer of a corporation who is in default shall be guilty of an offence against this Act. Penalty: Imprisonment for six months or One thousand pounds. (10) The provisions of this section relating to the description of any document acknowledging or evidencing or intended to acknowledge or evidence the indebtedness of a corporation shall apply to and in relation to every such document issued after the commencement of "The Companies Act Amendment Act of 1964," notwithstanding anything in any existing debenture or trust deed and any such document issued after the commencement of that Act may be described in accordance with the requirements of this section notwithstanding anything in any such existing debenture or trust deed. (11) For the purpo^zs of this section a document issued by a borrowing corporation certifying that a person named therein is in respect of any deposit with or loan to the corporation the registered holder of a specified number or value- (a) of unsecured notes or unsecured deposit notes; (b) of mortgage debentures or certificates of mortgage debenture stock; or (c) of debentures or certificates of debenture stock- issued by the corporation upon or subject to the terms and conditions contained in a trust deed referred to or identified in the certificate, shall be deemed to be a document evidencing the indebtedness of that corporation in respect of that deposit or loan.". (2) All declarations made by the Governor in Council pursuant to the provisions of section thirty-eight of the Principal Act and in force immediately prior to the coming into operation of this Act, shall continue in force and be deemed to have been made pursuant to the provisions of section thirty-eight of " The Companies Acts, 1961 to 1964," as inserted by this section , and may be varied or revoked in the same manner as a declaration made pursuant to the said section thirty-eight as so inserted. 5. Amendment of s. 41 . Section forty-one of the Principal Act is amended by in subsection (2) omitting the words " Where a corporation specifies " and inserting in their stead the words " Subject to the provisions contained in the Fifth Schedule where a corporation specifies ".

110 Companies Act Amendment Act of 1964, No. 10 6. Repeal of and new s. 74. The Principal Act is amended by repealing section seventy-four and inserting in its stead the following section:- " [74.] Qualifications of trustee for debenture holders. (1) Subject to this section every corporation which offers debentures to the public for subscription or purchase in the State after the commencement of " The Companies Act Amendment Act of 1964," shall make provision in those debentures or in a trust deed relating to those debentures for the appointment as trustee for the holders of the debentures of a corporation (in this section called the " trustee corporation ") being a person constituted as the Public Trustee or Public Curator in any State or Territory of the Commonwealth or a company within the meaning of Division 5 of this Part that is- (a) a corporation authorized by the law of any State or Territory of the Commonwealth to take in its own name a grant of probate or of letters of administration of the estate of a deceased person; (b) a corporation registered under the law of the Commonwealth relating to life insurance; (c) a banking corporation; (d) a corporation (in this paragraph called " the subsidiary the whole of the issued shares of which are held beneficially by a corporation or corporations of a kind referred to in subparagraphs (a), (b) or (c) of this subsection (in this paragraph called " the holding company ") if- (i) the holding company is liable for all liabilities incurred or to be incurred by the subsidiary as trustee for the holders of the debentures; or (ii) the holding company has subscribed for and beneficially holds shares in the subsidiary in respect of which shares there is a liability of not less than Two hundred and fifty thousand pounds which has not been called up and which the subsidiary has resolved by special resolution shall not be capable of being called up except in the event and for the purposes of the subsidiary being wound up; or (e) a corporation approved by the Crown Law Officer for the purposes of this subsection. (2) Where a borrowing corporation is required to appoint a trustee for the holders of any debentures in accordance with subsection (1) of this section it shall not allot any of those debentures until the appointment has been made and the trustee corporation has consented to act as trustee. (3) Without leave of the Court , a trustee corporation shall not be appointed, hold office or act as trustee for the holders of debentures of a borrowing corporation if that trustee corporation is- (a) a director of the borrowing corporation; (b) a shareholder that beneficially holds shares in the borrowing corporation; (c) beneficially entitled to moneys owed by the borrowing corporation to it; (d) a corporation that has entered into a guarantee in respect of the principal debt secured by those debentures or in respect of interest thereon; or

Companies Act Amendment Act of 1964, No. 10 111 (e) a corporation that is by virtue of subsection (5) of section six deemed to be related to- (i) any corporation of a kind referred to in paragraphs (a) to (d) inclusive of this subsection; or (ii) the borrowing corporation. For the purposes of this subsection, the Public Curator of Queensland and the companies to which " The Queensland Trustees, Limited, Acts, 1888 to 1963," or " The Union Trustee Company of Australia, Limited, Acts, 1890 to 1963," relate shall until the contrary is shown, be deemed not to be the beneficial owner of any share registered in his or its name. (4) Notwithstanding anything contained in subsection (3) of this section, that subsection shall not prevent a trustee corporation from being appointed, holumg office or acting as trustee for the holders of debentures of a borrowing corporation by reason only that- (a) the borrowing corporation owes to the trustee corporation or to a corporation that is deemed by virtue of subsection (5) of section six to be related to the trustee corporation any moneys so long as such moneys are- (i) moneys that (not taking into account any moneys referred to in subparagraphs (ii) and (iii) of this paragraph) do not, at the time of the appointment or at any time within a period of three months after the debentures are first offered to the public, exceed one-tenth of the amount of the debentures proposed to be offered to the public within that period and do not, at any time after the expiration of that period, exceed one-tenth of the amount owed by the borrowing corporation to the holders of the debentures; (ii) moneys that are secured by, and only by, a first mortgage over land of the borrowing corporation, or by any debentures issued by the borrowing corporation to the public or by any debentures not issued to the public which are issued pursuant to the same trust deed as that creating other debentures issued at any time by the borrowing corporation to the public or by any debentures to which the trustee corporation, or a corporation that is by virtue of subsection (5) of section six deemed to be related to the trustee corporation, is not beneficially entitled; or (iii) moneys to which the trustee corporation, or a corporation that is by virtue of subsection (5) of section six deemed to be related to the trustee corporation, is entitled as trustee for holders of any debentures of the borrowing corporation in accordance with the terms of the debentures or of the relevant trust deed; or (b) the trustee corporation, or a corporation that is deemed by virtue of subsection (5) of section six to be related to the trustee corporation, is a shareholder of the borrowing corporation in respect of shares that it beneficially holds, so long as the shares in the borrowing corporation beneficially held by the trustee corporation and by all other corporations that are deemed by virtue of subsection (5) of section six to be related to it, do not carry the right to exercise more than one-tenth of the voting power at any general meeting of the borrowing corporation.

112 Companies Act Amendment Act of 1964, No. 10 (5) Nothing in subsection (3) of this section shall- (a) affect the operation of any debentures or trust deed issued of executed before the commencement of " The Companies Act Amendment Act of 1964 or (b) apply to or in relation to the trustee for the holders of any such debentures- unless pursuant to any such debentures or trust deed a further offer of debentures is made to the public after the commencement of that Act. (6) If default is made in complying with any provision of this section, the corporation and every officer of the corporation who is in default shall be guilty of an offence against this Act. Penalty: Two hundred pounds. Default penaty." 7. New s. 74A. The Principal Act is amended by inserting after section seventy-four the following section:- E" [74A.] Retirement of trustees . (1) Notwithstanding anything contained in any Act or in the relevant debentures or trust deed a trustee for the holders of debentures shall not cease to be the trustee until a corporation qualified pursuant to section seventy-four for appointment as trustee for the holders of the debentures has been appointed to be the trustee for the holders of the debentures and has taken office as such but the foregoing provisions of this subsection shall not be applicable to a trustee appointed prior to the commencement of " The Companies Act Amendment Act of 1964," until the first day of July, one thousand nine hundred and sixty-five. (2) Where provision has been made in the debentures or in the relevant trust deed for the appointment of a successor tc a trustee for the holders of the debentures upon retirement or otherwise, the successor may subject to section seventy-four, be appointed in accordance with such provision. (3) Where no provision has been made in the debentures or in the relevant trust deed for the appointment of a successor to a retiring trustee the borrowing corporation may appoint a successor which is qualified for appointment pursuant to section seventy-four. (4) Notwithstanding anything in this Act or in any debentures or trust deed a borrowing corporation may, with the consent of an existing trustee for the holders of the debentures, appoint as successor to the existing trustee any corporation which is qualified for appointment pursuant to section seventy-four and which is deemed by virtue of subsection (5) of section six to be related to the existing trustee. (5) Where the trustee for the holders of the debentures has ceased to exist or to be qualified under section seventy-four or fails or refuses to act or is disqualified under that section the Court may on the application of the borrowing corporation or the trustee for the holders of the debentures or the holder of any of the debentures or the Crown Law Officer appoint any corporation qualified pursuant to section seventy-four to be-the-trustee-for the holders of the debentures in place of the trustee which has ceased to exist or to be qualified or which has failed or refused to act as trustee or is disqualified as aforesaid.

Companies Act Amendment Act of 1964, No. 10 113 (6) Where a successor is appointed to be a trustee in place of any trustee the successor shall within one month after the appointment lodge with the Registrar notice in the prescribed form of the appointment. Penalty: Fifty pounds. Default penalty." 8. New s . 74B. The Principal Act is amended by inserting after section 74A as inserted by this Act the following section:- " [74B.] Contents of trust deed . (1) Where a corporation offers debentures to the public for subscription in the State the debentures or the relevant trust deed shall contain a limitation on the amount that the borrowing corporation may pursuant to those debentures or that deed borrow and shall contain convenants by the borrowing corporation, or if the debentures do not or the trust deed does not expressly contain those covenants they or it shall be deemed to contain convenants by the borrowing corporation, to the following effect- (a) that the borrowing corporation will use its best endeavours to carry on and conduct its business in a proper and efficient manner; (b) that, to the same extent as if the trustee for the holders of the debentures or any registered company auditor appointed by the trustee were a director of the corporation, the borrowing corporation will- (i) make available for its or his inspection the whole of the accounting or other records of the borrowing corporation; and (ii) give to it or him such information as it or he requires with respect to all matters relating to the accounting or other records of the borrowing corporation; and (c) that the borrowing corporation will, on the application of persons holding not less than one-tenth in nominal value of the issued debentures to which the covenant relates' delivered to its registered office, by giving notice- (i) to each of the holders of those debentures (other than debentures payable to bearer) at his address as specified in the register of debentures; and (ii) by an advertisement in a daily newspaper circulating generally throughout the State addressed to all holders of those debentures- summon a meeting of the holders of those debentures to consider the accounts and balance-sheet which were laid before- the last preceding annual general meeting of the borrowing corporation and to give to the trustee directions in relation to the exercise of the trustee's powers, such meeting to be held at a time and place specified in the notice and advertisement under the chairmanship of a person nominated by the trustee or such other person as is appointed in that behalf by the holders of those debentures present at the meeting. (2) Where after the date of the commencement of " The Companies Act Amendment Act of 1964," any debenture (other than a debenture lawfully issued pursuant to a trust deed executed before that date) is issued and neither the debenture nor the trust deed relating to the issue of the debenture expressly contains the limitation on the amount that the borrowing corporation may borrow and the covenants referred to in

114 Companies Act Amendment Act of 1964, No. 10 subsection (1) of this section, the corporation that issued the debenture and every officer of the corporation who is in default shall be guilty of an offence against this Act, Penalty: One hundred pounds." 9. New s. 74C. The Principal Act is amended by inserting after section 74B as inserted by this Act the following section:- " [74C.] Power of Court in relation to certain irredeemable debentures. (1) Notwithstanding anything in any debenture or trust deed the security for any debentures which are irredeemable or redeemable only on the happening of a contingency shall, if the Court so orders, be enforceable, forthwith or at such other time as the Court directs if, on the application of the trustee for the holders of the debentures or (where there is no trustee) on the application of the holder of any of the debentures the Court is satisfied that- (a) at the time of the issue of the debentures the assets of the corporation which constituted or were intended to constitute the security therefor were sufficient or likely to become sufficient to discharge the principal debt and any interest thereon; (b) the security, if realized under the circumstances existing at the time of the application, would be likely to bring not more than sixty per centum of the principal sum of moneys outstanding (regard being had to all prior charges and charges ranking pari passu if any); and (c) the assets covered by the security, on a fair valuation on the basis of a going concern after allowing a reasonable amount for depreciation are worth less than the principal sum and the borrowing corporation is not making sufficient profit to pay the interest due on the principal sum or (where no definite rate of interest is payable) interest thereon at such rate as the Court considers would be a fair rate to expect from a similar investment. (2) Subsection (1) of this section shall not affect any power to vary rights or accept any compromise or arrangement created by the terms of the debentures or the relevant trust deed or under a compromise or arrangement between the borrowing corporation and creditors." 10. New s . 74D. The Principal Act is amended by inserting after section 74c as inserted by this Act the following section:- " [74D.] Duties of trustees . (1) A trustee for the holders of debentures- (a) shall exercise reasonable diligence to ascertain whether or not the assets of the borrowing corporation and of each of its guarantor corporations which are or may be available whether by way of security or otherwise are sufficient or are likely to be or become sufficient to discharge the principal debt as and when it becomes due; (b) shall satisfy itself that each prospectus relating to the debentures does not contain any matter which is inconsistent with the terms of the debentures or with the relevant trust deed; (c) shall ensure that the borrowing corporation and each of its guarantor corporations comply with the provisions of Division 7 of this Part so far as they relate to the debentures and are applicable;

Companies Act Amendment Act of 1964, No. 10 115 (d) shall exercise reasonable diligence to ascertain whether or not the borrowing corporation and each of its guarantor corporations have committed any breach of the covenants terms and provisions of the debentures or the trust deed; (e) except where it is satisfied that the breach will not materially prejudice the security (if any) for the debentures or the interests of those holders shall take all steps and do all such things as it is empowered to do to cause the borrowing corporation and any of its guarantor corporations to remedy any breach of those covenants terms and provisions; (f) where the borrowing corporation or any of its guarantor corporations fails when so required by the trustee to remedy any breach of the covenants terms and provisions of the debentures or the trust deed, may place the matter before a meeting of holders of the debentures, submit such proposals for the protection of their investment as the trustee considers necessary or appropriate and obtain the directions of the holders in relation thereto; and (g) where the borrowing corporation submits to those holders a compromise or arrangement, shall give to them a statement explaining the effect of the compromise or arrangement and, if it thinks fit, recommend to them an appropriate course of action to be taken by them in relation thereto. (2) Where, after due inquiry, the trustee for the holders of the debentures at any time is of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available whether by way of security or otherwise, are insufficient, or likely to become insufficient, to discharge the principal debt as and when it becomes due, the trustee may apply to the Minister for an order under this subsection and the Minister may, on such application, after giving the borrowing corporation an opportunity of making representations in relation to that application, by order in writing served on the corporation at its registered office in the State, impose such restriction on the activities of the corporation, including restrictions on advertising for deposits or loans and on borrowing by the corporation as the Minister thinks necessary for the protection of the interests of the holders of the debentures or the Minister may, and if the borrowing corporation so requires shall, direct the trustee to apply to the Court for an order under subsection (4) of this section and the trustee shall apply accordingly. (3) Where- (a) after due inquiry, the trustee at any time is of the opinion that the assets of the borrowing corporation and of any of its guarantor corporations which are or should be available, whether by way of security or otherwise, are insufficient or likely to become insufficient, to discharge the principal debt as and when it becomes due; or (b) the corporation has contravened or failed to comply with an order made by the Minister under subsection (2) of this section- the trustee may, and where the borrowing corporation has requested the trustee to do so the trustee shall, apply to the Court for an order under subsection (4) of this section.

116 Companies Act Amendment Act of 1964, No, 10 (4) Where an application is made to the Court under subsection (2) or subsection (3) of this section, the Court may, after giving the borrowing corporation an opportunity of being heard, by order, do all or any of the following things, namely:- (a) direct the trustee to convene a meeting of the holders of the debentures for the purpose of placing before them such information relating to their interests and such proposals for the protection of their interests as the trustee considers necessary or appropriate and of obtaining their directions in relation thereto, and give such directions in relation to the conduct of the meeting as the Court thinks fit; (b) stay all or any actions or proceedings before any court by or against the borrowing corporation; (c) restrain the payment of any moneys by the borrowing corporation to the holders of debentures of the corporation or to any class of such holders; (d) appoint a receiver of such of the property as constitutes the security (if any) for the debentures; (e) give such further directions from time to time as may be necessary to protect the interests of the holders of the debentures, the members of the borrowing corporation or any of its guarantor corporations or the public- but in making any such order the Court shall have regard to the rights of all creditors of the borrowing corporation. (5) The Court may vary or rescind any order made under subsection (4) of this section as the Court thinks fit. (6) A trustee in making any application to the Minister or to the Court shall have regard to the nature and kind of the security given when the debentures were offered to the public, and if no security was given shall have regard to the position of the holders of the debentures as unsecured creditors of the borrowing corporation. (7) A trustee may rely upon any certificate or report given or statement made by any solicitor, auditor or officer of the borrowing corporation or guarantor corporation if it has reasonable grounds for believing that such solicitor, auditor or officer was competent to give or make the certificate, report or statement." 11. New s. 74E. The Principal Act is amended by inserting after section 74D as inserted by this Act the following section:- " [74E.] Powers of trustee to apply to the Court for directions, &c. (1) The trustee for the holders of debentures may apply to the Court- (a) for directions in relation to any matter arising in connection with the performance of the functions of the trustee; or (b) to determine any question in relation to the interests of the holders of debentures- and the Court may- (c) give such directions to the trustee as the Court deems fit; and (d) if satisfied that the determination of the question will be just and beneficial accede wholly or partially to any such application on such terms and conditions as the Court thinks fit or make such other order on the application as the Court thinks just.

Companies Act Amendment Act of 1964, No. 10 117 (2) The Court may on an application under this section order a meeting of all or any of the holders of debentures to be called to consider any matters in which they are concerned and to advise the trustee thereon and may give such ancillary or consequential directions as the Court thinks fit. (3) The meeting shall be held and conducted in such manner as the Court directs, under the chairmanship of a person nominated by the trustee or such other person as the meeting appoints." 12. New s . 74F. The Principal Act is amended by inserting after section 74E as inserted by this Act the following section:- " [74F.] Obligations of borrowing corporation . (1) Where there is a trustee for the holders of any debentures of a borrowing corporation the directors of the borrowing corporation shall- (a) at the end of a period not exceeding three months ending on a day (not later than six months after the commencement of " The Companies Act Amendment Act of 1964," or after the date of the relevant prospectus, whichever is the later) which the trustee is hereby required to notify to the borrowing corporation in writing; and (b) at the end of each succeeding period thereafter, being a period of three months or such shorter time as the trustee may, in any special circumstances, allow, prepare a report that relates to that period and complies with the requirements of subsection (2) of this section and within one month after the end of each such period lodge a copy of the report relating to that period with the Registrar and with the trustee. Penalty: Two hundred pounds. Default penalty: Fifty pounds. (2) The report referred to in subsection (1) of this section shall be signed by not less than two of the-directors on behalf of all of them and shall set out in detail any matters adversely affecting the security or-the interests of the holders of the debentures and, without affecting the generality of the foregoing, shall state- (a) whether or not the limitations on the amount that the corporation may borrow have been exceeded; (b) whether or not the borrowing corporation and each of its guarantor corporations have observed and performed all the covenants and provisions binding upon them respectively by or pursuant to the debentures or any trust deed; (c) whether or not any event has happened which has caused or could cause the debentures or any provision of the relevant trust deed to become enforceable and if so, particulars of that event; (d) whether or not any circumstances affecting the borrowing corporation, its subsidiaries or its guarantor corporations or any of them have occurred which materially affect any security or charge included in or created by the debentures or any trust deed and if so, particulars of those circumstances;

118 Companies Act Amendment Act of 1964, No. 10 (e) whether or not there has been any substantial change in the nature of the business of the borrowing corporation or any of its subsidiaries or any of its guarantor corporations since the debentures were first issued to the public which has not previously been reported upon as required by this section and if so, particulars of that change; and (f) where the borrowing corporation has deposited money with or lent money to or assumed any liability of a corporation which pursuant to subsection (5) of section six is deemed to be related to the borrowing corporation, particulars of- (i) the total amounts so deposited or loaned and the extent of any liability so assumed during the period covered by the report; and (ii) the total amounts owing to the borrowing corporation in respect of money so deposited or loaned and the extent of any liability so assumed as at the end of the period covered by the report- distinguishing between deposits loans and assumptions of liability which are secured and those which are unsecured, but not including any deposit with or loan to or any liability assumed on behalf of a corporation if that corporation has guaranteed the repayment of the debentures of the borrowing corporation and has secured the guarantee by a charge over its assets in favour of the trustee for the holders of the debentures of the borrowing corporation. (3) Where there is a trustee for the holders of any debentures issued by a borrowing corporation, the borrowing corporation and each of its guarantor corporations which has guaranteed the repayment of the moneys raised by the issue of those debentures shall (within twenty-one days after the creation of the charge) in writing furnish the trustee for the holders of the debentures, whether or not any demand therefor has been made, with particulars of any charge created by the corporation or the guarantor corporation, as the case requires, and when the amount to be advanced on the security of the charge is indeterminate (within seven days after the advance) with particulars of the amount or amounts in fact advanced but where any such advances are merged in a current account with bankers or trade creditors it shall be sufficient for partir• ,rs of the net amount outstanding in respect of any such advances to be fu 'red every three months. (4) Where the directors of a borrowing corporation do not lodge with the trustee for the holders of debentures a report as required by subsection (1) of this section within the prescribed time the trustee shall forthwith lodge notice of that fact with the Registrar." 13. New s. 74G. The Principal Act is amended by inserting after section 74F as inserted by this Act the following section:- " [74G.] Obligation of guarantor corporation to furnish information. (1) For the purpose of the preparation of a report that, by this Act is required to be signed by or on behalf of the directors of a borrowing corporation or any of them, that corporation may, by notice in writing require any of its guarantor corporations to furnish it with any information relating to that guarantor corporation which is, by this Act, required to be contained in that report, and that guarantor corporation shall furnish

Companies Act Amendment Act of 1964, No. 10 119 the borrowing corporation with that information before such date, being a date not earlier than fourteen days after the notice is given, as may be specified in that behalf in the notice. (2) A corporation which fails to comply with a requirement contained in a notice given pursuant to subsection ( 1) of this section and every officer of that corporation who is in default shall be guilty of an offence against this Act. Penalty: Two hundred pounds . Default penalty." 14. New s. 74H. The Principal Act is amended by inserting after section 74G as inserted by this Act the following section:- " [74H.] Loans and deposits to be immediately repayable on certain events. (1) Where in any prospectus issued in connection with an invitation to the public to subscribe for or to purchase debentures of a corporation there is a statement as to any particular purpose or project for which the moneys received by the corporation in response to the invitation are to be applied the corporation shall from time to time make reports to the trustee for the holders of those debentures as to the progress that has been made towards achieving such purpose or completing such project. (2) Each such report shall be included in the report required to be furnished to the trustee for the holders of the debentures under subsection (1) of section 74F. (3) When it appears to the trustee for the holders of the debentures that such purpose or project has not been achieved or completed within the time stated in the prospectus within which the purpose or project is to be achieved or completed or, where no such time was stated, within a reasonable time, the trustee may and, if in his opinion it is necessary for the protection of the interests of the holders of the debentures, shall give notice in writing to the corporation requiring it to repay the moneys so received by the corporation and within one month after such notice is given, lodge with the Registrar a copy thereof. (4) The trustee shall not give a notice pursuant to the provisions of subsection (3) of this section if it is satisfied- (a) that the purpose or project has been substantially achieved or completed ; (b) that the interests of the holders of the debentures have not been materially prejudiced by the failure to achieve or complete the purpose or project within the time stated in the prospectus or within a reasonable time; or (c) that the failure to achieve the purpose or project was due to circumstances beyond the control of the corporation that could not reasonably have been foreseen by the corporation at the time that the prospectus was issued. (5) Upon receipt by the corporation of a notice referred to in subsection (3) of this section, the corporation shall be liable to repay, and on demand in writing by him shall immediately repay, to any person entitled thereto, any money owing to him as the result of a loan or deposit made in response to the invitation unless- (a) before the moneys were accepted by the corporation the corporation had given notice in writing to the persons from whom the moneys were received specifying the purpose or project for which the moneys would in fact be used and the moneys were accepted by the corporation accordingly; or

120 Companies Act Amendment Act of 1964, No. 10 (b) the corporation by notice in writing served on the holders of the debentures- (i) had specified the purpose or project for which the moneys would in fact be applied by the corporation; and (ii) had offered to repay the moneys to the holders of the debentures, and that person had not within fourteen days after the receipt of the notice, or such longer time as was specified in the notice, in writing demanded from the corporation repayment of the money. (6) Where the corporation has given a notice in writing as provided in subsection (5) of this section, specifying the purpose or project for which the moneys will in fact be applied by the corporation, the provisions of this section shall apply and have effect as if the purpose or project so specified in the notice was the particular purpose or project specified in the prospectus as the purpose or project for which the moneys were to be applied." 15. Amendment of s. 99 . The Principal Act is amended by omitting from subsection (1) of section ninety-nine the words " unless the conditions of issue of the shares or debentures otherwise provide " and inserting in their stead the words " unless in the case of shares the conditions of the issue otherwise provide ". 16. New s. 161A. (1) The Principal Act is amended by inserting after section one hundred and sixty-one the following section: " [161A.] As to accounting periods of companies with the same group. (1) Subject to the provisions of subsections (I1) and (12) of this section the directors of every holding company that is not a foreign company shall take such steps as are necessary to ensure that- (a) within twelve months after the commencement of " The Companies Act Amendment Act of 1964," the financial years of each of its subsidiaries coincide with the financial year of the holding company; and (b) within twelve months after any corporation becomes a subsidiary of the holding company, the financial year of that corporation coincides with the financial year of the holding company. (2) Where the financial year of the holding company that is not a foreign company and that of each of its subsidiaries coincide the directors of the holding company shall at all times take such steps as are necessary to ensure that without the consent of the Registrar the financial year of the holding company or any of its subsidiaries is not altered so that all such financial years do not coincide. (3) Where the directors of the holding company are of the opinion that there is good reason why the financial year of any of its subsidiaries should not coincide with the financial year of the holding company the directors may apply in writing to the Registrar for an order authorizing any subsidiary to continue to have or to adopt (as the case requires) a financial year which does not coincide with that of the holding company. (4) The application shall be supported by a statement by the directors of the holding company of their reasons for seeking the order. (5) The Registrar may require the directors who make an application under this section to supply such information relating to the operation of the holding company and of any corporation that is deemed by virtue of subsection (5) of section six to be related to the holding company as he thinks necessary for the purpose of determining the application.

Companies Act Amendment Act of 1964, No. 10 121 (6) The Registrar may at the expense of the holding company of which the applicants are directors request any registered company auditor to investigate and report on the application. (7) The Registrar may rely upon any report obtained pursuant to subsection ( 6) of this section from the registered company auditor. (8) The Registrar may make an order granting or refusing the application or granting the application subject to such limitations terms or conditions as he thinks fit and shall serve the order on the holding company. (9) Where the applicants are aggrieved by any order made by the Registrar , the applicants may within two months after the service of the order upon the holding company appeal against the order to the Board. (10) The Board shall determine the appeal and in determining the appeal may make any order that the Registrar had power to make on the original application and may exercise any of the powers that the Registrar might have exercised in relation to the original application. (11) Where the directors of a holding company have applied to the Registrar for an order authorizing any subsidiary to continue to have a financial year which does not coincide with that of the holding company, the operation of subsection (1) of this section shall be suspended in relation to that subsidiary until the determination of the application and of any appeal arising out of the application. (12) Where an order is made authorizing any subsidiary to have a financial year which does not coincide with that of the holding company, compliance with the terms of the order of the Registrar or where there has been an appeal, compliance with the terms of any order made on the determination of the appeal shall be deemed to be a compliance with the provisions of subsection (1) of this section in relation to that subsidiary but where an application for such an order and the appeal (if any) arising out of that application are refused the time within which the directors of the holding company are required to comply with the provisions of subsection (1) of this section in relation to that subsidiary shall be deemed to be the period of twelve months after the date upon which the order of the Registrar is served on the holding company or the period of twelve months after the determination of the appeal, as the case may be. (13) Where the directors of a holding company have applied to the Registrar for an order authorizing any of its subsidiaries to continue to have or to adopt a financial year which does not coincide with that of the holding company and the application and the appeal, if any, arising out of that application, have been refused, the directors of the holding company shall not make a similar application with respect to that subsidiary within three years after the refusal of the application or where there is an appeal after the determination of that appeal unless the Registrar is satisfied that there has been a substantial change in the relevant facts or circumstances since the refusal of the former application or the determination of the appeal as the case may be." (2) This section shall come into operation on a date (being a date subsequent to the date of commencement of this Act) fixed by Order in Council published in the Gazette.

122 Companies Act Amendment Act of 1964, No. 10 17. Amendments of s. 162 . Section one hundred and sixty-two of the Principal Act is amended by- (a) in subsection (2) omitting the words " period of eighteen months and inserting in their stead the words " periods of eighteen months and fifteen months "; (b) in subsection (6) inserting after the words " shall state " the words " with appropriate detail "; and (c) in subsection (6) inserting after paragraph (b) the following paragraphs:- " (ba) whether or not in the opinion of the directors any circumstances have arisen which render adherence to the existing method of valuation of assets or liabilities of the company misleading or inappropriate; (bb) whether any contingent liabilities have been undertaken by the company since the end of the period covered by the last report and, if so, the amount thereof and whether or not any contingent liability has become enforceable or in the opinion of the directors is likely to become enforceable within the succeeding period of twelve months which will materially affect the company in its ability to meet its obligations as and when they fall due;". 18. New s. 167A. The Principal Act is amended by inserting after section one hundred and sixty-seven, the following section:- " [167A.] Duties of auditors to trustee for debenture holders. (1) The auditor of a borrowing corporation shall within seven days after furnishing the corporation with any balance-sheet or profit and loss account or any report certificate or other document which he is required by this Act or by the debentures or trust deed to give to the corporation, send by post to every trustee for the holders of debentures of the borrowing corporation a copy thereof. (2) Where in the performance of his duties as auditor of a borrowing corporation the auditor becomes aware of any matter which is in his opinion relevant to the exercise and performance of the powers and duties imposed by this Act or by any trust deed upon any trustee for the holders of debentures of the corporation he shall within seven days after so becoming aware of the matter send by post a report in writing on such matter to the borrowing corporation and a copy thereof to the trustee. Penalty: Fifty pounds. Default penalty." 19. Amendments of s. 170 . Section one hundred and seventy of the Principal Act is amended by- (a) inserting in subsection (1) after the word " company " the words and brackets " (not being a company to which Division 4 of this Part applies) "; and (b) adding after subsection (2) the following subsection:- " (3) Upon the publication in the Gazette of a Proclamation under section one hundred and seventy-two declaring the company to be a company to which Division 4 of this Part applies the appointment of

Companies Act Amendment Act of 1964, No. 10 123 an inspector or inspectors pursuant to section one hundred and sixty-nine or this section shall terminate and he or they (as the case may be) shall cease to have, and shall not exercise any of, the powers and authorities of an inspector or inspectors under this Division." 20. Amendment of s. 171 . Section one hundred and seventy-one of the Principal Act is amended by inserting after subsection (3) the following subsection:- " (3A) An inspector who pursuant to this section requires the production of all books and documents in the custody or power or under the control of an officer or agent of any corporation whose affairs are being investigated under or pursuant to this Division may- (a) take possession of all such books and documents; (h) retain all such books and documents for such time as he considers to be necessary for the purpose of the investigation; and (c) permit such corporation to have access at all reasonable times to all such books and documents so long as they are in his possession." 21. Amendment of s. 172. Section one hundred and seventy-two of the Principal Act is amended by inserting after paragraph (a) of subsection (3) the following paragraphs:- (aa) the Governor in Council is satisfied that it is in the public interest that allegations of fraud misfeasance or other misconduct by persons who are or have been concerned with the formation or management of the company or foreign company should be investigated; or (ab) the Governor in Council is satisfied for any other reason that it is in the public interest that the affairs of the company or foreign company should be investigated under this Division; or ". 22. Amendments of s. 173. Section one hundred and seventy-three of the Principal Act is amended by- (a) inserting in paragraph (b) of subsection (2) after the words shall be paid " the words " in the first instance "; and (b) omitting subsection (3) and inserting in its stead the following subsections:- " (3) Where the Governor in Council is of the opinion that the whole or any part of the expenses of and incidental to the investigation should be paid by the company or by any person who requested the appointment of the investigator the Governor in Council may by Order in Council direct that the expenses be so paid. (3A) An Order under subsection (3) of this section may specify the time or times and the manner in which the payment of the expenses shall be made.

124 Companies Act Amendment Act of 1964, No. 10 (3B) Where an Order has been made by the Governor in Council under subsection (3) of this section the company and the persons named in the Order to the extent therein specified shall be liable to reimburse the Crown in respect of such expenses. (3c) Any expenses in respect of which a company or any person is liable under subsection (3a) of this section to reimburse the Crown shall be recoverable as a debt due to the Crown in any court of competent jurisdiction. (3D) Where an Order under subsection (3) has been made for the payment of the whole or part of the expenses by a company and the company is in liquidation or subsequently goes into liquidation the expenses directed by the Order to be paid by the company shall be deemed to be part of the costs and expenses of the winding up for the purposes of paragraph (a) of subsection (1) of section two hundred and ninety-two. (3E) The report of the inspector may if he thinks fit, and shall, if the Crown Law Officer so directs, include a recommendation as to the terms of the Order which he thinks proper in the light of his investigation to be made by the Governor in Council under subsection (3) of this section." 23. Amendment of s. 174 . Section one hundred and seventy-four of the Principal Act is amended by inserting in subsection (1) after the words " Crown Law Officer " where secondly occurring the words " (which may be given generally or in a particular case and which may be subject to such conditions and limitations as he thinks fit) ". 24. Amendments of s. 177. Section one hundred and seventy-seven of the Principal Act is amended by- (a) omitting the word " company " wheresoever occurring and inserting in its stead wheresoever omitted the word " corporation "; and (b) inserting in subsection (1) as amended by paragraph (a) of this section after the words " membership of any corporation " the words " whether or not it is a company to which this Division applies ". 25. Repeal of and new s . 178. The Principal Act is amended by repealing section one hundred and seventy-eight and inserting in its stead the following section:- " [178.] Power to require information as to persons interested in shares or debentures . (1) Where it appears to the Crown Law Officer that there is good reason so to do he may appoint one or more inspectors to investigate and report on the ownership of any shares in or debentures of a corporation or on the circumstances under which a person acquired or disposed of or became entitled to acquire or dispose of any shares in or debentures of a corporation. (2) An inspector may, by notice in writing, require any person whom he has reasonable cause to believe to be capable of giving any information in connection with an investigation conducted under subsection (1) of this section to appear for examination and to give to the inspector any information in connection with the investigation which that person has or can reasonably be expected to obtain.

Companies Act Amendment Act of 1964, No. 10 125 (3) A notice under subsection (2) of this section may require the production of all books and documents relevant to the investigation which are in the custody or under the control of the person to whom the notice is addressed and any such books and documents may be retained by the inspectors until the completion of the investigation and the inspectors may permit the corporation in which the shares or debentures are held to have access at all reasonable times to all such books and documents so long as they are in the possession of the inspectors. (4) Any person who fails to comply with the requirements of any notice issued under subsection (2) of this section or who fails to give any information required of him under this section, or who in giving any such information makes any statement which he knows to be false in a material particular, or recklessly makes any statement which is false in a material particular, shall be guilty of an offence against this Act. Penalty: Imprisonment for six months or Five hundred pounds or both. (5) No person who is or has formerly been an officer or agent of a corporation the affairs of which are being investigated under this Division shall be entitled to refuse to answer any question which is relevant or material to the investigation on the ground that his answer might tend to incriminate him but if he claims that the answer to any question might incriminate him and but for this subsection he would have been entitled to refuse to answer the question the answer to the question shall not be used in any subsequent criminal proceedings except in the case of a charge against him for an offence against this section committed by him in answer to that question. (6) Except as expressly provided in subsection (5) of this section any person shall be entitled to refuse to answer a question on the ground that the answer might tend to incriminate him." 26. Amendment of s. 179. Section one hundred and seventy-nine of the Principal Act is amended by inserting in paragraph (a) of subsection (1) after the words " of those shares " the words " or any exercise of the right to acquire or dispose of those shares". 27. Amendment of s. 303. Section three hundred and three of the Principal Act is amended by omitting from subsection (3) the words " three months or One hundred pounds " and inserting in their stead the words " six months or One thousand pounds ". 28. Amendments of Second Schedule . The Second Schedule to the Principal Act is amended by inserting after item 29 the following items:- 2299AA. . On lodging any application to the Registrar under section 161A £10 0 0 29B. On lodging any appeal against the decision of the Registrar under section 161A .. .. .. £10 0 0"

126 Companies Act Amendment Act of 1964, No. 10 29. Amendments of Fifth Schedule. The Fifth Schedule of the Principal Act is amended by- (a) repealing paragraph 5 thereof; (b) in paragraph 20- (i) omitting in clause (a) of subparagraph (I) the words " guarantor company " and inserting in their stead the words " guarantor corporations "; (ii) omitting in subparagraph (2) the words " guarantor companies " wheresoever occurring and inserting in their stead wheresoever omitted the words " guarantor corporations "; (iii) inserting in clause (a) of subparagraph (2) after the words " accounts of the company " the words " or the guarantor corporation "; (iv) omitting in clause (b) of subparagraph (2) the word " companies " where secondly occurring and inserting in its stead the words " company and of the guarantor corporations "; (v) omitting in subparagraph (3) the words " guarantor companies " where twice occurring and inserting in their stead where so omitted the words " guarantor corporations "; (vi) omitting in subparagraph (3) the words " guarantor companies' " where twice occurring and inserting in their stead where so omitted the words " guarantor corporation "'; (vii) inserting at the end of subparagraph (3) the following subparagraph:- (4) If the prospectus relates to shares in or debentures of a borrowing corporation the report shall state separately estimates of the amounts of moneys owing and payable to the company and the amounts of all liabilities payable by the company- (a) not later than two years; (h) later than two years but not later than five years; and (c) later than five years- calculated from the last date to which the accounts of the company were made up."; and (c) adding at the end of that Schedule the following part:- "PART IV-ADDITIONAL MATTERS TO BE INCLUDED IN PROSPECTUS RELATING TO INVITATION TO THE PUBLIC TO DEPOSIT MONEY WITH OR LEND MONEY TO A CORPORATION. [32.] Where subsection (4) of section thirty-eight applies there shall be included- (a) a statement to the effect that the repayment of all moneys that have been or may be deposited with or lent to the corporation in response to the invitation is secured by a first mortgage given to the trustee for the holders of the debentures to be issued in relation to the deposit or loan over land vested in the corporation or in any of its guarantor corporations and that the mortgage has been duly registered, or is a registrable mortgage which has been lodged for registration, in accordance

Companies Act Amendment Act of 1964, No. 10 127 with the law relating to the registration of mortgages of land in the place where the land is situated and that the aggregate amount of such moneys and of all other liabilities, if any, secured by the mortgage of that land ranking pari passu with the liability to repay such moneys does not exceed sixty per centum of the value of the corporation 's interest in that land as shown in the valuation included in the prospectus; and (b) a copy of a written valuation of the corporation' s interest in the land so mortgaged showing the nature and extent of the corporation' s interest made not more than six months before the date of the prospectus by a person competent and qualified to make the valuation in the place where the land is situated who is not an officer or employee of the corporation or of any of its guarantor corporations or of any corporation that by virtue of subsection (5) of section six is deemed to be related to either the first-mentioned corporation or any of its guarantor corporations. [33.] (1) Where subsection (5) of section thirty-eight applies there shall be included- (a) a statement to the effect- (i) that the repayment of all moneys that have been or may be deposited with or lent to the corporation in response to the invitation has been secured by a charge in favour of the trustee for the holders of the debentures over the whole or any part of the tangible assets of the corporation and of its guarantor corporations or of any of them; and (ii) that having regard to the particulars in the summary made in accordance with subparagraph (b) of this paragraph the tangible assets which constitutes the security for the charge are sufficient and are reasonably likely to be sufficient to meet the liability for the repayment of all such moneys and all other liabilities ranking in priority thereto or pari passu therewith that have been or may be incurred; and (b) a summary made by the registered company auditor who has made for inclusion in the prospectus the report required by Part II of this Schedule with respect to the assets and liabilities of the borrowing corporation showing in tabular form the aggregate values (based upon the amounts as disclosed in the statements of the assets and liabilities of the borrowing corporation and its guarantor corporations which have been prepared for the purposes of paragraphs 20 and 31 of this Schedule) of the tangible assets of the borrowing corporation and of its guarantor corporations which have been charged to secure the repayment of all moneys referred to in subclause (i) of clause (a) of subparagraph (1) of this paragraph, after making such adjustments as are proper to give a true and fair view of the tangible assets available as security for the charge and, in particular, after making adjustments- (i) to exclude from those aggregate values such part of the value of any shares in or advances to a corporation as is reflected in or depends upon the tangible assets of that corporation which are otherwise included in the summary;

128 Companies Act Amendment Act of 1964, No, 10 (ii) to exclude from those aggregate values such part of the value of any shares in a corporation which is by virtue of subsection (5) of section six deemed to be related to the borrowing corporation or the guarantor corporation (as the case requires) as is properly attributable to intangible assets of that first-mentioned corporation; and (iii) to add to those aggregate values the amount to be raised under the prospectus including the maximum amount of over-subscriptions which the prospectus in accordance with section forty-one specifies may be retained. (2) In such summary the registered company auditor- (a) shall show the amounts outstanding out of the aggregate amounts borrowed respectively by the borrowing corporation and by its guarantor corporations distinguishing between those which will rank for repayment in priority to the proposed issue and those which will rank pari passu with that proposed issue; (b) shall state by way of note or otherwise the total amount of the values of intangible assets excluded in making the adjustments required under subclause (ii) of clause (b) of subparagraph (1) of this paragraph; (c) may, where a corporation has given a charge over its assets to secure a liability the amount of which m:iy vary from time to time, take into account the actual amount of the liability as at the date at which the summary is made up but (in that event) shall show by way of note the further amount which may be advanced under that charge; (d) may explain or qualify by way of note or otherwise any of the matters set out in the summary; (e) shall disclose by way of note or otherwise the amount of advances by the borrowing corporation to any corporation which is by virtue of subsection (5) of section six deemed to be related to the borrowing corporation distinguishing between advances which are secured and advances which are unsecured. [34.] In every prospectus which relates to debentures there shall be included- (a) particulars of the limitations on the amount that the company may borrow; (b) a statement as to the amount of subscriptions that are being sought; (c) a statement as to whether or not the company reserves the right to accept or retain over-subscriptions and, if the company reserves such a right , the limit on the right so reserved expressed as a sum of money; and (d) where applicable , a statement as to whether or not the company has any right to create additional charges over any of the assets charged to secure the repayment of the deposits or loans which will rank in priority to or pari passu with that charge and if there is such a right particulars of its nature and extent."

Companies Act Amendment Act of 1964, No. 10 129 30. Amendment of Ninth Schedule . The Ninth Schedule of the Principal Act is amended by inserting at the end of clause 2 the following subclause:- " (4) There shall be shown by way of note or otherwise on the balance-sheet of every company which is a borrowing corporation or a guarantor corporation a schedule setting out separately estimates of the amounts of the liabilities payable by and the debts payable to the company- (a) not later than two years; (b) later than two years but not later than five years; and (c) later than five years- calculated from the date to which the balance-sheet of the company was made up." 5