The Gazette 1982

CIA/E T N

JANUARY/FEBRUARY 1982

shall be deemed to surrender his security, unless the

Court on application is satisfied that the omission to

value the security has arisen from inadvertence". The

Court is normally lenient in interpreting this proviso. It

will usually make the Creditor pay for the costs of the

application, but it is to be noted that a mistake as to

value is not "inadvertence" nor can there be any

"inadvertence" where there is a deliberate election

(Re.

Piers

(1898) (1 QB 627) ).

This, however, is not the end of the matter, as Rule 73

of the same Statutory Instrument provides that such a

statement (as referred to in Rule 70) does

not

apply to a

Meeting of Creditors held pursuant to Section 266, i.e.

the first Creditors' Meeting. Therefore it would appear

that a secured Creditor

entitled to vote.

solicitor

claiming a lien for his costs is in a similar situation to a

secured Creditor

(Re. Safety Explosives

[1904] 1 Ch.

266).

proxy, can vote in favour of any resolution which

directly or indirectly places either himself or his partner

or employer in a position to receive remuneration out

of the assets of the Company otherwise than as a

Creditor rateable with the other Creditors of the

Company - no further comment is necessory on this

Rule.

(d) Poll - There is no provision in Statutory Instrument

No. 28 of 1966 entitling a person to call a Poll; Section

137 of the Companies Act, 1963 applies only to General

Meetings of the

members

of the Company. If there are

only a few people at the meeting, it is possible to count

both the numbers and the value but otherwise the voting

should be by ballot.

Adjournment.

There are three instances when adjournments may

arise:

(a) Under Rule 66 of Statutory Instrument No. 28, the

Chairman may with the consent of the Meeting, adjourn

it from time to time and from place to place. The

adjourned Meeting should be held at the same place as

the original Meeting unless the resolution for the

adjournment provides otherwise, or unless the Court

provides otherwise.

(b) If within fifteen minutes from the time appointed for

the Meeting a quorum (at least three Creditors entitled

to vote) is not present, then the Meeting is adjourned to

the same day in the following week at the same time and

place or to such other day or time or place as the

Chairman may appoint but so that the day he does

appoint cannot be less than seven nor more than twenty

one days from the date from which the Meeting was

originally adjourned.

section (5) of this section provides that if the General

Meeting of the Company at which the Resolution to

wind up is being proposed is adjourned for any reason,

then any resolution passed at the subsequent meeting of

the Creditors held on the same day or the day after shall

have effect as if it had been passed immediately after the

passing of the members Resolution to wind up the

Company.

Committee of Inspection:

Before the termination of the Creditors' Meeting the

Committee of Inspection should be elected. Section 268

(1) provides that the Creditors may, if they think fit,

either at this meeting or a later Meeting, appoint a

Committee of Inspection consisting of not more than 5

persons. The Company has the right to appoint a

maximum of three persons, the appointment to take

place either at the Meeting to wind up or at a subsequent

general Meeting. The Creditors may resolve, again by a

majority in number and value, not to accept the

Company's nominees, in which case such nominees are

not qualified to sit on the Committee of Inspection

unless the Court otherwise orders.

Solicitation:

Attention is drawn to Rule 80 of Statutory Instrument

No. 28 of 1966, which provides that if the Court is

satisfied that solicitation has been used by or on behalf

of a liquidator in obtaining proxies or procuring his own

appointment as liquidator, the Court may order that no

remuneration be allowed to the person by whom or on

whose behalf the solicitation was expressed.

The

Liquidator

Solicitor:

It is not easy to decide whether a person who is a

Solicitor for the Company should act for a liquidator

when appointed. The general view is that he should not,

as there may be a conflict of interest if the Directors

have to be sued; there may however be exceptions to the

general rule.

In conclusion, it seems clear that it is time that Rule

63 was abolished and the true intention be given to

Section 267 (2) of the Companies Act, 1963. Also it

might be added that the penalties imposed by Section

266 (6) of the Act have, through inflation, become

inadequate. A Company need not call a Creditors

Meeting, though insolvent and the members can appoint

their own liquidator. A creditor has fourteen days

within which to object to the Liquidator so appointed

but, if he does not do so, then the liquidation is valid

even though no Creditors' Meeting was convened. This

procedure is called "Centrebinding", being named after

an English decision on the same point

(Re. Centrebind

Limited

[1966] 3 A11ER. 889). The only penalty

imposed on the Directors of the Company in this

instance is a £100,000 fine. It may be noted that in the

United Kingdom, since the coming into effect of the

Companies Act 1980, the fines in that regard are, for

conviction and indictment, unlimited and for summary

conviction, up to £1,000. •

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