Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 411

411. (1) Where a compromise or arrangement is proposed between a Part 5.1 body
and its creditors or any class of them or between a Part 5.1 body and its
members or any class of them, the Court may, on the application in a summary
way of the body or of any creditor or member of the body, or, in the case of a
body being wound up, of the liquidator, order a meeting or meetings of the
creditors or class of creditors or of the members of the body or class of
members to be convened in such manner, and to be held in such place or places,
as the Court directs and, where the Court makes such an order, the Court may
approve the explanatory statement required by paragraph 412 (1) (a) to
accompany notices of the meeting or meetings.

(2) The Court shall not make an order pursuant to an application under
subsection (1) unless:

   (a)  14 days notice of the hearing of the application, or such lesser
        period of notice as the Court or the Commission permits, has been
        given to the Commission; and

   (b)  the Court is satisfied that the Commission has had a reasonable
        opportunity:

        (i)    to examine the terms of the proposed compromise or arrangement
               to which the application relates and a draft explanatory
               statement relating to the proposed compromise or arrangement;
               and

        (ii)   to make submissions to the Court in relation to the proposed
               compromise or arrangement and the draft explanatory statement.
(3) In subsection (2), "draft explanatory statement", in relation to a
proposed compromise or arrangement between a body and its creditors or any
class of them or between a body and its members or any class of them, means a
statement:

   (a)  explaining the effect of the proposed compromise or arrangement and,
        in particular, stating any material interests of the directors of the
        body, whether as directors, as members or creditors of the body or
        otherwise, and the effect on those interests of the proposed
        compromise or arrangement in so far as that effect is different from
        the effect on the like interests of other persons; and

   (b)  setting out such information as is prescribed and any other
        information that is material to the making of a decision by a creditor
        or member of the body whether or not to agree to the proposed
        compromise or arrangement, being information that is within the
        knowledge of the directors of the body and has not previously been
        disclosed to the creditors or members of the body.

(4) A compromise or arrangement is binding on the creditors, or on a class of
creditors, or on the members, or on a class of members, as the case may be, of
the body and on the body or, if the body is in the course of being wound up,
on the liquidator and contributories of the body, if, and only if:

   (a)  at a meeting convened in accordance with an order of the Court under
        subsection (1):

        (i)    in the case of a compromise or arrangement between a body and
               its creditors or a class of creditors-the compromise or
               arrangement is agreed to by a majority in number of the
               creditors, or of the creditors included in that class of
               creditors, present and voting, either in person or by proxy,
               being a majority whose debts or claims against the company
               amount in the aggregate to at least 75% of the total amount of
               the debts and claims of the creditors present and voting in
               person or by proxy, or of the creditors included in that class
               present and voting in person or by proxy, as the case may be;
               and

        (ii)   in the case of a compromise or arrangement between a body and
               its members or a class of members-the compromise or arrangement
               is agreed to by a majority in number of the members, or of the
               members included in that class of members, present and voting,
               either in person or by proxy, being, in the case of a body
               having a share capital, a majority whose shares have nominal
               values that amount, in the aggregate, to at least 75% of the
               total of the nominal values of all the shares of the members
               present and voting in person or by proxy, or of the members
               included in that class present and voting in person or by
               proxy, as the case may be; and

   (b)  it is approved by order of the Court.

(5) Where the Court orders 2 or more meetings of creditors or of a class of
creditors, or 2 or more meetings of members or of a class of members, to be
held in relation to the proposed compromise or arrangement:

   (a)  in the case of meetings of creditors-the meetings shall, for the
        purposes of subsection (4), be deemed together to constitute a single
        meeting and the votes in favour of the proposed compromise or
        arrangement cast at each of the meetings shall be aggregated, and the
        votes against the proposed compromise or arrangement cast at each of
        the meetings shall be aggregated, accordingly; or

   (b)  in the case of meetings of members-the meetings shall, for the
        purposes of subsection (4), be deemed together to constitute a single
        meeting and the votes in favour of the proposed compromise or
        arrangement cast at each of the meetings shall be aggregated, and the
        votes against the proposed compromise or arrangement cast at each of
        the meetings shall be aggregated, accordingly.

(6) The Court may grant its approval to a compromise or arrangement subject to
such alterations or conditions as it thinks just.

(7) Except with the leave of the Court, a person shall not be appointed to
administer, and shall not administer, a compromise or arrangement approved
under this Act between a body and its creditors or any class of them or
between a body and its members or any class of them, whether by the terms of
that compromise or arrangement or pursuant to a power given by the terms of a
compromise or arrangement, if the person:

   (a)  is a mortgagee of any property of the body;

   (b)  is an auditor or an officer of the body;

   (c)  is an officer of a body corporate that is a mortgagee of property of
        the body;

   (d)  is not a registered liquidator;

   (e)  is an officer of a body corporate related to the body; or

   (f)  unless the Commission directs in writing that this paragraph does not
        apply in relation to the person in relation to the body-has at any
        time within the last 12 months been an officer or promoter of the body
        or of a related body corporate.

(8) Paragraph (7) (d) does not apply in relation to a body corporate
authorised by or under:

   (a)  in any case-an Act; or

   (b)  if the Part 5.1 body concerned is incorporated in a State or
        Territory-a law in force in that State or Territory; to administer the
        compromise or arrangement concerned.

(9) Where a person is or persons are appointed by, or under a power given by,
the terms of a compromise or arrangement, to administer the compromise or
arrangement:

   (a)  section 425, subsections 427 (2) and (4) and sections 428, 432 and 434
        apply in relation to that person or those persons as if:

        (i)    the appointment of the person or persons to administer the
               compromise or arrangement were an appointment of the person or
               persons as a receiver and manager, or as receivers and
               managers, of property of the body; and

        (ii)   a reference in any of those sections or subsections to a
               receiver, or to a receiver of property, of a corporation were a
               reference to that person or to those persons; and

   (b)  section 536 applies in relation to that person or those persons as if:

        (i)    the appointment of the person or persons to administer the
               compromise or arrangement were an appointment of the person or
               persons as a liquidator of the body; and

        (ii)   a reference in that section to a liquidator were a reference to
               that person or to those persons.

(10) An order of the Court made for the purposes of paragraph (4) (b) does not
have any effect until an office copy of the order is lodged with the
Commission, and upon being so lodged, notwithstanding subsection 171 (5), the
order takes effect, or shall be deemed to have taken effect, on and from the
date of lodgment or such earlier date as the Court determines and specifies in
the order.

(11) Subject to subsection (12), a copy of every order of the Court made for
the purposes of paragraph (4) (b) shall be annexed to every copy of the
memorandum of the body issued after the order has been made or, in the case of
a body not having a memorandum, to every copy so issued of the constitution of
the body.

(12) The Court may, by order, exempt a body from compliance with subsection
(11) or determine the period during which the body shall comply with that
subsection.

(13) Where a compromise or arrangement referred to in subsection (1) (whether
or not for the purposes of or in connection with a scheme for the
reconstruction of a body or bodies or the amalgamation of any 2 or more
bodies) has been proposed, the directors of the body shall:

   (a)  if a meeting of the members of the body by resolution so
        directs-instruct such accountants or solicitors or both as are named
        in the resolution to report on the proposals and send their report or
        reports to the directors as soon as practicable; and

   (b)  if a report or reports is or are obtained pursuant to paragraph
        (a)-make the report or reports available at the registered office of
        the body for inspection by the shareholders and creditors of the body
        at least 7 days before the day of the meeting ordered by the Court to
        be convened as provided in subsection (1).

(14) If default is made in complying with subsection (11), the body
contravenes this subsection.

(15) If default is made in complying with subsection (13), each director of
the body contravenes this subsection.

(16) Where no order has been made or resolution passed for the winding up of a
Part 5.1 body and a compromise or arrangement has been proposed between the
body and its creditors or any class of them, the Court may, in addition to
exercising any of its other powers, on the application in a summary way of the
body or of any member or creditor of the body, restrain further proceedings in
any action or other civil proceeding against the body except by leave of the
Court and subject to such terms as the Court imposes.

(17) The Court shall not approve a compromise or arrangement under this
section unless:

   (a)  it is satisfied that the compromise or arrangement has not been
        proposed for the purpose of enabling any person to avoid the operation
        of any of the provisions of Chapter 6; or

   (b)  there is produced to the Court a statement in writing by the
        Commission stating that the Commission has no objection to the
        compromise or arrangement; but the Court need not approve a compromise
        or arrangement merely because a statement by the Commission stating
        that the Commission has no objection to the compromise or arrangement
        has been produced to the Court as mentioned in paragraph (b).