Close Corporations Act, 1984 (Act No. 69 of 1984)Part IX : Winding up72. Composition |
| (1) | Any person, in this section referred to as "the offeror", may at any time after the commencement of the liquidation of a corporation which is unable to pay its debts, submit to the liquidator a written offer of composition. |
| (2) | If the liquidator is of the opinion that the creditors will probably accept the offer of composition, the liquidator shall send by registered post or deliver to every known creditor as well as the Master, a copy of the offer referred to in subsection (1) with the liquidator's report thereon, and an explanation of the effect of the composition. |
| (3) | If the liquidator is of the opinion that there is no likelihood that the creditors will accept the composition or that he or she has insufficient information at his or her disposal to make a recommendation, the liquidator shall inform the offeror in writing that the offer is unacceptable and that he or she does not propose to send a copy thereof to the creditors and the Master. |
| (4) | The offeror may, within 30 days from the date on which the liquidator advised that offeror of the rejection of the offer, submit representations in writing to the Master who, after having allowed the liquidator 14 days to comment in writing, shall consider the representations and comment and may thereafter direct the liquidator to send by registered post or deliver a copy of the offer to every known creditor of the corporation together with the liquidator's report thereon, and an explanation of the effect of the composition. |
| (5) | Whenever the liquidator posts or delivers to the creditors and the Master an offer of composition in terms of the provisions of this section, he or she shall simultaneously give notice to the creditors of the meeting at which the offer and any other matter mentioned in the notice, are to be considered. |
| (6) | An offer of composition may be considered at a general meeting of creditors of the corporation in terms of this Act, provided that notice was given to creditors and the Master not less than 10 days and not more than 28 days before the date of such a meeting. |
| (7) | An offer of composition which has been accepted by creditors whose votes amount to not less than two-thirds in value and two-thirds in number, calculated in accordance with the provisions of section 52 of the Insolvency Act, 1936 (Act No. 24 of 1936), of the votes of all the creditors who proved claims against the corporation, shall be binding upon every person who had notice of and was entitled to vote at that meeting, whether or not that person was present or represented at the meeting, as if that person were a party to the composition: Provided that— |
| (a) | no offer may be so accepted if it contains any condition whereby any creditor would obtain any benefit to which that creditor would not have been entitled upon the distribution of the estate in the ordinary way; |
| (b) | payment under the composition has been made or security for such payment has been given as specified in the offer of composition; and |
| (c) | the right of any secured or preferent creditor shall not be prejudiced thereby, except insofar as that creditor has expressly and in writing waived the preference. |
| (8) | composition shall not affect the liability of a surety of the corporation. |
| (9) | Any money to be paid and anything to be done for the benefit of creditors in pursuance of a composition shall be paid and done through the liquidator: Provided that any creditor who has failed to prove a claim before the liquidator has made a final distribution amongst those creditors who have proved their claims, shall be entitled to prove a claim and share in such final distribution up to the amount to which that creditor may have been entitled to under the composition: Provided further, that no claim shall be proved against the corporation after the expiration of six months as from the date of the meeting at which the composition was accepted, except with leave of the Court or Master and on payment of such sum to cover the costs or any part thereof, occasioned by the late proof of the claim, as the Court or Master may direct. |
| (10) | When a composition has been entered into between a corporation and its creditors, the liquidator shall, in terms of this Act, frame an account and plan of distribution of all the assets which are or will become available for creditors under the composition. |
| (11) | If an accepted offer of composition so provides, the offeror may apply to the Court for the setting aside of the winding-up of the corporation and the Court may make such an order provided that the offeror has, not less than three weeks before making the application, given notice by advertisement in the Gazette, of the intention to make the application and has served a copy of the application on the Master, the Registrar and the liquidator. |
| (12) | The application for the setting aside of the liquidation of the corporation may be opposed by any creditor or other interested person on the following grounds: |
| (a) | That the composition approved under this section unfairly prejudices the interests of a creditor of the corporation; |
| (b) | that there has been some material irregularity at or in the relation to the meetings held for the consideration of the composition; |
| (c) | that insufficient or materially inaccurate information on the composition was disclosed; or |
| (d) | any other grounds that the Court may deem sufficient. |