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Somaliland Company Law Cont'd

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

 

(1)        The Attorney General may appoint one or more competent inspectors to investigate the affairs of a company and to report on them in such manner as he may direct.

 

(2)        The Attorney General may make such an appointment if it appears to him that there are circumstances suggesting –

 

           that the company’s affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or otherwise for a fraudulent or unlawful purpose, or in a manner which is unfairly prejudicial to some part of its members, or

           that any actual or proposed act or omissions of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent  or unlawful purpose, or

           that persons concerned with the company’s formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members, or

           that the company’s members have not been given all the information with respect to its affair which they might reasonably expect.

            

 Section 178 - Production of documents and evidence to inspectors 

 

(1)        When inspectors are appointed under section 177, it is the duty of all officers and agents of the company -

 

           To produce to the inspectors all documents of or relating to the company;

           To attend before the inspectors when required to do so;

           Otherwise to give the inspectors all assistance in connecting with the investigation which they are reasonably able to give.

 

(2)        The inspectors consider that an officer or agent of the company or any other person is or may be in possession of information relating to a matter which they believe to be relevant to the investigation, they may require him-

 

           To produce to them any documents in his custody or power relating to that matter,

           To attend before them, and otherwise to give them all assistance in connection with the investigation which is reasonably able to give; And it is that person’s duty to comply with the requirement.

 

(3)        An inspector may for the purposes of the investigation examine any person on oath, and may administer an oath accordingly.

 

(4)        In this section a reference to officers or to agents include past as well as present, officers or agents (as the case may be); and “agents”, in relation to a company includes its bankers and solicitors and persons employed by it as auditors, whether these persons are or are not officers of the company or other body corporate.

 

(5)        An answer given by a person to a question put to him in exercise of powers conferred by this section may be used in evidence against him.

 

(6)        In this section “documents” includes information recorded in any form; and in relation to information recorded  otherwise than in legible form, the power to require its production include  power to require the production of a copy of the information in legible form.

 

Section 179 - Obstruction  of inspectors treated as contempt of court

 

(1)        If any person –

 

           fails to comply with section 178 (1) (a) or (c)

           refuses to comply with a requirement  under section 178 (1)(b) or (2) or

           refuse to answer any question put to him by the inspectors for the purpose of the investigation.

 

The inspectors may certify that fact in writing to the court.

 

(2)        The court may thereupon enquire into the case; and, after hearing any witness who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defense, the court may punish the offender in like manner as if he had been guilty of contempt of the court.

 

Section 180 - Inspectors ‘s report to be evidence

 

(1)        A copy of any report of inspectors under this Part, certified by the Attorney General to be a true copy, is admissible in any legal proceedings as evidence of the opinion of the inspectors in relation to any matter contained in the report.

 

(2)        A document purporting to be such a certificate as is mentioned above shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

 

Section 181 - Power to investigate company ownership

 

(1)        Where it appears to the Attorney General that there is good reason to do so, he may appoint one or more competent inspectors to investigate and report on the membership of any company , and otherwise with respect to the company, for the purpose of determining the true person who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence its policy.

 

(2)        Subject to the terms of their appointment, the inspectors’ powers extend to the investigation of any circumstances suggesting the existence of an arrangement or understanding which, though not legally binding, is or was observed or likely to be observed in practice and which is relevant to the purposes of the investigation.   

 

Section 182 - Provisions applicable on investigation under 181

 

(1)        For purposes of an investigation under section 181, sections 182 (1), 178, and 179 apply with the necessary modifications of references to the affairs of the company, subject however to the following subsections.

 

Those sections apply to –

 

           all persons who are or have been, or whom the inspector has reasonable cause to believe to be or have been, financially interested in the success or failure or the apparent success or failure of the company or able to control or materially influence its policy (including persons concerned only on behalf of others), and

           any other person whom the inspector has reasonable cause to believe possesses information relevant to the investigation, as they apply in relation to officers and agents of the company.

 

(2)        If the Attorney General is of opinion that there is good reason for not divulging any part of a report made by virtue of section 178 and this section, he may disclose the report with the omission of that part; and he may cause to be kept by the registrar of companies a copy of the report with that part omitted.        

                       

Section 183 - Power to obtain information as those interested in shares, etc

 

(1)        If it appears to the Attorney General that there is good reason to investigate the ownership of any shares in or debentures of a company and that it is unnecessary to appoint inspectors for the purpose, he may require any person whom he has reasonable cause to believe to have or to be able to obtain any information as to the present and past interests in those shares or debentures and the names and addresses of the person interested and of any persons who act or have acted on their behalf in relation to the shares or debentures to give any such information to the Attorney General.

 

(2)        A person who fails to give information required of him under this section, or who in giving 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, is liable to imprisonment or to a fine or both.

 

Section 184 - Attorney General ‘s power to require production of documents

 

(1)        The Attorney General may at any time if he thinks there is good reason to do so, give directions to a company requiring it, at such time and place as may be specified in the directions, to produce such documents as may be so specified.

 

(2)        The power under this section to require a company or other person to produce documents includes poser –

 

           if the documents are produced

           to take copies of them or extracts from them, and

           to require that person, or any other person who is present or past officer of, or is or was at any time employed by the company in question, to provide an explanation of any of them;

           if the documents are not produced, to require the person who was required to produce them to state, to the best of his knowledge and believed what they are.

 

(3)        If the requirements to produce documents or provide an explanation or make a statement is not complied with, the company or other person on whom the requirement was so imposed is guilty of an offence and liable to a fine

 

(4)        However; where a person is charged with an offence under subsection (3) in respect of a requirement to produce any documents, it is a defense to prove that they were not in possession or under his control and that it was not reasonably practicable for him to comply with the requirement.

 

(5)        A statement made by a person in compliance with such a requirement may be used in evidence against him.

 

(6)        In this section “documents” includes information recorded in any form; and in relation to information recorded  otherwise than in legible form, the power to require its production include  power to require the production of a copy of the information in legible form.

 

Section 185 - Provision for security of information obtained

 

(1)        No information or document relating to a company which has been obtained under section 184 shall without the previous consent in writing of that company be published or disclosed, except to a competent authority.

 

(2)        A person who publishes or discloses any information or document in contravention of this section is guilty of an offence and liable to imprisonment or fine.

 

For the purpose of this section each of the following is a competent authority –

 

           the Attorney general;

           the Chief Justice of the High Court; 

           an inspector appointed by the Inland Revenue Department;    

           the Minister of Finance 

           the Bank of Somaliland

 

Section 186 - Punishment for destroying, mutilating etc company documents

 

(1)        An officer of a company who –

 

           destroy, mutilates or falsifies or is privy to the destruction, mutilation, falsification of a document affecting or relating to the company’s property or affairs, or

           makes, or is privy to the making of, a false entry in such a document, is guilty of an offence, unless he proves that he had no intention to conceal the state of affairs of the company or to defeat the law.

 

(2)        A person guilty of an offence under this section is liable to imprisonment  or a fine or both.

 

(3)        In this section “document” includes information recorded in any form.          

 

Section 187 - Disclosure of information by Attorney General

 

The Attorney General may, if he/she thinks for to disclose any information obtained under section 183 to-

 

           the company whose ownership was the subject of the investigation,

           any member of the company,

           any person whose conduct was investigated in the course of the investigation,

           the auditors of the company ,

           any person whose financial interests appear to the Attorney General to be affected by matters covered by the investigation.

 

PART  XIII

 

FRAUDULENT TRADING BY A COMPANY

 

Section 188 - Punishment for fraudulent trading

 

In any business of a company is carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, every person who was knowingly a party to the carrying on of the business in that manner is liable to imprisonment or a fine, or both.

 

This applies whether or not the company has been, or his in the course of being wound up.

 

PART XIV

 

PROTECTION OF COMPANY’S MEMBER AGAINST UNFAIR PREJUDICE     

 

Section  189 - Order on application of company member

 

(1)        A member of a company may apply to the court by petition for an order under this Part on the ground that the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members or that any actual or proposed act or omission of the company is or would be so prejudicial.

 

(2)        The provision of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted or transmitted by operation of law, as those provisions apply to member of the company; and reference to a member or members are to be construed accordingly.  

 

Section 190 - Provisions as to petition and order under this part 

 

(1)        If the court is satisfied that a petition under his/her Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.

 

(2)        Without prejudice to the generality of subsection (1), the court’s order may –

 

           Regulate the conduct of the company’s affairs in the future,

           Require the company to refrain from doing or continuing an act complained by the petitioner or do an act which the petitioner has complained it has omitted to do,

           Authorize civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct,

           Provide for the purchase of the shares of any members of the company or other members or by the company itself, the reduction of the company’s capital accordingly.

 

(3)        If an order under this ĘPart requires the company not to make any, or any specified, alteration in the memorandum or articles, the company does not than have power without leave of the court to make any such alteration in breach of that requirement.

 

(4)        Any alteration in the company’s memorandum or articles made by virtue of an order under this Part is of the same effect as if duly made by the resolution of the company, and the provisions of this Act apply to the memorandum or articles as so altered accordingly.

 

(5)        An office copy of an order under this Part altering or giving leave to alter, a company’s memorandum or articles shall, within 14 days from the making of the order or such longer period as the court may allow, be delivered by the company to the registrar of companies for registration; and if a company makes default 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.  

 

 

 

 

  

PART XV

 

WINDING UP OF COMPANIES REGISTERED UNDER THIS ACT OR THE FORMER COMPANIES ACT

 

Chapter I. Preliminary

 

Section 191 - Modes of winding up

 

(1)        Modes of winding up

 

The winding up of a company may be either –

           By the court; or

           Voluntarily;,

           Subject to the supervision of the court.

 

(2)        The provisions of this Act with respect to winding up applies, unless the contrary appears , to the winding of a company limited by shares.

 

Section 192 - Liabilities as contributories 

 

(1)        In the case of a company limited by shares, no contribution shall be required from any member exceeding the amount , if any, unpaid on the shares in respect of which he is liable as a present or past member;

 

(2)        A sum due to any member of a company, in his character of a member, by way of dividends, profits or otherwise shall not be deemed to be a debt of the company payable to that member in a case of competition between himself and any other creditor not a member of the company, but any such sum may be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves.

 

(3)        In the winding up of a limited company, any director or manager, whether past or present, whose liability is under the provisions of this Act , unlimited, shall in addition to his liability  (if any)  to contribute as an ordinary member, be liable to make a further contribution as if he were at the commencement of the winding up a member of an unlimited company :

 

Provided that –

 

           A past director or manager shall not be liable to make such further contribution if he has ceased to hold office for a year or upwards before the commencement of the winding up;

           A past director or manager shall not be liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office;

           Subject to the articles of the company, a director or manager shall not be liable to make such further contribution unless the court deems it necessary to require that contribution in order to satisfy the debts and liabilities of the company and the costs, charges and expenses of the winding up.

 

Section 193 - Definition of contributory 

 

The term contributory means every person liable to contribute to the assets of a company in the event of its being wound up, and for the purposes of all proceedings for determining and all proceedings prior to the final determination of the persons who are to be deemed contributories, include any person alleged to be a contributory.

 

Section 194 - Nature of liability of contributory 

 

The liability of a contributory shall create a debt accruing due from him/her at the time when his liability commenced, but payable at the time when calls are made for enforcing the liability.

 

Section 195 - Contributories in case of death of member

 

(1)        If a contributory dies either before or after he/she has been placed on the list of contributories, his/her personal representative shall be liable in a due course of administration to contribute to the assets of the company in discharge of his liabilities  and shall be contributories accordingly.

 

(2)        If the personal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased contributory and for compelling payment there out of the money due.  

 

Chapter II - Winding up by the court jurisdiction

 

Section 196 - Jurisdiction to wind up companies registered in Somaliland

 

The high Court shall have jurisdiction to wind up any company registered in Somaliland.

 

Cases in which Company may be wound up by Court

 

Section 197 - Circumstances in which company my be wound up by the court

 

A company may be wound up by the court if-

 

           The company has by special resolution resolved that the company be wound up by the court;

           Default is made in delivering the statutory report to the registrar or in holding the statutory meeting;

           The company does not commence its business within a year from its incorporation or suspends its business for the whole year;

           The numbers of members are reduced, in the case of a private company, below two, or, in the case of any other company, below seven;

           The company is unable to pay its debts;

           The court is of opinion that it is just and equitable that the company should be wound up;

           in the case of a company incorporated outside Somaliland and carrying on business in Somaliland, winding up proceedings have been commenced in respect of it in the country or territory of its incorporation or in any other country or territory in which it has established a place of business.

 

Section 198 - Definition of inability to pay debts

 

A company shall be deemed to be unable to pay its debts-

 

           if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding ………. then due has served on the company, by leaving it at the registered office of the company, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or

 

           if execution or other process issued on a judgment, decree or order of any court in favor of a creditor of the company is returned unsatisfied in whole or in part; or

 

           if it is proved to the satisfaction of the court that the company is unable to pay its debt, and in determining whether a company is unable to pay its debts the court shall take into account the contingent and prospective liabilities of the company.

 

Petition for Winding Up and Effects Thereof

 

Section 199 - Provisions as to applications for winding up

 

(1)        An application to the court for the winding up of a company shall be by petition presented, subject to the provisions of this section, either by the company or by any creditor or creditors (including any contingent or prospective creditors), contributory or contributories, or by all or any of those parties, together or separately;

 

Provided that –

 

           A contributory shall not be entitled to present a winding-up petition unless-

 

           Either the number of members is reduced, in the case of a private company, below two, or on the case of any other company, below seven; or

           The shares in respect of which he is a contributory, or some of them, either were originally allotted to him or have been held  by him, and registered in his name, for at least six months during the eighteen months before the commencement of the winding up, or have devolved on him through the death of a former holder; and

 

           A winding up petition shall not, if the ground of the petition is default in delivering the statutory report to the registrar or in holding the statutory meeting, be presented by any person except a shareholder, nor before the expiration of fourteen days after the last day on which the meeting ought to have been held; and

 

           The court shall not give a hearing to a winding up petition presented by a contingent or prospective creditor until such security for costs has been given as the court thinks reasonable and until a prima facie for winding up has been established to the satisfaction of the court; and

 

 

 

 

Section 200 - Power of the court on hearing petition 

 

(1)        On hearing a winding up petition the court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order, or any other order that it thinks, but the court shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged to an amount equal to or in excess of those assets or that the company has no assets.

 

(2)        Where the petition is presented by members of the company as contributories on the ground that it is just and equitable that the company should be wound up, the court if it is of opinion –

 

           that the petitioners are entitled to relief either by winding up the company or by some means; and

           that in advance of any other remedy it would be just and equitable that the company should be wound up, Shall make a winding-up order, unless it is also the opinion both that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.

 

(3)        Where the petition is presented on the ground of default in delivering the statutory report to the register or in holding the statutory meeting, the court may –

           instead of making a winding-up order, direct that the statutory report shall be delivered or that a meting shall be held; and

           order the costs to be paid by any persons who, in the opinion of the court, are responsible for the default.   

 

Section 201 - Avoidance of dispositions of property etc after commencement of winding up

 

In a winding up by the court, any disposition of the property, including things in action, and any transfer of shares, or alteration in the status of the members of the company, made after the commencement of the winding up, shall, unless the court otherwise orders, be void.

 

Section 202 - Avoidance of attachment

 

Where any company is being wound up by the court, any attachment, distress or execution put in force against the estate or effects of the company after the commencement of the winding up shall be void.

 

Commencement of Winding-Up

 

Section 203 - Commencement of winding up by the court

 

(1)        Where, before the presentation of a petition for the winding up of a company by the court, a resolution has been passed by the company for voluntarily winding up, the   winding up of the company shall be deemed  to have commenced at the time  of the passing of the resolution, and unless the court on proof of fraud or mistake, thinks fit otherwise to direct, all proceedings taken in the voluntary winding up shall be deemed to have been validity taken.

 

(2)        In any other case, the winding up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding up.               

Consequences of Winding Up Order

 

Section 204 - Copies of order to be forwarded to registrar     

 

On the making of a winding-up order, a copy of the order shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar for registration.

 

Section 205 - Actions stayed on winding up order

 

When a winding up order has been made or an interim liquidator has been appointed  under section 211 no action or proceeding shall be proceed with or commenced against the company except by leave of the court and subject to such terms as the court may impose.

 

Section 206 - Effect of winding up order

 

An order for winding up a company shall operate in favor of all the creditors and of all the contributories of the company as if made on the joint petition of a creditor and of a contributory.

 

Official Receiver in Winding-Up

 

Section 207 - Official receiver in bankruptcy

 

(1)        For the purposes of this Act so far as it relates to the winding up of companies by the court, “official receiver “ means the official receiver attached to the court for bankruptcy purposes.  

 

Any such officer shall for the purpose of his duties under this Act, be styled the official receiver.

 

Section 208 - Appointment of official receiver by court in certain cases

 

If, in the case of the winding-up of any company by the court it appears to the court desirable, with a view  to securing the more convenient and economical conduct of the winding-up, that some officer other than the person who would by virtue of section 207 be the official receiver should be the official receiver for the purposes of that winding up, the court may appoint that other officer to act as official receiver in that winding up, and the person so appointed shall be deemed to be the official receiver in that winding up for all the purposes of this Act.

 

Section 209 - Statement of company’s affair to be submitted to official receiver

 

(1)        When  the court has made a winding-up order or appointed an interim liquidator under section 212, there shall, unless the court thinks fit to order otherwise and so orders, be made out and submitted to the official receiver a statement as to the affairs of the company in the prescribed form, verified by affidavit, and showing the particulars of its assets, debts and liabilities, the names, postal address and occupations of its creditors, the securities held by them respectively, the dates when the securities were respectively given, and such further or other information as may be prescribed or as the official receiver may require.

 

(2)        The statement shall be submitted and verified by one or more of the persons who are the relevant date of the directors and by the persons who is at that date the secretary of the company, or by such of the persons hereinafter in this subsection mentioned as the official receiver, subject to the direction of the court , may require to submit and to verify the statement, that is to say, persons-

 

           who are or have been officers of the company;

 

           who have taken part in the formation of the company at any time within one year before the relevant date;

 

           who are in the employment of the company or have been in the employment of the company within the said year, and are in the opinion of the official receiver capable of giving the information required;

 

           who are or have been within the said year officers or in the employment of a company which is, or within the said year was, an officer of the company to which the statement relates;

 

           who are at the relevant date the receivers or managers of the whole or substantially the whole of the company’s property.

 

(3)        The statement shall be submitted within fourteen days from the relevant date or within such extended time as the official receiver or the court may for special reasons appoint.

 

(4)        Any person making or concurring in making the statement and affidavit required by this section may be allowed, and if so allowed shall be paid by the official receiver or provisional liquidator, as the case may be, out of the assets of the company such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the official receiver may consider reasonable, subject to an appeal to the court.

 

(5)        If any person, without reasonable excuse, makes default in complying  with the requirements of this section, he shall be liable to a fine and for continued contravention, to a daily default fine.

 

(6)        Any person stating himself in writing to  be a creditor or contributory of the company shall be entitled by himself or by his agent at all reasonable times, on payment of the prescribed fee, to inspect the statement submitted in pursuance of this section, and to copy thereof or extract there from.

 

(7)        Any person untruthfully so stating, himself to be a creditor or contributory of the company shall be liable to a fine.

 

(8)        In this section, “the relevant date” means, in a case where an interim liquidator is appointed, the date of his appointment, and in a case where no such appointment is made, the date of the winding-up order.   

 

Section 210 - Report by official receiver

 

(1)        In the case where a winding up order is made, the official receiver shall, as soon as practicable after receipt of the statement to be submitted under section 209, or, in a case where the court orders that no statement shall be submitted, as soon as practicable after the date of the order, submit a preliminary report to the court –

 

           As to the amount of capital issued, subscribed and paid up, and the estimated amount of assets and liabilities; and

           If the company has failed, as to the causes of the failure; and

           Whether in his opinion further inquiry is desirable to any matter relating to the promotion, formation or failure of the company or the conduct of the business thereof.

 

(2)        The official receiver may also, if he thinks fit, make a further report, or further reports, stating the manner in which the company was formed and whether in his opinion any fraud has been committed by any person in its promotion or formation or by any officer of the company in relation to the company since the formation thereof, and any other matters which in his opinion it is desirable to bring to the notice of the court.

 

(3)        If the official receiver states in any further report as aforesaid that in his opinion a fraud has been committed as aforesaid, the court shall have the further powers provided in section 240.     

  

Liquidators

 

Section 211 - Power of court to appoint liquidators 

 

For the purpose of conducting the proceedings in winding up a company and performing such duties in reference thereto as the court may impose, the court may appoint a liquidator or liquidators.

 

Section 212 - Appointment and powers of interim liquidator 

 

(1)        The court may appoint the official receiver to be the liquidator provisionally at any time after the presentation of a winding up petition and before the making of a winding-up order.

 

(2)        Where a liquidator (in this Act referred to as an interim liquidator) is so appointed by the court, the court may limit and restrict his powers by the order appointing him. 

 

 Section 213 - Appointment of liquidator 

 

The following provisions with respect to liquidators shall have effect on a winding up order being made-

 

           the official receiver shall by virtue of his office become the provisional liquidator and shall continue to act as such until he or another person becomes liquidator and is capable of acting as such;

 

           the official receiver shall summon separate meetings of the creditors and contributories of the company for the purpose of determining whether or not an application is to be made to the court for appointing a liquidator in the place of the official receiver.

 

 

 

 

Section 214 - Provisions where person other than official receiver is appointed liquidator           

 

Where, in the winding up of a company by the court, a person other than the official receiver is appointed liquidator, that person –

 

           shall not be capable of acting as liquidator until he has notified his appointment to the registrar and given security in the prescribed manner to the satisfaction of the official receiver;

           shall give the official receiver such information and such access to and facilities for inspecting the books and documents of the company and generally such aid as may be requisite for enabling that officer to perform his duties under this Act.

 

Section 215 - General provision as to liquidator 

 

(1)        A liquidator appointed by the court may resign or, on cause shown, be removed by the court.

 

(2)        Where a person other than the official receiver is appointed liquidator, he shall receive such salary or remuneration by way of percentage or otherwise as the court may direct, and, if more such persons than one are appointed liquidators, their remuneration shall be distributed among them in such proportions as the court directs.

 

(3)        A vacancy in the office of a liquidator appointed  by the court shall be filled by the court.

 

(4)        If more than one liquidator is appointed by the court, the court shall declare whether any act by this Act required or authorized to be done by the liquidator is to be done by all or any or more of the persons appointed.

 

(5)        The acts of a liquidator shall be valid notwithstanding any defects that may afterwards be discovered in his appointment or qualification.

 

Section 216 - Custody of company’s property

 

Where a winding up order has been made or where an interim liquidator has been appointed, the liquidator or the interim liquidator, as the case may be, shall take into his custody or under his control all the property and things in action to which the company is or appears to be entitled.

 

Section 217 - Vesting of property of company in liquidator   

 

Where a company is being wound up by the court, the court may on the application of the liquidator by order direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest accordingly, and the liquidator may, after giving such indemnity, if any, as the court may direct, bring or defend in his official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purposes of effectually winding up the company and recovering its property.

 

Section  218 - Powers of liquidator

 

(1)        The liquidator in a winding up by the court shall have power, with the sanction of the court –

           To bring or defend any action or other legal proceeding in the name and on behalf of the company;

           To carry on the business of the company so far as may be necessary for the beneficial of the winding up thereof;

           To appoint an advocate to assist him in the performance of his duties;

           To pay any class of creditors in full;

           To make any compromise, or arrangement with creditors, or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable;

           To compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts and all claims, present or future, certain or contingent, subsisting or supposed to subsist between the company and a contributory or alleged contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim and give a complete discharge in respect thereof.

 

(2)        The liquidator in a winding up by the court shall have power –

 

           to sell the movable and immovable property and things in action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels;

           to do all acts to execute, in the name and on behalf of the company, all deeds, receipts and other documents, and for that purpose to use, when necessary the company ‘s seal;

           to prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributors for any balance against his estate, and to receive dividends in the bankruptcy, insolvency and sequestration in respect of that balance, as a separate debt due from the bankrupt or insolvent, and rateably with the other separate creditors;

           to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if the bill or note had been drawn, accepted, made or endorsed by or behalf of the company in the course of its business;

           To raise on the security of the assets of the company any money requisite;

           To appoint an agent to do any business which the liquidator is unable to do himself;

           To do all such other things as may be necessary for winding up the affairs of the company and distributing its assets.

 

(3)        The exercise by a liquidator in a winding up by the court of the powers conferred by this section shall be subject to the control of the court , and any creditor or contributory may apply to the court, and any creditor or contributory may apply to the court with respect to any exercise or proposed exercise of any of those powers.

 

Section 219 - Exercise and control of liquidators powers

 

Subject to the provisions of this Act,

 

(1)        The liquidator may summon general meeting of the creditors or contributories for the purpose of ascertaining their wishes, and it shall his duty to summon meetings at such times as the creditors or contributories, by resolution, either at the meeting appointing the liquidator or otherwise, may direct, or whenever requested in writing to do so by one tenth in value of the creditors or contributories as the case may be. 

 

(2)        The liquidator may apply to the court in manner prescribed for directions in relation to any particular matter arising under the winding up.

 

(3)        The liquidator shall use his own discretion in the management of the estate and its distribution among the creditors.

 

(4)        If any person is a aggrieved by any act or decision of the liquidator, that person may apply to the court, and the court may confirm, reverse or modify the act or decision    complained of, and make such order in the premises as it thinks just.

 

Section 220 - Books to be kept by the liquidator 

 

Every liquidator of a company which is being wound up by the court shall keep, in manner prescribed, proper books in which he shall cause to be made entries or minutes of proceedings at meetings, and such other matters as may be prescribed, and any creditor or contributory may, subject to the control of the court, personally or by his agent inspect any such books.   

 

Section 221 - Payments by liquidator to official receiver    

 

Every liquidator of a company which is being would up by the court shall, in such manner and at such times as the official receiver shall direct, pay the money, received by him to the official receiver for the credit of the Companies Liquidation Account, and the official receiver shall furnish him with a receipt for the money so paid.

 

Section 222 - Audit of liquidator’s account

 

(1)        Every liquidator other than the official receiver of a company which is being wound up by the court shall, at such times as may prescribed but not less than twice in each year during his tenure of office, send to the official receiver, or as he directs, an account of his receipts and payment as liquidator.

 

(2)        The account shall be in the prescribed form, shall be made in duplicate and shall be verified by a statutory declaration in the prescribed form.

 

(3)        The official receiver shall cause the account to be audited, and for the purpose of the audit the liquidator shall furnish the official receiver with such vouchers and information as the official receiver may require, and the official receiver may at any time require the production of and inspect any books or accounts kept by the liquidator.

 

(4)        When the account has been audited, one copy thereof shall be filled by the official receiver and the other copy shall be delivered to the court for filling, and each copy shall be open to the inspection of any person on payment of the prescribed fee.

 

Section 223 - Control over liquidators

 

The official receiver may at any time require any liquidator of a company which is being wound up by the court to answer any inquiry in relation to any winding up in which he is engaged, and may, if the official receiver thinks fit, apply to the court to examine him or any other person on oath concerning the winding up.

 

Section 224 - Release of liquidators

 

(1)        When the liquidator of a company which is being wound up by the court has realized all the property of the company or so much thereof as can, in his opinion, be realized without needlessly protracting the liquidation, and has distributed a final dividend, if any to the creditors, and adjusted the rights of the contributories among themselves, and made a final return, if any, to the contributories or has resigned , or had been removed from his office, the court shall, on his application, cause a report and any objection which may be urged by any creditor or contributory or person interested against the release of the liquidator, and shall either grant or withhold the release accordingly.

 

(2)        Where the release of a liquidator is withheld, the court may on the application of any creditor or contributory or person interested, make such order as he thinks just, charging the liquidator with the consequences of any act or default which he may have done or made contrary to his duty.

 

(3)        An order from the court releasing the liquidator shall discharge him from all liability in respect of any act done or default made by him in the administration of the affairs of the company or otherwise in relation to his conduct as liquidator, but any such order may be revoked on proof that it was obtained by fraud or by suppression or concealment of any material fact.

 

(4)        Where the liquidator has not previously resigned or been removed, his release shall operate as a removal of him from his office.

 

Committee of Inspection

 

Section 225 - Meeting of creditors and contributories to determine whether committee of inspection shall be established

 

When a winding up order has been made by the court, it shall be the business of the separate meeting of creditors and contributories to be summoned for the purpose of determining whether or not an application is to be made to the court for appointing a liquidator in place of the official receiver, to determine further whether or not an application is to be made to the court for the appointment of a committee of inspection to act with the liquidator and who are to be members of the committee if appointed.

 

Section 226 - Constitution and proceedings of committee of inspection

 

(1)        A committee of inspection appointed in pursuance of this Act shall consist of creditors and contributories of the company or persons holding general powers of attorney from creditors or contributories in such proportions as may be agreed on by the meetings of creditors and contributories or as, in the case of difference, may be determined by the court.

 

(2)        The committee shall meet at least once a month, and the liquidator or any member of the committee may also call a meeting of the committee as and when they thinks necessary.

 

(3)        The committee may act by a majority of their members present at a meeting but shall not act unless a majority of the committee are present.

 

(4)        A member of the committee may resign by notice in writing signed by him and delivered to the liquidator.

 

Section 227 - Powers of court where no committee of inspection

 

Where in the case of a winding up there is no committee of inspection, the court may, on the application of the liquidator, do any act or give any direction or permission which is by this Act authorized or required to be done or given by the committee.

 

General powers of Court in Case of Winding Up by Court

 

Section 228 - Powers to stay winding up

 

The court may at any time after an order for winding up, on the application either of the liquidator or the official receiver or any creditor or contributory, and on proof to the satisfaction of the court that all proceedings in relation to the winding up ought to stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the court thinks fit.

 

Section 229 - Settlement of list of contributories and application of assets 

 

(1)        As soon as may be after making a winding up order, the court shall settle a list of contributories, with power to rectify the register of members in all cases where rectification is required in pursuance of this Act, and shall cause the assets of the company to be collected, and applied in discharge of its liabilities.

 

(2)        In setting the list of contributories, the court shall distinguish between persons who are contributories in their own right and persons who are contributories as being representatives of or liable for the debts of others.   

 

Section 230 - Delivery of property to liquidator

 

The court may, at any time after making a winding-up order, require any contributory for the time being on the list of contributories  to pay, delivery, convey surrender or transfer forthwith, or within such time as the court directs, to the liquidator any money, property or books and papers in his hands to which the company is prima facie entitled.

       

Section 231 - Payment of debts due by contributory to company

 

The court may, at any time after making a winding-up order, make an order on any contributory for the time being on the list of contributories  to pay, in manner directed by the order, any money due from him or from the estate of the person whom he represents to the company.

 

Section 232 - Power of court to make calls

 

The court may, at any time after making a winding-up order, and either before or after it has ascertained the sufficiency of the assets of the company, make call on all or any of the contributories to the extent of their liability, for payment of any money which the court considers necessary to satisfy the debts and liabilities of the company, and the costs and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, and make  an order for payment of any calls so made.

 

Section 233 - Payment into bank of money due to company

 

The court may order any contributory, purchaser or other person from whom money is due to the company to pay the amount due into a specified bank or any branch thereof to the account of the liquidator, and any such order may be enforced in the same manner as if it had directed payment to the liquidator.

 

Section 234 - Appointment of special manager

 

(1)        Where the official receiver becomes the liquidator of the company, he may, if satisfied that the nature of the estate or business of the company, or the interests of the creditors or contributories generally, require the appointment of a special manager of the estate or business of the company other than himself, apply to the court, and the court on such application appoint a special manager of the said estate or business to act during such time as the court may direct, with such powers, including any of the powers of a receiver or manager, as may be entrusted to him be the court.

 

(2)        The special manager shall give such security and account in such manner as the official receiver shall direct.

 

(3)        The special manager shall receive such remuneration as may be fixed by the court.

 

Section 235 - Power to exclude creditors not proving in time

 

The court may fix a time or times within which creditors are to prove their debts or claims or to be excluded from the benefit of any distribution made before those debts are proved.

 

Section 236 - Inspection of books by creditors and contributories

 

The court may, at any time after making a winding-up order, make such order for inspection of the books and papers of the company by creditors and contributories as the court thinks just and any books and papers of the company may be inspected by creditors or contributories accordingly, but not further or otherwise.  

  

Section 237 - Power to order cost of winding up to be paid out of assets

 

The court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the costs, charges and expenses incurred in the winding up in such order of priority as the court thinks just. 

 

Section 238 - Power to summon persons suspected of having property of company

 

(1)        The court may, at any time after the appointment of an interim liquidator or the making a winding-up order, summon before it any officer of the company or person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the court deems capable of giving information concerning the promotion, formation, trade, dealings, affairs or property of the company.

 

-2)        If any person so summoned refuses to come before the court at the time appointed, not having a lawful impediment (made known to the court at the time of its sitting and allowed by it), the court may cause him to be arrested and brought before the court for examination.

 

Section 239 - Attendance of officers of company at meeting of creditors

 

In the winding up by the court of a company the court shall have power to require the attendance of any officer of the company at any meetings of creditors or of contributories or of a committee of inspection for the purposes of giving information as to the trade, dealings, affairs or property of the company.

 

Section 240 - Power to order public examination of promoters and officers

 

(1)        Where an order has been made for winding up a company by the court, and the official receiver has made a further report under this Act stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company or by any officer of the company in relation to the company since its formation, the court may, after consideration of the report, direct that that person or officer shall attend before the court on a day appointed by the court for that purpose and be publicly examined as to the promotion or formation or the conduct of the business of the company or as to his conduct and dealings as an officer thereof.

 

(2)        The person examined shall be examined on oath and shall answer all such questions as the court may put or allow to be put to him.

 

(3)        A person ordered to be examined under this section shall at his own cost, before his examination, be furnished with a copy of the official receiver’s report, and may at his own cost employ an advocate who shall be at liberty to put  to him such questions as the court may deem just for the purpose of enabling him to explain or qualify any answers given by him.    

 

 Section 241- Dissolution of a company

 

(1)        When the affairs of a company have been completely wound up, the court, if the liquidator makes an application in that behalf, shall make an order that the company be dissolved from the date of the order, and the company shall be dissolved accordingly.

 

(2)        A copy of the order shall within fourteen days from the date thereof be delivered by the liquidator to the registrar for registration.

 

(3)        If the liquidator makes default in complying with the requirements of this section, he shall be liable to a fine.

 

Appeals

 

Section 242- Appeals

 

Subject to such conditions and limitations as may be prescribed by rules, an appeal from any decision shall lie to the court of Appeal from any decision or order given or made by the High Court in the exercise of the jurisdiction conferred upon it by section 196.

 

Chapter III - Voluntary Winding Up

 

Resolutions for, and commencement of, Voluntary Winding up

 

Section 243 - Circumstances in which company may be wound up voluntarily

 

(1)        A company may be  wound up voluntarily –

 

           When the period, if any, fixed for the duration of the company by the articles expires, or the event, if any, occurs on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily;

           If the company resolves by special resolution that the company be wound up voluntarily;

(2)        In this Act, a resolution for voluntarily winding means a resolution passed under any of the provisions of subsection (1)

 

Section 244 - Notice of resolution

 

(1)        When a company has passed a resolution for voluntarily winding up, it shall, within fourteen days after the passing of the resolution, give notice of the resolution by advertisement in the Official Bulletin and also in some newspaper circulating in Somaliland.

 

(2)        If default is made in complying with this section, the company and every officer of the company who is in default shall be liable to a default fine , and for the purposes of this subsection the liquidator of the company shall be deemed to be an officer of the company.   

 

Section 245 - Commencement of voluntary winding up  

 

In case of a voluntary  winding up, the company shall from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof.

 

Consequences of Voluntary Winding Up

 

Section 246 - Effects of voluntary winding up on business and status of company

 

(1)        In case of a voluntary winding up, the company shall from the commencement of the winding up, cease to carry on its business, except so far as may be required for the beneficial winding up thereof.   

 

(2)        Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of a voluntary winding up, shall be void.    

 

Section 247 - Avoidance of transfers of share after commencement of voluntary winding up

 

Any transfer of shares, not being a transfer made or with the sanction of the liquidator, and any alteration in the status of the members of the company, made after the commencement of a voluntary winding up, shall be void.

 

Declaration of solvency

 

Section 248 - Statutory declaration of solvency in case of proposal to wind up voluntary

 

(1)        Where it is proposed to wind up a company voluntarily, the directors of the company or, in the case of a company having more than two directors, the majority of the directors, may, at a meeting of the directors make a declaration in the prescribed form to the effect that they have formed the opinion that the company will be able to pay its debts in full within such period not exceeding twelve months from the commencement of the winding up as may be specified in the declaration.

 

(2)        Any director of a company making a declaration under this section, without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration, shall be liable to …….and if the company is wound up in pursuance of a resolution passed within the period of thirty days after the making of the declaration, but it’s debts are not paid or provided for in full within the period stated in the declaration, it shall be presumed until the contrary is shown that the director did not have reasonable grounds  for his opinion. 

 

Provisions Applicable to a Members’ Voluntary Winding

 

Section 249 - Power of company to appoint and fix remuneration of liquidators

 

(1)        The company in general meeting  shall appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company and may fix the remuneration to be paid to him or them.

 

(2)        On the appointment of a liquidator all the powers of the directors shall cease, except so far as the company in general meeting or the liquidator sanctions the continuance thereof.

 

Section 250 - Power to fill vacancy in office of liquidator

 

(1)        If a vacancy occurs by death, resignation or otherwise in the office of a liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy.

 

(2)        For that purpose a general meeting may be convened by any contributory or, if there were more liquidators than one, by any continuing liquidator.

 

(3)        The meeting shall be held in manner provided by this Act or by the articles, or in such manner as may, on application by any contributory or, by any continuing liquidator be determined by the court.           

 

 

Section 251- Power of liquidator for sale of property of company

 

(1)        Where a company is proposed to be, or in the course of being, wound up voluntarily, and the whole or part of its business or property is proposed to be transferred or sold to another company, whether a company within the meaning of this Act or not (in this section called the transferred company), the liquidator of the first mentioned company (in this section called the transferor company) may, with the sanction of a special resolution of that company, conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, receive, in compensation or part compensation for the transfer or sale, shares policies or other like interests in the transferee company for distribution among the members of the transferors company, may, in lieu of receiving cash, shares, policies and other like interests, or in addition thereto, participate in the profits of or receive any other benefit from the transferee company.

 

(2)        Any sale or arrangement in pursuance of this section shall be binding on the members of the transferor company.

 

(3)        If any member of the transferor company who did not vote in favour of the special resolution expresses his dissent therefrom in writing  addressed to the liquidator, and left at the registered office of the company within seven days after the passing of the resolution , he may require the liquidator either to abstain from carrying the resolution into effect or to purchase his interest at a price to be determined by agreement or by arbitration in accordance with the law relating to arbitration for the time being in force in Somaliland.

 

Section 252 - Duty of liquidator to call creditors’ meeting in case of insolvency

 

(1)        If in the case of a winding up commenced after the appointed day, the liquidator is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the declaration under section 245 he shall forthwith notify the registrar accordingly and summon a meeting of the creditors and shall lay before the meeting a statement of the assets and liabilities of the company.

 

(2)        If the liquidator fails to comply with this section, he shall be liable to a fine .

 

Section 253 - Duty of liquidator to call general meeting at the end of each year

 

(1)        In the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding up, and of each  succeeding year, or at the convenient  date within three months from the end of the year or such longer period as the registrar may allow, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the preceding year.    

 

(2)        If the liquidator fails to comply with this section, he shall be liable to a fine 

 

Section 254 - Final meeting and dissolution

 

(1)        As soon as the affairs of the company are fully wound up, the liquidator shall make up an account of the winding up, showing how the winding up has been conducted and the property of the company disposed of, and thereupon shall call a general meeting of the company for the purpose of laying before it the account, and giving any explanation thereof.

 

(2)        The meeting shall be called by advertisement in the Official Bulletin and in two newspaper circulating in Somaliland, specifying the time, place and object thereof, and published thirty days at least before the meeting.

 

(3)        Within fourteen days after the meeting, the liquidator shall deliver to the registrar a copy of the account, and shall make a return to him of the holding of the meeting and of its date, and if the copy is not delivered or the return is not made in accordance with this  subsection the liquidator shall be liable to a daily default fine.

 

(4)        The registrar on receiving the account and either of the returns, hereinbefore mentioned shall forthwith register them, and on the expiration of three months from the registration of the return the company shall be deemed to be dissolved.

 

(5)        It shall be the duty of the person on whose application an order of the court under this section is made, within seven days after the making of the order, to deliver to the registrar a certified copy of the order, to deliver to the registrar a certified copy of the order for registration and if that person fails so to do he shall be liable to a fine and, for continued contravention, to a daily default fine.

 

(6)        If the liquidator fails to call a general meeting of the company as required by this section, he shall be liable …..              

 

Provisions Applicable to a Creditors’ Voluntary Winding Up

 

Section 255 - Provisions applicable to a creditors’ winding up

 

The provisions of sections 256 to 262 shall apply in relation to a creditors’ voluntary winding up.

 

Section 256 - Meeting of creditors

 

(1)        The company shall cause a meeting of the creditors of the company to be summoned for the next day following the day, on which there is to be held the meeting at which the resolution for voluntary winding up is to be proposed, and shall cause the notices of the said meetings of creditors to be sent by post to the creditor simultaneously with the sending of the notices of the said meeting of the company.

 

(2)        The company shall cause notice of the meeting of the creditors to be advertised once in the Official Bulletin and once at least, in a newspaper circulating in Somaliland.

 

(3)        The directors of the company shall-

 

           Cause a full statement of the position of the company’s affairs together with a list of the creditors of the company and the estimated amount of their claims to be laid before the meeting of the creditors to be held as aforesaid; and

 

           Appoint one of their number to preside at the said meeting.

 

(4)        It shall be the duty of the director appointed to preside at the meeting of the creditors to attend the meeting and preside thereat.  

 

(5)        If default is made

 

           by the company in complying with subsections (1) and (2),

           by the directors of the company in complying with subsection (3);

           by any director of the company in complying with subsection (4),

 

the company, directors or director, as the case may be, shall be liable to a fine and in the case of default by the company, every officer of the company who is in default shall be liable to the like penalty.

 

Section 257 - Appointment of liquidator

 

The creditors and the company at their respective meetings mentioned in section 256 may nominate a person to be the liquidator for the purpose of winding up the affairs and distributing the assets of the company, and if the creditors and the company nominate different persons, the person nominated by the creditors shall  be the liquidator, and if no person is nominated by the creditors the person, if any, nominated by the company shall be the liquidator.

 

Section 258 - appointment of committee of inspection

 

(1)        The creditors at the meeting to be held in pursuance of section 256 or at any subsequent meeting may, if they think fit, appoint not more than five persons to be members of the committee of inspection, and if such a committee is appointed the company may, either at the meeting at which the resolution for voluntarily winding up is passed or any time subsequently in general meeting, appoint such number of persons as they think fit to be members of the committee so, however, that the majority of the members of the committee shall be persons appointed by the creditors.    

 

Provided that the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not be members of the committee of inspection, and if the creditors so resolve, the persons mentioned in the resolution shall not, unless the court otherwise directs, be qualified to act as members of the committee, and on any application to the court may, if it thinks fit, appoint other persons to act as such members in place of the persons mentioned in the resolution.

 

(2)        Subject to the provisions of this section and to any rules made in this behalf, the provisions of section 226, except subsection (1) thereof, shall apply with respect to a committee of inspection appointed under this section as they apply with respect to a committee of inspection appointed in a winding up by the court.    

 

Section 259 - Fixing of liquidators’ remuneration

 

The committee of inspection, or if there is no such committee the creditors, may fix the remunerations to be paid to the liquidator or liquidators.

 

Section 260 - Termination of directors powers on appointment of liquidators    

On the appointment of a liquidator, all the powers of the directors shall cease, except so far as the committee of inspection, or if there is no such committee the creditors sanction the continuance thereof. 

 

Section 261- Duty of the liquidator to cll meetings of company and creditors at end of each year

 

In the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company and a meeting of the creditors at the end of the first year from the commencement of the winding up, and each succeeding year, or at the first convenient date within three months from the end of the year or such longer period as the registrar may allow, and  shall lay before the meetings an account of his acts and dealings and on the conduct of the winding up during the preceding year.

 

Section 262 - Final Meeting and dissolution

 

(1)        As soon as the affairs of the company are fully wound up, the liquidator shall make an account of the winding up, showing how the winding  has been conducted and the property of the company disposed of, and thereupon shall call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving an explanation thereof.

 

(2)        Each such meeting shall be called  by advertisement in the Official Bulletin and in a newspaper circulating in Somaliland specifying the time, place and object thereof, and published thirty days at least before the meeting.

 

(3)        Within fourteen days after the date of the meetings or if the meeting was not held on the same date, after the date of the later meeting, the liquidator shall deliver to the registrar a copy of the account, and shall make a return to him of the holding of the meeting and of their dates, and if the copy is not delivered or the return is not made in accordance with this subsection the liquidator shall be liable to a fine he is liable to a fine and, for continued contravention, to a daily default fine.

 

Provided that, if a quorum is not present at either such meeting, the liquidator shall, in lieu of the return hereinbefore mentioned, make a return that the meeting was duly summoned and that no quorum was present thereat and upon such a return being made the provisions of this subsection as to the making of the return shall, in respect of that meeting, be deemed to have been complied with.

 

(4)        The registrar on receiving the account and, in respect of each such meeting, either of the returns hereinbefore mentioned, shall forthwith register them, and on the expiration of three months from the registration thereof the company shall be deemed to be dissolved.

 

Provided that the court may, on the application of the liquidator or on any other person who appears to the court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the court thinks fit.

 

(5)        It shall be the duty of the person on whose application an order of the court under this section is made, within seven days after the making of the order, to deliver to the registrar a certified copy of the order for registration, and if that person fails to do so he shall be liable to a fine and, for continued contravention, to a daily default fine.

 

(6)        If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he shall be liable to a fine.

  

Provisions Applicable to every Voluntary Winding Up

 

Section 263 - Provision applicable to every voluntary winding up

 

The provisions of sections 264 to 271 shall apply to every voluntary winding up whether a members’ or a creditors’ winding up.

 

Section 264 - Distribution of property of company

 

Subject to the provisions of this Act as to preferential payments, the assets of a company shall, on its winding up, be applied in satisfaction of its liabilities pari passu, and subject to such application, shall, unless the articles otherwise provide, be distributed among the members according to their rights and interests in the company.

 

Section 265 - Powers and duties of the liquidator in voluntary winding up

 

(1)        The liquidator may –

 

           In the case of a members’ voluntarily winding up, with the sanction of a special resolution of the company, and in the case of a creditors’ voluntarily winding up; with the sanction of the court or the committee of inspection or (if there is no such committee) a meeting of the creditors, exercise any of the power given by paragraphs (d), (e) and (f) of subsection (1) of section 218 to a liquidator in a winding up by the court.

           Without sanctions, exercise any of the other powers by this Ac t given to the liquidator in a winding  up by the court.

           Exercise the power of the court under this Act of setting a list of contributories, and the list of contributories shall be prima facie evidence of the liability of the persons names therein to be contributories;

           Exercise the power of the court of making calls;

           Summon general meetings of the company for the purpose of obtaining the sanction of the company by special resolution or for other purpose he may think fit.       

 

(2)        The liquidator shall pay the debts of the company and shall adjust the rights of the contributories among themselves.

 

Section 266 - Power of court to appoint and remove liquidator in voluntary winding up

 

(1)        If from any cause whatever there is no liquidator acting, the court may appoint a liquidator.

 

(2)        The court may, on cause shown, remove a liquidator and appoint another liquidator.

 

Section 267 - Notice by liquidator of his appointment

 

(1)        The liquidator shall, within fourteen days after his appointment, publish in the Official Bulletin and deliver to the registrar for registration a notice of his appointment in the form prescribed.

 

(2)        If the liquidator fails to comply with the requirements of this section he shall be liable to a fine and, for continued contravention, to a daily default fine.

 

Section 268 - Arrangement when binding on creditors  

 

(1)        Any arrangement entered into between a company about to be, or in the course of being, wound up and its creditor shall, subject to the right of appeal under this section, be binding on the company if sanctioned by a special resolution and on the creditors if acceded to by three-fourths in number and value of the creditors.

 

(2)        Any creditor or contributor may, within thirty days from the completion  of the arrangement, appeal to the court against it, and the court may thereupon, as it thinks just, amend, vary or confirm the arrangement.

     

Section 269 - Power to apply to court to have questions determined or powers exercised

 

(1)        The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls or any other matter, all or any of the powers which the court might exercise if the company were being wound by the court.

 

(2)        The court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just.

 

(3)        A copy of an order made by virtue of this section staying the proceedings in the winding up shall forthwith be delivered by the company, or otherwise as may be prescribed to the registrar for registration.  

 

Section 270 - Costs of voluntary winding up

 

All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator, shall be payable out of the assets of the company in priority to all other claims.

 

Section 271 - Saving for rights of creditors and contributories

 

The voluntary winding up of a company shall not bar the right of any creditor or contributory to have it wound up by the court, but in the case of an application by a contributory the court shall be satisfied that the rights of the contributories will be prejudiced by a voluntary winding up. 

 

Chapter IV - Winding Up Subject to Supervision of Court

 

Section 272 - Power in order winding up subject to supervision

 

When a company has passed a resolution for voluntary winding up, the court may make an order that the voluntary winding up shall continue but subject to such supervision of the court, and with such liberty for creditors, contributories, or others to apply to the court, and generally on such terms and conditions, as the court thinks just.

 

Section 273 - Effect of petition for winding up subject to supervision

 

A petition for the continuance of a voluntary winding up subject to the supervision of the court shall, for the purpose of giving jurisdiction to the court over actions, be deemed to be a petition for winding up by the court.

 

Section 274 - Application of sections 201 and 202 to winding up subject to supervision

 

A winding up subject to the supervision of the court shall, for the purposes of sections 201 and 202 be deemed to be a winding up by the court.

 

Section 275 - Power of court to appoint or remove liquidators

 

(1)        Where an order is made for a winding up subject to supervision, the court may by that or any subsequent order appoint  an additional liquidator.

 

(2)        A liquidator appointed by the court under this section shall have the same powers, be subject to the same obligations, and in all respects stand in the same position, as if he had been duly appointed in accordance with the provision of this Act with respect to the appointment of liquidators in a voluntary winding up.

 

(3)        The court may remove any liquidator so appointed by the court or any liquidator continued under the supervision order and fill any vacancy by the removal, or by death or resignation.      

 

Section 276 -  Effect of supervision order

 

(1)        Where a an order is made for a winding up subject to supervision, the liquidator may, subject to any restrictions imposed by the court, exercise all his powers, without the sanction or intervention of the court, in the same manner as if the company were being wound up voluntarily.

 

Provided that none of the powers specified in paragraph (d), (c) and (f) of subsection (1) of section 218 Shall be exercised by the liquidator except with the sanction of the court or, in a case where before the order the winding up was a creditors’ voluntarily winding up, with the sanction of the court or the committee of inspection, or (if there is no such committee) a meeting of the creditors.

 

(2)        A winding up subject to the supervision of the court is not a winding up by the court for the purpose of the proposition of this Act specified in the Eight Schedule, but subject to aforesaid, an order for a winding up subject to supervision shall for all purposes be deemed to be an order for winding up by the court.

 

Provided that where the order for winding up subject to supervision was made in relation to a creditors’ voluntary winding up in which a committee of inspection had been appointed, the order shall be deemed to be an order for winding up by the court for the purpose of section 176, except subsection (1) thereof , except in so far as the operation of that section is excluded in a voluntary winding up by general rules. 

 

Chapter V - Provisions Applicable to Every Mode of Winding Up

 

Proof and Ranking of Claims

 

Section 277 - Debts of all description may be proved

 

In every winding up, all debts payable on a contingency, and all claims against the company present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of the debts or claims as may be subject to any contingency or sound only in damages, or for some other reason do not bear a certain value.

 

Section 278 - Application of bankruptcy rules in winding up of insolvent companies

 

In the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secures and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of bankruptcy with respect to the estate of persons adjudged bankrupt, and all persons who is in any such case would be entitled to prove and to receive dividends out of the asset of the company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section.

 

Section 279 - Preferential payments

 

In the winding up of a company there shall be paid in priority to all other debts-

 

a) All taxes and local rates due from the company at the relevant date and having become due and payable within twelve months next before that date not exceeding in the whole one year’s assessment.

b) All government rents not more than one year in arrear

c) All wages and salary (whether or not earned wholly or in part by way of commission) of any clerk or servant (not being a director) in respect of services rendered to the company during four months next before the relevant date and all wages (whether payable for time or for piece work) of any worker in respect of services rendered. 

 

Effect of Winding Up on Antecedent and other transactions

 

Section 280 - Fraudulent preference  

 

Any transfer, conveyance, mortgage, charge, delivery of goods, payment, execution or other act relating to property made or done by or against a company within six months before which, had it been made or done by or against an individual within six months before the presentation of a bankrupt, would be deemed in his bankruptcy petition on which he is adjudged bankrupt, would be deemed in his bankruptcy a fraudulent preference shall in the event of the company being wound up be deemed a fraudulent preference of its creditors and be void accordingly.

 

Section 281 - Liabilities and rights of certain fraudulently preferred persons

 

Where anything made or done after the appointed day is void under section 280 as a fraudulent preference of a person interested in property mortgaged or charged to secure the company’s debt, then the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as surely for the debt  to the extent of the mortgage or charge on the property or the value of his interest, whichever is the less.

 

Section 282 - Disclaim of onerous property in case of company wound up.

 

(1)        Where any part of the property of a company which is being wound up consists of land of any tenure burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts or of any other property that is unsaleable, or not readily saleable, the liquidator of the company, notwithstanding that he has endeavored to sell or has taken possession of the property or exercised any act of ownership in relation thereto, may with the leave of the court and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the court; disclaim the property;

 

Provided that where any such property has not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended as may be allowed by the court.

 

(3)        The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interest and liabilities of the company, and the property of the company, in or in respect of the property disclaimed, but shall not, except so far is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person.

 

(4)        The court, before or on granting leave to disclaim may require such notices to be given to persons interested and impose such terms as a condition for granting leave, and make such other order, in the matter as the court thinks just.  

 

(5)        The court may, on an application by any person who claims any interest in any disclaimed property, make an order for the vesting of the property in or the delivery of the property to any person entitled thereto, or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid and on such terms as the court may thinks fit.

  

Chapter VI -Matters Arising Subsequent To Winding Up

 

Section 283 - Power of court to declare dissolution of company void

 

(1)        Where a company has been dissolved, the court may at any time within two years of the date of the dissolution, on an application made for the purpose by the liquidator of the company or by any other person appearing to the court to be interested, make an order, on such terms as the court thinks fit, declaring the dissolution to have been void.

 

(2)        Thereupon such proceedings may be taken as might have been taken if the company had not been dissolved.

 

(3)        It is the duty of the person on whose application the order was made, within 7 days after its making (or such further time as the court may allow), to deliver to the registrar of companies for registration an office copy of the order. Fails to do so, he is liable to a fine and, for continued contravention, to a daily default fine.

 

Section 284 - Registrar may strike defunct company off register

 

(1)        If the registrar of companies has reasonable cause to believe that a company is not carrying on business or in operation, he may send to the company a letter inquiring whether the company is carrying on business or in operation.

 

(2)        If the registrar does not within thirty days of sending the letter receive any answer to it, he shall within 14 days after the expiration of that month send to the company a registered letter referring to the first letter, and stating that no answer to it has been received, and that if no answer is not received to the second letter within on month from its date, a notice will be published in the Official Bulletin with a view to striking the company’s name off the register

 

(3)        If the registrar either receives an answer to the effect that the company is not carrying on business or in operation, or does not within thirty days after sending the second letter receive any answer, he may publish in the Official Bulletin, and send to the company by post, a notice that at the expiration of three months from the date of that notice the name of the company mentioned in it will, unless cause is shown to the contrary, be struck of the register and the company will be dissolved.

 

(4)        If, in a case where a company is being wound up, the registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company are fully wound up, and the returns required to be made by the liquidator have not been made for a period of six consecutive months, the registrar shall publish in the gazette and send to the company or the liquidator (if any) a like notice as is provided in subsection (3).

 

(5)        At the expiration of the time mentioned in the notice the registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register, and shall publish notice in the Official Bulletin and on the publication of that notice in the Official Bulletin the company is dissolved.

 

(6)        However

           The liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company has not been dissolved, and

           Nothing in subsection (5) affects the power of the court to wind up a company the name of which has been struck off the register.    

 

(7)        A notice to be sent to a liquidator under this section may be addressed to him at his last known place of business; and a letter or notice to be sent under this section to a company may be addressed to the company at its registered office, or, if no office has been registered, to the care of some officer of the company.

 

If there is no officer of the company whose name and address are known to the registrar of companies; the letter or notice may be sent to each of the persons who subscribed the memorandum, addressed to him at the address mentioned in the memorandum.    

 

Section 285 - Registrar may strike private company off register on application

 

(1)        On application by private company, the registrar of companies may strike the company’s name off the register.

 

(2)        An application by a company under this section shall –

           Be made on its behalf by its directors or by a majority of them,

           Be in the prescribed form, and

           Contain the prescribed information.

 

(3)        The registrar shall not strike a company off under this section until after the expiration of 3 months from the publication by him in the Official Bulletin of a notice –

           Stating that he may exercise his power under this section in relation to the company, and

           Inviting any person to show cause why he should not do so.

 

(4)        Where the registrar strikes a company off under this section, he shall publish notice of the fact in the Official Bulletin;

 

(5)        On the publication in the Official Bulletin of a notice under subsection (4) the company to which the notice relates is dissolved.

 

(6)        However –

 

           the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company has not been dissolved.

 

           Nothing in this section affects the power of the court to wind up a company the name of which has been struck off the register. 

 

 Section 286 - Property of dissolved company

 

Where a company is dissolved, all property and tights whatsoever vested in or held in trust for the company immediately before its dissolution shall subject and without prejudice to any order which may at any time be made by the court under section 283 or section 284 be deemed to be bona vacantia, and shall accordingly belong to the government.

 

Section 287 - Power of Government to disclaim title of property

 

(1)        Where any property vests in the Government under section 286, the government’s title thereto under that section may be disclaimed by a notice signed by the Attorney General.

 

(2)        Where a notice of disclaimer under this section is executed as respects any property, that property shall be deemed not to have vested in the Government under section 286 and subsequent (2) and (5) of section 282 shall apply in relations to the property as it had been disclaimed under subsection (1) of section 282 immediately before the dissolution of the company.

 

Companies Liquidation Account

 

Section 288 - Companies Liquidation Account

 

An account to be called the Companies Liquidation Account shall be kept by the official receiver with the National Bank of Somaliland, and all moneys received by the official receiver in respect of proceedings under this Act in connection with the winding up of companies shall be paid to that account.

 

Section 289- Investment of surplus funds

 

(1)        Whenever the cash balance standing to the credit of the Companies Liquidation Account in excess of the amount which, in the opinion of the official received, is required for the time being  to answer demands in respect of companies’ estates, the official receiver may invest the amount not so required, or any part thereof, in any investment authorized by law for the investment of trust funds or may place the same or part thereof, on fixed deposit with the National Bank of Somaliland.

 

(2)        The dividends and interest accruing from any money so invested or placed on deposit shall be paid by the official receiver to the credit of a separate account, to be called the Companies Contingency Fund to be kept by him at the National Bank of Somaliland.

 

Rules and Fees

 

Section 290 - Rules and fees for winding up

 

(1)        The Minister may make rules for carrying into effects the objects of this Act so far as relates to the winding up of, and without prejudice to the generation of the foregoing power, for providing for any matter or thing which by this Act is to be or may be provided for by rules.

 

(2)        There shall be in respect of proceedings under his Act in relation to the winding up of companies such fees as the Minister may prescribe by rules made under sub-section (1).

 

(3)        No rules which are in the nature of the rules of court shall be made under this section except after obtaining the advice of the Chief Justice.

 

PART XVI

 

COMPANIES INCORPORATED  OUTSIDE SOMALILAND

 

Chapter I. Provisions as to Establishment of Place of Business in Somaliland

 

Section  291 - Application of sections 292-300

 

(1)        The next nine following sections shall apply to all foreign companies, that is to say, companies incorporated outside Somaliland which after [date of commencement of the Act] have established a place of business in Somaliland and companies incorporated outside Somaliland which have [date of commencement of the Act] established a place of business in Somaliland on and after the [date of commencement of the Act]

 

(2)        A foreign company shall not be deemed to have a place of business in Somaliland solely on account of its doing business through an agent in Somaliland at the place of business of the agent.

 

Section 292 - Documents to be delivered to registrar by foreign companies carrying on business in Somaliland

 

(1)  Foreign companies which, after the [date of commencement of the Act]  establish a place of business within Somaliland shall, within thirty days of the establishment of the place of business deliver to the registrar for registration –

 

(a)  A  certified copy of the charter, statutes or memorandum and articles of the company or other instrument constituting or defining the constitution of the company, and, if the instrument is not written in the English language, a certified translation thereof;

 

(b)  A list of the directors and secretary of the company containing the particulars mentioned in the next following subsection;

 

(c)  The names and postal addresses of some one or more persons resident in Somaliland authorized to accept on behalf of the company service of process and any notices required to be served on the company;

 

(d)  The full address of the registered or principal office of the company.

 

(2)        The list referred to in paragraph (b) of the foregoing subsection shall contain the following particulars with respect to each director and secretary –

 

(a)  In the case of an individual, his present family name and  surname, his usual postal address, his nationality and his business occupation, if any; and

 

(b) In the case of a corporation, its corporate name and registered or principal office, and its postal address:

 

Provided that, where all the partners in a firm are joint secretaries of the company, the name and principal office of the firm maybe stated instead of the particulars mentioned in this subsection.

 

Subsection (1) of section 118 of this Act shall apply for the purpose of the construction of references in this subsection to present and former last names and surnames as they apply for the purpose of the construction of such references in that section.

 

(3)  If any charge, being a charge which ought to have been included in the statement required by paragraph (c) of subsection (1) of this section, is not so included, it shall be void as regards property in Somaliland against the liquidator and any creditor of the company.

 

Section 293 - Certificate of registration and power to hold land  

 

(1)        On the registration of the documents specified in the last foregoing section the registrar shall certify under his hand that the company has complied with the provisions of that section and such certificate shall be conclusive evidence that the company is registered as a foreign company under this Act.

 

(2)        From the date of registration under this Act, a foreign company shall have the same power to hold land in Somaliland as if it were a company under this Act.

 

Section 294 - Returns to be delivered to registrar by foreign company 

 

(1)        If any alteration is made in –

 

(a) the charter, statutes, or memorandum and articles of a foreign company or any such instrument as a foresaid; or

 

(b) the directors or secretary of foreign company or the particulars contained in the list of the directors and secretary; or

 

(c) the names or postal addresses of the persons authorised to accept service on behalf of a foreign company; or

 

(d) the address of the registered or principal office of a foreign company, the company shall within sixty days, deliver to registrar for registration a return containing the prescribed particulars of the alteration.

 

(2)        Where in the case of a company to which this Part of this Act applied –

 

           a winding up order is made by; or

 

           proceedings substantially similar to a voluntary winding up of the company under this Act are commenced in, a court of the country in which such company was incorporated, the company shall within thirty days of the date of the making of such order or the commencement of such proceedings, as the cause may be, deliver to the registrar a return containing the prescribed particulars relating to the making of such order or the commencement of such proceedings and shall cause the prescribed advertisements in relation thereto to be published.

 

Section 295 -  Accounts of foreign company  

 

(1)        Every foreign company shall, in every calendar year, make out a balance sheet and profit and loss account and, if the company is a holding company, group accounts in such form, and containing such particulars and including such documents, as under the provisions of this Act (subject, however, to any prescribed exceptions) it would, if it had been a company within the meaning of this Act, have been required to make out and lay before the company in general meeting, and deliver copies of those documents to the registrar for registration:

 

(2)       If any such document as is mentioned in subsection (1) of this section is not written in English language there shall be annexed

        

Section 296 - Obligation to state name of foreign company, whether limited and country where incorporated 

 

(1)         Every foreign company shall –

 

  (a) in every prospectus inviting subscriptions for its shares or debentures in Somaliland state the country in which the company is incorporated; and

 

 (b) conspicuously exhibit in legible roman characters or every place where it carries on business in Somaliland, the name of the company and the country in which the company is incorporated; and

 

(c) cause the name of the company and of the country in which the company is incorporated to be stated in legible roman letters  in all bill-heads and letter-paper, and in all notices and other official publications of the company; and

 

(d) if the liability of the members of the company is limited, cause notice of that fact to be stated in the English language in legible roman characters in every such prospectus as aforesaid and in all bill-heads, letter-paper, notices and other official publications of the company in Somaliland and to be affixed on every place where it carries on its business.

 

(2)        Every foreign company shall in all trade catalogues, trade circulars, show cards and business letters on or in which the company’s name appears and which are issued or sent by the company to any person in Somaliland, state in legible roman letters with respect to every director being a corporation, the corporate name, and with respect to every director, being an individual, the following particulars --

 

           his present family name, or the initials thereof, and present surname;

 

           any former family names and surnames;

 

           his nationality:

 

Provided that, if special circumstances exist which render it in the opinion of the registrar expedient that such an exemption should be granted, the registrar may by order grant, subject to such conditions as may be specified in the order, exemption from the obligations imposed by this section.

 

Section  297 - Service on foreign company 

 

Any process or notice required to be served on foreign company shall be sufficiently served if addressed to any person whose name has been delivered to the registrar under the foregoing provisions of this Part of this Act and left at or sent by registered post to the address  which has been so delivered:

 

Provided that –

 

(a)  where any such company makes default in delivering to the registrar the name and address of a person resident in Somaliland who it is authorised to accept on behalf of the company service of process or notices; or

 

(b)  if at any time all the persons whose names and addresses have been so delivered are dead or have ceased so to reside, or refuse to accept service on behalf of the company or for any reason cannot be served, a document may be served on the company leaving it at or sending it by registered post to any place of business established by the company in Somaliland.

 

Section 298 - Cessation of business by foreign company and striking off register

 

(1)        If any foreign company ceases to have a place of business in Somaliland it shall  forthwith give notice in writing of the fact to the registrar for registration and is from the date on which notice is so given the obligation of the company to deliver any document to the registrar shall cease and the registrar shall strike the name of the company off the register.

 

(2)        Where the registrar has reasonable cause to believe that a foreign company has ceased to have a place of business in Somaliland, he may send by registered post to the person authorised to accept service on behalf of the company and, if more than one, to all such persons, a letter inquiring whether the company is maintaining a place of business in Somaliland.

 

(3)        If the registrar receives an answer to the effect that the company has ceased to have a place of business in Somaliland or does not within three months receive any reply, he may strike the name of the company off the register.

 

Section 299 - Penalties

 

If any foreign company fails to comply with any of the foregoing provisions of this Part of this Act the company and every officer or agent of the company and every officer or agent of the company who knowingly and wilfully authorises or permits the default, shall be liable to a fine and for continued contravention, to a daily default fine.

 

Section 300 - Interpretation of sections 292 to 299

 

For the purposes of the foregoing provision of this Part of this Act –

“Certified” means certified in the prescribed manner to be a true copy or a correct translation;

“Director”, in relation to a company, includes any person in accordance with whose directions or instructions the director of the company are accustomed to act;

“Place of business” includes a share transfer or share registration office;

“Prospectus” has the same meaning as when used in relation to a company includes any person occupying the position of secretary by whatever name called.

Prospectuses.

 

Chapter II - Prospectuses

 

Section 301- Dating of prospectus and particulars to be contained therein

 

(1) It shall not be lawful for any person to issue, circulate or distribute in Somaliland any prospectus offering for subscription shares in or debentures of a company incorporated outside Somaliland, whether the company has or has not established, or when formed will or will not establish, a place of business in Somaliland unless the prospectus is date and –

 

  (a) Contains particulars with respect to the following matters —  

       

 (i) The instrument constituting or defining the constitution of the company;

  

     (ii) The enactments, or provisions having the force of an enactment, by   or under which the incorporation of the company was effected;

  

     (iii)  an address in Somaliland where the said instrument, enactments or provisions, or copies thereof, and if the same are in a language other than English an English translation thereof certified in the prescribed manner, can be inspected;

  

     (iv)  whether the company has established a place of business in Somaliland , and, if so the address of its principal office in Somaliland;

 

           Subject to the provisions of this section, states the matters specified in Part I of the Third Schedule to this Act and sets out the reports specified Part II of that Schedule, subject always to the provisions contained Part III of that Schedule:

 

Provided that the provisions of sub-graphs (i), (ii) and (iii) of paragraph (a) of this subsection shall not apply in the case of a prospectus issued more than two years after the date at which the company is entitled to commence business, and, in the application of Part I of the Third Schedule for the purposes of this subsection, paragraph 2 thereof shall have effect with the substitution, for the reference to the articles, of a reference to the constitution of the company.

 

(2)        Any condition requiring or binding an applicant for shares or debentures to waive compliance with any requirement imposed by virtue of paragraph (a) or (b) of the foregoing subsection, or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.

 

(3)        It shall not be lawful for any person to issue to any person in Somaliland a form of application for shares in or debentures of such a company or intended company as is mentioned in subsection (1) of this section unless the form is issued with a prospectus which complies with this Part of this Act and the issue whereof in Somaliland does not contravene the provisions of section 302 of this Act:

 

Provided that this subsection shall not apply if it is shown that the form of application was Issued in connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to the shares or debentures.

 

(4)        In the event of non-compliance with or contravention of any of the requirements imposed by paragraphs (a) and (b) of subsection (1) of this section a director, or other person responsible for the prospectus shall not incur any liability by reason of the non-compliance or contravention, if –

 

           As regards any matter not disclosed, he proves that he was not cognisant thereof; or

 

           He proves that the non-compliance or contravention arose from an honest mistake of fact on his part ; or

 

           the non-compliance or contravention was in respect of matters which, in the opinion of the court dealing with the case, were immaterial or were otherwise such as ought, in the opinion of that court, having regard to all the circumstance of the case, reasonably to be excused:

 

Provided that, in the event of failure to include in a prospectus a statement with respect to the matters contained in paragraph 16 of the Third Schedule to this Act, no director or other person shall incur any liability in respect of the failure unless it be proved that he had knowledge of the matters not disclosed.

 

(5)        This section—

 

           shall not apply to the issue to existing members or debenture holders of a company of a prospectus or form of application relating to shares in or debentures of the company, whether an applicant for shares or debentures will or will not have the right to renounce in favour of other persons;

 

           except in so far as it requires a prospectus to be dated, shall not apply to the issue of a prospectus relating to shares or debentures which are or are to be in all respects uniform with shares or debentures previously issued, But, subject as aforesaid, this section shall apply to a prospectus or form of application whether issued on or with reference to the formation of a company or subsequently. 

 

(6) Nothing in this section shall limit or diminish any liability, which any person may incur under the general law or this Act, apart from this section.

 

Section 302 - Provision as to expert ‘s consent and allotment   

 

(1) It shall not be lawful for any person to issue, circulate or distribute in Somaliland, any prospectus incorporated or to be incorporated outside Somaliland, whether the company has or has not established, or when formed will or will not establish, a place of business in Somaliland –

 

           If, where the prospectus includes a statement purporting to be made by an expert, he has not given, or has before delivery of the prospectus for registration withdrawn, his written consent to the issue of the prospectus with the statement included in the form and context in which it is included or there does not appear in the prospectus a statement that he has given and has not withdrawn his consent as aforesaid; or

 

           If the prospectus doe not have the effect, where an application is made in pursuance thereof, of rendering all persons concerned bound by all the provisions (other than penal provisions) of section 52 and 53 of this Act so far as applicable.

 

(2)        In this section “expert” includes engineer, valuer, accountant and any other person whose profession gives authority to a statement made by him, and for the purposes of this section a statement shall be deemed to be included in a prospectus if it is contained therein or in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith.

 

Section 303 - Registration of Prospectus  

 

(1)  It shall not be lawful for any person to issue circulate or distribute in Somaliland any prospectus offering for subscription shares in or debentures of a company incorporated or to be incorporated outside Somaliland, whether the company has or has not established, or when formed will or will not establish a place of business in Somaliland, unless before the issue, circulation or distribution of the prospectus in other directors of the company as having been delivered to the registrar for registration , and the prospectus states on the face of it that a copy has been so delivered, and there is endorsed on or attached to the copy –

 

           Any consent to the issue of the prospectus required by section 303;

           A copy of any required by paragraph 14 of the Third Schedule to this Act to be stated in the prospectus or, in the case of a contract not reduced into writing, a memorandum giving full particulars thereof;

           Where the persons making any report required by Part II of that Schedule have made therein or have, without giving the reasons, indicated therein any such adjustments as are mentioned in paragraph 29 of that Schedule, a written statement signed by those persons setting out the adjustments and giving the reasons therefore;

 

(2)  The references in paragraph (b) of the foregoing subsection to the copy of a contract required thereby to be endorsed on or attached to a copy of the prospectus shall, in the case of a contract wholly or partly in a language other than English of the parts in a language other than English, as the case may be, being a translation and the reference to a copy of a contract required to be available for inspection shall include a reference to a copy of a translation thereof or a copy embodying a translation of parts thereof.

 

Section 304 - Penalty for contravention of sections 301, 302 and 303

 

Any person who is knowingly responsible for the issue, circulation or distribution of a prospectus, or for the issue of a form of application for shares or debentures, in contravention of any of the provisions of the four last foregoing sections 301,302 and 303 shall be liable to a fine.

 

 

 

Section 305 - Civil liability for mis-statement in prospectus

 

Section 38of this Act shall extend to every prospectus offering for subscription shares in or debentures of a company incorporated or to be incorporated outside Somaliland, whether the company has or has not established, or when formed will or will not establish, a place of business in Somaliland, with the substitution for reference to section 35 of reference to section 302.

 

Section 306 - Interpretation of provisions as to prospectus

 

(1)         Where any document by which any shares in or debentures of a company incorporated outside Somaliland are offered for sale to the public would, if the company concerned had been a company within the meaning of this Act, have been deemed by virtue of section 33 of this Act to be a prospectus issued by the company, that document shall be deemed to be, for the purpose of this Part of this Act, a prospectus issued by the company.

 

(2)        An offer of share or debentures for subscription or sale to any person whose ordinary business it is to buy or sell shares or debentures, whether as principal or agent shall not be deemed an offer to the public for the purposes of this Part of this Act.

 

(3)        In this Part of this Act, “prospectus”, “shares” and “debentures” have the same meaning as when used in relation to a company incorporated under this Act.

 

PART XVII

 

GENERAL PROVISION AS TO REGISTRATION

 

Chapter I -  The Registrar Of Companies, His Functions And Offices

 

Section 307 - Inspection of records kept by the registrar

 

(1)        Any person may inspect any records kept by the registrar for the purposes of the companies Act and may require –

 

           A copy in such form as the registrar considers appropriate, of any information contained in those records, or

           A certified copy of , or extract from, any such record.

 

(2)        The right of inspection extends to the originals of documents delivered to the registrar in legible from only where the record kept by the registrar of the contents of the document is illegible or unavailable.

 

(3)        A copy of or extract from a record kept at the office for the registration of companies at Hargeysa, certified in writing by the registrar (whose official position it is unnecessary to prove) to be an accurate record of the contents of any document delivered to him under the Companies Act, is in all legal proceedings admissible in evidence as of equal validity with the original document and as evidence of any fact stated therein of which direct oral evidence would be admissible.

 

(4)        Copies of or extracts from records furnished by the registrar may, instead of being certified by him in writing to be an accurate record, be sealed with his official seal.  

 

Section 308 - Public notice by registrar of receipt and issue of certain documents 

 

(1)        The registrar of companies shall cause to be published in the Official Bulletin/Gazette notice of the issue or receipt by him of documents of any of the following description (stating in the notice the name of the company, the description of document and the date of issue or receipt.) –

 

           Any certificate of incorporation of a company,

           Any document making or evidencing an alteration in a company’s memorandum or articles,

           Any notification of a change among the directors of a company,

           any return of allotment of a public company 

           any notice of a change in the situation of a company’s registered office, 

           any copy of a winding up order in respect of a company

           any return by a liquidator of the final meeting of a company on a winding up

           any copy of a draft of the terms of a scheme delivered to the registrar of companies,

 

(2)        In section 31 “official notification” means

 

           In relation to anything stated in a document of the above descriptions, the notification of that document in the Gazette under this section,

           In relation to the appointment of a liquidator in a voluntary winding up, the notification of it in the Gazette.    

 

And “officially notified” is to be construed accordingly.

 

 

Section 309 – Regulations

 

The president of the Somaliland Republic, on the proposal of the Board, and having heard the Minister of Commerce and Industry and the Council of Ministers, may issue regulation for the proper implementation of this Law.

 

Section 310 – Entry into force

 

This Law shall come into a force following its signature by the H.E. President of the Republic of Somaliland.

 

 

 

Mohamed Hussein Osman                                                     Ahmed Mohamed Adan

Secretary General of The HoR                                                Chairman of the HoR

 

 

 ________________________________

 

 THIRD SCHEDULE

 

Form and contents of a prospectus.

Matters be specified in Prospectus and Reports

 

 

PART I. MATTERS TO BE SPECIFIED

 

The following are the items to be included in a prospectus as per Third Schedule of the Act.

 

the number of founders or deferred shares, and the nature and extent of the interest of the holders in the company’s property and profits.

 

a)       The number of shares, if any, fixes by the Articles as the qualification of a director, and the remuneration of directors for their services.

 

b)      The names, occupations and addresses of the director of proposed directors

 

c)       The minimum subscription, i.e. the minimum amount considered by the persons issuing the prospectus to be necessary for:

 

d)      The preliminary expenses incurred in the issue,

 

e)      The purchase of any property intended to be bought out of the proceeds of the issue

f)        The purchase of any property intended to be bought out of the proceeds of the issue

g)      The repayment of any money borrowed by the company in respect of any of the foregoing matters

h)       Sufficient working capital.

 

i)        The time of opening of the subscription list

 

j)        The amount payable on allocation and allotment of each share, and in the case of subsequent offer of shares, the amount offered and allotted during the two preceding years.

 

a)       The number, description and amount of any shares for which any person has or entitled to be given an option to subscribe; and

 

b)      The period during which the option is exercisable

 

c)       The price to be paid

 

d)      The consideration given for the option

 

e)      The names and address of the persons entitled to the options, or the relevant shares. 

f)        The number and amount of shares issued or agreed to be issued during the two preceding years as fully or partly paid up otherwise than in cash, and the consideration for such issue.

 

g)      Particulars of the vendors of any property to be purchased out of the issue, giving details of the price and particulars of any transaction in relation to the property purchased from the vendors, specifying  of the amount payable for good will.

 

h)       Particulars of any underwriting commission paid within the two preceding years or payable for subscribing for shares of the company

 

i)        The amount or estimated amount of the preliminary expenses and to the expenses of the issue, and the persons by whom they have been respectively paid or payable.

 

j)        The amount paid or any benefit given within two preceding years or intended to be paid or given, to any promoter and the consideration thereof.

 

k)       The dates of, parties to and the general nature of every material contract , unless made in the ordinary course of the company’s business or made more than two  years before the issue of the prospectus. Material contract here means one, which might have, if known, influence the decision of the individual for or against subscribing to the issue.

 

l)        The names and address of the auditors, if any

 

m)     Full particulars of the nature and extent of the interest, if any, of every director in the promotion of the company , or in any property acquired by the Company, and all sums paid to him in cash as an inducement to become a director, or as a share qualification, or in return of services.

 

n)       The rights attached to the various classes of shares , e.g. the right of voting at meetings or receiving dividends

 

o)      The length of time during which the company ‘s business or the business

      Has been carried on , if less than three years.   

 

PART II REPORTS TO BE SET OUT IN THE PROSPECTUS

 

A report by the auditors of the company stating :

 

Profit or losses of the company in each of the five financial years preceding the issue of the prospectus;

 

The rate of dividends, if any, paid by the company in respect of each classes of shares in each of those years;

 

The assets and liabilities at the last date to which the accounts of the company were made up ;

 

If the proceeds, or any of the proceeds, of the issue of the shares are to be applied directly or indirectly in the purchase of any business, then a report must be made on the profit and losses of such business during the five financial years immediately preceding the issue of the prospectus, and also on the assets and liabilities of the business at the last date to which the account were made up.

 

FORM OF MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES

 1. The name of the Company is …………………………………………………….

2. The registered office of the Company will be situated in Somaliland.   

3. The objects for which the Company is established are ….……………………………

 ………………………………………………………………………………………………….........................

..………………………………………………………………………………………………….

4.  The liability of the members is limited.

5. The share of the capital of the Company is …………………………………………..

divided into …………………….shares of……………………………each.

6. We, the several persons whose names and addresses are subscribed, are desirous of being formed into a Company, in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the company set opposite our respective names.

Names, Postal Addresses

 and Number of shares taken

 by each subscriber                                  Occupation of subscribers 

 1………………………………………………………                       ……………………….

 

2………………………………………………………                       ………………………….

 

3……………………………………………………….                        …………………………

 

4…………………………………………………………                    …………………………..

 

5…………………………………………………………                    …………………………..

 

6………………………………………………………….                    ……………………………

 

7…………………………………………………………                     ……………………………

 

Dated this ……………………………………..

 

Witness to all above written signatures, …………………………………………………                                                      

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