THE COMPANIES ORDINANCE, 1972

Directors

162.—(1) Every company shall have at least two directors.

(2) if at the coming into force of this Ordinance a company has less than two directors : —

{a) the director or any member of the company may call an extraordinary general meeting to appoint directors, and such a meeting may appoint one or more directors, or one or more additional directors ; and

(b) the court may on the application of any shareholder or debenture holder of the company direct that such a meeting shall be held and may further give any direction which it could give under section 124.

(3)  If a company has less than two directors, or in the case of an existing company, if it has less than two directors at any time after the expiration of six months from the coming into force of this Ordinance, no director or other person shall have power to carry on the business of the company or to enter into transactions on its behalf (other than calling general meetings) until the company has two or more directors :

Provided that nothing in this section shall affect the application of section 39.

(4)  Nothing in this section shall affect the power of an annual general meeting to appoint directors.

163.—(1) Subject to the provisions of this section, a director of a company may be appointed only by an ordinary resolution passed at a general meeting of the company for a period not exceeding five years, but any director may be reappointed in like manner on any number of occasions for a period not exceeding five years on each reappointment.

(2)  The memorandum or articles of a company may prescribe the maximum and minimum number of directors of the company who shall be appointed (being not less than two directors), and such a maximum or minimum number may be varied from time to time by an ordinary resolution passed at a general meeting, but so that the minimum number is not less than two.

(3)  The memorandum or articles may appoint or provide for the appointment of the first directors of the company, but unless the first directors are appointed by a general meeting of the company, they shall all cease to hold office at the termination of the first annual general meeting of the company, but shall be eligible for re-appointment at that meeting under subsection (1),

(4)  If a casual vacancy occurs in the office of a director, the directors may fill it, and the person appointed by them shall retire at the termination of the next succeeding annual general meeting, but shall be eligible for re-appointment at that meeting under subsection (1).

(5)  Any provision in the memorandum or articles of a company by which a director may be appointed in any other manner than the manner provided by this section shall be invalid :

Provided that the memorandum or articles may provide for the appointment of one director, or for the appointment of two or more directors (not exceeding in number one-third of the maximum number of directors who may be appointed for the time being) by the holders of debentures issued by the company or by the trustees of the debenture trust deeds covering such debentures.

(6)  At a general meeting of a company a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made unless a resolution that it shall be so made has first been agreed to by the meeting without any vote being given against it.

(7)  The memorandum or articles of a company may provide for the re appointment of a director at the expiration of his term of office without the passing of a resolution by a general meeting to that effect if no other person is or has been appointed by a general meeting in his place, but such a director shall not be reappointed under this subsection if an ordinary resolution is or has been passed at a general meeting that the vacant directorship shall not be filled, or if a resolution for the re-appointment of the director is defeated.

(8)  This section shall not apply to a managing director or to a proprietary company, and shall apply to an existing company only from the date when all directors of the company holding office at the time when this Ordinance comes into force have completed the terms of office for which they were appointed before that time, or have ceased to be directors before the completion of such terms.

164.—(1) A person may not be appointed to be a director of a company if—

(a)   he is an undischarged bankrupt; or

(b)   an order has been made in respect of him under section 165 and the period of disability imposed by it has not expired ; or

(c)   he is a trustee of a debenture trust deed covering debentures issued by the company or by a company belonging to the same group of companies as the company; or

(d)   it is a company or a body corporate.

(2)  If a person is adjudged bankrupt or has an order aiade against him under section 165 after he is appointed to be a director, he shall forthwith cease to be a director, and a casual vacancy in the directorship which he held shall occur.

(3)  The court may for special reasons permit a person who is disabled from being appointed to be a director by paragraph (a) or (b) of subsection (1) of this section, or who would but for this subsection have ceased to be a director by reason of subsection (2), to be appointed to be a director of a particular company or to continue to be a director of a particular company, (as the case may be), and if a person is permitted by the court to continue to be a director of a company, he shall be deemed not to have ceased to be a director by reason of subsection (2).

(4)  If immediately before the coming into force of this Ordinance an existing company or a body corporate is a director of a company, the board of directors or governors of that existing company or body corporate may within six months thereafter nominate one of their own number to be a director of the company in place of the existing company or body corporate, and thereupon he shall become a director of the company for the same period and on the same conditions as if he had been appointed to be a director instead of the existing company or body corporate at the date when it was so appointed :

Provided that—

(a)   the person so nominated shall account to the existing company or body corporate for all remuneration which it would have received if paragraph (d) of subsection (1) had not been enacted; and

(b)   if no person is nominated as aforesaid within six months after the coming into force of this Ordinance, there shall be a casual vacancy in the directorship formerly held by the existing company or body corporate.

(5)  Any person who acts as a director of a company at any time when he is disqualified by this section from being appointed to be a director, or from continuing to be a director, shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or to imprisonment for not more than two years, or to both such fine and imprisonment.

165.—(1) If—

(a) a person is convicted of any offence involving fraud or dishonesty ; or

(b) a director, officer, or auditor of a company or a trustee of a debenture trust deed covering debentures issued by a company has committed a serious breach or persistent breaches of duties owed by him to a company or to its shareholders or debenture holders, or has been guilty of a serious or persistent failure to comply with this Ordinance; or

(c) a director has failed, or has acquiesced in the failure of the other directors, to call a general meeting of a company with a view to pass a resolution to wind it up when he knows, or has reasonable cause to believe, that it is unable to pay its debts as they fall due or that the company's debts and liabilities exceed the value of its assets as ascertained in accordance with section 161 ; the court may make an order that that person shall not be a director, or directly or indirectly in any way be concerned or take part in the management, of any company, or of any overseas company which carries on business in Seychelles, for such period not exceeding live years as may be specified in the order, and if he is sentenced to a term of imprisonment, the court may order that the said period shall be extended by the term of imprisonment which he actually undergoes.

(2)  In this section the expression "company" includes an overseas company and the expression "the court" includes the court by which the person against whom an order under subsection (1) is to be made is convicted of an offence, or is found to have committed the breach or breaches of duty, and also any court having jurisdiction to wind up the company or overseas company.

(3)  A person intending to apply for the making of an order under this section shall give not less than ten days' notice of his intention to the person against whom the order is sought, and on the hearing of the application the last-mentioned person may appear and himself give evidence or call witnesses :

Provided that nothing in this subsection shall affect the power of a court by whom a person is convicted of an offence to make an order under this section on its own motion.

(4) An application, for the making of an order under this section may be made by the official receiver or the liquidator of the company, or by any person who is or has been a shareholder, debenture holder or creditor of the company; and on the hearing of any application for an order under this section, or of any application for permission to be appointed or to continue Lo be a director of a particular company by a person against whom an order has been made under this section, the official receiver or liquidator of the company (if it is in liquidation) shall appear and call the attention of the court to any matters which appear to him to be relevant, and may himself give evidence or call witnesses.

166.—(1) A person shall not be capable of being appointed to be director of a company by the memorandum or articles, and shall not be named as a director or proposed director of a company in a prospectus issued by or on behalf of the company, or in a registration statement delivered to the Registrar by or on behalf of a company, unless before the registration of the memorandum and articles, or the publication of the prospectus, or the delivery of the registration statement to the Registrar (as the case may be), he has (by himself or by his agent authorised in writing)—

(a)   signed and delivered to the Registrar for registration a consent in writing to act as such director; and

(b)   either—

(i) signed the memorandum for a number of shares not less than his share qualification (if any) prescribed by the memorandum or articles of the company ; or

(ii) taken from the company and paid or agreed to pay for his qualification shares, if any; or

(iii) signed and delivered to the Registrar for registration an undertaking in writing to take from the company and pay for his qualification shares, if any ; or

(iv) made and delivered to the Registrar for registration a signed declaration to the effect that a number of shares, not less than his share qualification, if any, are registered in his name.

(2)  Where a person has signed and delivered as aforesaid an undertaking to take and pay for his qualification shares, he shall, as regards those shares, be in the snmc position as if he had signed the memorandum as a subscriber thereof for that number of shares.

(3)  References in this section to the share qualification of a director or proposed director shall be construed as meaning a share qualification required on his appointment or within a period determined by reference to the time of his appointment.

(4)  On the application for registration of the memorandum and articles of a company, the applicant shall deliver to the Registrar a list of the persons who have consented to be directors of the company, and if this list contains the name of any person who has not so consented, the applicant shall be liable to a fine not exceeding one thousand rupees.

(5)  Nothing in this section shall make it necessary for any person to comply with subsection (1) thereof more than once.

(6)  In this Ordinance "qualification shares" means shares equal in number to the share qualification prescribed by the memorandum or articles in respect of a director, being shares of the class and conforming to the conditions (if any) which are so prescribed.

(7) This section shall not apply to a proprietary company.

167.—(1) Without prejudice to the disqualification and the restrictions imposed by section 166, it shall be the duty of every director who is by the memorandum or articles of the company required to hold a share qualification, and who does not already hold qualification shares, to obtain his qualification shares within two months after his appointment, or such shorter tune as may be fixed by the memorandum or articles,

(2)  For the purpose of any provision in the memorandum or articles requiring a director to hold a share qualification, the holder of a bearer share certificate shall not be deemed to be the holder of the shares specified therein.

(3)  The office of a director of a company shall be vacated if the director does not, within two months from the date of his appointment, or within such shorter time as may be fixed by the memorandum or articles, obtain his qualification shares, or if, after the expiration of the said period or shorter time, he ceases at any time to hold his qualification shares or any of them.

(4)  If the share qualification of a director is increased by an alteration of the memorandum or articles after he has been appointed, this section shall apply as if he has been appointed to be a director at the time the alteration is made.

(5)  A person vacating office under this section shall be incapable of being reappointed as a director of the company until he has obtained his qualification shares or increased number of qualification shares (as the case may be).

(6)  If, after the expiration of the period fixed by this section or such shorter time as may be fixed by the memorandum or articles, any person who has not obtained his qualification shares, or has ceased to hold his qualification shares or any of them, acts as a director of the company, he shall be liable to a fine not exceeding one hundred rupees for every day between the expiration of the said period or shorter time, or the day on which he ceased to hold his qualification shares or any of them (as the case may be), and the last day on which it is proved that he acted as a director.

168.—(1) A company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its memorandum or articles or in any agreement between it and him. Such a resolution may be passed at an annual general meeting or at an extraordinary general meeting, and it shall be immaterial whether the meeting is called by the directors, the Registrar or any other person, or by order of the court, and whether the proposed resolution is included in the notice of the meeting at the instance of the directors or any other person.

(2)  The directors or the other person who calls the general meeting shall give written notice of the proposal to the director whose removal is proposed : —

(a)   if the meeting is called pursuant to a requisition made under section 120(2), at least fifteen days before the day when notices calling the meeting are sent to members of the company or when the meeting is advertised under section 127(4), whichever is the earlier; or

(b)   in any other case, at least one month before the date when notices calling the meeting are sent out or the meeting is advertised, as aforesaid.

(3)  If the director whose removal is proposed makes written representations in respect of the proposal to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so : —

(a)   in every notice or advertisement relating to the meeting at which the proposal is to be considered, state the fact of the representations having been made ;

(b)   send a copy of the representations to every shareholder, debenture holder and trustee for debenture holders of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company);

(c)   in any advertisement of the meeting published under section 127(4), state that copies of the representations may be obtained by any shareholder, debenture holder or trustee for debenture holders of the company on a written request being made at an address in Seychelles given for the purpose ; and

(d)   send a copy of the representations to every shareholder, debenture holder or trustee for debenture holders of the company to whom notice of the meeting has not been sent, within two days after receipt of a written request by him for such a copy at the address given in the advertisement of the meeting published under section 127 (4), or if no such advertisement is published, at the company's registered office ; and if a copy of the representations is not sent as aforesaid because it is received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting :

Provided that copies of the representations need not be sent out, and the representations need not be read out at the meeting if, on. the application either of the company or of any other person who claims to be aggrieved made within seven days after the receipt of the representations by the company, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter ; and the court may order the company's costs on an application under this section to be paid in whole or in part by the director.

(4)  If a director who is removed from office under this section is a ma-naging director of the company, he shall on such removal also be removed from office as a managing director without any separate resolution being necessary for that purpose.

(5)  A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.

(6)  A person appointed to be a director in place of a person removed under this section shall be treated, for the purpose of determining the time at which he or any other director is to retire, as if he had become a director on the day on which the person in whose place he is appointed was appointed or last re-appointed to be a director, whichever is the later.

(7)  Nothing in this section shall be taken as depriving a person, removed thereunder of compensation or damages payable to him in respect of the termination of his appoint ment as a director, or of any appointment, office or employment under the company which terminates with his appointment as a director, or as derogating from any power to remove a director which may exist apart from this section :

Provided that the damages or compensation payable to a director, whether fixed as liquidated damages or compensation by any agreement entered into by him, and whether constituting damages or compensation for breach of any such agreement or a condition to be fulfilled by the company or by any other person if his appointment is terminated, shall not exceed the aggregate remuneration to which he has been entitled during the three years immediately preceding the termination of his appointment for his services as a director of the company and in respect of any other appointment, office or employment under the company which terminates with his appointment as a director.

(8)  For the purposes of this section a person shall be deemed to hold an appointment, office or employment under the company if he holds it by virtue of a contract with the company or its holding company or subsidiary, or if he was appointed to it by the company or its holding company or subsidiary under a provision for the purpose contained in the memorandum or articles of any such company.

(9)  If a company—

(a)   fails to give written notice to a director of a proposal to remove him from office in compliance with subsection (2); or

(b)   fails, in any notice or advertisement relating to the meeting at which the proposal is to be considered, to state that representations have been made by the director whose removal is proposed (if that is the case) ; or

(c)   fails to send a copy of any written representations made, by the director whose removal is proposed, in respect of the proposal to every shareholder, debenture holder and trustee for debenture holders of the company to whom is sent a notice of the meeting at which the proposal is to be made, and to every other shareholder, debenture holder or trustee for debenture holders who makes a written request for such a copy within two days after the request is received by the company;

the company and any officer of the company who is in default shall be guilty of an offence punishable by a fine not exceeding one thousand rupees.

(10)  This section shall not apply—

(a) to a proprietary company ; or

(b) to a director appointed or nominated by trustees of one or more debenture trust deeds, or by debenture holders, pursuant to a right to make the appointment or nomination conferred by a debenture trust deed or debentures.

169.—(1) Every company shall keep at its registered office a register of its directors and secretaries.

(2)  The said register shall contain the following parti-lars with respect to each director, that is to say, his present Christian name and surname, any former Christian name or surname, his usual residential address, his nationality, his business occupation (if any), and particulars of any other directorships held by him :

Provided that it shall not be necessary for the register to contain particulars of a directorship held by a director in a company of which the company is the wholly-owned subsidiary.

(3)  The said register shall contain the following particulars with respect to the secretary or, where there are joint secretaries, with respect to each of them, that is to say—

(a)   in the case of an individual, his present Christian name and surname, any former Christian name and surname and his usual residential address ; and

(b)   in the case of a company or corporation, its corporate name and registered or principal office :

Provided that, where all the partners in a firm are joint secretaries, the name and principal office of the firm may be stated instead of the said particulars.

(4)  The company shall, within the periods respectively mentioned in subsection (5), send to the Registrar a return in the prescribed form containing the particulars specified in the said register and a notification in the prescribed form of any change among its directors or in its secretary or in any of the particulars contained in the register, specifying the date of the change.

(5)  The periods referred to in the last foregoing subsection are the following, namely,—

(a) the period within which the said return is to be s«nt shall be a period of fifteen days from the appointment of the first directors of the company ; and

(b) the period within which the said notification of a change is to be sent shall be fifteen days from the happening thereof : Provided that, in the case of a return containing particulars with respect to the persons who are the company's directors and secretary at the date when this Ordinance comes into force, the period shall be fifteen days from the coming into force of this Ordinance.

(6)  The register to be kept under this section shall during business hours (subject to such reasonable restrictions as the company may by its articles or in general meeting impose, so that not less than two hours in each day be allowed for inspection) be open to the inspection of any shareholder or debenture holder of the company without charge, and of any other person on payment of one rupee, or such less sum as the company may specify, for each inspection.

(7)  If a company fails to' comply with any of the provisions of subsections (1) to (5) inclusive of this section, the company and any officer of the company who is in default shall be guilty of an offence punishable by a fine not exceeding one hundred rupees for every day during the first month that default continues, two hundred and fifty rupees for every day during the next two months that default continues, and five hundred rupees for every day that default continues thereafter.

(8)  If any inspection required under this section is refused—

(a)   the court may by order compel an immediate inspection of the register ; and

(b)   the company and any officer of the company who is in default shall be guilty of an offence punishable by a fine not exceeding one hundred rupees and further by a default fine not exceeding one hundred rupees.

(9)  For the purpose of this section—

(a)   the expression "Christian name" includes a forename or personal name and the expression "surname" includes a family name ;

(b)   references to a former Christian name or surname does not include—

(i) in the case of any person, a former Christian name or surname where that name or surname was changed or disused before the person bearing the name attained the age of eighteen years, or has been changed or disused for a period of not less than twenty years; or

(ii) in the case of a married woman, the name or surname by which she was known prior to the marriage.

170.—(1) Every company to which this section applies shall, in all written and printed publications and business letters on or in which the company's name appears and which are issued or sent by the company to any person within or outside Seychelles, state in legible characters with respect to every director the following particulars : —

(a)   his present Christian name, or the initials thereof, and present surname ;

(b)   any former Christian names and surnames ;

(c)   his nationality, if not British :

Provided that, if special circumstances exist which render it in the opinion of the Registrar expedient that such an exemption should be granted, the Registrar, may by order grant, subject to such conditions as may be specified in the order, exemption from the obligations imposed by this subsection.

(2)  If a company makes default in complying with this section, the company and every officer of the company who is in default shall be liable for each offence to a fine not exceeding one thousand rupees.

(3)  For the purpose of this section—

(a)   the expression "initials" includes a recognised abbreviation of a Christian name ; and

(b)   the expressions "Christian name", "surname", "former Christian name" and "former surname" shall have the same meaning as in section 169.

(4)  This section shall apply to every company incorporated under this Ordinance, every existing company and every overseas company which has established a place of business in Seychelles or which carries on business there.

171.—(1) It shall be the duty of the directors of a company : —

(a)   to exercise their powers in accordance with this Ordinance and within the limits and subject to the conditions and restrictions established by the company's memorandum and articles;

(b)   to obtain the authorisation of a general meeting before doing any act or entering into any transaction for which the authorisation or consent of a general meeting is required by this Ordinance or by the company's memorandum or articles ;

(c)   to exercise their powers in good faith in what they reasonably consider to be the interests of the shareholders of the company as a whole and for the respective purposes for which such powers are explicitly or impliedly conferred ;

{d) to account to the company for any monetary gain, or the value of any other gain or advantage, obtained by them in connection with the exercise of their powers, or by reason of their position as directors of the company, except remuneration, pensions, provisions and compensation for loss of office in respect of their directorships of any company which are lawfully authorised or approved by a resolution passed by a general meeting and (where necessary) by a meeting of a class of shareholders ;

(e) not to make use of any information received by them respectively as directors otherwise titan for the benefit of the shareholders of the company as a whole, either during their respective terms of office or thereafter;

(f) not to compete with the company or become a director or officer of a competing company, unless a general meeting by ordinary resolution authorises the director concerned to do so in any specific case ;

(g) if directors have any interest, whether direct or indirect, immediate or prospective, in any contract or transaction or proposed contract or transaction with the company, to disclose each of their respective interests to the meeting of the directors of the company at which the contract or transaction is first taken into consideration, or to the first meeting of the directors held after the interest arises (whichever is the later), and in such written disclosure to state the nature and extent of their respective interests and the effect or probable effect on them of the contract or transaction ; and

(h) not to use any assets of the company for any illegal or improper purpose, and not to do, or knowingly allow to be done, anything by which the company's assets may be damaged or lost (otherwise than in the ordinary course of carrying on its business);

(i) to transfer forthwith to the company all cash or assets acquired on its behalf (whether before or after its incorporation) or as the result of employing its cash or assets, and until such transfer is effected to hold such cash or assets on behalf of the company and to use it only for the purposes of the company;

(j) to attend meetings of the directors of the company with reasonable regularity, unless prevented from so doing by illness or other reasonable excuse :

Provided that nothing in this section shall affect the operation of sections 33, 34 and 39.

(2) The duties imposed by this section shall be owed to the company, and not to the members, shareholders, debenture holders or creditors of the company, but : -

(a) an application may be made to the court by any shareholder or debenture holder for a declaration that any act or transaction, or proposed act or transaction, by the directors or any director or former director involves a breach of any of their said duties, and if the court makes such a declaration it may issue an injunction to restrain the directors or any director or former director from doing any such proposed act or entering into any such proposed transaction ; and

{b) an action for damages for breach of the said duties may be brought in the name of the company by the holders of at least one-tenth of the issued and outstanding shares of the company which carry unrestricted voting rights, or on behalf of the holders of that fraction of those shares by any one or more of their number authorised by each of the others of them in writing.

(3)  The notice of a general meeting called to give an authorisation under paragraph (f) of subsection (1) of this section shall contain or be accompa'nied by a statement in clearly legible print setting out—

(a)   the nature of the business which the director intends to carry on and the extent to which it is likely to compete with any class of business carried on by the company ; or

(b)   the name and the class or principal classes of business carried on by the competing company of which he intends to become a director or officer, and the extent to which any class of business carried on by it competes or is likely to compete with that of the company.

(4)  For the purpose of this section, a general 'notice given to the directors of a company by a director to the effect that he is a member, shareholder, debenture holder or officer of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, shall be deemed to be a sufficient declaration of interest in relation to any contract so made :

Provided that no such notice shall be of effect unless it is given at a meeting of the directors, or unless the director ensures it is brought up and read at the next meeting of the directors after it is given.

(5)  Any person who commits a breach of a duty imposed on him by paragraphs (d), (e), (f), (k) or (h) of subsection (1) shall, without prejudice to the generality of the expression, be deemed to have committed a serious breach of dutv within the meaning of section: 128(2) and 165(1).

(6)  A person who—

(a)  knowingly commits a breach of any duty imposed on him by subsection (1) of this section ; or

(b)   commits a breach of a duty imposed on him by paragraphs (d), (e), (g), (h) or (i) of that subsection ;

shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or to both such fine and such imprisonment, but a person shall not be sentenced to a term of imprisonment unless the court is satisfied that he acted wilfully.

(7) If a company has a subsidiary, directors of the company and the subsidiary shall owe the same duties under subsection (1) to the company in respect of the affairs of the subsidiary and their conduct in relation to the subsidiary as though the compa-ny and the subsidiary were one company, and the company owned the subsidiary's assets and undertaking, and the whole of this section shall then be applied accordingly :

Provided that nothing in this subsection shall affect the duties of the directors of the subsidiary toward the subsidiary and the remedies conferred by this section for the breach of any such duties.

172. It shall not be lawful for a company to make a loan to any person who is a director of it or of a company which belongs to the same group of companies as the company, or to enter into any guarantee, or provide any security, in connection with a loan made to such a person as aforesaid by any other person :

Provided that nothing in this section shall apply either—

(a)   to anything done by a company which is for the time being a proprietary company; or

(b)   to anything done by a company in respect of a director who holds a salaried employment or office under the company or under a company which belongs to the same group of companies as the company with a view to enabling him to subscribe for or purchase shares or debentures of the company or of any such other company ;

(c)   subject to the next following subsection, to anything done to provide a director of the company with funds to meet expenditure incurred or to be incurred by him for the purposes of the company or for the purpose of enabling him properly to perform his duties as an officer of the company ; or

(d) in the case of a company whose ordinary business includes the lending of money or the giving of guarantees in connection with loans made by other persons, to anything done by the company in the ordinary course of that business.

(2)  Paragraphs {b) and (c) of the proviso to subsection (1) shall not authorise the making of any loan, or the entering into any guarantee, or the provision of any security, except either—

{a) with the prior authorisation of the company given at a general meeting at which the purposes of the expenditure and the amount of the loan or the extent of the guarantee or security, as the case may be, are disclosed in the notice calling the meeting and in any advertisement published under section 127(4) ; or (b) on condition that, if the approval of the company is not given as aforesaid at or before the next following annual general meeting, the loan shall be repaid or the liability in respect of which the guarantee or security was given shall be discharged, as the case may be, within six months from the conclusion of that meeting, and in no case shall a loan be made, guaranteed or secured by a company under paragraph (b) aforesaid except on condition that it shall be wholly repaid within two years from the time when it is made,

(3)  Where the authorisation of the company is not given in accordance with any such condition as is mentioned in paragraph (b) of subsection (2), the directors who authorise the making of the loan, or the entering into the guarantee, or the provision of the security, shall be jointly and severally liable to indemnify the company against any loss arising therefrom.

(4)  If a loan is made, or a guarantee is given, or security is provided by a company in contravention of this section : —

(a)   the contract of loan, or guarantee, or the security shall be as valid and enforceable as though no contravention had occurred ;

(b)   every director in default and every person who participates in the making of the loan or its use by the borrower, or in the giving of the guarantee or the providing of the security, knowing of the contravention aforesaid : —

(i) shall be liable to compensate the company for any loss suffered by it; and

(ii) shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or to both such fine and such imprisonment.

173.—(1) Before issuing or re-issuing any shares or debentures of a company, the directors of the company shall offer the shares or debentures for subscription to the existing shareholders of the company in proportion to the respective nominal values of their shareholdings, and the directors may allot shares or debentures in some other manner only to the extent that they are not subscribed for pursuant to the said offer :

Provided that this section shall not apply to : —

(a)   shares allotted to the subscribers of the company's memorandum of association ; or

(b)   shares allotted to directors to provide them with the share qualification specified in the memorandum or articles ; or

(c)   shares allotted to trustees of a scheme authorised by an ordinary resolution passed by a general meeting of the company, being a scheme by which the company provides money gratuitously to enable the trustees to subscribe for or purchase fully paid scares of the company, or of any other company or body corporate, to be held by or for the benefit of employees (including directors holding a salaried employment or office) of the company, or of a company which belongs to the same group of companies as the company ; or

(d)   shares or debentures allotted to employees (including directors holding a salaried employment or office) of the company, or of a company which belongs to the same group of companies as the company, under an employee share subscription scheme (whether involving the issue of options to subscribe to the beneficiaries of the scheme or not), being a scheme which has been authorised by an ordinary resolution passed by a general meeting of the company; or

(e)   shares or debentures of a company (other than a proprietary company) which the directors have been authorised to issue by an ordinary resolution passed by a general meeting of the company under section 122(3) or (5) during a period not exceeding one year from the passing of the resolution, subject to the conditions (if any) imposed by the resolution ; or

(f)    shares or debentures of a proprietary company which the directors have been authorised to issue otherwise than in proportion to the respective nominal values of the shareholdings of the existing shareholders by a special resolution passed at a general meeting of the company; or

(g)   shares or debentures properly allotted for a consideration other than cash pursuant to sections 6(1) or 122(3); or

(h) shares or debentures in respect of which a class of shareholders have waived their rights under this section by a resolution passed by the majority specified in section 19 at a meeting of the class held under that section.

(2)  If shares or debentures are offered to shareholders, or to one or more classes of shareholders, under this section, the directors may not issue any of the shares or debentures to other persons : —

(a)   at an issue price less than that at which they were offered to the existing shareholders, or less than the issue price at which they were most recently offered to the existing shareholders (as the case may be); or

(b)   more than one year after the offer, or the most recent of two or more successive offers (as the case may be), is made to the existing shareholders.

(3)  If shares or debentures are offered for subscription to existing shareholders on two or more successive occasions, the issue price at which they are offered on a later occasion may be greater or less than the issue price at which they were offered on a previous occasion.

(4)  This section shall apply to the issue of options to subscribe for shares or debentures as it applies to the allotment of shares or debentures.

(5)  If a company issues convertible debentures, this section shall not apply to shares allotted in satisfaction of the conversion rights of any debenture holder, and for the purpose of this Ordinance : —

(a)   the expression "convertible debenture" means a debenture which, by its terms or by the terms of the covering trust deed, confers conversion rights which entitle the holder of the debenture to exchange his debenture for a specified number of fully or partly paid shares, or to subscribe at a specified issue price for shares in proportion to the principal amount of his debenture ; and

(b)   the conversion rights of the holder of a convertible debenture include any right conferred on him by the debenture or the covering trust deed to acquire additional shares to those mentioned in paragraph (a) of this subsection in proportion to the number of shares which the company has (under sections 55(4) or 160(3) or otherwise) since the issue of the convertible debentures issued to its shareholders as bonus shares paid up out of capital reserve or by means of a capitalisation of profits or revenue reserves, or has since that time offered for subscription to its shareholders by way of a rights issue.

(6)  In this Ordinance "employee share subscription scheme" means a scheme to which a company is a party and which, by the furnishing of money by the company, by the allocation of a fraction ot the company's profits, the making available of shares or debentures of the company or of any other company or body corporate, or otherwise, provides facilities for the subscription or purchase of such shares or debentures by employees (including salaried directors) of the company or of another company which belongs to the same group of companies as the company.

(7)  If directors allot shares or debentures in contravention, of this section : —

(a)   the allotment shall be valid in favour of a person who subscribes for or purchases them in good faith without knowledge that this section lias not been complied with, and in favour of his successors in title ; and

(b)   any director who participated or acquiesced in the allotment shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or to both such fine and such imprisonment.

174.—(1) No remuneration shall be paid to a director unless the amount or rate thereof is specified in the memorandum or articles of the company, or in a written service agreement between the company and the director which has been authorised or approved by a general meeting of a company :

Provided that if such a service agreement is entered into without the prior authorisation of a general meeting, remuneration may be paid to the director thereunder for a period not exceeding six months until the remuneration is approved by a general meeting, and if such approval is refused no remuneration paid in respect of a period prior to the refusal shall be recoverable by the company from the director.

(2) No payment shall be made by a company : —

(a)   to a director or former director as a pension or retirement benefit;

(b)   to a director or former director as compensation for loss of office or as consideration for or in connection with his retirement from office ;

(c)   to a dependant of, or to a person nominated by, a director or former director by way of a pension or a provision ; or

(d)   to any person in return for an undertaking to provide any benefit falling within the foregoing paragraphs :

unless the payment has previously been authorised or approved by an ordinary resolution passed at a general meeting of the company, or unless the payment is provided for by a written service agreement between the company and the director and the term relating to the payment has been approved by an ordinary resolution passed at a general meeting before or within six months after the agreement was entered into.

(3) No payment to which this section applies shall be made by a company free of income tax, or otherwise calculated by reference to, or varying with, the amount of income tax payable by any person, or by reference to, or varying with, or to or with any specified rate of income tax, and the payment to be made shall be a gross sum subject to income tax equal to the net sum for which the memorandum or articles or any resolution or contract in respect of the payment actually provides.

(4)  In this section and section 171 the expressions-

(a) "remuneration" shall include salary, fees, commission, share or percentage of profits, expenses allowance and any other form of emolument, whether in the form of cash or not, relating to services as a director of the company or of any of its subsidiaries;

(b) "pension" shall include any superannuation allowance, superannuation gratuity or similar payment;

"dependant" shall include any person, whether related to a director or former director or not, who is entitled to any benefit or advantage under a contract, trust, scheme or arrangement to which the company is a party by reason of his connection with the director or former director ;

"provision" shall include any payment of money to, or the conferment of any benefit on, the recipient, whether on one occasion or on two or more successive occasions ; and

"income tax" shall mean any tax imposed on and calculated by reference to the amount of the income of a person by the law of Seychelles or of any other country.

(5)  Nothing in this section shall enatle a company or any other person to recover any premium paid by the company to an insurance company in order to secure the provision to another person of any benefit falling within paragraph (a), (b) or (c) of subsection (2), but if the payment of the premium has not been authorised under that subsection, the value of any benefit falling within any of those paragraphs which is conferred by the insurance company shall be recoverable by the company from the person who Teceives it.

175.—(1) It shall not be lawful in connection with the transfer of the whole or any part of the undertaking or property of a company for any payment to be made to any director of the company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, unless particulars with respect to the proposed payment (including the amount thereof) have been disclosed to the shareholders of the company and the proposal has been approved by the company by an ordinary resolution passed in general meeting.

(2)  Where a payment which is prohibited by this section is made to a director of the company, the amount received shall be deemed to have been received by him on behalf of the company, and may be recovered by it from him as a debt immediately due and payable.

(3)  Particulars of a proposed payment to a director within this section shall be sufficiently disclosed to shareholders of the company if the particulars are included in or accompany the notice calling the general meeting and any advertisement of the meeting published by the company under section 127(4).

(4)  If any person makes or receives a payment, or if a director of the company acquiesces in the making of a payment, which is prohibited by this section, he shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or by both such fine and such imprisonment, but a person shall not be sentenced. to a term of imprisonment unless the court is satisfied that he acted wilfully.

176.—(1) Where, in connection with the transfer to any persons of all or any of the shares in a company, being a transfer resulting from : —

(a)   an offer made to all the shareholders of the company; or

(b)   an offer made by or on behalf of some other company or body corporate with a view to the company becoming its subsidiary or a subsidiary of its holding company ; or

(c)   an offer made with a view to acquiring at least twenty per cent of the issued and outstanding shares of any class of the company, being shares which carry unrestricted voting rights; or

(d)   any other offer which is conditional on acceptance to a given extent;

a payment is to be made to a director of the company by way of compensation for loss of office, or as consideration for on in connection with his retirement from office, it shall be the duty of that director to ensure that particulars with respect to the proposed payment (including the amount thereof) shall be included in or sent with any notice of the offer made for their shares which is given to any shareholders.

(2)  If : —

(a)   any such director fails to take all proper steps to ensure that particulars are given as aforesaid ; or

(b)   any person who has been required by any such director to include the said particulars in or send them with any such notice as aforesaid fails so to do :

he shall be guilty of an offence punishable by a fine not exceeding ten thousand rupees or to imprisonment for not more than two years, or to both such fine and such imprisonment, but a person shall not be sentenced to a term of imprisonment unless the court is satisfied that he acted wilfully.

(3)  If—

(a)   the requirements of subsection (1) of this section are not complied with in relation to any such payment as is therein mentioned ; or

(b)   the making of the proposed payment is not, before the execution and delivery of a transfer of any shares in pursuance of the offer, approved by a meeting of the holders of the class of shares all or some of which are the subject of the offer, and if there are two or more such classes, by separate meetings of the holders of each such class ;

any sum received by the director on account of the payment shall be deemed to have been received by him on behalf of any persons who have accepted the offer in respect of their shares in proportion to the consideration offered for their respective shares, and the expenses incurred by the director in distributing that sum amongst those persons shall be borne by him and not retained out of that sum. Each such person may sue the director for the proportion of the said sum held on his behalf as though it were a debt immediately due and payable to that person.

(4)  A meeting of a class of shareholders under the last foregoing subsection shall be held in accordance with section 19(2), and a resolution approving a payment to which this section relates shall be valid if passed by a simple majority of the votes cast.

(5) If at a meeting of a class of shareholders summoned for the purpose of approving any payment under paragraph (6) of subsection (3) of this section a quorum is not present and, after the meeting has been adjourned to a later date, a quorum is again not present, the payment shall be deemed for the purposes of that subsection to have been approved by a meeting of that class of shareholders.

177.—(1) Where in proceedings for the recovery of any payment as having, by virtue of section 175 or 176, been received by any person on behalf of the company or any other persons, it is shown that :—-

(a)   the payment was made in pursuance of any arrangement entered into as part of the agreement for the transfer in question, or within one year before or two years after that agreement or the offer leading thereto was made ; and

(b)   the company or any person to whom the transfer was made was privy to that arrangement;

the payment shall be deemed, except insofar as the contrary is shown, to be one to which those sections apply.

(2)  If in connection with any such transfer as is mentioned in section 175 or 176—

(a)   the price to be paid to a director whose office is to be abolished, or. who is to retire from office, for any shares in the company held by him is in excess of the price which could at the time have been obtained by other holders of the like shares ; or

(b)   any valuable consideration is given to any such director ;

the excess of the price or the money value of the consideration, as the case may be, shall, for the purposes of that section, be deemed to have been a payment made to him by way of compensation for loss of office or as consideration for or in connection with his retirement from office.

(3)  It is hereby declared that references in sections 174, 175 and 176 to payments made to any director of a company by way of compensation for loss of office, or as consideration for or in connection with his retirement from office, do not include any bona fide payment by way of damages (hot exceeding the amount specified in the proviso to section 168(7)) or by way of pension in respect ot past services, and for the purposes of this subsection the expression "pension" includes any superannuation allowance, superannuation gratuity or similar payment.

178.—(1) The directors of a company may appoint one or more of their number to be the managing director or managing directors of the company, and may revocably delegate to him, or to them jointly or separately, such of the powers of the directors as they think fit, but without prejudice to their right subsequently to vary such delegated powers or to exercise any such powers themselves.

(2)  If the appointment of a managing director is authorised by an ordinary resolution passed by a general meeting of the company, or is approved by such a resolution passed not later than six months after his appointment by the directors, the managing director may be appointed to hold office as such for more than five years, and thereupon section 163(1) and any provisions in the memorandum or articles as to the maximum period for which directors may be appointed and as to the retirement of directors by rotation shall not apply to him so long as he continues to be a managing director.

(3)  The notice of a meeting called to pass a resolution under subsection (2) and any advertisement of that meeting published under section 127(4) shall include or be accompanied by a statement of the period for which the managing director has been, or is proposed to be, appointed, and a concise statement of the powers which have been delegated, or which it is proposed to delegate, to him.

(4)  This section shall not apply to a proprietary company.

(5). Notlrng in this section shall be taken as affecting section 34(2).