At the last session of the Special Committee the debate had adjourned at the conclusion of section 128 which the Committee had agreed to delete. Therefore, the debate is to resume on section 129 and the Minister is to move amendment No. 179.
NEW SECTION
NEW SECTION.
I move amendment No. 179:
In page 108, before section 129, to insert the following new section:
"129.—Where a receiver of the property of a company is appointed, the provisions of this Chapter shall, with the necessary modifications, apply as if the references therein to the liquidator and to winding up were construed as references to the receiver and to receivership.".
This amendment would effect two changes to the present section 129 of the Bill. First, I propose omitting the present references to a receiver of "the whole or substantially the whole" of the property of a company since I fear that this loose wording would lead to a lot of uncertainty. In other words, I think it would be unreasonable to put receivers in a position where they had to make a judgment as to what was substantially the whole of a company's property. Indeed, it might discourage receivers from coming to a view as to whether the company was insolvent in the first place and from thereby activating the process of restricting the directors of the company.
Second, I feel that the words in lines 20 to 23 are unnecessary and that the section would be much clearer and simpler without them. Furthermore, the present wording is uncertain in that it is not specified to whom it must appear the company is insolvent, unlike a winding up where section 128 provides that this must be proved to the court or certified by the liquidator. The lines 20 to 23 that would be omitted read:
. . . and at the date of the commencement or at any time during the course of the receivership it appears that the company is unable to pay its debts, taking into account the contingent and prospective liabilities of the company,. . .
This section imports "receiver" into all the amendments we adopted at our last meeting, that is where the word "liquidator" now appears. It says that the receiver shall have the responsibility of initiating proceedings to restrict directors in a way that will require that if they were directors of an insolvent company, they would have to have subscribed capital as set out in paragraph (3) of amendment No. 175. Is that correct?
Yes.
Am I correct in thinking that the key issue is simply insolvency, that the only involvement here of either a receiver or a liquidator is that he is the person who certifies that insolvency exists? Is that his only part in it?
Yes, though he will have to demonstrate that to the court.
I know that. But if the court is satisfied that the company is insolvent, on a report from either a receiver or a liquidator, the restrictions and the black list etc. would come into effect. Is that correct?
"The restrictions" might be sufficient to say there.
We do not accept this approach at all. We think it is quite unnecessary to institute general restrictions on directors of insolvent companies simply because the company is insolvent. We contend that restrictions of any kind should apply only where there has been wrong doing of some kind, whether it be reckless or deliberate wrong-doing. However, the committee has disagreed with that and adopted this approach. That being so it is only logical that receivers should have the same role as liquidators. For that reason I do not see any objection to the amendment.
Amendment agreed to.