THE COMPANIES ORDINANCE, 1972

Debentures

69.—(1) If a company issues or agrees to issue debentures of the same class to more than twenty-five persons in Seychelles, or to any one or more persons with a view to the debentures or any of them being offered for sale to more than twenty-five persons in Seychelles, the company shall before issuing any of the debentures execute a debenture trust deed in respect of them and procure the execution of the deed by the trustees appointed thereby.

(2)  For the purpose of this section, debentures shall be deemed to be issued to more than twenty-five persons if the debentures or the trust deed covering them permits the conlpany to issue further debentures which will form part of the same class as the debentures originally issued, and does not restrict the total number of persons to whom the original and any further debentures may be issued to not more than twenty-five.

(3)  For the purpose of this Ordinance, debentures belong to different classes if different rights attach to them in respect of—

(a)   the rate of, or dates for, payment of interest; or

(b)   the dates when, or the instalments by which, the principal of the debentures will be repaid, unless the difference is solely that the class of deben-tures will be repaid during a stated period of time and particular debentures will be repaid at different dates during that period according to selections made by the company, or by drawings, ballot or otherwise ; or

(c)   any right to subscribe for or convert the debentures into shares or other debentures of the company or any other company or corporation ;

(d) the powers of the debenture holders to realise any security ; and debentures further belong to different classes if they do not rank equally for payment when any security vested in the debenture holders or the trustees of the covering trust deed (if any) is realised or when the company is wound up, that is to say, if in those circumstances the subject matter of any such security or the proceeds thereof, or any assets available to satisfy the debentures, are not to be applied in satisfying the debentures strictly in proportion to the amount of principal, premiums and arrears of interest to which the holders of them are respectively entitled.

(4)  No debenture trust deed shall cover more than one class of debentures, whether the trust deed is required to be executed by this section or not.

(5)  The directors of a company who are in default shall be guilty of an offence if the company issues debentures in circumstances in which this section requires a debenture trust deed to be executed without such a deed having been executed in compliance with this section, or if the company issues debentures under a trust deed which covers two or more classes of debentures.

(6)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

(7)  If a trust deed should have been executed by a company in accordance with this section but has not been executed, the court may on an application made by a debenture holder of the class in question order the company to execute such a trust deed and direct that persons nominated by the court shall be appointed to be the trustees thereof, and the court may give such consequential directions as it thinks fit as to the contents of the trust deed and the execution of the trust deed by the trustees thereof.

(8)  For the purposes of this Ordinance a debenture is covered by a debenture trust deed if the holder of the debenture is entitled to participate in any money payable by the company under the deed, or is entitled to the benefit of any mortgage, charge or security created by the deed, whether alone or together with other persons.

(9)  This section shall not apply to debentures issued, or forming part of a class of debentures some of which were issued, before the coming into force of this Ordinance.

70.—(I) Every debenture trust deed, whether required by section 69 or not, shall state : —

(a) the maximum sum which the company may raise by issuing debentures of the same class ;

(b) the maximum discount which may be allowed on the issue or re-issue of the debentures, and the maximum premium at which the debentures may be made redeemable ;

(c)   if debenture stock is to be issued under the deed, that the company is indebted to the trustees for the amounts from time to time payable in respect of the debentures (whether for principal, interest, premiums, costs or otherwise) and that (except for their own remuneration and indemnity against expenses incurred by them) the trustees hold those amounts on behalf of the holders of debenture stock from time to time issued under the trust deed and remaining outstanding in accordance with their respective rights ;

(d)   the nature of any assets over which a hypothecation, mortgage, charge or security is created by the trust deed in favour of the trustees for the benefit of the debenture holders equally, and except where such a charge is a floating charge or a general floating charge, the identity of the assets subject to it;

(e)   the nature of any assets over which a hypothecation mortgage, charge or security has been or will be created in favour of any person other than the trustees for the benefit of the debenture holders equally, and except where such a charge is a floating charge or a general floating charge, the identity of the assets subject to it;

(/) whether the company has created or will have power to create any hypothecation, mortgage, charge or security for the benefit of some, but not all, of the holders of debentures issued under the trust deed;

(g) any prohibition or restriction on the power of the company to issue debentures or to create hypothecations, mortgages, charges or any security on any of its assets ranking in priority to, or equally with, the debentures issued under the trust deed ;

(h) whether the company will have power to acquire debentures issued under the trust deed before the date for their redemption and to re-issue such debentures;

(i) the dates on which interest on the debentures issued under the trust deed will be paid and the manner in which payment will be made ;

(j) the date or dates on which the principal of the debentures issued under the trust deed will be repaid, and unless the whole principal is to be repaid to all the debenture holders at the same time, the manner in which redemption will be effected (whether by the payment of equal instalments of principal in respect of each debenture, or by the selection of debentures for redemption by the company, or by drawing, ballot or otherwise) ;

(k) in the case of convertible debentures, the dates and terms on which the debentures may be converted into shares and the amounts which will be credited as paid up on such shares, and the dates and terms which the debenture holders may exercise any right to subscribe for shares in right of the debentures held by them;

(l) the circumstances in which the debenture holders will be entitled to realise any hypothecation, mortgage, charge or security vested in the trustees or any other person for their benefit (other than the circumstances in which they are entitled to do so by this Ordinance);

(m) the powers of the company and the trustees to call meetings of the debenture holders, and the rights of debenture holders to require the company or the trustees to call such meetings ;

(n) whether the rights of debenture holders may be altered or abrogated, and if so, the conditions which must be fufilled, and the procedure which must be followed to effect such an alteration or abrogation ;

(o) the amount or rate of remuneration to be paid to the trustees and the period for which it will be paid, and whether it will be paid in priority to the principal, interest and costs in respect of debentures issued under the trust deed.

(2)  If the debentures are issued without a covering debenture trust deed being executed, the statements required by subsection (1) (except paragraph (c) thereof) shall be included in each debenture or in a note forming part of the same document or indorsed thereon, and in applying that subsection references therein to the debenture trust deed shall be construed as references to all or any of the debentures of the same class.

(3)  The last foregoing subsection shall not apply if the debenture is the only debenture of the class to which it belongs which has been or may be issued, and the rights of the debenture holder cannot be altered or abrogated without his consent

(4)  The directors of a company who are in default shall be guilty of an offence if they issue debentures under a trust deed which does not comply with subsection (1), or if they issue a debenture which should comply with subsection (2) but does not do so.

(5)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

(6)  The matters specified in subsections (1) and (2) may be altered or added to by regulations made by the Governor in Council.

(7)  This section shall not apply to a debenture trust deed executed or to debentures issued before the coming into force of this Ordinance.

71.—(1) Every debenture which is covered by a debenture trust deed shall state either in the body thereof, or in a note forming part of the same document or endorsed thereon : —

(a) the matters required to be stated in a debenture trust deed by paragraphs (a), (b), (g), (i), (j), (k), (m) and (n) of section 70(1) of this Ordinance ;

(b) whether the trustees of the covering debenture hold the hypothecations, mortgages, charges and securities vested in them by the trust deed in trust for the debenture holders equally, or in trust for some only of the debenture holders, and if so, which debenture holders ; and

(c) whether the debenture is secured by a general floating charge vested in the trustees of the covering debenture trust deed or in the debenture holders.

(2)  A debenture issued by a company shall state on its face in clearly legible print that it is unsecured if no hypothecation, mortgage, charge or security is vested in the holder of the debenture or in any other person for his benefit as security for payment of principal or interest, but in the case of loan stock, this requirement shall be satisfied by the designation of the loan stock certificate as such on its face in clearly legible print.

(3)  The directors of a company who are in default shall be guilty of an offence if the company issues a debenture which should comply with subsection (1) or (2) of this section but does not do so.

(4) An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

(5) The matters specified in subsection (1) may be altered or added to by regulations made by the Governor in Council.

(6) This section shall not apply to debentures issued before the coming into force of this Ordinance.

72.—(1) A person shall not be qualified for appointment as a trustee of a debenture trust deed if he is a director, officer, or employee of the company which issues debentures covered by the deed, or if he is a substantial shareholder of the company.

(2)  If a trustee becomes subject to any of the disqualifications mentioned in subsection (1) after he has been appointed, he shall immediately cease to be qualified to act as a trustee of the debenture trust deed.

(3)  Any person who acts as a trustee of a debenture trust deed shall be guilty of an offence if his appointment is invalid tinder subsection (1), or if he is disqualified so to act under subsection (2).

(4)  An offence under this section shall be punishable by a fine not exceeding ten thousand rupees.

73.—(1) Debenture holders shall be entitled to realise any security vested in them or in any other person for their benefit if : —

(a) the company fails to pay any instalment of interest, or the whole or part of the principal or any premium, owing under the debenture or the debenture trust deed covering the debentures within one month after it becomes due ; or

(b)   the company fails to fulfil any of the obligations imposed on it by the debentures or the debenture trust deed; or

(c)   any circumstances occur which by the terms of the debentures or debenture trust deed entitle the holders of the debentures to realise their security ; or

(d) the company is wound up.

(2)  Debenture holders whose debentures are secured by a general floating charge vested in themselves or the trustees of the covering debenture trust deed or any other person shall additionally be entitled to realise their security if : —

(a)   any creditor of the company issues a process of execution against any of its assets, or commences proceedings for the winding up of the company by order of any court of competent jurisdiction ;

(b)   the company ceases to pay its debts as they fall due ; or

(c)   the company ceases to carry on business ; or

(d)   the company suffers, after the issue of debentures of the class concerned, losses or dimunitions in the value of its assets which in the aggregate amount to more than one half of the total amount owing in respect of debentures of the class held by the debenture holders who seek to enforce their security and debentures whose holders rank before them for payment of principal or interest; or

(f) any circumstances occur which entitle debenture holders who rank for payment of principal or interest in priority to the debentures secured by the general floating charge to realise their security.

(3)  At any time after a class of debenture holders become entitled to realise their security, a receiver of any assets subject to a hypothecation, mortgage, charge or security in favour of the class of debenture holders or the trustees of the covering trust deed or any other person may be appointed—

(a)   by such trustees ; or

(b)   by the holders of debentures in respect of which there is owing more than half of the total amount owing in respect of all the debentures of the same class ;

(c)   by the court on the application of any trustee or debenture holder of the class concerned.

(4)  A receiver appointed under this section shall, subject to any order made by the court, have power to take possession of the assets subject to the hypothecation, mortgage, charge or security, and to sell such assets and, if the hypothecation, mortgage, charge or security extends to such property, to collect debts owed to the company, to enforce claims vested in the company, to compromise, settle and enter into arrangements in respect of claims by or against the company, to carry on the company's business with a view to selling it on the most favourable terms, to grant or accept leases of land and licences in respect of patents, designs, copyright or trademarks, and to call up and recover capital unpaid on the company's issued shares.

(5)  The remedies given by this section shall be in addition to, and not in substitution for, any other powers and remedies conferred on the trustees of the debenture trust deed or on the debenture holders by the debentures or the debenture trust deed, and any power or remedy which is expressed in any instrument to be exercisable if the debenture holders become entitled to realise their security shall be exercisable on the occurrence of any of the events specified in subsection (1), or in the case of a general floating charge, in subsections (1) and (2) :

Provided that a manager of the business or ot any of the assets of a company may 'not be appointed for the benefit ef debenture holders unless a receiver has also been appointed and has not ceased to act.

(6)  This section shall apply to debentures issued before or after the commencement of this Ordinance.

(7)  No provision in any instrument which purports to exclude or restrict the remedies given by this section shall be valid and effectual

74.—(1) A person may not be appointed to be a receiver or manager of any assets of a company, and may not act as such a receiver or manager, if—

(a)   it is a company or corporation ; or

(b)   he is an undischarged bankrupt;

(c)   he is disqualified from being a trustee of a debenture trust deed executed by the company, or would be so disqualified if a debenture trust deed had been executed by it.

(2)  If a person who was appointed to be a receiver or manager becomes disqualified from continuing to act under the foregoing subsection or under any provision contained in a debenture or a debenture trust deed, another person may be appointed in his place by the persons who are entitled to make the appointment or by the court, but a receivership shall not terminate or be interrupted by the occurrence of the disqualification.

(3)  Any person who acts as a receiver or manager of any assets of a company while disqualified by subsection (]) shall bo guilty of an offence punishable by a fine not exceeding ten thousand rupees.

(4)  This section applies to a person appointed to be a receiver or manager before or after the coming into force of this Ordinance.

75. A receiver of assets of a company appointed under section 73(3) or under the powers contained in any instrument may apply to the court for directions in relation to any particular matter arising in connection with the performance of his functions, and on any such application the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, or may order any person to do or abstain from doing any thing, as the court thinks just or necessary in the circumstances.

76.—(1) A receiver of assets of a company appointed under section 73(3) or under the powers contained in any instrument shall be personally liable on any contract entered into by him in the performance of his functions, except in so far as the contract otherwise provides, and shall be entitled in respect of that liability to an indemnity out of the assets of which he was appointed to be receiver:

Provided that nothing in this subsection shall be taken as limiting any right to an indemnity which he would have apart from this subsection, or as limiting his liability on contracts entered into without authority, or as conferring any right to indemnity in respect of that liability.

(2) This section shall apply whether the receiver was appointed before or after the commencement of this Ordinance, but shall not apply to contracts entered into before the commencement of this Ordinance.

77.—(1) Where a receiver or manager of any assets of a company has been appointed for the benefit of debenture holders, every invoice, order for goods or business letter issued by or on behalf of the company or the receiver or the liquidator of the company, being a document on or in which the name of the company appears, shall contain a statement that a receiver or manager has been appointed.

(2) If default is made in complying with the requirements of this section, any of the following persons who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver, shall be liable to a fine of one thousand rupees.

78.—(1) The court may, on an application made by the liquidator of a company, by order fix the amount to be paid by way of remuneration to any person who, under section 73(3) or under the powers contained in any instrument, has been appointed as receiver or manager of any assets of the company for the benefit of debenture holders.

(2) The power of the court under the foregoing subsection shall, where no previous order has been made with respect thereto under that subsection—

(a)   extend to fixing the remuneration for any period . before the making of the order or the application therefor; and

(b)   be exercisable notwithstanding that the receiver or manager has ceased to act before the making of the order ; and

(c)   where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that so fixed for that perioi, extend requiring him to account for the excess or such part thereof as may be specified in the order :

Provided that the power conferred by paragraph (e) of this subsection shall not be exercised as respects any period before the making of the application for the order unless in the opinion of the court there are special circumstances making it proper for the power to be so exercised.

(3)  The court may from time to time on an application made either by the liquidator or by the receiver or manager, vary or amend an order made under subsection (1) of this section.

(4)  This section shall apply whether the receiver was appointed before or after the commencement of this Ordinance, and to periods before, as well as to periods after, the commencement of this Ordinance.

(5)  This section shall not apply if the receiver is appointed by the court, and the court fixes his remuneration by the order appointing him or by a subsequent order made on his application.

79.—(1) Where a receiver of the whole or substantially the whole of the assets of a company (hereafter in this section and in the next following section referred to as "the receiver") is appointed under section 73(3), or under the powers contained in any instrument, for the benefit of the holders of any debentures of the company secured by a general floating charge, then subject to the provisions of this and the next following section—

(a)   the receiver shall forthwith send notice to the company of his appointment; and

(b)   there shall, within fourteen days after receipt of the notice, or such longer period as may be allowed by the receiver, be made out and submitted to the receiver in accordance with the next following section a statement in the prescribed form as to the affairs of the company ; and

(c)   the receiver shall within two months after receipt of the said statement send— (i) to the Registrar and (if he was appointed by the court) to the court, a copy of the statement and of any comments he sees fit to make thereon, and in the case of the Registrar also a summary of the statement and of his comments (if any) thereon ; and

(ii) to the company, a copy of any such comments as aforesaid or, if he does not see fit to make any comments, a notice to that effect; and

(iii) to the trustees of the debenture trust deed covering the debentures in respect of which he was appointed, a .upy of the statement and such comments ; and

(iv) to the holders of all debentures belonging to the same class as the debentures in respect of which he was appointed, a copy of the said summary.

(2)  The receiver shall within two months, or such longer period as the court may allow after the expiration of the period of twelve months from the date of his appointment and of every subsequent period of twelve months, and within two months or such longer period as the court may allow after he ceases to act as receiver of the assets of the company, send to the Registrar, to the trustees of the trust deed covering the debentures in respect of which he was appointed, and to the holders of all debentures '•:>.-longing to the same class as the debentures in respect oi which he was appointed, an abstract in the prescribed form showing his receipts and payments during that period oi twelve months or, where he ceases to act as aforesaid, during the period from the end of the period to which the last preceding abstract related up to the date of his so ceasing, and the aggregate amounts of his receipts and of his payments during all preceding periods since his appointment.

(3)  Subsection (1) of this section shall not apply in relation to the appointment of a receiver to act with an existing receiver, or in place of a receiver dying or ceasing to act, except that, where that subsection applies to a receiver who dies or ceases to act before it has been fully complied *with, the references in paragraphs (b) and (c) thereof to the receiver shall (subject to the next .following subsection) include references to his successor and to any continuing receiver.

(4)  If the company is being wound up, this and the next following section shall apply notwithstanding that the receiver and the liquidator are the same person, but with any necessary modifications arising from that fact,

(5)  Nothing in subsection (2) of this section shall be taken to prejudice the duty of the receiver to render proper accounts of his receipts and payments to the persons to whom, and at the times which, he may be required to cfo so apart from that subsection.

(6)  If the receiver makes default in complying with the requirements of this section, he shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues.

80.—(1) The statement as to the affairs of a company required by the last foregoing section to be submitted to the receiver (or his successor) shall show as at the date of the receiver's appointment the particulars of the company's assets, debts and liabilities, the names, residences and occupations of its creditors, the securities held by them respectively, the dates when the securities where respectively given and such further or other information as may be prescribed.

(2)  The statement of affairs shall be submitted by, and be verified by the signed declaration of, one or more persons who are at the date of the receiver's appointment the directors and by the person who is at that date the secretary of the company, or by such of the persons hereafter in this subsection mentioned as the receiver (or his successor), subject to the direction of the Registrar, may require to submit and verify the statement, that is to say, persons—

(a)   who are or have been officers of the company ;

(b)   who have taken part in the formation of the company at any time within one year before the date of the receiver's appointment;

(c)   who are in the employment of the company, or have been in the employment of the company within the said year, and are in the opinion of the receiver capable of giving the information required ;

(d)   who are or have been within the said year officers of or in the employment of a company which is, or within the said year was, the holding company or a subsidiary of the company to which the statement relates.

(3)  Any person making or verifying the statement of affairs or any part of it shall be allowed, and shall be paid by the receiver (or his successor) out of his receipts, such costs and expenses incurred in and about the making or verifying of the statement as the receiver (or his successor) may consider reasonable, subject to an appeal to the court.

(4) If any person without reasonable excuse makes default in complying with the requirements of this section, he shall be liable to a fine not exceeding one hundred rupees for every day during which the default continues.

81.—(1) If any receiver of any assets of a company—

(a)   having made default in filing, delivering or making any return, account or other document, or in giving any notice which a receiver is by law or by order of the court required to file, deliver, make or give, fails to make good the default within fourteen days after the service on him of a notice requiring him to do so ; or

(b)   having been appointed under section 73(3) or under the powers contained in any instrument, has, after being required at any time by the liquidator of the company so to do, failed to render proper accounts of his receipts and payments and to vouch the same and to pay over to the liquidator any amount shown by the accounts as payable to him, the court may, on an application made for the purpose, make an order directing the receiver to make good the default within such time as may be specified in the order.

(2) In the case of any such default as is mentioned in paragraph (a) of subsection (I), an application for the purposes of this section may be made by any shareholder, member, creditor or debenture holder of the company or by the Registrar, and in the case of any such default as is mentioned in paragraph (b) of that subsection, the application shall be made by the liquidator, and in either case the order of1 the court made on the application may provide that all costs of and incidental to the application shall be borne bv the receiver.

82.—(1) The trustees of a debenture trust deed shall hold all contracts, stipulations and undertakings given to them and all hypothecations, mortgages, charges and securities vested in them in connection with the debentures covered by the deed, or some of those debentures, exclusively for the benefit of the debenture holders concerned (except insofar as the deed otherwise provides), and the trustees shall owe the duties of a salaried commercial agent to those debenture holders in respect of the enforcement of those contracts, stipulations, undertakings, hypothecations, mortgages, charges and securities and the fulfilment of their functions generally.

(2)  A debenture holder may sue : —

(a)   the company which issued the debentures he holds for payment of any amount payable to him in respect of the debentures ; or

(b)   the trustees of the debenture trust deed covering the debentures he holds for compensation for any breach of the duties which they owe him ;

and in such an action it shall not be necessary for any other debenture holders of the same class, or if the action is brought against the company, the trustees of the covering trust deed, to be joined as parties.

(3)  This section shall apply notwithstanding anything contained in a debenture, debenture trust deed or other instrument :

Provided nevertheless that a provision in a debenture or debenture trust deed shall be valid and binding on all the debenture holders of the class concerned insofar as it enables a meeting of the debenture holders by a resolution supported by the votes of the holders of at least three-quarters i-n value of the debentures of that class in respect of which votes are cast on the resolution : —

(a)   to release any trustee from liability for any breach of his duties to the debenture holders which he has already committed, or generally from liability for all such breaches (without necessarily specifying them) upon him ceasing to be a trustee ; or

(b)   to consent to the alteration or abrogation of any of the rights, powers or remedies of the debenture holders and the trustees of the debenture trust deed covering their debentures (except the powers and remedies conferred by section 73); or

(c)   to consent to the substitution for the debentures of debentures of a different class issued by the company or any other company or corporation, or the cancellation of the debentures in consideration of the issue to the debenture holders of shares credited as fully paid in the company or any other company or corporation.