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RECONSTRUCTION OF STATE-INDEBTED INSOLVENT COMPANIES ACT(CHAPTER 24:27)

CHAPTER 24:27

RECONSTRUCTION OF STATE-INDEBTED INSOLVENT COMPANIES ACT

Act 27/2004

ARRANGEMENT OF SECTIONS

PART I

PRELIMINARY Section

PART II

RECONSTRUCTION ORDERS

  1. Requirements for and scope of reconstruction order.
  2. Contents of reconstruction order.
  3. Effect of reconstruction order.
  4. Transmission of reconstruction order to certain officers.
  5. Confirmation of reconstruction order.

PART III

CULPABLE PERSONS IN RELATION TO COMPANIES UNDER RECONSTRUCTION

  1. Statement of company’s affairs.
  2. Identification of culpable persons.
  3. Special commissioners for taking evidence.
  4. Forfeiture or vesting in State of rights held by culpable persons.
  5. Attachment of assets of culpable persons in satisfaction of their liabilities to company under reconstruction.
  6. Powers of administrator in relation to culpable persons.
  7. Transactions by culpable persons.
  8. Offences by culpable persons.
  9. Power of administrator to compromise with persons liable to be prosecuted or declared culpable.

PART IV

FUNCTIONS OFADMINISTRATOR IN RECONSTRUCTION

  1. General powers of administrator in relation to company under reconstruction.
  2. Application of certain provisions of the Act to reconstruction.
  3. Voidable dispositions of property by companies under reconstruction and culpable persons.
  4. Initial meeting of creditors and members.

22   Subsequent meetings of creditors and members.

PART V

SCHEMES OF RECONSTRUCTION AND INTERIM MANAGEMENT OF RECONSTRUCTED COMPANIES

  1. Powers of administrator with respect to scheme of reconstruction.
  2. Approval of scheme of reconstruction.
  3. Consequences where reconstruction not possible or scheme therefor unapproved.
  4. Implementation of scheme of reconstruction and matters incidental thereto.
  5. Duties of interim board.

PART VI

GENERAL

  1. Persons employed by company before its reconstruction.
  2. Application of assets during reconstruction.
  3. Remuneration of administrator and assistant administrators.
  4. Liabilities incurred by administrator and interim board to have preference over pre-reconstruction liabilities.
  5. Period of reconstruction excluded in determining preference under mortgage bond.
  6. Position of auditor during reconstruction.
  7. Reconstruction expenses.
  8. Cancellation of reconstruction order.
  9. Offences consequent upon a reconstruction.
  10. Saving of powers exercised under Statutory Instrument 187 of 2004.

AN ACT to provide for the reconstruction of State-indebted companies and associate companies that are unable to repay credits made to them from public funds, or in respect of whose liabilities the State has issued any guarantee that has become due; to provide for appointment and functions of administrators of companies under reconstruction; to provide for formulation and implementation of schemes of reconstruction in respect of such companies; and to provide for matters connected with or incidental to the foregoing.

[Date of commencement: 25th February, 2005.]

PART I

PRELIMINARY

1    Title

This Act may be cited as the Reconstruction of State-Indebted Insolvent Companies Act [Chapter 24:27].

                   2    Application

This Act shall apply to all State-indebted companies, including those formed or incorporated before the date of commencement of this Act and regardless of when they became indebted to the State:

Provided that if in relation to a State-indebted company there is made or presented to the court

  • an application in terms of section 191 of the Act for the sanctioning of a compromise or arrangement proposed between the company and its creditors or members, sections 191 to 194 of the Act; or
  • a petition for the winding up of the company in terms of section 207 of the Act, Part V or VI of the Act; or
  • an application for a provisional judicial management order in terms of section 299 of the Act, Part V or

VI of the Act; shall apply to such company unless, within thirty days of the date of presentation of the petition or the making of the application, as the case may be, the Minister issues a reconstruction order in respect of the company.

                   3    Interpretation

(1) In this Act

“the Act” means the Companies Act [Chapter 24:03];

“administrator” means an administrator appointed under section 5(1)(b), and includes any assistant administrator appointed under that provision;

“associate”, in relation to—

  • a company referred to in paragraph (a) of the definition of “company” or any body or association referred to in paragraph (c) of that definition which is registered or incorporated in terms of the Act, means—
    • its subsidiary, as defined in section 143 of the Act; or
    • any company of which the company is the single largest shareholder; or
    • its holding company, as defined in section 143 of the Act; or
    • where the company is itself a subsidiary of a holding company, as defined in section 143 of the Act, any other such subsidiary of the same holding company; or
    • any person who has power, directly or indirectly, to control the company’s management

or policies;

  • an entity referred to in paragraphs (b), (c), (d) or (e) of the definition of “company”, means any person who has power, directly or indirectly, to control the entity’s management or policies;

“company” means

  • a company registered or incorporated in Zimbabwe or a company, wherever registered or incorporated, that carries on business in Zimbabwe or is liable to be wound up under the Act;
  • a private business corporation;
  • any body or association incorporated or registered under any law relating to banking, building societies, co-operative societies, insurance or pensions or under a special law; (d) a trust;

(e)                a partnership, a syndicate, a club or any other association of persons which is not a body

corporate;

and includes any associate company;

“company under reconstruction” means a company subjected to a reconstruction order that has not yet been reconstructed in accordance with a scheme of reconstruction;

“credit” means any loan, advance or other disbursement of a sum of money in exchange for a right to repayment of the amount disbursed and to the payment of interest or other charges on such amount;

“culpable person” means any person identified by the administrator as a culpable person in terms of section

9(1)(b);

“financial institution” means—

  • any banking institution registered or required to be registered in terms of the Banking Act [Chapter 24:20]; or
  • any building society registered or required to be registered in terms of the Building Societies Act [Chapter 24:02]; or
  • the People’s Own Savings Bank established in terms of the People’s Own Savings Bank of Zimbabwe Act [Chapter 24:22]; or
  • the Reserve Bank of Zimbabwe referred to in section 4 of the Reserve Bank of Zimbabwe Act [Chapter 22:15]; or
  • an asset manager as defined in the Asset Management Act [Chapter 24:26]; or
  • a collective investment scheme as defined in section 3 of the Collective Investment Schemes

Act, 1997; or

  • any person who carries on a business of acceptance of deposits and other repayable funds from the public;

“interim board” means the board of directors in which the management of a reconstructed company is vested in terms of section 23(1)(m);

“member”, in relation to a company, means

  • a shareholder, debenture-holder or other person having a right to vote at meetings of the company; or
  • any contributory as defined in section 202 of the Act;

"Minister" means the Minister of Justice, Legal and Parliamentary Affairs or any other Minister to whom the President may, from time to time, assign the administration of this Act;

“public funds” means funds held by or on behalf of the State (whether or not appropriated by Act of Parliament) and includes the funds of any statutory corporation or State-controlled company;

“reconstructed company” means a company that has been reconstructed in accordance with a scheme of reconstruction, and includes a company formed in succession to a company under reconstruction that was dissolved;

“reconstruction”, in relation to a company, means the reconstruction of the company in accordance with a reconstruction order or a scheme of reconstruction;

“reconstruction order” means a reconstruction order issued in terms of section 4;

“Reserve Bank of Zimbabwe” means the Reserve Bank of Zimbabwe referred to in section 4 of the Reserve Bank of Zimbabwe Act [Chapter 24:22];

“scheme of reconstruction” means a scheme referred to in section 23;

“State-controlled company” means a company in which the State holds directly the controlling interest;

“State-indebted”, in relation to a company, means that the company is indebted to the State, a statutory corporation or State-controlled company by reason of having received any credit or guarantee in its favour that is disbursed or payable out of public funds or which imposes any liability upon the State;

“statutory corporation” means any body corporate established directly by or under any Act of Parliament for special purposes specified in that Act.

(2) Any word or expression to which a meaning has been assigned in the Act shall have the same meaning when used in this Act.

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