Companies Act (Cap. 386), article 327

327. (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 m embers, or any class of them: (a) the court may, on the application of the company or any creditor or member of it or, in the case of a company being wound up, the liquidator, order a meeting of the 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 court directs; or COMP ANIES [CAP. 386. 197 Cap. 474. (b) the company or any creditor, w ith the sanction of not less than two-thirds of the creditors or class of creditors, may seek the appointment of a mediator in terms of article 20 of the Mediation Act, and suc h mediation shall organise a meeting of the creditors, or class of creditors, as the case may be, in order for such creditors and the company to reach a compromise or arrangement. The principles under the Mediation Act shall apply. (2) (a) If a majority in number representing two-thirds in value of the creditors or class of creditors or members or clas s of members, as the case may be, present and voting either in perso n or by proxy at the meeting called in terms of sub-article (1)(a), agree to any compromise or arrangement, t he compromise or arrangement, if sanctioned by the court, shall be binding on all creditors o r the class of creditors or on the members or class of members, as th e case may be, and also on the company or, in the case of a compa ny in the course of being wound up, on the liquidator and contributories of the company. (b) If all the creditors, as a r esult of the mediation process, execute a written agreement containing a compromise or arrangem ent in terms of sub-article (1)(b), such arrangement shall be bindi ng on all creditors, and also on the company or, in the case of a company in the course of being wound up, on the liquidator. (3) The court’s order, compromise or agreement reached during mediation in terms of sub-article (2) shall have no effect unti l a copy of every such order, c ompromise or arrangement has been deliver ed to the Registrar for registration in accordance with article 329(5 ); and a copy of every such order, compromise or arrangement shall be annexed to every copy of the company’s memorandum issued after order, compromise or arrangement has been made. (4) If a company makes default in complying with sub-article (3), the company and every officer thereof who is in default sh all be liable to a penalty. (5) For the purposes of this article and article 328 - (a) "company" means any compan y which is unable to pay its debts in terms of article 214(5) or in those c i r c u m s t a n c e s w h e r e t h e c o u r t i s o f t h e o p i n i o n t h a t there are grounds of sufficient gravity that would have otherwise warranted the dissolution and consequent winding up of the company in terms of article 214(2)( b)(iii); and (b) "arrangement" includes a reorganisation of the company’s share capital by th e consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods. Information as to compromise to be circulated. Amended by: XI. 2017.14.