Chapter 6: Business Rescue and Compromise With Creditors
Part A: Business rescue proceedings
s137: Effect on shareholders and directors
- (1) During business rescue proceedings an alteration in the classification or status of any issued securities of a company, other than by way of a transfer of securities in the ordinary course of business, is invalid except to the extent:
- (a) that the court otherwise directs; or
- (b) contemplated in an approved business rescue plan.
- (2) During a company's business rescue proceedings, each director of the company:
- (a) must continue to exercise the functions of director, subject to the authority of the practitioner;
- (b) has a duty to the company to exercise any management function within the company in accordance with the express instructions or direction of the practitioner, to the extent that it is reasonable to do so;
- (c) remains bound by the requirements of section 75 concerning personal financial interests of the director or a related person; and
- (d) to the extent that the director acts in accordance with paragraphs (b) and (c), is relieved from the duties of a director as set out in section 76, and the liabilities set out in section 77, other than section 77(3)(a), (b) and (c).
- (3) During a company's business rescue proceedings, each director of the company must attend to the requests of the practitioner at all times, and provide the practitioner with any information about the company's affairs as may reasonably be required.
- (4) If, during a company's business rescue proceedings, the board, or one or more directors of the company, purports to take any action on behalf of the company that requires the approval of the practitioner, that action is void unless approved by the practitioner.
- (5) At any time during the business rescue proceedings, the practitioner may apply to a court for an order removing a director from office on the grounds that the director has:
- (a) failed to comply with a requirement of this Chapter; or
- (b) by act or omission, has impeded, or is impeding;
- (i) the practitioner in the performance of the powers and functions of practitioner;
- (ii) the management of the company by the practitioner; or
- (iii) the development or implementation of a business rescue plan in accordance with this Chapter.
- (6) Subsection (5) is in addition to any right of a person to apply to a court for an order contemplated in section 162.
Related Sections
s75: Director's personal financial interests
s76: Standards of directors conduct
s77: Liability of directors and prescribed officers
s162: Application to declare director delinquent or under probation
Related Regulations
No related regulations.
Related Notes
No related note.
Related Forms
No related forms.