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SOMALILAND COMPANIES LAW (Continued)
Chapter II
Meetings and Resolution
Meetings
Section 143 – Statutory meeting and Annual general meeting
A – Statutory meeting and statutory report
(1) Every company limited by shares and every company limited by guarantee and having a share capital shall, within a period of not less than one month nor more than three months from the date at which the company is entitled to commence business, hold a general meeting of the members of the company, which is called ‘the statutory meeting”.
(2) The directors shall, at least fourteen before the day on which the meeting is held, forward a report (in the Act referred to as the “statutory report”) to every member of the company.
(3) The statutory report shall be certified by not less than two directors of the company and shall state:
the total number of shares allotted, distinguishing them as fully or partly paid up, otherwise than in cash and stating in the case of shares partly paid up the extent to which, they are so paid up, and in either case the consideration for which they have been allotted.
the total amount of cash received by the company in respect of all the shares allotted, distinguishing as aforesaid.
An abstract of the receipts of the company and of the payments made there out, up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the payments made there out, and particulars concerning the balance remaining in hand, and an account or estimate of the preliminary expenses of the company.
the names, postal addresses and descriptions of the directors, auditors, if any, managers, if any, and secretary of the company.
the particulars of any contract the modification of which is to be submitted to the meeting for its approval, together with the particulars of the modification or proposed modification.
(4) The statutory report shall, so far as it relates to the shares allotted by the company, and to the receipts and payments of the company on capital account, be certified as correct by the auditors, if any, of the company.
(5) The directors shall cause a copy of the statutory report, certified as required by this section, to be delivered to the registrar for registration forthwith after the sending thereof to the members of the company.
(6) The directors shall cause a list showing the names and postal addresses of the members of the company, and the member of shares held by them respectively, to be produced at the commencement of the meeting and to remain open and accessible to any member of the company, during the continuance of the meeting.
(7) The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company, or arising out of the statutory report, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles may be passed.
(8) In the event of any default in complying with the provisions of this section, every director of the company who is knowingly and willfully guilty of the default, or in the case of default by the company, every officer of the company who is in default, shall be liable to a fine.
(9) This section A shall not apply to a private company.
B- Annual General Meeting
(10) Every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notice calling it.
(11) However, so long as a company holds its first annual general meeting within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.
(12) Not more than 15 months shall elapse between the date of one annual general of a company and that of the next.
(13) If default is made in holding a meeting in accordance with this section, the company and every officer of it who is in default is liable to a fine.
Section 144 - Election by private company to dispense with annual general meetings
(1) A private company may elect (by elective resolution in accordance with section 156 to dispense with the holding of general annual meetings.
(2) An election has effect for the year in which it is made and subsequent years, but does not affect any liability already incurred by reason of default in holding an annual general meeting.
(3) In any year in which an annual meeting would be required to be held but for the election, and in which no such meeting has been held, any member of the company may, by notice to the company not later than three months before the end of the year, require the holding of an annual general meeting in that year.
Section 145 - Attorney General’s power to call meeting in default
(1) If a default is made in holding a meeting in accordance with section 144 the Attorney General may, on the application of any member of the company, call, or direct the calling of, a general meeting of the company and give such ancillary or consequential directions, as he thinks expedient, including directions modifying or supplementing, in relation to the calling, holding and conduct of the meeting, the operation of the company’s articles.
(2) If default is made in complying with directions of the Attorney General under subsection (1), the company and every officer of it who is in default is liable to a fine.
(3) A general meeting held under this section shall, subject to any directions of the Attorney General be deemed to be an annual general meeting of the company; but, where a meeting so held is not held in the year in which the default in holding the company’s annual general meeting occurred, the meeting so held shall not be treated as the annual general meeting for the year in which it is held unless at that meeting the company resolves that it be so treated.
(4) Where a company so resolves, a copy of the resolution shall, within 15 days after its passing, be forwarded to the registrar of companies and recorded by him; and if default is made in complying with this subsection, the company and every officer of it who is in default is liable to a fine and, for continued contraventions, to a daily default fine.
Section 146 - Extraordinary general meeting on member‘s requisition
(1) The directors of a company shall, on a members’ requisition, forthwith proceed duly to convene an extraordinary general meeting of the company.
This applies notwithstanding anything in the company’ articles.
(2) A member requisition is a requisition of members of the company holding at the date of the deposit of the requisition not less than one –tenth of such a paid –up capital of the company as at that date carries the right of voting at general meetings of the company.
(3) The requisition must state the object of the meeting, and must be signed by the requisitionists and deposited at the register office of the company, and may consist of several documents in like form of each signed by one or more requisitionists.
(4) If the directors do not within 21 days from the date of the deposit of the requisition proceed duly to convene a meeting, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, but any meeting so convene shall not be held after the expiration of 3 months from that date.
(5) Any reasonable expenses incurred by the requisitionists by reason of failure of the directors duly to convene a meeting shall be repaid to the requisitionists by the company, and any sum due or to become due from the company by way of fees or other remuneration in respect of their services to such of the directors as were in default.
Section 147 - Length of notice for calling meetings
(1) A provision of a company’s articles is void in so far as it provides for the calling of a meeting of the company (other than an adjourned meeting) by a shorter notice than -
In the case of the annual meeting, 21 days’ notice in writing; and
In the case of a meeting other than an annual general meeting or a meeting for the passing of a special resolution by 14 days’ notice in writing.
(2) Notwithstanding that a meeting is called by shorter notice than that specified in subsection (1) or in the company’s articles (as the case may be) it is deemed to have been duly called if it is so agreed –
In the case of meeting called as the annual general meeting, by all the members entitled to attend and vote at it; and
Otherwise, by the requisite majority.
(3) The requisite majority for this purpose is a majority in number of the members having the right to attend and vote at the meeting being a majority together holding not less than per cent in nominal value of the shares giving a right to attend and vote at the meeting.
Section 148 - General provision as to meeting and votes
(1) the following provisions have effect in so far as the articles of the company do not make other provision in that behalf.
(2) Notice of the meeting of a company shall be served on every member of it in the manner in which notices are required to be served by Table A (as for the time being in force).
(3) Two or more members holding not less than one-tenth of the issued share capital may call a meeting.
(4) Two members personally present are a quorum.
(5) Any member elected by the members present at a meeting may be chairman of it.
Section 149 - Quorum at meetings of the sole member
Notwithstanding any provision to the contrary in the articles of a private company limited by shares having only one member, one member present in person or by proxy shall be a quorum.
Section 150 - Power of Court to order meeting
(1) If for any reason it is impracticable to call a meeting of a company in any manner in which meetings of that company may be called, or to conduct the meeting in manner prescribed by the articles or this Act, the court may, either of its own motion or on the application –
of any director of the company, or
of any member of the company who would be entitled to vote at the meeting, order a meeting to be called , held and conducted in any manner the courts thinks fit.
(2) A meeting called, held and conducted in accordance with an order under subsection (1) is deemed for all purposes a meeting of the company duly called, held and conducted.
Section 151 - Proxies
(1) Any member of a company entitled to attend and vote at a meeting of it is entitled to appoint another person (whether a member or not) as his proxy to attend and vote instead of him; and in the case of a private company a proxy appointed to attend and vote instead of a member has also the same as the member to speak at the meeting.
(2) But unless the articles otherwise provide –
a member of a private company is not entitled to appoint more than one proxy to attend on the same occasion; and
a proxy is not entitled to vote except on a poll.
(3) In the case of a company having a share capital, in every notice calling a meeting of the company there shall appear with reasonable prominence a statement that a member is entitled to attend and vote is entitled to appoint a proxy or, where that is allowed, one or more proxies to attend and vote instead him, and that a proxy need not also be a member.
(4) If default is made in complying with subsection (3) as respects any meeting, every officer of the of the company who is in default is liable to a fine.
(5) This section applies to meetings of any class of members as it applies to general meeting of the company.
Section 152 - Right to demand a poll
(1) A provision contained in a company’s articles is void in so far as it would have the effect either –
of excluding the right to demand a poll at a general meeting on any question other than the election of the chairman of the meeting or the adjournment of the meeting; or
of making ineffective a demand for a poll on ay such question which is made either –
by not less than 5 members having the right to vote at the meeting; or
by a member or members representing not less than one-tenth of the total voting rights of all members having the right to vote at the meeting; or
by a member or members holding shares in the company conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one –tenth of the total sum paid up on the shares conferring that right.
(2) The instrument appointing a proxy to vote at a meeting of a company is deemed also to confer authority to demand or join in demanding a poll; and for the purposes of subsection (1) a demand by a person as proxy for a member is the same as a demand by the member.
Resolutions
Section 153 - Circulation of members ‘s resolutions
(1) Subject to the section next following, it is the duty of a company, on the requisition in writing of such number of members as is specified below and (unless the company otherwise resolves) at the expense of the requisitionists-
to give to members of the company entitled to receive notice of the next annual general meeting notice of any resolution which may properly be moved and is intended to be moved at the meeting .
(2) The number of members necessary for a requisition under subsection (1) is-
any number representing not less than one twentieth of the total voting rights of all members having at the date of the requisition a right to vote at the meeting to which the requisition relates.
(3) Notice of any such resolution shall be given, and any such statement shall be circulated, to members of the company entitled to have notice of the meeting sent to them, by serving a copy of the resolution or statement on each such member in any manner permitted for service of notice of the meeting.
(4) Notice of any such resolution shall be given to any other member of the company by giving notice of the general effect of the resolution in any manner permitted for giving him notice of meetings of the company/
(5) For compliance with subsections (3) and (4) the copy must be served or notice to the effect of the resolution be given (as the case may be) in the same manner and (so far it is practicable) at the same time as notice of the meeting. ; and, where it is not practicable for it to be served or given at the same time, it must be served or given as soon as practicable thereafter.
(6) In the event of default in complying with this section, every officer of the company who is in default is liable to a fine.
Section 154 - Extraordinary and special resolution
(1) A resolution is an extraordinary resolution when it has been passed by a majority of not less than three-fourths of such members as (being entitled to do so) vote in person or; where proxies are allowed, by proxy, at a general meeting of which notice specifying the intention to propose the resolution as an extraordinary resolution has been duly given.
(2) A resolution is a special resolution when it has passed by such a majority as is required for the passing of an extraordinary resolution and at a general meeting of which not less than 21 days’ notice, specifying the intention to propose the resolution as a special resolution, has been duly given. us
(3) If it is so agreed by a majority in number of the members having the right to attend and vote at such meeting , being a majority together holding not less than 95 percent in nominal values of the shares giving that right, a resolution may be proposed and passed as a special resolution at a meeting of which less than 21 day’s notice has been given.
(4) A private company may elect (by elective resolution in accordance with section 156) that the above provisions shall effect in relation to the company as if for the references to such lesser percentage, but not less than 90 per cent, as may be specified in the resolution or subsequently determined by the company in general meeting.
(5) In computing the majority on a poll demanded on the question that an extraordinary resolution or a special resolution passed, reference is to be had to the number of votes cast for and against the resolution.
(6) For purpose of this section, notice of a meeting is deemed duly given, and the meeting duly held, when the notice is given and the meeting held in the manner provided by this Act or the company’s articles.
Section 155 - Resolution requiring special note
(1) Where by any provision of this Act special notice is required of a resolution, the resolution is not effective unless notice of the intention to move it has been given to the company at least 28 days before the meeting at which it is moved.
(2) The company shall give its members notice of any such resolution at the same time and in the same manner as it gives notice of the meeting or, if that is not practicable, shall give them notice either by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the company’s articles, at least 21 days before the meeting.
(3) If, after notice of the intention to move such a resolution has been given to the company, a meeting is called for a date 28 days or less after the notice has been given, the notice is deemed properly given, though not given within the time required.
Section 156 - Elective resolution of private company
(1) An election by a private company for the purpose of –
Election as to duration of authority to allot shares
Election to dispense with laying of accounts and reports before general meeting
Election to dispense with holding of annual general meeting
Election as to majority required to authorize short notice of meetings, or
Election to dispense with appointment of auditors annually
Shall be made by resolution of the company in general meeting in accordance with this section.
Such a resolution is referred to in this Act as an “elective resolution”.
(2) An elective resolution is not effective unless –
At least 21 days‘ notice in writing is given of the meeting, stating that an elective resolution is to be proposed and stating the terms of the resolution, and
The resolution is agreed to at the meeting, in person or by proxy, by all members entitled to attend and vote at the meeting.
(3) An elective resolution is effective notwithstanding the fact that less than 21 days notice in writing of the meeting is given if all the members entitled to attend and vote at the meeting so agree.
(4) The company may revoke an elective resolution by passing an ordinary resolution to that effect.
(5) An elective resolution shall cease to have effect if the company is re-registered as a public company.
(6) An elective resolution may be passed or revoked in accordance with this section, and the provisions referred to in subsection (1) have effect, notwithstanding any contrary provision in the company’s articles of association.
Section 157 - Registration, etc of resolutions and agreements
(1) A copy of every resolution or agreement to which this section applies shall, within 15 days after it is passed or made, be forwarded to the registrar of companies and recorded by him; and it must be either a printed copy or else a copy in some other form approved by the registrar.
(2) Where articles have been registered, a copy of every such resolution or agreement for the time being in force shall be embodied in or annexes to every copy of the articles issued after the passing of the resolution or the making of the agreement.
(3) Where articles have not been registered, a printed copy of every such resolution or agreement shall be forwarded to any member at his request on payment of such sum as the company may direct.
(4) If a company fails to comply with subsection (1) the company and every officer of it who is in default is liable to a fine and for continued contravention, to a daily default fine.
(5) If a company fails to comply with subsection (2) and (3), the company and every officer of it who is in default are liable to a fine.
(6) For purposes of subsections (4) and (5), a liquidator of a company is deemed an officer of it.
Written resolutions of private companies
Section 158 - Written resolutions of private companies
(1) Anything which in the case of a private company may be done –
by resolution of the company in general meeting, or
by resolution of a meeting of any class of members of the company, may be done, without a meeting and without any previous notice being required, by resolution in writing signed by or on behalf of all the members of the company who at the date of the resolution would be entitled to attend and vote at such meeting.
(2) The signatures need not to be on a single document provided each is on a document which accurately states the terms of the resolution.
(3) The date of the resolution means when the resolution is signed by or on behalf of the last member to sign.
(4) A resolution agreed to in accordance with this section has effect as if passed-
by the company in general meeting, or
by a meeting of the relevant class of members of the company, as the case may be, and any reference in any enactment to a meeting at which a resolution is passed or to members voting in favor of a resolution shall be construed accordingly.
(5) Any reference in any enactment to the date of passing of a resolution is, in relation to a resolution agreed to in accordance with this section, a reference to the date of the resolution.
Records of proceedings
Section 159 - Minutes of meetings
(1) Every company shall cause minutes of all proceedings of general meetings, all proceedings at meeting of its directors and, where there are managers, all proceedings at meetings of its managers to be entered in books kept for that purposes.
(2) Where minutes have been made in accordance with this section of the proceedings at any general meeting of the company or meeting of directors or managers, then, until the contrary is proved, the meeting is deemed duly held and convened and all proceedings had at the meeting to have been duly had; and all appointments of directors, managers or liquidators are deemed valid.
(3) If a company fails to comply with subsection (1), the company and every officer of it who is in default is liable to a fine and for continued contravention, to a daily default fine.
Section 160 - Recording of written resolutions
(1) When a written resolution is agreed to in accordance with section 158 which has effect as if agreed by the company in general meeting, the company shall cause a record of the resolution (and of the signatures) to be entered in a book in the same way as minutes of proceedings of a general meeting of the company.
(2) Any such record, if purporting to be signed by a director of the company or by the company secretary, is evidence of the proceedings in agreeing to the resolution; and where a record is made in accordance with this section, then until the contrary is proved, the requirements of this Act with respect to those proceedings shall be deemed to be complied with.
Section 161- Recording of decisions by the sole member
(1) Where a private company limited by shares has only one member and he takes the decision which may be taken by the company in general meeting, he shall (unless that decision is taken by way of a written resolution) provide the company with a written record of that decision.
(2) If the sole member fails to comply with subsection (1) he shall be liable to a fine.
(3) Failure by the sole member to comply with section (1) shall not affect the validity of any decision referred to in that subsection.
Section 162 - Inspection of minute’s books
(1) The books containing the minutes of proceeding of any general meeting of a company shall be kept at the company’s registered office, and shall be open to the inspection of any member without charge.
(2) If an inspection required under this section is refused or if a copy required under this section is not sent within the proper time, the company and every officer of it who is in default is liable in respect of each offence to a fine.
(3) In the case of any such refusal or default, the court may by order compel an immediate inspection of the books in respect of all proceedings of general meeting, or direct that the copies required to be sent to the persons requiring them.
Chapter III
Auditors
Appointment of auditors
Section 163 - Duty to appoint auditors
(1) Every company shall appoint an auditor or auditors in accordance with this chapter.
This is subject to section 165 certain companies exempt from obligation to appoint auditors.
(2) Auditors shall be appointed in accordance with section 164 (appointment at general meeting at which accounts are laid) except in the case of a private company which has elected to dispense with the laying of accounts in which case the appointment shall be made in accordance with section 165.
Section 164 - Appointment at general meeting at which accounts are laid
(1) This section applies to every public company and to a private company which has not elected to dispense with the laying of accounts.
(2) The company shall, at each general meeting at which accounts are laid, appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next general meeting at which accounts are laid.
(3) The first auditors of the company may be appointed by the directors at any time before the fist general meeting of the company at which accounts are laid; and auditors so appointed shall hold office until the conclusion of that meeting.
(4) If the directors fail to exercise their powers under subsection (3), the powers may be exercised by the company in general meeting.
Section 165 - Appointment by private company which is not obliged to lay accounts
(1) This section applies to private company which has elected to dispense with the laying of accounts before the company in general meeting.
(2) Auditors shall be appointed by the company in general meeting before the end of the period of 28 days beginning with the day on which copies of the company’s annual accounts for the year are sent to members under section 105 or, if notice is given requiring the laying of the accounts before the company in general meeting, the conclusion of that meeting.
Auditors so appointed shall hold office from the end of that period or, as the case may be, the conclusion of that meeting until the end of the time for appointing auditors for the next financial year.
(3) The first auditor of the company may be appointed by the directors at any time before –
The end of the period of 28 days beginning with the day on which copies of the company’s first annual accounts are sent to members under section 238, or
If the notice is given requiring the laying of the accounts before the company in general meeting, the beginning of that meeting. and auditors so appointed shall hold office until the end of that period or, as the case may be, the conclusion of that meeting.
(4) If the directors fail to exercise their powers under subsection (3), the powers may be exercised by the company in general meeting.
(5) Auditors holding office when the election is made shall, unless the company in general meeting determine otherwise, continue to hold office until the end of the time for appointing auditors to the next financial year, and auditors holding office when an election ceases to have effect shall continue to hold office until the conclusion of the next general meeting of the company at which accounts are laid.
Section 166 - Election by private company to dispense with annual appointment
(1) A private company may elect (by elective resolution in accordance with section 156) to dispense with the obligation to appoint auditors annually.
(2) When such an election is in force the company’s auditors shall be deemed to be re-appointed for each succeeding financial year on the expiry of the time for appointing auditors for that year, unless –
A resolution has been passed by virtue of which the company is exempt from the obligation to appoint auditors, or a resolution has been passed to the effect that their appointment should be brought to an end.
(3) If the election ceases to be in force, the auditors then holding office shall continue to hold office –
where section 165 then applies, until the conclusion of the next general meeting of the company at which accounts are laid ;
where section 166 then applies, until the end of the time for appointing auditors for the next financial year under that section.
Rights of auditors
Section 167- Right to information
(1) The auditors of a company have a right of access at all times to the company’s books, account and vouchers, and are entitled to require from the company’s officer such information and explanation as they think necessary for the performance of their duties as auditors.
(2) An officer of a company commits an offence if he knowingly or recklessly makes to the company‘s auditors a statement (whether written or oral) which –
Conveys or purports to convey any information or explanation which the auditors require, or are entitled to require, as auditors of the company, and
Is misleading, false or deceptive in a material particular.
A person guilty of an offence under this subsection is liable to imprisonment or a fine or both.
Section 168 - Right to attend company meeting
A company’s auditors are entitled –
to receive all notices of, and other communications relating to, any general meeting which a member of the company is entitled to receive;
To attend any general meeting of the company; and
To be heard at any general meeting which they attend on any part of the business of the meeting which concerns them as auditors.
Section 169 - Remuneration of auditors
(1) The remuneration of auditors appointed by the company in general meetings shall be fixed by the company in general meeting or in such manner as the company in general meeting may determine.
(2) There shall be stated in a note to the company’s annual account the amount of the remuneration of the company’s auditors in their capacity as such.
(3) For the purposes of this section “remuneration” includes sums paid in respect of expenses.
(4) This section applies in relation to benefits in kind as to payment in cash, and in relation to any such benefit references its amount are to its estimated money value.
The nature of any such benefit shall be disclosed.
Section 170 - Removal of auditors
(1). A company may by ordinary resolution at any time remove an auditor from office, notwithstanding anything in any agreement between it and him.
(2). Where a resolution removing an auditor is passed at a general meeting of a company, the company shall within 14 days give notice of the fact in the prescribed form to the registrar.
If a company fails to give the notice required by the subscription, the company and every officer of it who is in default is liable to a fine and for continued contravention, to a daily default fine.
(3). Nothing in this section shall be taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as auditor or of any appointment terminating with that as auditor.
Section 171 - Rights of auditors who are removed or not re-appointed
(1) Special notice is required for a resolution at a general meeting of a company-
removing an auditor before the expiration of his term of office, or
appointing as auditor a person other than a retiring auditor.
(2) On receipt of notice of such an intended resolution the company shall forthwith send a copy of it to the person proposed to be removed or, as the case may be, to the person proposed to be appointed and to the retiring auditor.
(3) The auditor proposed to be removed or (as the case may be ) the retiring auditor may make with respect to the intended resolution representations in writing to the company (not exceeding a reasonable length) and request their notification to members of the company.
(4) The company shall (unless the representations are received by it too late for it to do so)-
in any notice of the resolution given to members of the company, state the fact of the representations having been made, and
send a copy of the representations to every member of the company to whom notice of the meeting is or has been sent.
(5) If a copy of any such representations is not sent out as required because received too late or because the company’s default, the auditor may (without prejudice to his right to be heard orally) require that the representations be read out at the meeting.
Section 172- Resignation of auditors
(1) An auditor of a company may resign his office by depositing a notice in writing to that effect at the company ‘s registered office.
The notice is not effective unless it is accompanied by the statement required by section 174.
(2) An effective notice of resignation operates to bring the auditor’s term of office to an end as of the date on which the notice is deposited or on such later date as may be specified in it.
(3) The company shall within 14 days of the deposit of a notice of resignation send a copy of the notice to the registrar of companies.
If default is made in complying with this subsection, the company and every officer of it who is in default is liable to a fine and for continued contravention, to a daily default fine.
Section 170 - Rights of resigning auditors
(1) This section applies where an auditor’s notice of resignation is accompanied by a statement of circumstances which he considers should be brought to the attention of members or creditors of the company.
(2) He may deposit with the notice a signed requisition calling on the directors of the company forthwith duly to convene an extraordinary general meeting of the company for the purpose of receiving and considering such explanation of the circumstances connected with his resignation as he may wish to place before the meeting.
(3) He may request the company to circulate to its members –
before the meeting convened on his requisition, or
before any general meeting at which his term of office would have otherwise expired or at which it is proposed to fill the vacancy caused by his resignation, a statement in writing (not exceeding a reasonable length) of the circumstances connected with his resignation.
(4) The company shall (unless the representations are received by it too late for it to do so)-
in any notice of the meeting given to members of the company, state the fact of the statement having been made, and
send a copy of the statement to every member of the company to whom notice of the meeting is or has been sent.
(5) If the directors do not within 21 days from the date of the deposit of a requisition under this section proceed duly to convene a meeting for a day not more than 28 days after the date on which the notice convening the meeting is given, every director who failed to take all reasonable steps to secure that a meeting was convened as mentioned above is guilty of an offence and liable to a fine.
(6) If a copy of the statement mentioned above is not sent out as required because received too late or because the company’s default, the auditor may (without prejudice to his right to be heard orally) require that the statement be read out at the meeting.
Section 174 - Statement by person ceasing to hold office as auditor
(1) Where an auditor ceases for any reason to hold office, he shall deposit at the company ‘s registered office a statement of nay circumstances connected with his ceasing to hold office which he considers should be brought to the attention of the members or creditors of the company or, if he considers that there are no such circumstances, a statement that there are none.
(2) In the case of resignation, the statement shall be deposited along with the notice of resignation; in the case of failure to seek re-appointment, the statement shall be deposited not less than 14 days before the end of the time allowed for next appointing auditors; in any other cases, the statement shall be deposited not later than the end of the period of 14 days beginning with the date on which he ceases to hold office.
(3) If the statement is of circumstances which the auditors considers should be brought to the attention of the members or creditors of the company, the company shall within 14 days of the deposit of the statement send a copy of it to every person who under section 105 is entitled to be sent copies of the account.
PART XI
ARRANGEMENTS AND RECONSTRUCTIONS
Section 175- Power of company to compromise with creditors and members
(1) Where a compromise or arrangement is proposed between a company and its creditors, or any class of them, or between the company and its members, or any class of them, the court may on the application of the company or any creditor of member of it or, in the case of a company wound up or an administration order being in force in relation to a company, of the liquidator or administrator, order a meeting of the creditors or class of creditors or of the members of the company or class of members (as the case may be), to be summoned in such manner as the courts directs.
(2) If a majority in number representing three-fourths in value of the creditors or class of creditors or members or class of members, (as the case may be) , present and voting either in person or by proxy at the meeting , agree to any compromise or arrangement, the compromise or arrangement, if sanctioned by the court, is binding on all the creditors or the class of creditors or on the members or class of members (as the case may be), and also on the company or in the case of accompany in the course of being wound up, on the liquidator and contributories of the companies.
(3) The court’s order under subsection (2) has no effect until an office copy of it has been delivered to the registrar of the companies for registration; and a copy of every such order shall be annexed to every copy of the company ‘s memorandum issued after the order has been made or, in the case of a company not having a memorandum, of every copy so issued of the instrument constituting the company or defining its constitution.
(4) If a company makes default in complying with subsection (3), the company and every officer of it who is in default is liable to a fine.
(5) In this section and the next –
“company” means any company liable to be wound up under this Act, and
“arrangements” includes a reorganization of the company’s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods.
Section 176 - Provisions for facilitating company reconstruction or amalgamation
(1) the following applies where application is made to the court under section 175 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section.
(2) If it is shown –
that the compromise or arrangement as been proposed for the purposes of, or in connection with, a scheme for the reconstruction of any company or companies, or the amalgamation of any two or more companies, and
that under the scheme the whole or any part of the undertaking or the property of nay company or companies concerned in the scheme (“a transferor company”) is to be transferred to another company (“the transferee company”).
The court may, either by the order sanctioning the compromise or arrangement or by subsequent order, make provision for all or any of the following matters.
(3) The matters for which the court’s order may make provision are –
the transfer of the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company.
the allotting or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person.
the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company,
the dissolution, without wending up, of any transfer company,
the provision to be made for any persons who, within such time and in such manner as the court directs, dissent from the compromise or arrangement,
such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation is fully and effectively carried out.
(4) If an order under this section provides for the transfer of property or liabilities, then -
the property is by virtue of the order transferred to, and vests in, the transferee company, and
those liabilities are, by virtue of the order, transferred to and become liabilities of that companies; and property (if the order so directs) vests from any charge which is by virtue of the compromise or arrangement to cease to have effect.
(5) Where an order is made under this section, every company in relation to which the order is made shall cause an office copy of the order to be delivered to the registrar of companies for registration within 7 days after its making; and if default is made in complying with this subsection, the company and every officer of it who is in default is liable to a fine and for continued contravention, to a daily default fine.
(6) In this section the expression “property” includes property, rights and powers of every description; the expression “liabilities” include duties and “company” include only a company as defined in section 2 (1) or 268 (1).
PART XII
INVESTIGATION OF COMPANIES AND THEIR AFFAIRS
REQUISITION OF DOCUMENTS
Appointment and functions of inspectors
Section 177 - Investigation of a company on its own application or that of its members
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