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Section 418 of Insolvency Act CAP 53: Power of liquidator to accept shares or membership rights as consideration for sale of company's property

    

(1) In this section—
(a) the transferor company is a company to which this section applies; and
(b) a transferee company, or a transferee limited liability partnership, is the company or partnership to which the property of the transferor company is proposed to be, or is to be, transferred or sold.
(2) This section applies to a company that is proposed to be, or is being, liquidated voluntarily if the whole or part of the company's business or property is proposed to be transferred or sold— (a) to a transferee company; or
(b) to a transferee limited liability partnership.
(3) With the required approval, the liquidator of the transferor company may receive, in compensation or part compensation for the transfer or sale—
(a) in the case of the transferee company, shares, policies or other similar interests in the transferee company for distribution among the members of the transferor company; or
(b) in the case of the transferee limited liability partnership—membership rights in the transferee limited liability partnership for distribution among the members of the transferor company.
(4) The approval required under subsection (3) is—
(a) in the case of a members' voluntary liquidation, a special resolution of the company, conferring either a general authority on the liquidator or an authority in respect of any particular arrangement; and
(b) in the case of a creditors' voluntary liquidation, the approval of either the Court or the liquidation committee (if any).
(5) As an alternative to subsection (3), the liquidator may, with the required approval, enter into any other arrangement under which the members of the transferor company may—
(a) in the case of the transferee company, instead of receiving cash, shares, policies or similar interests (or in addition to them), participate in the profits of, or receive any other benefit from, the transferee company; or
(b) in the case of the transferee limited liability partnership, instead of receiving cash or membership rights (or in addition to them), participate in some other way in the profits of, or receive any other benefit from, that partnership.
(6) A sale or arrangement in accordance with this section is binding on members of the transferor company.
(7) A special resolution is not invalid for purposes of this section only because it is passed before or concurrently with a resolution for voluntary liquidation or for appointing a liquidator, but, if an order for the liquidation of the company is made by the Court within twelve months after the date on which the resolution was passed, the special resolution is valid only if approved by the Court.
(8) This section applies to a transferee company even if it is not a company registered under the Companies Act (Cap. 486).

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Disclaimer: This document is not to be taken as legal advise.

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