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Companies Act B

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Length of
notice for
calling
meetings

(4) Any meeting convened under this section by the
requisitionists shall be convened in the same manner, as nearly as
possible, as that in which meetings are to be convened by the
directors.
(5) Any reasonable expense incurred by the requisitionists by
reason of the failure of the directors duly to convene a meeting
shall be repaid to the requisitionists by the company, and any sum
so repaid shall be retained by the company out of any sum due or
to become due from the company by way of fee or other
remuneration in respect of their services to such of the directors as
were knowingly party to the default.
(6) Any officer of the company who is knowingly a party to a
default in convening a meeting as required by sub-section (1) of
this section shall be guilty of an offence and liable on conviction
to a fine not exceeding one hundred rand.

100. (1) A company’s annual general meeting may be called
by twenty-one days’ notice in writing, and a meeting of a
company other than an annual general meeting or a meeting for
the passing of a special resolution may be called by fourteen days’
notice in writing or in the case of a private company, by seven
days’ notice in wiring; and any provision of a company’s articles
shall be void so far as it provides for the calling of a meeting of
the company (other than an adjourned meeting), by shorter notice
than that specified in this section.

(2) A meeting of a company shall, notwithstanding that it is
called by shorter notice than that specified in sub-section (1) of
this section or in the company’s articles, as the case may be,
deemed to have been duly called if it is so agreed –

(a) in the case of a meeting called as the annual general
meeting, by all the members entitled to attend and vote
thereat; and

(b) in the case of any other meeting, by a majority in
numbers of the member having a right to attend and vote
at the meeting, being a majority holding not less than
ninety-five per cent in nominal value of the shares giving
a right to attend and vote at the meeting , or, in the case
of a company not having a share capital, together
representing not less than ninety-five percent of the total
voting rights at that meeting of all the members.

101. (1) The following provisions shall have effect in so far as
the articles of a company do not make other provision in that
behalf:
(a) Notice of the meeting of a company shall be served on
every member of the company in the manner in which
notices are required to the served by Table A:

General
provisions as
to meetings
and votes and
power of court
to order meting

(b) two or more members holding not less than one-tenth of
the issued share capital, or, if the company has not share
capital, not less than five percent in numbers of the
members of the company, may call a meeting;

(c) in the case of a private company, two members and in the
case of any other company three members, personally
present shall be a quorum;

Proxies and
voting on a poll

(d) any member elected by the members present at a meeting
may be chairman thereof;
(a) every member shall have one vote in respect of each
share or each twenty rand of stock held by him, and in
any other case every member shall have one vote.

(2) If for any reason it is impracticable to call a meeting of a
company in any manner in which meetings of that company
may be called, or to conduct the meeting of the company in
manner prescribed by the articles or this Act, or if for any
reason the court sees fit, the court may, either of its own
motion or on the application of any director of the company
or of any member of the company who would be entitled to
vote at the meeting, order a meeting of the company to be
called, held and conducted in such manner as the court thinks
fit, and where any such order is made may give such ancillary
or consequential direction as it thinks expedient, including a
direction that one member of the company present in person
or by proxy shall be deemed to constitute a meeting.

(3) Any meeting called, held and conducted in accordance with
an order under sub-section (2) of this section shall for all
purposes be deemed to be a meeting of the company duly
called, held and conducted.

102. (1) Any member of any company, other than private
company, who is entitled to attend and vote at a meeting of the
company shall be entitled to appoint another person (whether a
member or not) as his proxy to attend any meeting of the company
in his stead.

(2) Any member of a private company who is entitled to
attend and vote at a meeting of the company shall be entitled to
appoint another member of the company or such other person as
the articles of the company may allow to attend any meeting of the
company in his stead.

(3) A proxy appointed to attend a meeting of a company
instead of a member shall have the same right as the member to
speak at the meeting but shall not be entitled to vote except on a
poll.

(4) In every notice calling a meeting of a company and on
the face of every proxy form issued at the company’s expense
shall appear with reasonable prominence a statement that a
member entitled to attend and vote is entitled to appoint a
proxy to attend and vote and speak in his stead and, where
that is so, that a proxy need not also be a member; and if
default is made in complying with this sub-section in
relation to a meeting, every officer of the company who
authorizes, knowingly permits or is part to the default shall
be guilty of an offence and liable to conviction to a fine not
exceeding one hundred rand.

(5) Any provision contained in a company’s articles shall be
void in so far as it would have the effect of requiring the
instrument appointing a proxy, or any other document necessary
to show the validity of or otherwise relating to the appointment of
a proxy, to be received by the company or any other person
more than forty-eight hours before a meeting in order that the
appointment may be effective thereat.

(6) If for the purpose of any meeting or a company
invitations to appoint as proxy a person or one of a number of
persons specified in the invitations are issued at the company’s
expense to some only of the members entitled to be sent a notice
of the meeting and to vote thereat by proxy, every officer of the
company who authorizes or knowingly permits or is a party to the
issue as aforesaid shall be guilty of an offence and liable on
conviction to a fine not exceeding one hundred rand:
Provided that an officer shall not be liable under this
subsection by reason only of the issue to a member at his
written request of a form of appointment naming the proxy
or of a list of persons willing to act as proxy if the form or
list is available on request in writing to every member
entitled to vote at the meeting by proxy.
(7) On a poll taken at a meeting of a company, a member
entitled to a more than one vote need not, if he
votes, use all his votes or cast all the votes he uses
in the same way.

(8) This section shall apply to meetings of any class of
members of a company as it applies to general meetings of the
company.

103. (1) If at any meeting of a company, any member of the
company who is present and entitled to vote at that meeting
demands an adjournment of the meeting upon any grounds stated
by him the chairman shall put the demand to the vote of the
meeting and if a majority of the members present personally or by
proxy and entitled to vote at the meeting or if such members
representing either personally or by proxy more than half of the

Procedure for
compulsory
adjournment

share capital of the company represented at the meeting vote in
favour of an adjournment, the chairman shall adjourn the meeting
to a day seven days after the date of the meeting or if that day is
public holiday, to the next succeeding day other than a public
holiday.
(2) when a meeting has been adjourned as aforesaid the
secretary of the company shall, upon a date not later than four
days after the adjournment publish in a newspaper circulating in
Lesotho, a notice stating –
(a) the time and place to which the meeting was
adjourned;
and
(b) the matter before the meeting at the time when it
was adjourned; and
(c) the ground for adjournment
This sub-section shall not apply to a private company.

(3) Any person acting as chairman of a meeting of a
company who fails to comply with the requirements of sub-
section (1) of this section and any secretary of a company other
than a private company who fails to comply with the requirements
of sub-section (2) of this section shall be guilty of an offence and
liable on conviction to a fine not exceeding one hundred rand.

104. (1) A corporation, whether a company within the
meaning of this Act or not, may –
(a) if it is a member of another corporation, being a
company within the meaning of this Act, by
resolution of its directors or other governing body
authorize such person as it thinks fit to act as its
representative at any meeting of any class of
members of the company;

(b) if it is a creditor (including a holder of
debentures) of another corporation, being a
company within the meaning of this Act,
authorize by resolution of its directors or other
governing body, such person as it thinks fit to act
as its representative at any meeting of any
creditors of the company held in pursuance of this
Act or of any rules made thereunder, or in
pursuance of the provisions contained in any
debenture or trust deed, as the case may be.

(2) A person authorized as aforesaid shall be entitled to
exercise the same powers on behalf of the corporation which he
represents, as that corporation could exercise if it were an
individual member, creditor or holder of debentures of that other
company.

Representation
of corporations
at a meeting of
a company and
of creditors

Circulation of
members’
resolutions, etc
.

105. (1) Subject to the following provisions it shall be the
duty of a company, on the requisition in writing of such number
of members as is hereinafter specified and (unless the company
otherwise resolves) at the expense of the requisitionists –
(a) to give to members of the company entitled to receive
notice of the next annual general meeting notice of any
resolution which may properly be moved and is intended
to be moved at that that meeting;
(b) to circulate to members entitled to have notice of any
general meeting sent to them any statement of not more
than one thousand woods with respect to the matter
referred to in any proposed resolution of the business to
be dealt with at that meeting.

(2) The number of members necessary for a requisition
under sub section (1) of this section shall be –

(a) any number of members representing not less than one
twentieth of the total voting rights of all the members
having at the date of the requisition a right to vote at the
meeting to which the requisition relates; or

(b) not less than one hundred members holding shares in the
company on which there has been paid up an average
sum, per member, of not less than two hundred rand.

(3) Notice of any such resolution shall be given, and any such
statement shall be circulated, to members of the company entitled
to have notice of the meeting sent to them, by serving a copy of
the resolution or statement on each such member in any manner
permitted for service of notice of the meeting and notice of any
such resolution shall be given to any other member of the
company by giving notice of the general effect of the resolution in
any manner permitted for giving him notice of meetings of the
company:
Provided that the copy shall be served, or notice of the
effect of the resolution shall be given, as the case may be,
in the same manner and, so far as a practicable, at the same
time as notice of the meeting and where it is not practicable
for it to be served or given at that time, it shall be served or
given as soon as practicable thereafter.

(4) A company shall not be bound under this section to give
notice of any resolution or not circulate any statement unless-
(a) a copy of the requisition signed by the requisitionists
(or two or more copies which between them contain
the signatures of all the requisitionists) is deposited at

Definition of
special
resolution

the registered office of the company –

(i) in the case of a requisition requiring notice of a
resolution not less than six weeks before the
meeting; and
(ii) in the case of any other requisition, not less than
twenty-one days before the meeting, and
(b) there is deposited or tendered with the requisition a
sum reasonably sufficient to meet the company’s
expenses in giving effect thereto:
Provided that it, after a copy of a requisition
requiring notice of a resolution has been deposited at the
registered office of the company, an annual general
meeting is called for a date six weeks or less after the
copy has been deposited, the copy tough not deposited
within the time required by this sub-section shall be
deemed to have been properly deposited for the purposes
thereof.

(5) The company shall also not be bound under this section to
circulate any resolution or statement if, on the application either of
the company or of any other person who claims to be aggrieved,
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
requisitionists, notwithstanding hat they are not parties to the
application.

(2) Notwithstanding anything in the company’s articles,
the business which may be dealt with at an annual general
meeting shall include any resolution of which notice is given in
accordance with this section, and for the purposes of this sub-
section notice shall be deemed to have been so given
notwithstanding the accidental omission, in giving it, of one or
more members.

(7) In the event of any default in complying with the
provisions of this section every officer of the company who
authorizes, or knowingly permits or is party to the default shall be
guilty of an offence and liable on conviction to a fine not
exceeding one thousand rand.

106. (1) A resolution shall be a special resolution when it
has been passed by a majority of not less than three-fourths of
such members entitled to vote who vote in person or by proxy at a
general meeting of which not less than twenty-one days’ notice
has been given, specifying the intention to propose the resolution
as a special resolution and the terms of the resolution and at which
members holding in the aggregate not less than one-fourth of the

total votes of the company are present in person or by proxy.

(2) If the members present at the meeting hold less than one-
fourth of the total votes of all members entitled to vote, the
meeting shall stand adjourned to the same day in the following
week or, if that is a public holiday, to the next succeeding day
other than a public holiday. At the adjourned meeting the
members present in person or by proxy may deal with the business
for which the original meeting was convened and a resolution
passed by not less than three-fourths of such members shall be
deemed to be a special resolution, notwithstanding that less than
one-fourth of the total votes of the company are represented at
such adjourned meeting.

(3) If it is so agreed by the majority in number of the
members having the right to attend and vote at any such meeting,
being a majority together holding not less than ninety-five percent
in nominal value of the shares giving that right or, in the case of a
company having no share capital, together representing not less
than ninety-five percent of the total voting rights at that meeting
of all the members, a resolution may be proposed and passed as a
special resolution at a meeting of which less than twenty-one
days’ notice has been given, and sub-section (8) of this section
shall not apply for the purposes of this sub-section.

(4) In the case of a private company a resolution which is
dated and signed by all members of the company, stating that it is
passed as a special resolution shall be a special resolution passed
on the said date, notwithstanding that it was so passed at a
meeting of which less than twenty-one days’ notice has been
given, and sub-section (8) of this section shall not apply for the
purposes of this sub-section.
(5) All other resolutions at a general meeting shall be called
ordinary resolutions.
(6) At any meeting at which a special resolution is
submitted to be passed, a declaration of the chairman that the
resolution is carried shall, unless a poll is demanded, the
conclusive evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against the
resolution.
(7) When a poll is demanded regard shall be had in
computing the majority on the poll to the number of votes cast for
and against the resolution.
(8) For the purposes of this section notice of a meeting shall
be deemed to be duly given and the meeting shall be deemed to be
duly held when the notice is given and meeting held manner
provided by the articles but subject always to the provisions of
this Act.
107. (1) Where by any provision of this Act or of the
articles of association of a company special notice is required of a

Resolutions
requiring
special notice

resolution, the resolution shall not be effective unless notice of
the intention to move it has been given to the company not less
than twenty-eight days before the meeting at which it is moved,
and the company shall given its members notice of any such
resolution at the same time or, if that is not practicable, shall give
them notice and thereof, either by advertisement in a newspaper
having an appropriate circulation or in any other mode allowed by
the articles, not less than twenty-one days before the meeting:

Provided that if, after notice of the intention to
move such a resolution has been given to the company, a
meeting is called for a date twenty-eight days or less
after the notice has been given, the notice though not
given within the time required by this sub-section shall
be deemed to have been properly given for the purposes
thereof.

(2) If the status of any person in relation to a
company will ha affected by the terms of a resolution of which
special notice has been given the company shall send to or serve
upon such person a copy of such resolution and of the notice of
the meeting at which it will be moved at the time when similar
notice is given to the members of the company, and such person
shall be entitled to speak on the resolution at the meeting before
any vote is taken upon it.
(3) If default is made by a company in giving notice to its
members the company and every officer of the company who is in
default shall be guilty of an offence and liable on conviction to a
fine not exceeding one hundred rand.

108. (1) Within fifteen days from the passing of any
special resolution, a copy of such resolution shall be transmitted to
the Registrar, who shall, subject other provisions of sub-section
(2) of this section, record the same and the special resolution shall
be of no force or effect until so recorded.

(2) The Registrar may, except upon the order of the
court, refuse to record any special resolution so transmitted to him
if such resolution appears to him to be contract to the provisions
of this Act or of the memorandum or articles of the company.
(3) Where articles have been registered, a copy of every
special resolution for the time being in force shall be embodied in
or annexed to every copy of the articles issued after the recording
of the resolution.

(4) Where articles have not been registered, a copy of
every special resolution shall be transmitted to any member of the
company at his request on payment of one rand or such less such
as the company may direct.

Registration
and copies of
special
resolution

Resolution
passed at
adjourned
meetings

Minutes of
proceedings of
meetings of
company or
directors or
managers

(5) If default is made in transmitting the copy of a special
resolution to the Registrar, the company and every officer of the
company who is in default shall be guilty of an offence and liable
on conviction to a fine not exceeding four rand for every day
during which the offence continues.

(6) If default is made in complying with sub-section (3)
sub-section (4) of this section the company and every officer of
the company who is in default shall be guilty of an offence and
liable on conviction to a fine not exceeding two rand for each
copy of articles or special resolution in respect of which the
default is made

109. If a resolution is passed at an adjourned meeting of –
(c) a company;
(d) the holders of any class of shares in a company;
or
(e) the directors of a company;
h shall for all purposes be treated as having been passed on the date
on which it was in fact passed and shall not be deemed to have
been passed on any earlier date.
110. (1) Every company shall cause minutes of all
proceedings of general meetings, all proceedings at meetings of its
directors and, where there are managers, all proceedings at
meetings of its managers to be entered in books kept for that
purpose.

(2) Any such minute if purporting to be signed by the
chairman of the meeting at which the proceedings were had, or by
the chairman of the next succeeding meeting, shall be evidence of
the proceedings.

(3) Where minutes have been made in accordance with the
provisions of this section of the proceedings at any general
meeting of the company or meeting of directors or managers,
then, until the contrary is proved, the meeting shall be deemed to
have been duly held and convened, and all proceedings thereat to
have been duly had, and all appointments of directors, managers,
secretaries or liquidators shall be deemed to be valid.

(4) If default is made in complying with sub-section (1) of
this section the company and every officer of the company who is
in default shall be guilty of an offence and liable on conviction to
a fine not exceeding two hundred rand.

111. (1) The books or copies of the books certified by a

Inspection of

director or secretary containing the minutes of proceedings of any
general meeting of a company held after the commencement of
this Act, shall be kept at the registered office of the company, and
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 member without
charge.

(2) Any member shall be entitled to be furnished within
fourteen days after he has made a request in that behalf to the
company with a copy of such minutes as aforesaid certified by the
secretary or director, as correct, at a charge not exceeding twenty
cents for every hundred words.

(3) If any inspection required under this section is refused,
or if any copy required under this section is not sent within the
proper time, the company and every officer of the company who is
in default shall be guilty of an offence and liable on conviction to
a fine not exceeding four rand and to a further fine not exceeding
four rand for every day during which the offence continues.

(4) In the case of any such refusal or default the court may by
order compel an immediate inspection of the books in respect of
all proceedings of general meetings or direct that the copies
required shall, subject to the payment of the appropriate sum, be
sent to the persons requiring them.

Accounts and Audit

112. (1) Every company shall cause to be kept in the English or
the Sesotho language proper books of account with respect to –

(a) all sums of money received and expended by the
company and the matters in respect of which the
receipt and expenditure takes place;

(b) all sales and purchases of goods by the company;

(c) the assets and liabilities of the company.

(2) For the purposes of sub-section (1) of this section,
proper books of account shall not be deemed to be kept with
respect to the matters aforesaid if the are not kept such books as
are necessary to give a true and fair view of the state of the
company’s affairs and to explain its transactions.

(3) The books of account shall be kept at the registered minute books

Keeping of
books of
account

Profit and Loss
account and
balance sheet
and financial
year of holding
company and
subsidiary

office of the company or at such other place as the directors think
fit, and shall at all times be open to inspection by the directors:

Provided that if books of account are kept at a place
outside Lesotho there shall be sent to, and kept at a place in
Lesotho, and be at all times open to inspection by the
directors such accounts and returns with respect to the
business dealt with in the books of account so kept as will
disclose with reasonable accuracy the financial position of
that business at intervals not exceeding twelve months and
will enable to be prepared in accordance with this Act the
company’s balance sheet, its profit and loss account or
income and expenditure account, and any document annexed
to any of those documents giving information which is
required by this Act and is thereby allowed to be so given.

(4) If any directors of a company fails to take all reasonable
steps to secure compliance by the company with the requirements
of this section, or has by own willful act been the cause of any
default by the company thereunder, he shall, in respect of each
default and subject to the provisions of section one hundred and

twenty, be guilty of an offence and liable on conviction to a fine
not exceeding four hundred rand.

113. (1) The directors of every company shall at some date not
later than eigtheen months after the incorporation of the company,
and subsequently once at least in every calendar year, lay before
the company in general meeting a profit and loss account for the
period, in the case of the first account, since the incorporation of
the company, and, in any other case, since the year preceding
account, made up to a date not earlier than the date of the meeting
by more than nine months. Every such account shall comply with
the provisions of section one hundred and fourteen:

Provided that the Registrar on cause shown to his
satisfaction may, in the case of any company, extend by a
period not exceeding three months the period of eigtheen
months or nine months aforesaid, or both such periods.

(2) The directors shall cause to be made out in every calendar
year and to be laid before the company in general meeting, a
balance sheet as at the date to which the profit and loss account is
made up.

(3) A holding company’s directors shall secure that except
where in their opinion there are good reasons against it, the
financial year of each of its subsidiaries shall coincide with the

company’s own financial year.

(4) If any director of a company fails to take all reasonable
steps to comply with the requirements of this section, he shall
subject to the provisions of section one hundred and twenty, be
guilty of an offence and liable on conviction to a fine not
exceeding four hundred rand, or to imprisonment for a period of
exceeding twelve months, or to both such fine and imprisonment.

114. (1) Every balance sheet of a company shall give a true
and fair view of the state of affairs of the company as at the end
of its financial year, and every profit and loss account of a
company shall give a true and fair view of the profit or loss of the
use company for the financial year.
(2) A company’s balance sheet and profit and loss account
shall comply with the requirements of the Sixth Schedule so far as
applicable thereto.

(3) The requirements of sub-section (2) of this section and
the Sixth Schedule shall be without prejudice either to the general
requirements of sub-section (1) of this section or to any other
requirements of this Act.

(4) The Minister may, on the application or with the
consent of the company’s directors, modify in relation to that
company any of the requirements of this Act as to the matter to be
stated in a company’s balance sheet or profit and loss account
(except the requirements of sub-section (1) of this section) for the
purpose of adapting them to the circumstances of the company.

(5) Sub-sections (1) and (2) of this section shall not apply
to a company’s profit and loss account if –
(a) the company has subsidiaries; and
(b) the profit and loss account is framed as a
consolidated profit and loss account dealing with all
or any of the company’s subsidiaries as well as the
company and –

(ii) complies with the requirements of this Act relating
to consolidated profit and loss accounts; and
(iii) shows how much the consolidated profit or loss for
the financial year is dealt with in the accounts of
the company.
(6) If a director of a company fails to take all reasonable steps to
secure compliance by the company as respects any accounts
required to be laid before the company in general meeting with the
provisions of this section and with the other requirements of this
Act as to the matters to be stated in the accounts, he shall, subject
to the provisions of section one hundred and twenty, be guilty of

General
provisions as
to contents and
form of
accounts

Meaning of
holding
company,
subsidiary and
wholly owned
subsidiary

an offence and liable on conviction in respect of each offence to a
fine not exceeding four hundred rand or to imprisonment for a
period not exceeding six months, or to both such fine and such
imprisonment.
(7) For the purposes of this Act, except where the context
otherwise requires –
(a) any reference to a balance sheet or profit and loss
account shall include any note thereon or document
annexed thereto giving information which is required
by this Act and is thereby allowed to be so given; and
(b) any reference to a profit and loss account shall in the
case of a company not trading for profit, be taken as
including an income and expenditure account or any
similar account which may be appropriate and
references to profit or to loss and if the company has
subsidiaries, references to a consolidated profit and
loss account shall be construed accordingly.

115. (1) A company shall, subject to the provisions of
subsection (3) of this section, be deemed to be a subsidiary of
another if, but only if –

(a) that other either –
(i) is a member of if and controls the
composition of its board of directors; or
(ii) holds more than half in nominal value of its
equity share capital; or
(b) the first-mentioned company is a subsidiary of any
company which is that other’s subsidiary:
Provided that the first-mentioned company
shall be deemed to be a subsidiary of that other
if subsidiaries of that other between them hold
more than one half in nominal value of the
equity share capital of the first mentioned
company or if that other and one or more of its
subsidiaries between them hold more than one-
half of such capital.

(2) For the purposes of sub-section (1) of this section the
composition of a company’s board of directors shall be deemed to
be controlled by another company if, but only if, that other
company the exercise of some power exercisable by it without the
consent or concurrence of any other person can appoint or remove
the holders of all or a majority of the directorships: but for the
purpose of this provision that other company shall be deemed to
have power to appoint to a directorship with respect to which any
of the following conditions is satisfied, that is to say –

(a) that a person cannot be appointed thereto without the
exercise in his favour by that other company of such
power as aforesaid; or

(b) that a person’s appointment thereto follows necessarily
from his appointment as a director of that other company;

(c) that the directorship is held by that other company itself or
by a subsidiary of it.

(3) In determining whether one company is a subsidiary of
another-
(a) any shares held or power exercisable by that other
in a fiduciary capacity shall be treated as not held or
exercisable by it;

(b) subject to the two following paragraphs, any shares
held or power exercisable –

(i) by any person as a nominee for that other
except where that other is concerned only in a
fiduciary capacity; or
(ii) by, or by nominee for, subsidiary of that other,
not being a subsidiary which is concerned only
in a fiduciary capacity;

(c) any shares held or power exercisable by any person
by virtue of the provisions of any debentures of the
first-mentioned company or of a trust deed for
securing.

(d) any shares held or power exercisable by, or by a
nominee for, that other or its subsidiary (not being
held or exercisable as mentioned in paragraph (c) of
this sub-section) shall be treated as not held or
exercisable by that other if the ordinary business of
that other or its subsidiary, as the case may be,
includes the lending of money and the shares are
held or power is exercisable as aforesaid by way of
security only for the purposes of a transaction
entered into in the ordinary course of that business.

(4) A company shall be deemed to be the wholly-owned
subsidiary of another if it has no members except that other and
that other’s wholly-owned subsidiaries and its or their nominees.

(5) A company shall be deemed to be another’s holding

Obligation to
lay group
accounts before
holding
company

company if that other is its subsidiary.

(6) In this section, the expression “company” includes any
body corporate, and the expression “equity share capital” means,
in relation to a company, its issued share capital excluding any
part thereof which, neither as respects dividends nor as respects
capital, carries any right to participate beyond a specified amount
in a distribution.

116. (1) Where at the end of its financial year a company has
subsidiaries, accounts of statements (in this Act referred to as
group accounts) dealing as hereinafter mentioned with the state of
affairs and profit or loss of the company and the subsidiaries
shall, subject to the provisions of sub-section (2) of this section,
be laid before the company in general meeting when the
company’s own balance sheet and profit and loss accounts are so
laid.

(2) Notwithstanding anything in sub-section (1) of this section –
(a) group accounts shall not be required where the
company is at the end of its financial year the wholly-
owned subsidiary of another company incorporated in
Lesotho; and

(b) group accounts need not deal with a subsidiary of the
company if the company’s directors are of the opinion
that –

(i) it is impracticable, or would be of no real value
to members of the company, in view of the
insignificant amounts involved, or would entail
expense or delay out of proportion to the value
to members of the company; or
(ii) the result would be misleading, or harmful to
the business of the company or any of its
subsidiaries;
or
(iii) the business of the holding company and that of
the subsidiary are so different that they cannot
reasonably be treated as a single undertaking;
and
(c) group accounts shall not be required if the directors are
of an opinion described in paragraph (b) of this
subsection about each of the company’s subsidiaries:
Provided further, that the approval of the
Minister shall be required for not dealing in group
accounts with a subsidiary on the ground that the
result would be harmful or on the ground of the
difference between the business of the holding

company and that of the subsidiary.

(3) If any director of a company fails to take all reasonable steps
to secure compliance as respects the company with the
requirements of this section he shall, subject to the provisions
of section one hundred and twenty, be guilty of an offence
and liable on conviction to a fine not exceeding four hundred
rand or to imprisonment for a period not exceeding twelve
months, or to both such fine and such imprisonment:
Provided that he shall not be sentenced to
imprisonment unless in the opinion of the court dealing
with the case, the offence was committed willfully.

117. (1) The group accounts laid before a holding company
shall be consolidated account comprising –

(a) a consolidated balance sheet dealing with the state of
affairs of the company and all the subsidiaries to be
dealt with in the group accounts; and

(b) a consolidated profit and loss account dealing with
profit or loss of the company and those subsidiaries.

(2) If the company’s directors are of opinion that it is better for the
purpose –

(a) of presenting the same or equivalent information
about the state of affairs and profit or loss of the
company and those subsidiaries; and

(b) of so presenting it that it may be readily appreciated
by the company’s members;

the group accounts may be prepared in a form other than that
required by sub-section (1) of this section and in particular may
consist of more than one set of consolidated accounts, that is to
say, one set dealing with the company and one groups of
subsidiaries and one or more sets dealing with other groups of
subsidiaries, or of separate accounts dealing with each of the
subsidiaries or of statement expanding the information about the
subsidiaries in the company’s own accounts, or any combination or
these forms.

(3) The group accounts may be wholly or partly
incorporated in the company’s own balance sheet and profit and
loss accounts.

(4) The group accounts laid before a company shall give
a true and fair view of the state of affaires and profit or loss of the
company and the subsidiaries dealt with thereby as a whole, so far

Form and
contents of
group accounts

Accounts and
auditor’s report
to be Annexed
to signed
balance sheet

Directors’
report to be
attached
balance sheet

as concerns members of the company; and in particular shall
exclude intergroup balances and any profit or loss arising from
transaction within the group in so far as those profits or losses
may not have been realized or incurred so far as concerns
members of the company.

(5) Where the financial year of a subsidiary does not
coincide with that of the holding company the group accounts
shall, unless the Minister on the application or with the consent of
the holding company’s directors otherwise directs, deal with the
subsidiary’s last before that of the holding company and with the
subsidiary’s profit or loss for the financial year.

(6) Without prejudice to sub-section (4 )of this section,
the group accounts, if prepared as consolidated accounts, shall
comply with the requirements of the Sixth Schedule so far as
applicable thereto, and if not so prepared shall give the same or
equivalent information:

Provided that the Minister may, on the application or
with the consent of the company’s directors, modify the
said requirements in relation to that company for the
purpose of adapting them to the circumstances of the
company.

118. (1) The profit and loss account and, so far as not
incorporated in the balance sheet or profit and loss account, any
group account laid before a company in general meeting shall be
annexed to the balance sheet and approved by the board of
directors before the balance sheet is signed on its behalf, and the
auditor’s report shall be attached thereto except in the case of a
private company which in terms of subsection (7) of section one
hundred and twenty-two is not required to appoint an auditor.

(2) If any copy of a balance sheet is issued. Circulated, or
published without having a copy annexed thereto of the profit and
loss account or any group accounts required by this section to be
so annexed or without having attached thereto a copy of the
auditor’s report as required by this section, the company and every
officer of the company who is in default shall be guilty of an
offence and liable to a fine not exceeding one hundred rand.

(3) Every balance sheet of a company shall be signed on
behalf of the board by two of the directors of the company who is
in default shall be guilty of an offence an liable on conviction to a
fine not exceeding on hundred rand.

119. (1) Save in the case of a private company there shall be
attached to every balance sheet laid before the company in general
meeting a report by the directors with respect to the state of the
company’s affairs, amount, if any, already paid or declared or

which they recommend should be paid by way of dividend and the
amount, if any, which they propose to carry to reserves within the
meaning of the Sixth Schedule, and if directors’ remuneration is to
be determined at the meeting the amount of remuneration
recommended.

(2) The said report shall deal, so far as is material for the
appreciation of the state of the company’s affairs by it members
and will not in the directors’ opinion be harmful to the business of
the company or of any of its subsidiaries, with any change during
the financial year in the nature of the company’s business, or in
the company’s subsidiaries or in the classes of business n which
the company has and interest, whether as members of another
company or otherwise.

(3) If any director of a company fails to take all reasonable
steps to comply with the provisions of sub-section (1) of this
section he shall subject to the provisions of section one hundred
and twenty. Be guilty of an offence, and liable on conviction to a
fine not exceeding four hundred rand or to imprisonment for a
period not exceeding twelve months or to both such fine and such
imprisonment:

Provided that he shall not be sentenced to
imprisonment unless, in the opinion of the court
dealing with the case, the offence was committed
willfully.

120. In any proceedings against a person under sub-section (4)
of section one hundred and twelve, or sub-section (4) of section
one hundred and thirteen, or sub-section (6) of one hundred
and fourteen, or subsection (3) of section one hundred and
sixteen , or sub-section (3) of the section one hundred and
nineteen for failing to take all reasonable steps to comply or
secure compliance by a company with the requirements referred to
in the sub-section under which he is so charged, it shall be a
defence for him to prove that he had reasonable ground to
believe, and did believe, that a competent and reliable person was
charged with the duty of seeing that the requirements or
provisions referred to in that sub-section were complied with and
was in a position to discharge that duty.

121. (1) Save in the case of a private company a copy of every
balance sheet, including every document required by this Act to
be annexed thereto, which is to be laid before the company in
general meeting, together with group accounts, if any, prepared
under section one hundred and sixteen and one hundred and
seventeen and a copy of the auditor’s report, shall, not less than
fourteen days before the date of the meeting, be sent to all persons
entitled to receive notices of general meetings of the company.

Defence to
certain charges

Right to
receive copy of
balance sheet
and auditor’s
report

Appointment
and
remuneration of
auditors

(2) Any member and any debenture holder of the company
shall be entitled to be furnished on demand without charge with a
company of the last balance sheet of the company, including every
document required by law to be annexed thereto, together with a
copy of the auditor’s report on the balance sheet unless he shall
previously have been supplied therewith.

(3) If default is made in complying with the provisions of
sub-section (1) of this section, of this section, the company and
every officer of the company who is in default shall be guilty of
an offence and liable on conviction to a fine not exceeding one
hundred rand, and if, where any person makes a demand for a
document to which he is by virtue of sub-section (2) of this
section entitled, default is made in complying with the demand
within fourteen days after the making thereof, the company and
any officer of the company who is in dealt shall be guilty of an
offence and liable on conviction to a fine not exceeding ten rand
for every day during which the offence continues.

122. (1) The first auditor of a company shall be appointed by
the directors within thirty day of the issue of the certificate that the
company is entitled to commence business in the case of a
company to which Section eighty-seven applies, and in the case of
other companies within thirty days of the issue of the certificate of
incorporation; and an auditor so appointed shall hold office until
the conclusion of the first annual general meeting:

Provided that –
(i) subject to the provisions of the next succeeding
section the company may at a general meeting
remove any such auditor and appoint in his place
any other person who has by special notice been
nominated for appointment by any member of the
company and of whose nomination notice has
been given to the members of the company, not
less than fourteen days before the date of the
meeting; and
(ii) if the directors fail to exercise their power under
this sub-section, the company in general meeting
may appoint the first auditor, and thereupon the
said powers of the directors shall cease; and
(iii) if neither the directors nor the company appoint
and auditor under this sub-section, the Minister
may on the application of any member do so.

(2) Every company shall at each annual general meeting
appoint an auditor to hold office from the conclusion of that, until
the conclusion of the next annual general meeting.

(3) Where at an annual general meeting no auditor is
appointed or re-appointed, the Minister may appoint a person to

fill the vacancy.

(4) The company shall, within one week of the Minister’s
power under sub-section (3) of this section becoming exercisable,
give him notice of that fact, and if a company fails to give notice
as required by this sub-section, the company and every officer of
the company who is in default shall be guilty of an offence and
liable on conviction to a fine not exceeding ten ran for every day
during which the offence continues.

(5) The directors may fill any casual vacancy in the office of
auditor, but while any such vacancy continues the surviving or
continuing auditor, if any, may act.

(6) The remuneration of the auditor of a company –

(a) in the case of an auditor not appointed by Minister,
shall be fixed by the company in general meeting of
in such manner as the company in general meeting
may determine;
(b) in the case of an auditor appointed by the Minister,
shall be fixed by the Minister.

For the purposes of this sub-section, any sums paid by the
company in respect of the auditor’s expenses shall be deemed to
be included in the expression “remuneration”.

(7) Notwithstanding anything to the contrary contained in this
section, a private company shall not be required to appoint an
auditor if, but only if –

(a) the number of shareholders in such company does not
exceed ten;

(b) none of the shareholders in such company is a
company;

(c) all the shareholders in such company agree that an
auditor shall not be appointed.

123. (1) Special notice shall be required for a resolution at a
company’s annual general meeting appointing as auditor a person
other than a retiring auditor or providing expressly that a retiring
auditor shall not be re-appointed.

(2) On receipt of notice of such an intended resolution as
aforesaid, the company shall forthwith sent a copy thereof to the
retiring auditor (if any).

Special notice
required of
resolution to
appoint or
remove auditor

Disqualifica-
tions for
appointment as
auditor

(3) Where notice is given of such an intended resolution as
aforesaid and the retiring auditor makes with respect to the
intended resolution representations in writing 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 any notice of the resolution given to members of
the company, state the fact of the representations
having been made; and

(b) send a copy of the representations to every member
of the company to whom notice of the meeting is sent
(whether before or after receipt of the representations
by the company);

and if a copy of the representations is not sent as aforesaid
because received too late or because of the company’s default the
auditor 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 at the
meeting, if, on the application either of the company or of
any other person who claims to be aggrieved, 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 auditor, notwithstanding that he is not a party to the
application.

(4) The last foregoing sub-section shall apply to a resolution
to remove the first auditors by virtue of sub-section (1) of the last
foregoing section as it applies in relation to a resolution that a
retiring auditor shall not be re-appointed.

124. (1) A person shall not be qualified for appointment as an
auditor of a company unless either –

(a) he is a member of a body of accountants established
by law in any country and recognized by the
Minister for the purposes of the qualifications of
auditors; or

(b) he is for the time being authorized by the Minister to
be so appointed as having adequate alternative
qualifications or as having obtained adequate
knowledge and experience in the course of

employment.

(2) None of the following persons shall be qualified for
appointment as auditors of a company-
(a) an officer or servant of the company;
(b) a person who is a partner of an officer or servant of
the company;
(c) a person who is an employer or an employee of an
officer or servant of the company;
(d) a body corporate;
(e) a person who is an officer or servant of a body
corporate which is an officer of the company;
(f) a person who by himself, or his partner or his
employee, regularly performs the duties of secretary
or bookkeeper to the company.

Reference in this sub-section to an officer or servant shall be
construed as not including reference to an auditor.

(3) A person shall also not be qualified for appointment as
auditor of a company if he is, by virtue of sub-section (1) of this
section, disqualified for appointment as auditor of any other body
corporate which is that company’s subsidiary holding company,
or a subsidiary of that company’s holding company, or would be
disqualified if the body corporate were a company.

(4) Any person who acts as auditor of a company when
disqualified in terms of this section shall be guilty of an offence
and liable on conviction to a fine not exceeding two hundred
rand.

125. (1) The auditor shall make report to the members on the
accounts examined by him, and on every balance sheet, every
profit and loss account and all group accounts laid before the
company in general meeting during his tenure of office, and the
report shall contain statements as to the following matters:-

(a) whether he has examined or satisfied himself on the
existence of the securities and examined the books
and accounts and vouchers of the company;

(b) whether he has obtained all the information and
explanations which to the best of his knowledge and
belief were necessary for the purposes of his audit.

(c) Whether, in his opinion, proper books of account
have been kept by the company, so far as appears
from his examination of those books, and proper
returns adequate for the purpose of his audit have
been received form branches not visited by him;

Contents of
auditor’s report

Auditor’s right
of access to
books and to
attend general
meeting

(d) (i) whether the company’s balance sheet and profit
and loss account dealt with by the report are in
agreement with the books of account and returns:

(ii) whether, in his opinion and to the best of his
information and according to the explanations
given him, the said accounts give the information
required by the Act in the manner so required and
give a true and fair view, in the case of the
balance sheet, of the state of the company’s
affairs as at the end of the financial year, and in
the case of the profit and loss account, of the
profit and loss for its financial year; or, as the
case may be, gives a true and fair view thereof
subject to the non-disclosure of any matters (to
be indicated in the report) which by virtue of Part
III of the Sixth Schedule are not required to be
disclosed;

(d) in the case of a holding company submitting
group accounts whether, in his opinion, the group
accounts have been properly prepared in
accordance with the provisions of this Act so as
to give a true and fair view of the state of affairs
and profit or loss of the company and its
subsidiaries dealt with thereby, so far as concerns
members of the company, or, as the case may be,
so as to give a true and fair view thereof subject
to the non-disclosure of any matters (to be
indicated in the report) which by virtue of Part III
of the Sixth Schedule are not required to be
disclosed.

(2) In the event of the auditor being unable to make such
report, or to make it without qualification, he shall inscribe upon
or attach to the balance sheet a statement of that fact or of the
nature of the qualification, as the case may be, and he shall set
forth therein the facts or circumstances which prevent him from
making the report or from making it without qualification.

(3) The auditor’s report or any statement under sub-section
(2) of this section shall, unless all the members present agree to
the contrary, be read before the company in general meeting, and
shall, in any event, be open to inspection by any member.

126. (1) Every auditor of a company shall have a right of
access at all times to the books, accounts, vouchers and securities
of the company, and shall be entitled to require from the officers
of the company such information and explanation as he thinks
necessary.

Construction of
reference to
documents
annexed to
accounts

(2) Every auditor of a holding company shall have a right of
access to all current and former accounts of any company
subsidiary thereto and shall be entitled to require from the officers
of the holding or subsidiary company all such information and
explanations in connection therewith as he may deem necessary.

(3) Every auditor of a company shall be entitled to attend any
general meeting of the company and to receive all notices of and
other communications relating to any general meeting which any
member of the company is entitled to receive and to be heard at
any general meeting which he attends on any part of the business
of the meeting which concerns him as auditor.

127. References in this Act to a document annexed or
required to be annexed to a company’s accounts or any oft hem
shall not include the directors’ report or the auditor’s report.

Provided that any information which is required by
this Act to be given in accounts, and is hereby allowed
to be given in a statement of annexed, may be given in
the director’s report instead of in the accounts, and, if
any such information is given the report shall be
annexed to the accounts and this Act shall apply in
relation thereto accordingly, except that the auditor shall
report thereon only so far as it gives the said
information.

Inspection

128 (1) The Minister may appoint one or more inspectors to
investigate the affairs of a company and to report thereon in such
manner as he may direct –

(a) in the case of a company having a share capital, on the
application either of not less than one hundred members or
of members holding not less than one-twentieth of the
issued shares of such company;
(b) in the case of a company having no share capital, on the
application of not less than one-tenth in number of the
persons on the company’s register of members.

(2) The application shall be supported by such evidence as the
Minister may require for the purpose of showing that the
applicants have good reason for requiring the investigation, and
the Minister may, before appointing an inspector, require the
applicants to give satisfactory security in an amount not exceeding
four hundred rand for payment of the costs of the investigation.

129. Without prejudice to his powers under section one hundred
and twenty-eight, the Minister-

Investigation
of company’s
affairs on
application of
members

Investigation
of company’s

Powers of
inspectors to
investigate
related
companies

Production of
documents and
evidence on
investigation

(a) shall appoint one or more inspectors to investigate the
affairs of a company and to report thereon in such manner
as he directs if –
(i) the company by special resolution, or
(ii) the court by order,

declares that its affairs ought to be investigated by an
inspector appointed by him.; and

(b) may do so, if it appears to him that there are
circumstances suggesting –
(i) that its business sis being conducted with intent to
defraud its creditors or the creditors of any other
person or otherwise for a fraudulent or unlawful
purpose or in a manner oppressive of any part of its
members or that it was formed for any fraudulent or
unlawful purpose;

(ii) that persons concerned with its formation or the
management of its affairs have in connection
therewith been guilty of fraud or other misconduct
towards it or towards its members; or

(iii) that its members have not been given all the
information with respect to its affairs which they
might reasonably expect.

130. If an inspector appointed under either section one hundred
and twenty-eight or one hundred and twenty-nine to investigate
the affairs of a company thinks it necessary for that purpose to
investigate also the affairs of any other body corporate which is or
has at any relevant time been the company’s subsidiary or holding
company or a subsidiary of its holding company or a holding
company of its subsidiary, he shall, with the sanction of the
Minister, have power so to do, and shall report on the affairs of
the other body corporate so far as he thinks the results of his
investigation thereof are relevant to the investigation of the affairs
of the first-mentioned company.

131. (1) It shall be the duty of all others and agents of the
company and of all officers and agents of any other body
corporate whose affairs are investigated by virtue of section one
hundred and twenty-eight, one hundred and twenty-nine, one
hundred and thirty or one hundred and thirty-five as the case may
be to produce to the inspector all books and documents of or
relating to the company or, as the case may be, the other body
corporate which are in their custody or power and otherwise to
give to the inspector all assistance in connection with the
investigation which they are reasonably able to give.

(2) The inspector may examine on oath the officers and affairs in other
cases

agents of the company or other body corporate in relation to its
business and may administer an oath accordingly.

(3) If any officer or agent of the company or other body
corporate refuses to produce to the inspector any book or
document which it is his duty under this section so to produce, or
refuses on any ground other than that the answer may tend to
incriminate him, to answer any question which is put to him by
the inspector with respect to the affairs of the company or other
body corporate as the case may be, the inspector may certify the
refusal under his hand to the court, and the court my thereupon
inquire into the case, and after hearing any witnesses who may be
produced against to on behalf of the alleged offender and after
hearing any statement which may be offered in defense, convict
and punish the offender in like manner as if he had been guilty of
contempt of the court.

(4) It an inspector thinks it necessary for the purpose of his
investigation that a person whom he has no power to examine on
oath should be so examined, he may apply to the court and the
court may, if it sees fit, order that person to attend and be
examined on oath before it on any matter relevant to the
investigation, and on any such examination –

(a) the inspector may take part therein either personally
or by attorney or counsel;

(b) the court may put such questions to the person
examined as the court thinks fit;

(c) the person examined may at his own cost employ an
attorney with or without counsel who shall be at
liberty to put to him such questions as the court may
deem just for the purpose of enabling him to explain
or qualify any answers given by him:

Provided that the court may allow the person
examined such costs as in its discretion it may think
fit, and any costs so allowed shall be paid as part of
the expense of the investigation.

(5) Notes of any examinations made in terms of this section
shall be taken down in writing, shall be read over to or by, and
signed by, the person examined, and may thereafter be used in
evidence against him.

(6) In this section any references to officers or to agents shall
include past as well as present officers or agents, as the case may
be, and for the purpose of this section the expression “agents” in
relation to a company or other body corporate shall include the
bankers and attorneys of the company or other body corporate and

Proceedings on
inspector’s
report

any person employed by the company or other body corporate as
auditors, whether those persons are or are not officers of the
company or other body corporate.

132. (1) The inspector may, and, if so directed by the Minister,
shall, make interim reports to the Minister, and on the conclusion
of the investigation shall make a final report to the Minister.
(2) The Minister shall-
(a) send a copy of any report made by the inspector to
the registered office of the company;
(b) where the inspector is appointed under section one
hundred and twenty-eight, furnish each applicant
for the investigation, on request, with a copy of the
report; and
(c) where the inspector is appointed under section one
hundred and twenty-nine in pursuance of an order
of the court, furnish copy to the court; and may –
(d) furnish a copy thereof on request and on payment
of the prescribed fee, to any person who is a
member of the company or of any other body
corporate dealt with in the report by virtue of
section one hundred and thirty or whose interests as
a creditor of the company or of any other such body
corporate as aforesaid appear to the Minister to be
affected;

(e) cause the report to be printed and published.

133. (1) If from any report made under section one hundred
and thirty-two it appears to the Minister that any person has, in
relation to the company or any other body corporate whose affairs
have been investigated by virtue of section one hundred and thirty,
been guilty of an offence for which he is criminally liable, the
Minister shall refer the mater to the [Attorney-general].

(3) If, in the case of any body corporate liable to be wound up
under this Act, it appears to the Minister from any such report as
aforesaid, that it is expedient so to do by reason of any such
circumstance as are referred to in sub-paragraph (i) or (ii) of
paragraph (b) of section one hundred and twenty-nine the Minister
may, unless the body corporate is already being wound up by the
court, present a petition for it to be so wound up if the court thinks
it just and equitable that it should be wound up or a petition for an
order under section one hundred and sixty-five, or both.

(4) If from any such report as aforesaid it appears to the Minister
that proceedings ought in the public interest to be brought by any
body corporate dealt with by the report for the recovery of
damages in respect of any fraud or other misconduct in connection
with the promotion or formation of that body corporate or the
management of its affairs, or for the recovery of any property of

Inspector’s
report

Expenses of
investigation of
company’s
affairs

the body corporate which has been mis-applied or wrongfully
retained the Minister may himself bring the proceedings for that
purpose in the name of the body corporate.

(5) The Minister shall indemnify the body corporate against any
costs or expenses incurred by it in or in connection with any
proceedings brought by virtue of subsection (3) of this section.

134. (1) The expenses of and incidental to investigation by an
inspector appointed by the Minister under this law shall be
defrayed in the first instance by the Minister from public funds,
but the following persons shall, to the extent mentioned, be liable
to repay the Minister –

(a) any person who is convicted on a prosecution
instituted as a result of the investigation, or who is
ordered to pay damages or restore any property in
proceedings brought by virtue of sub-section (3) of
section one hundred and thirty-three, may in the same
proceedings be ordered to pay the said expenses to
such extent as be specified in the order;

(b) any body corporate in shoes name proceedings are
brought as aforesaid shall be liable to the amount or
value of any sums or property recovered by it as a
result of those proceedings; and

(c) unless as a result of the investigation a prosecution is
instituted –

(i) any body corporate dealt with by the report, where
the inspector was appointed otherwise than of the
Minister’s own motion, shall be liable, except so
far as the Minister may otherwise direct; and

(ii) the applicants for the investigation, where the
inspector was appointed under section one
hundred and twenty-eight, shall be liable to such
extent (if any) as the Minister may direct;
and any amount for which a body corporate is liable
by virtue of paragraph (b) of this sub-section shall be a
first charge on the sums or property mentioned in that
paragraph.

(2) The report of an inspector appointed otherwise than
of the Minister’s own motion may, if he thinks fit, and shall, if the
Minister so directs, include a recommendation as to the
directions, if any, which he thinks appropriate, in the light of his
investigation, to be given under paragraph (c) of sub-section (1)
of this section.

Power to
require
information as
to persons
interested in
shares or
debentures

(3) For the purpose of this section, any costs or
expenses incurred by the Minister in or in connection with
proceedings brought by virtue of sub-section (3) of section one
hundred and thirty-three (including expenses incurred by virtue
of sub-section (4) thereof), shall be treated as expenses of the
investigation giving rise to the proceedings.

(4) Any liability to repay the Minister imposed by
paragraphs (a) and (b) of sub-section (1) of this section shall
subject to satisfaction of the Minister’s right to repayment be a
liability also to indemnify all persons against liability under
paragraph (c) thereof, and any such liability imposed by the said
paragraph shall, subject as aforesaid, be a liability also to
indemnify all persons against liability under the said paragraph
(b); and any person liable under the said paragraph (a) or (b) or
either sub-paragraph of the said paragraph (c) shall be entitled to
contribution from any other person liable under the same
paragraph or sub-paragraph, as the case may be, according to the
amount of their respective liabilities thereunder.

135. (1) The Minister may, with or without an
application by members of the company, appoint one or more
inspectors to investigate and report on the membership of any
company and otherwise with respect of the company for the
purpose of determining the true persons who are or have been
financially interested in the success or failure of the company or
able to control or materially to influence the policy of the
company and may determine the limits, conditions and methods
of such investigation.

(2) The expenses of any investigation under this section
shall be defrayed by the Minister out of public funds.

136. (1) Where it appears to the Minister that there is good
reason to investigate the ownership of any shares in or debentures
of a company and that it is unnecessary to appoint an inspector
for the purpose, he may require any person whom he has
reasonable cause to believe –

(a) to be or to have been interested in those shares or
debentures; or

(b) to act or to have acted in relation to those shares or
debentures as the agent of someone interested therein
to give him any information which he has or can
reasonably be expected to obtain as to the present and
past interests int hose shares or debentures and the
names and addresses of the persons interested and of
any persons who act or have acted on their behalf in
relation to the shares or debentures.

Appointment
and powers of
inspectors to
investigate
ownership of
company

Power to
impose
restriction on
shares or
debentures

(2) For the purposes of this section, a person shall be deemed
to have an interest in a share or debenture if he has any right to
acquire or dispose of the share or debenture or any interest therein
or to vote in respect thereof, or if his consent is necessary for the
exercise of any of the rights of other persons interested therein, or
if other persons interested therein can be required or are
accustomed to exercise their rights in accordance with his
instructions.

(3) Any person who fails to give any information required of
him under this section, or who in giving any such information
makes any statement which he knows to be false in a material
particular, or recklessly makes any statement which is false in a
material particular, shall be guilty of an offence and liable on
conviction to a fine not exceeding one thousand rand or
imprisonment for a period not exceeding two years or to both
such fine and such imprisonment.

137. (1) Where in connection with an investigation under
section one hundred and thirty-five or section one hundred and
thirty-six, it appears to the Minister that there is difficulty in
finding out the relevant facts about any shares (whether issued or
to be issued) and that the difficulty is due wholly or mainly to the
unwillingness of the persons concerned or any of the them to
assist the investigation as required by this Act, he may by order
direct that the shares shall until further order be subject other
restrictions imposed by this section.

(2) So long as any shares are directed to be subject to the
restrictions imposed by this section –

(b) any transfer of those shares, or in the case of unissued
shares any transfer of the right to be issued therewith and
any issue thereof, shall be void;

(c) no voting rights shall be exercisable in respect of those
shares;

(d) no further shares shall be issued in right of those shares or
in pursuance of any offer made to the holder thereof;

(e) except in a liquidation, no payment shall be made of any
sums due form the company on those shares, whether in
respect of capital or otherwise.

(3) Where the Minister makes an order directing that shares
shall be subject to the said restrictions, or refuses to make an order
directing that shares shall cease to be subject thereto, any person
aggrieved thereby may apply to the court, and the court may, if it
sees fit, direct that the shares shall cease to be subject to the said

Saving for
Attorneys and
bankers

Inspector’s
report to be restrictions and may have such order as to costs as it deems fit.

(4) Any order (whether of the minister or of the court) directing
that shares shall cease to be subject to the said restriction which is
expressed to be made with a view to permitting a transfer of those
shares may continue the restriction mentioned in paragraph
(c)and(d) of subsection (2)of this section either in whole or in part,
so far as they relate to any acquired or offer made before the
transfer.

(5) Any person who-

(a) exercises or purports to exercise any right to dispose of
any shares which, to his knowledge, are for the time
being subject to the said restrictions or of any right to
be issued with any shares;

(b) votes in respect of any such shares, whether as holder
or proxy, or appoints a proxy to vote in respect
thereof; or

(c) being the holder of any such shares, fails to notify of
their being subject to the said restriction any person
whom he does not know to be aware of that fact but
does know to be entitled, apart from the said
restrictions, to vote in respect to those shares whether
as holder or proxy;

shall be guilty of an offence and liable on conviction to a fine not
exceeding one thousand rand or imprisonment for a period not
exceeding two years or to both such fine and such imprisonment.

(6) Where shares in any company are issued in contravention of
the said restrictions, the company shall be guilty of an offence and
liable on conviction to a fine not exceeding one thousand rand.

(7) This section shall apply in relation to debentures as it
applies in relation to shares.

138. Nothing in this Act shall require disclosure to the Minister
or an inspector appointed by him –

(a) by an attorney of any privileged communication made
to him in that capacity, except as respects the name
and address of his client; or

(b) by a company’s bankers as such of any information as
to the affairs of any of their customers other than the
company.

139. A copy of any report of any inspector appointed under

evidence

Directors and
secretary

Validity of Acts
of Directors

Restrictions on
appointment or
advertisement
of director

the Act shall be admissible in any legal proceedings as evidence
of the opinion of the inspector in relation to any matter contained
in the report.

Directors and other Officers

140. (1) Every company not being a private company
shall have at least two directors and every private company at
least one director, and every company shall have a secretary.

(2) The sole director of a company shall not also be
secretary nor shall any company have as secretary to the company
a corporation the sole director of which is a sole director of a
company.

(3) Every subscriber to a memorandum of association of
a private company shall, until other directors are appointed, be

deemed to a director of the company and be liable for all the
duties and obligations of a director.

(4) Any provision requiring or authorizing a thing to be
done by or to a director and the secretary shall not be satisfied by
its being done by or to the same person acting both as director and
as or in place of the secretary.

141. The acts of the director or manager shall be valid
notwithstanding any defect that may afterwards be discovered in
his appointment or qualification.

142. (1) This section shall not apply to –

(a) an association licensed under section twenty-
three;
(b) a private company;

© a company which was a private company before
becoming a public company; or
(d) a prospectus issued by or on behalf of a company
after the expiration of one year from the date at
which the company was entitled to commence
business.

(2) A persons shall not be capable of being appointed director
of a company by the articles, and shall both be named as a director
or proposed director of a company in the list to be lodged in terms
of sub-section (4) of this section or in any prospectus issued by or
on behalf of the company or in any statement in lieu of prospectus
lodged by or on behalf of the company, unless, before the lodging
of the list or registration of the articles or the publication of the

prospectus, or the lodging of the statement in lieu of the
prospectus, as the case may be, he has himself or by his agent
authorised in writing –

(a) signed and lodged with the Registrar a consent in
writing to act as such director; and

(b) either signed the memorandum of association for a
number of shares no less than his qualification, if any, or signed
and lodged with the Registrar a contract in writing to take
from the company and pay for his qualification shares, if any.

(3) The share qualification mentioned in sub-section (2) of this
section means a share qualification required on appointment to the
office of director or within a period determined by reference to the
time of appointment, and the words “qualification shares” shall be
construed accordingly.

(4) When application is made under section eighteen for
registration of the memorandum and of the articles, if any, of a
company the applicant shall lodge with the Registrar a list, in the
prescribed form, of the persons, if any, not being less than two,
with their full names, addresses and occupations, who have
consented to be directors of the company and, upon such
registration, the persons who have so consented shall, until other
directors are appointed, be deemed to be the directors of the
company and liable for a duties and obligations of a director.

(5) For the purpose of sub-section (4) of this section a person
who, having consented to be a director, has, before the lodging of
the list with the Registrar, withdrawn his consent by notice in
writing lodged with the Registrar, shall be deemed to be a person
who has not so consented.

143. (1) Without prejudice to the restrictions imposed by
section one hundred and forty-two, it shall be the duty of every
director who is by the articles of the company required to hold a
specified share qualification and who is not already qualified, to
obtain his qualification within two months after his appointment,
or such shorter time as may be fixed by the articles.

(2) The office of 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
articles, obtain his qualification, or if after the expiration of the
said period or shorter time he ceased at any time to hold his
qualification.

(3) A person vacating office under this section shall be
incapable of being re-appointed director of the company until he
has obtained his qualification.

Share
qualifications
of directors

Disqualification
for appointment
as director

(4) If after the expiration of the said period or shorter time
any unqualified person acts as a director of the company, he shall
be guilty of an offence and liable on conviction to a fine not
exceeding ten rand for every day between the expiration of the
said period or shorter time, or the day on which he ceased to be
qualified, as the case may be, and the last day on which it is
proved that he acted as a director.

144. (1) Any of the following persons shall be
disqualified for being appointed a director of a company;
(a) a body corporate;

(b) a minor or any other person under legal disability,
provided that a woman married in community of
property may be a director if her husband gives his
written consent and that consent is lodged with the
Registrar;

(c) save with the leave of the court, an unrehabilitated
insolvent;

(d) save with the leave of the court any person who has at
any time been convicted (whether in Lesotho or
elsewhere) of theft, fraud, forgery or uttering a forged
document, or perjury and has been sentenced therefore
fine, or to a fine exceeding a hundred rand;

(e) any person who is the subject of any order under this Act
disqualifying him as director;

(f) save with the leave of the court, any person removed by
a competent court from an office of trust on account of
misconduct.

(2) A director of any company shall cease to hold office as
such if, after the date of commencement of this Act –

(a) his estate is sequestrated as insolvent;

(b) he is convicted (whether in Lesotho or elsewhere) of
theft, fraud, forgery or uttering a forged document, or
perjury and has been sentenced therefore to serve a
term of imprisonment without the option of a fine, or to
a fine exceeding a hundred rand; or

(c) he is removed by the court from any office of trust on
account of misconduct.

(3) If any person who is disqualified under this section for
being or continuing to be a director of any company directly or

indirectly takes part in or is concerned in the management of any
company. he shall be guilty of an offence and liable on conviction
to a fine not exceeding one thousand rand or to imprisonment for a
period not exceeding two years or to both such fine and such
imprisonment.

(4) Nothing in this section shall be deemed to prevent a
company from applying under its regulations any further
disqualification for the appointment of, the retention of office by,
a director.

145. (1) At a general meeting of a company other than private
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.

(2) A resolution moved in contravention of this section shall be
void. whether or not its being so moved was objected to at the
time:

Provided that –
(i) this sub-section shall not be taken as excluding the
operation of section one hundred and forty-one; and

(ii) where a resolution so moved is passed, no provision for
the automatic re-appointment of retiring directors in
default of another appointment shall apply.

(3) For the purposes of this section, a motion for approving a
person’s appointment or for nominating a person for appointment
shall be treated as a motion for his appointment.

146. (1) A company may by ordinary resolution of which
special notice has been given remove a director before the
expiration of his period of office notwithstanding in its articles or
any agreement between it and him:

Provided that this sub-section shall not, in the case of
a private company. authorise the removal of a director
holding office for life on the commencement of this Act,
whether or not he is subject to retirement under an age limit
by virtue of the articles or otherwise.

(2) Where the director concerned makes with respect to the
intended resolution representations in writing to the company, not
exceeding one thousand words, 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 any notice of the resolution given to members of

Appointment
of directors to
be voted on
individually

Removal of
directors

Prohibition of
tax-free
payments to
directors

the company state the fact of the representations
having been made; and

(b) send a copy of the representations to every member
of the company to whom notice of the meeting is
or has been sent;
and if a copy of the representations is not sent as
aforesaid because it was received too lat 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, 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, notwithstanding that he is not
a party to the application.

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

(4) A person appointed 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 director on the day on which the person in
whose place he is appointed was last appointed a director.

(5) 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 appointment as director
or of any appointment termination with that as director or as
derogating from any power to remove a director which may exist
apart from this section.

147. (1) It shall not be lawful for a company to pay a
director remuneration (whether as director or otherwise) free of
any taxation in respect of income, or otherwise calculated by
reference to or varying with the amount of such taxation, or with
the rate of taxation on incomes, except under a contract which was
in force on the 1st February, 1967, and provides expressly, and not
by reference to the articles, for payment of remuneration as
aforesaid.

(2) Any provision contained in a company’s articles, or in

any contract other than such a contract as aforesaid, or in any
resolution of a company or a company’s directors, for payment to
a director of remuneration as aforesaid shall have effect as if it
provided for payment, as a gross sum subject to taxation of the net
sum for which it actually provides.

(3) This section shall not apply to remuneration due before
or in respect of a period before this Act came into force.

148. (1) It shall not be lawful for a company to make a
loan either of money or any other property to any person who is
its director or a director of its holding company, or to enter into
any guarantee or provide any security connection with a loan
made to such person as aforesaid by any other person:

Provided that nothing in this section shall apply
either-
(i) to anything done by a private company with the
consent of all members; or

(ii) Subject to the provisions of sub-section (2) of this
section, to anything done to provide any such
person as aforesaid with funds to meet expenditure
incurred or to be incurred by him for purpose of the
company or for the purpose of enabling him
properly to perform his duties as an officer of the
company; or

(iii) 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) Proviso (ii) to sub-section (1) of this section shall not
authorise the making of any loan, or the entering into any
guarantee, or the provisions of any security, except either-

(a) with the prior approval 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;

(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 under the guarantee or security shall be
discharged, as the case may be, within six months from
the conclusion of that meeting.

Prohibition of
loans to
directors

Approval of
company
requisite for
payment by it
to director for
loss of office,
etc

Approval of
company
requisite for
payment in
connection with
transfer of its
property to
director for loss
of office

Duty of director
to disclose
payments for
loss of office,
etc., made in
connection with
transfer of
shares in
company

(3) Where the approval of the company is not given as
required by any such condition, the directors authorising 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.

149. It shall not be lawful for a company to make to any
director of the company any payment by way of compensation for
loss of office, or as consideration for or in connection with his
retirement from office, without full particulars with respect to the
proposed payment (including the amount thereof) being disclosed
to members of the company and proposal being approved by the
company in general meeting.

150. (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 part of the undertaking or property or a
company for any payment to be made by any person 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 disclose to the
members of the company and proposal approved by the company
in general meeting.

(2) Where a payment which is hereby declared to be illegal
is made to a director of the company, the amount received shall be
deemed to have been received by him in trust for the company.

151. (1) Wherein connection with the transfer to any
persons of all or any of the sharers in a company, being a
transferred resulting from-

(a) an offer made to the general body of shareholders;

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

(c) an offer made by or on behalf of an individual with a
view to his obtaining the right to exercise or control
the exercise of not less than on-third of the voting
power at any general meeting of the company; 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 or in
connection with his retirement from office, it shall be the duty of

that director to take all reasonable steps to secure to 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 fail s to take reasonable steps as
aforesaid; or
(b) any person who has been properly required by any such
director to include to said particulars in or send them
with any such notice as aforesaid fail so to do;
such director or such person, as the case may be shall be
guilty of an offence and liable on conviction to a fine not
exceeding one hundred rand.

(3) If –
(a) the requirements of sub-section (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
transfer of any shares in pursuance of the offer,
approved by a meeting summoned for the purpose of the
holders of the shares to which the offer relates and of
other holders of shares of the same class as any of the
said shares;
any sum received by the director on account of the payment shall
be deemed to have been received by him in trust for any persons
who have sold their shares as a result of the offer made, and the
expenses incurred by him in distributing that sum amongst those
persons shall be borne by him and not retained out of that sum.

(4) Where the shareholders referred to in paragraph (b) of sub-
section (3) if of this section are not all the members of the
company and no provision is made by the articles for summoning
or regulating such a meeting as is mentioned in that paragraph, the
provisions of this Act and of the company’s articles relating to
general meetings of the company shall, for that purpose, apply to
the meeting either without modification or with such
modifications as the minister on the application of any person
concerned may direct for the purpose of adapting them to the
circumstances or the meeting.

(5) If at a meeting summoned for the purpose of approving
any payment as required by paragraph (b) of sub-section (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 sub-section to
have been approved.

Provisions
supplementary
to the last three
foregoing
sections

152. (1) Where in proceedings for the recovery of any
payment as having, by virtue of sub-sections (1) and (2) of section
one hundred and fifty or sub-sections (1) and (3) of section one
hundred and fifty-one , been received by and person in trust it is
shown that-

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

(b) the company or any person to whom the transfer was
made was privy to that arrangement;
the payment shall be deemed, except in so far as the contrary is
shown, to be one to which the sub-sections apply.

(2) If in connection with any such transfer as is mentioned in
either section one hundred and fifty or one hundred and fifty
one –

(a) the price to be paid to a director of the company,
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 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) References in section one hundred and forty-nine, section
one hundred and fifty or section one hundred and fifty-one 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 for breach of contract or by
way of pension in respect of past services, and for the purposes of
this sub-section the expression “pension” includes any
superannuation allowance, superannuation gratuity or similar
payment.

(4) Nothing in section one hundred and fifty or section one
hundred and fifty-one shall be taken to prejudice the operation of
any rule of law requiring disclosure to be made with respect to any
such payments as are therein mentioned or with respect to any
other like payments made or to be made or to be made to the
directors of a company.

153. (1) Every company shall keep a register showing as
respects each director of the company the number, description and
amount of any shares in or debentures of the company or any
other body corporate, being the company’s subsidiary or holding
company, or a subsidiary of the company’s holding company,
which are held by or in trust for him of which he has any right to
become the holder (whether on payment or not):

Provided that the register need not include shares
in any body corporate which is the wholly-owned
subsidiary of another body corporate.

(2) Where any shares or debentures fail to be or cease to be
recorded in the said register in relation to any director by reason of
a transaction entered into after the commencement of this Act and
while he is a director, the register shall also show the date of, and
price or other consideration for, the transaction:

Provide that where there is an interval between the
agreement for any such transaction and the completion
thereof, the date shall be that of the agreement.

(3) The natural and extent of a director’s interest or right in
or over any shares or debentures recorded in relation to him in the
said register shall, if he so requires, be indicated in the register.

(4) The company shall not, by virtue of anything done for
the purposes of this section, be affected with notice of or put upon
inquiry as to, the rights of any person in relation to any shares or
debentures.

(5) The said register shall, subject to the provisions of this
section, be kept at the company’s registered office and shall be
open to inspection 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) as follows –

(a) During the period beginning fourteen days before the
date of the company’s annual general meeting and
ending three days after the date of its conclusion, it
shall be open to the inspection of any member or
holder of debentures of the company; and

(b) during that or any other period it shall be open to the
inspection of any person acting on behalf of the
Minister.

In computing the fourteen days and the three days mentioned in

Register of
directors
shareholdings,
etc.

this sub-section any day which is a Saturday or Sunday or public
holiday shall be disregarded.

(6) The Registrar may at any time require a copy o the said
register, or any part thereof.

(7) The said register shall be produced at the commencement
of the company’s annual general meeting and remain open and
accessible during the continuance of the meeting to any person
attending the meeting.

(8) If default is made in complying with sub-section (1) or (2)
of its section the company and every officer of the company who
is in default shall be guilty of an offence and liable on conviction
to a fine not exceeding on thousand rand.

(9) If default is made in complying with sub-section (5) or (7)
of this section the company and every officer of the company who
is in default shall be guilty of an offence and liable on conviction
to a fine not exceeding on hundred rand and the court, including
the court convicting, may by order compel an immediate
inspection of the register.

(10) For the purposes of this section –
(a) any person in accordance with whose directions or
instructions the directors of a company are
accustomed to act shall be deemed to be a director
of the company; and

(b) a director of a company shall be deemed to hold, or
to have an interest or right in or over, any shares or
debentures if a body corporate other than the
company holds them or has that interest or right in
or over them, and either –

(i) that body corporate or its directors are
accustomed to act in accordance with his
directions or instructions; or

(ii) he is entitled to exercise or control the exercise
of one-third or more of the voting power at
any general meeting of that body corporate.

(11) It shall be the duty of every director of a company, and
of every person deemed to be a director under paragraph (a) of
sub-section (10) of this section to give notice to the company of
such matters relating to himself as may be necessary for the
purposes of this section. Any such notice shall be in writing and if
it is not given at a meeting of directors the person giving it shall
take reasonable steps to secure that it is given. Any person who

makes default in complying with the provisions of sub-section
shall be guilty of an offence and liable on conviction to a fine not
exceeding two years or to both such fine and such imprisonment.

154. (1) Notwithstanding anything in the articles of
association the directors of a company shall not be empowered
without the approval of the company in general meeting-

(a) to issue or allot reserve shares or new shares to
any director or his nominee save in so far as they
are issued or allotted to him or to such nominee
as a member on the same terms and conditions as
have been simultaneously offered in respect of
the said issue or allotment of shares to all the
members of the company in proportion to their
existing holdings;

(b) to dispose of the undertaking of the company or
the whole or the greater part of the assets of the
company.

(2) No resolution of the company shall be effective as
approving of the differential issue or allotment of shares to a
director or of a disposal in terms of paragraph (b) of sub-section
(1) of this section unless it authorises, in terms, the specific
transaction proposed by directors.

155. (1) In any accounts of a company laid before it in
genera meeting, or in a statement annexed thereto, thereto, there
shall, subject to and in accordance with the provisions of this
section, be shown so far as the information is contained in the
company’s books and papers or the company has the right to
obtain it from the persons concerned –

(a) the aggregate amount of the directors’ emoluments;
(b) the aggregate amount of directors’ or past directors’
pensions; and
(c) the aggregate amount of any compensation to directors
or past directors in respect of loss of office.

(2) The amount to be shown under paragraph (a) of sub-
section (1) of this section –

(a) shall include any emoluments paid to or receivable
by any person in respect of his services, while
director of the company, as director of any
subsidiary thereof or otherwise in connection with
the management of the affairs of the company or
any subsidiary thereof; and

Prohibition of
allotment of
shares to
directors save
on same terms
as to all
members, and
restriction on
sale of by
directors
undertakings

Particulars in
accounts of
directors’
salaries,
pensions, etc.

(b) shall distinguish between emoluments in respect of
services as director, whether of the company or its
subsidiary, and other emoluments;
and for the purposes of this section the expression ’emoluments’ in
relation to a director, includes fees and percentages, any sums paid
by way of expenses allowances in so far as those sums are deemed
under any law to be taxable income of the recipient, any
contribution paid in respect of him under any pension scheme and
the estimated money value of any other benefits received by him
otherwise than in cash.

(3) The amount to be shown under paragraph (b) of sub-
section (1) of this section-

(a) shall not include any pension paid or receivable under a
pension scheme is such that the contribution thereunder
are substantially adequate for the maintenance of the
scheme, but save as aforesaid shall include any pension
paid or receivable in respect of any such services of a
director or past-director of the company as are
mentioned in sub-section (2) of this section, whether to
or by him or, on his nomination or by virtue of
dependence on or other connection with him to or by
any other person; and

( b) shall distinguish between pensions in respect of services
as director, whether of the company or its subsidiary,
and other pensions;
and for the purposes of this section the expression “pension”
includes any superannuation allowance, superannuation gratuity
or similar payment, and the expression “pension scheme” means a
scheme for the provision of pensions in respect of services as
director or otherwise which is maintained in whole or in part by
means of contributions, and the expression “contribution”, in
relation to pension scheme, means any payment (including an
insurance premium) paid for the purposes of the scheme by or in
respect of persons rendering services in respect of persons
rendering services in respect of which pensions will or may
become payable under the scheme, except that it does not include
any payment in respect of two or more persons if the amount paid
in respect of them is not ascertainable

(5) the amount to be shown under each paragraph o sub-
section (1) of this section –

(a) shall include any sums paid to or receivable by a
director or past director by way of compensation for
the loss of office as director of the company, or for
the loss, while director of the company or on or in
connection with his ceasing to be a director of the

company, of any other office in connection with the
management of the company’s affairs or of any
office as director or otherwise in connection with the
management or the affairs of any subsidiary thereof;
and

(b) shall distinguish between compensation in respect of
the office of director, whether of the company or its
subsidiary, and compensation in respect of other
offices;
and for the purposes of this section reference to compensation for
loss of office shall include sums paid as consideration for or in
connection with a person’s retirement from office.

(5) The amounts to be shown under each paragraph of sub-
section (1) of this section –
(a) shall include all relevant sums paid by or receivable
from –
(i) the company; and
(ii) the company’s subsidiaries; and
(iii) any other person;

except sums to be accounted for to the company or
any of its subsidiaries or, by virtue of section one
hundred and fifty-one, to past or present members of
the company or any of its subsidiaries or any class
of those members; and

(b) shall distinguish, in the case of the amount to be
shown under paragraph (c) of sub-section (1) of this
section between the sums respectively paid by or
receivable from the company, the company’s
subsidiaries and persons other than the company and
its subsidiaries.

(6) The amount to be shown under this section for any
financial year shall be the sums receivable in respect of that year
whenever paid, or, in the case of sums not receivable in respect of
a period, the sums paid during that year, so, however, that where –

(a) any sums are not shown in the accounts for the
relevant financial year on the ground that the
person receiving them is liable to account
therefore as mentioned in paragraph (a) of sub-
section (5) of this section, but the liability is
thereafter wholly or partly released or is not
enforced within a period of two years; or
(b) any sum paid by way of expenses allowance are
included in the recipient’s taxable income after the
end of the relevant financial year;
those sums shall, to the extent to which the liability is

Particulars in
accounts of
loans to
officers, etc.

released or not enforced or they are included as
aforesaid, as the case may be, be shown in the first
accounts in which it is practicable to show them or in a
statement annexed thereto and shall be distinguished
from the amount to be shown therein apart from this
provision.

(7) Where it is necessary so to do for the purpose of making
any distinction required by this section in any amount to be shown
thereunder, the directors may apportion any payments between the
matters in respect of which they have been paid or are receivable
in such manner as they think appropriate.

(8) If in the case of any accounts the requirements of this
section are not complied with, it shall be the duty of the auditors
of the company by whom the accounts are examined to include in
their report thereon, so far as they are reasonably able to do so, a
statement giving the required particulars.

(9) In this section any reference to a company’s subsidiary-

(a) in relation to a person who is or was, while a director
of the company, a director also, by virtue of the
company’s nomination, direct or indirect, of any other
body corporate, shall, subject to the following
paragraph, include that body corporate, whether or
not it is or was in fact the company’s subsidiary; and

(c) shall for the purposes of sub-sections (2) and (3) of
this section be taken as referring to a subsidiary at the
time the services were rendered, and for the purposes
of sub-section (4) of this section be taken as referring
to a subsidiary immediately before the loss of office
as director of the company.

(10) It shall be duty of every director of a company and of
every person who has at any time during the preceding two years
been a director to give notice to the company of such matters
relating to himself as may be necessary for the purposes of this
section; and if he makes default in complying with such duty he
shall be guilty of an offence and liable on conviction to a fine not
exceeding on e hundred rand.

156. (1) Save in the case of private companies the accounts
which in pursuance of this Act are to be laid before every
company in general meeting shall, subject to the provisions of this
section, contain particulars showing-

(a) the amount of any loans which during the period to
which the accounts relate have been made either by
the company or by any subsidiary company or by
any other person under a guarantee from or on a
security provided by the company or a subsidiary
thereof to any director or other officer of the
company, including any such loans which were
repaid during the said period;

(b) the amount of any loans made in manner aforesaid
to any director or officer at any time before the
period aforesaid and outstanding at the expiration
thereof.

(2) The provisions of sub-section (1)of this section with
respect to loans shall not apply-

(a) in the case of a company or subsidiary thereof the
ordinary business of which includes the lending of
money, to a loan by the company or the subsidiary in the
ordinary course of its business; or

(b) to a loan made by the company or the subsidiary to any
employee of the company if the loan does not exceed
four thousand rand and is certified by the directors of the
company or the subsidiary, as the case may be, to the
company or the subsidiary with respect to loans to its
employees.

(3) The provisions of sub-section (1) of this section with
respect to loans shall apply to a loan to any person who has
during the company’s financial year been a director or other
officer of the company made before he became a director or
officer, as it applies to a loan to a director or officer of the
company.

(4) If in the case of any such accounts as aforesaid the
provisions of this section are not complied with, it shall be the
duty of the auditors of the company by whom the accounts are
examined to include in their report on the balance sheet of the
company, so far as they are reasonably able to do so, a statement
giving the required particulars.

(6) References in this section to a subsidiary shall be taken as
referring to a subsidiary at the end of the company’s financial
year (whether or not a subsidiary at the date of the loan).

Register of
directors and
secretaries

(7) It shall be the duty of the every director and of every
other officer of a company and of every person who had at any
time within the previous two years been a director or officer to
give notice to the company of any such matters relating to himself
as may be necessary for the purposes of this section; and if he
makes default in complying with such duty he shall be guilty of an
office and liable on conviction to a fine not exceeding one
hundred rand.

157. (1) Subject to the provisions of this section, it shall
be the duty of a director of a company who is in any way, whether
directly or indirectly, interested in a contract or proposed contract
with the company to declare the nature and full extent of his
interest at a meeting of the directors of the company.

(2) In the case of a proposed contract the declaration
required by this section to be made by the director shall be made
at the meeting of the directors at which the question of entering
into the contract is first taken into consideration, or if the director
was not at the date of that meeting interested in the proposed
contract, at the next meeting of the directors held after he became
so interested, and in a case where the director becomes interested
in a contract after it is made, the said declaration shall be made at
the first meeting of the directors held after the director becomes
so interested.
(3) 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 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 either it is given at a meeting of the directors
or the director takes reasonable steps to secure that it
is brought up and read at the next meeting of the
directors after it is given.

(4) Any director who fails to comply with the provisions
of this section shall be guilty of an offence, and liable on
conviction to a fine not exceeding two hundred rand.

(5) Nothing in this section shall be taken to affect the
operation of any rule of law restricting directors of a company
from having any interest in contracts with the company.

158. (1) Every company shall keep at its registered office
a register of its directors and secretaries, containing with respect
to each of them the following particulars: –

(a) In the case of an individual, his present forenames

Disclosure by
directors of
interests in
contracts

and surname, and if he has changed his name or
names, and his former forenames and surname and
when and where the change took place, his
nationality, his usual residential address, his
business occupation, if any, and particulars of any
other directorships; and

(b) In the case of a body corporate, its corporate name
and registered or principal office.

(2) The company shall within the periods respectively
mention in this sub-section, send to the Registrar a return in
duplicate in the prescribed form, if any, containing the particulars
specified in the said register and a notification of any change
among its directors or secretaries or in any of the particulars
contained in the register and of the date of any such change.

The period within which the said return is to be sent shall
be twenty-one days from the appointment of the first directors the
company, or in the case of an existing company, ninety days after
the commencement of this Act and the period within which the
said notification of a change is to be sent shall be fourteen days
from the happening thereof.

(3) 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 member of the company without
change, and of any other person on payment of twenty cents, or
such less sum as the company may prescribe, for each inspection.

(4) If any inspection required under this section is
refused, or if default is made in complying with sub-section (1) or
(2) of this section the company and every officer of the company
who is in default shall be guilty of an offence and liable on
conviction to a fine not exceeding ten rand for every day during
which the offence continues, and in the case of any such refusal
the court, including the court convicting, may be order compel an
immediate inspection of the register.

159. (1) Every company shall in all trade catalogues, trade
circulars, and business letters on or in which the company’s name
appears and which are issued or sent by the company of any
person state in legible characters with respect to every director his
present forenames or the initials thereof, his present surname, and
his nationality in full or abbreviated form:
Provided that the Minister may by order grant
exemption from the provisions of this sub-section
subject to such conditions as he may prescribe in the
order to any company.

Particulars of
directors in
trade
catalogues,
circulars, etc.

Power to
compromise
with creditors
and members

(2) If default is made in complying with this section, the
company and every officer of the company who is in default shall
be guilty of an offence and liable on conviction to a fine not
exceeding one hundred rand.

Avoidance of Provisions in Articles or Contracts
Relieving Officers from Liability

160. Subject as hereinafter provided, any provision,
whether contained in the articles of a company or in any contract
with a company or otherwise, for exempting any officer of the
company, or any person employed by the company as auditor,
from, or indemnifying him against, any liability which by law
would otherwise attach to him in respect of any negligence,
default, breach of duty or breach of trust of which he may be
guilty in relation to the company shall be void:

Provided that –

(i) In relation to any such provision which is in force
at the date of the commencement of this Act, this
section shall have effect only on the expiration of
a period of six months from that date; and

(ii) nothing in this section shall operate to deprive any
person of any exemption or right to be
indemnified in respect of anything done or
omitted to be done by him while any such
provision was in force; and

(iii) notwithstanding anything in this section, a
company may, in pursuance of any such
provision as aforesaid, indemnify any such
officer or auditor against any liability incurred by
him in defending any proceedings, whether civil
or criminal, in which judgment is gien in his
favour or in which he is acquitted or in
connection with any application under section
three hundred and three in which relief is
granted to him by the court.

Arrangement and Reconstruction

161. (1) Where a compromise or arrangement is proposed
between a company in its creditors or any class of them, or
between a company and its members or any class of them, the
court may, on the application of the company or of any creditor or
member of the company, or, in the case of a company being
wound up, of the liquidator, order a meeting of the creditors or

Provisions as
to liability of
officers and
auditors

class of creditors, or of the members of the company or class of
members, as the case may be, to be summoned in such manner as
the court directs.

(2) If majority in number representing three-fourths in value
of the creditors or class of creditors or members or class of
members, as the case may be, present and voting either in person
or by a duly authorised agent or proxy at the meeting, agree to
any compromise or arrangement, the compromise or arrangement
shall, if sanctioned by the court, be binding on all the creditors or
class of creditors, or on the members or class of members, as the
case may be, and also on the company, or, in the case of a
company in the course of being wound up, on the liquidator and
contributories of the company.

(3) An order made under sub-section (2) of this section shall
have no effect until a copy of the order certified by the Registrar
of the court has been delivered to the Registrar for registration,
and copy of every such order shall be annexed to every copy of
the memorandum of the company after the order has been made.

(4) If a company makes default in complying with subsection
(3) of this section, the company and every officer of the company
who is in default shall be guilty of an offence and liable on
conviction to a fine not exceeding two rand for each copy in
respect of which default is made.

(5) In this section the expression “company” means any
company or external company liable to be wound up under this
Act and the expression “arrangement” includes a reorganisation
of the share capital of the company by the consolidation of shares
of different classes or by the division of shares into shares of
different classes or by both those methods.

162. (1) Where a meeting of creditors any class of creditors
or of members or any class of members is summoned under
section one hundred and sixty-one there shall –

(a) with every notice summoning the meeting which is
sent to a creditor or member, be sent also a
statement explaining the effect of the compromise or
arrangement in a particular stating any material
interests of the directors of the company, whether as
directors or as members or as creditors of the
company or otherwise, and the effect thereof of the
compromise or arrangement, in so far as it is
different from the effect on the like interests of other
persons; and

(b) in every notice summoning the meeting which is
given by advertisement, be included either such a

Information as
to compromise
with creditors
and members

Provisions for
facilitating
reconstruction
and
amalgamation
of companies

statement as aforesaid or a notification of the place
at which and the manner in which creditors or
members entitled to attend the meeting may obtain
one copy each of such a statement as aforesaid.

(2) Where the compromise or arrangement affect the rights
of debenture holders of the company, the said statement shall give
the like explanation as respects the trustees of any deed for
securing the issue of the debentures as it is required to give as
respects the company’s directors.

(3) Where a notice given by advertisement includes a
notification that copies of a statement explaining the effect of the
compromise or arrangement proposed can be obtained by creditors
or members entitled to attend the meeting, every such creditor or
member shall, on making application in the manner indicated by
the notice, be furnished by the company free of charge with a
copy of the statement.

(4) Where a company makes default in complying with any
requirement of this section, every officer of the company who is in
default shall be guilty of an offence and liable on conviction to a
fine not exceeding one thousand rand, and for the purpose of this
sub-section any liquidator of the company and any trustee of a
deed for securing the issue of debentures of the company shall be
deemed to be an officer of the company:

Provided that a person shall not be liable under this
sub-section if that person shows that the default was due
to the refusal of any other person, being a director or
trustee for debenture holders, to supply the necessary
particulars as to his interests.

(5) It shall be the duty of any director of the company and of
any trustee for debenture holders of the company of such matters
relating to himself as may be necessary for the purposes of this
section, and any person who makes default in complying with this
sub-section shall be guilty of an offence and liable on conviction
to a fine not exceeding one hundred rand.

163. (1) Where an application is made to the court under
section one hundred and sixty-one for the sanctioning of a
compromise or arrangement proposed between a company and
any such person as are mentioned in that section, and it is shown
to the court that the compromise or arrangement has been
proposed for the purposes of or in connection with a scheme for
the reconstruction of any company or companies or the
amalgamation of any two or more companies, and that under the
scheme the whole or any part of the undertaking, or the property
of any company concerned in the scheme(in this section referred
to as a transferor company), is to be transferred to another

company (in this section referred to as the transferee company),
the court may either by the order sanctioning the compromise or
arrangement or by any subsequent order, make provision for all or
any of the following matters:-

(a) The transfer to the transfer company of the whole or
any part of the undertaking and of the property or
liabilities of any transferor company;

(b) the allotting or appropriation by the transferee
company of any shares, debentures, policies or other
like interest in that company, which under the
compromise or arrangement, are to be allotted or
appropriated by that company to or for any person;

© the continuation by or against the transferee company
of any legal proceedings pending by or any
transferor company;

(d) the dissolution, without winding up, of any
transferor company;

(e) the provisions to be made for any persons who,
within such time and in such manner as the court
directs, dissent from the compromise or
arrangement;

(f) such incidental matters as are necessary to secure
that the reconstruction or amalgamation shall be
fully and effectively carried out.

(2) Where an order under this section provides for the
transfer of property or liabilities, that property shall, by virtue of
the order, be transferred to and vest in, and those liabilities shall,
by virtue of order, be transferred to and become the liabilities of,
the transferee company, and, in the case of any property, if the
order so directs freed from any pledge or hypothecation which is,
by virtue of the compromise or arrangement, to cease to have
effect.
The transfer under this Sub-section of any immovably
property or mining claims shall be made in accordance with the
provisions of any governing the transfer thereof.

(3) Where an order is made under this section, every
company in relation to which the order is made shall cause a copy
thereof certified by the Registrar of the Court to be delivered to
the Registrar for registration within thirty days after the making of
the order, and if default is made in complying with this sub-

section, the company and every officer of the company who is in
default shall be guilty of an offence and liable on conviction to a
fine not exceeding ten rand for every day during which the
offence continues.

(4) In this section the expression “property” includes
property, rights and powers of every description, and the
expression “liabilities” includes duties.

(5) Notwithstanding the provisions of sub-section (5) of
section one hundred and sixty-one, the expression “company” in
this section does not included any company other than a company
within the meaning of this Act.

164. (1) Where a scheme or contract involving the transfer
of shares or any class of shares in a company (in this section
referred to as the transferor company), to another company,
whether a company within the meaning of this Act or not (in this
section referred to as the transferee company), has within four
months after the making of the offer in that behalf by the
transferee company, been approved by the holders of not less than
nine-tenths in value of the shares whose transfer is involved (other
than shares already held at the date of the offer by, or by a
nominee company may, at any time thin two months after the
expiration of the said four months, give notice in the prescribed
manner to any dissenting member that it desires to acquire his
shares, and when such a notice is given the transferee company
may, at any time within two months after the expiration of the said
four months, give notice in the prescribed manner to any
dissenting member that it desires to acquire his shares, and when
such a notice is given, the transferee company shall, unless on an
application made by the dissenting member within one month
from date on which the notice was given the court thinks fit to
order otherwise, be entitled and bound to acquire those shares on
the terms on which, under the scheme or contract, the shares of the
approving members are to be transferred to the transferee
company:
Provided that where shares in transferor
company of the same class or classes as the shares
whose transfer is involved are already held as
aforesaid to a value greater than one tenth of the
aggregate of their value and that of the shares (other
than those already held as aforesaid) whose transfer is
involved, the foregoing provisions of this subsection
shall not apply unless –

(a) the transferee company offers the same terms
to all holders of the shares (other than those
already held as aforesaid) whose transfer is
involved, or, where those shares include shares
of different classes, of each class of them; and

Power to
acquire shares
of members
dissenting from
scheme or
contract
approved by
majority

(b) the holders who approve the scheme or
contract, besides holding not less than nine-
tenths in value of the shares (other than those
already held as aforesaid) whose transfer is
involved, are not less than three-fourths in
number of the holders of those shares.

(2) Where in pursuance of any such scheme or contract as
aforesaid, shares in a company are transferred to another
company or its nominee, and those shares together with any other
shares in the first-mentioned company held by, or by nominee for,
the transferee company or its subsidiary at the date of the transfer
comprise or include nine-tenths in value of the shares, in the first-
mentioned company or of any class of those shares, then –

(a) the transferee company shall within one months
from the date of the transfer (unless on a previous
transfer in pursuance of the scheme or contract it
has already complied with this requirement) give
notice of that fact in the prescribed manner to the
holders of the remaining shares or of the
remaining shares of that class, as the case may be,
who have not assented to the scheme or contract;
and

(b) any such holder may within three months from
the giving of the notice to him require the
transferee company to acquire the shares in
question;
and where a member gives notice under paragraph (b) of this sub-
section with respect to shares, the transferee company shall en
titled and bound to acquire those shares on the terms on which
under the scheme or contract the shares of the approving members
were transferred to it, or on such other terms as may be agreed or
as the court on the application of either the transfer company or
the member thinks fit to order.

(3) Where a notice has been given by the transferee
company under sub-section (1) of this section and the court ha
snot, on an application made by the dissenting member, ordered to
the contrary the transferee company shall, on the expiration of one
month from the date on which the notice has been given, or, if an
application to the court by the dissenting member is then pending,
after that application has been disposed of, transmit a copy of the
notice to the transferor company together with an instrument of
the transfer executed on behalf of the member by any person
appointed by the transferee company and on its own behalf by the

transferee company, and pay or transfer to the transferor company
the amount or other consideration representing the rice payable by
the transferee company for the shares which by virtue of this
section that company is entitled to acquire, and the transferor
company shall thereupon register the transferee company as the
holder of those shares.

(4) Any sums received by the transferor company under this
section shall be paid into a separate bank account, and any such
sums and other consideration so received shall be held by that
company in trust for the several persons entitled to the shares in
respect of which the said sums or other consideration were
respectively received.

(5) In this section the expression “dissenting member”
includes a member who ha snot assented to the scheme or contract
and any member who has failed or refused to transfer his shares to
the transferee company in accordance with the scheme or contract.

Minorities

165. (1) any member of a company who complains that the
affairs of the company are being conducted in a manner
oppressive to some part of the members (including himself), may
make an application to the court for an order under this section:
and in a case falling within sub-section (2) of section one
hundred and thirty-three the Minister may make the like
application.

(2) If on any such application the court is of opinion –
(a) that the company’s affairs are being conducted as
aforesaid; and

(b) that to wind up the company or to make an order for
judicial management would unfairly prejudice that part
of the members, but otherwise the facts would justify the
making of a winding-up order on the ground that it was
just and equitable that the company should be wound up,
or an order for judicial management on the ground that
such order was desirable;
the court may, with a view to bringing to an end the matters
complained of, make such order as it thinks fit, whether for
regulating the conduct of the company’s affairs in future, or for
the purchase of the shares of any members of the company by
other members of the company or by the company, and in the case
of a purchase by the company, for the reduction accordingly of the
company’s capital, or otherwise.

(3) Where an order under this section makes any

Alternative
remedy to
winding up in
cases of
oppression

Modes of
winding up

alternation or addition to any company’s memorandum or articles,
then notwithstanding anything in this Act but subject to the
provisions of the order the company concerned shall not have
power without the leave of the court to make any further alteration
in or addition to the memorandum or articles inconsistent with the
provisions of the order but, subject to the foregoing provisions of
this sub-section, the alterations or additions made by the order
shall be of the same effect as if duly made by resolution of the
company and this Act shall apply to the memorandum or articles
as so altered or added to.

(4) A copy of any order under this section altering or
adding to, or giving leave to alter or add to, a company’s
memorandum or articles shall, within fourteen days after the
making thereof, be delivered by the company to the Registrar for
registration; and if a company makes default in complying with
this sub-section, the company and every officer of the company
who is in default shall be guilty of an offence and liable on
conviction to a fine not exceeding ten rand for every day during
which the offence continues.

PART IV
WINDING UP AND JUDICIAL MANAGEMENT

Preliminary

166. (1) The winding up of a company may be either –
(b) by the court; or
(c) voluntary.

(2) The Provisions of this Act with respect to winding up
apply, unless the contrary appears, to the winding up of a
company by either of those modes.

167. For purposes of the winding up or judicial
management of companies the Master shall have the jurisdiction
conferred on him by this Part.

Contributories

168. In the event of a company being wound up, every
present and past member shall, subject to the provisions of this
section, be liable to contribute to the assets of the company to an
amount sufficient for payment of its debts and liabilities and the
costs, charges and expenses of the winding up, and for the
adjustment of the rights of the contributories amount themselves,
subject to the following qualifications:-

(a) In the case of a company limited by shares no
contributions shall be required from any member

Jurisdiction of
Master

Liability as
contributories
of present and
past members

exceeding the amount, if any, unpaid on the
shares in respect of which he is liable as a
present or past member;

(b) In the case of a company limited by guarantee no
contribution shall be required from any member
exceeding the amount undertaken to be
contributed by him to the assets of the company
in the event of its being wound up;

(c) A past member shall not be liable to contribute if
he has ceased to be a member for one year or
upwards before the commencement of the
winding up;

(d) A past member shall not be liable to contribute
unless at the commencement of the winding up
there is unsatisfied debt or liability of the
company contracted before he ceased to be a
member;

(e) a past member shall not be liable to contribute
unless it appears to the court that the present
members are unable to satisfy the contributions
required to be made b y them in pursuance of this
Act;

(f) a past member shall not be liable to contribute in
respect of any dept or liability of the company
other than a debt or liability contracted before he
ceased to be a member and unsatisfied at the
commencement of the winding up, or in respect
of the costs, charges and expenses of the

winding up, except in so far as these been
occasioned by the necessity of recovering a
contribution from him under this section;

(g) a past member shall not be liable to contribute in
respect of the adjustment of the rights of the
contributories among themselves;

(h) anything in this section to the contrary
notwithstanding, no transfer of shares improperly
issued as fully or partly paid up shall relieve the
transferor of any liability which he would have
had to contribute in respect to the amount
improperly credited as paid on the shares had he
not transferred them; but in so far as the present
member is liable to contribute in respect of the

Definition of
“contributory”

Nature of
liability of
contributory

Contributories
in case of death
or insolvency

amount improperly credited, such liability shall
be a joint and several liability of such transferor
and the present member;

(i) nothing in this Act shall invalidate any provision
contained in any policy of insurance or other
contract, whereby the liability of individual
members on the policy or contract is restricted, or
whereby the funds of the company are alone
made liable in respect of the policy or contract;

(j) a sum due to any member of a company, in his
character of a member, by way of dividends,
profits or otherwise, shall not be deemed to be a
debt of the company, payable to that member in a
case of a competition between himself and any
other creditor not a member of the company; but
any such sum may be taken into account for the
purpose of the final adjustment of the rights of
the contributories among themselves.

169. The term “contributory” means any person liable to
contribute to the assets of a company in the event of its being
wound up, and for the purposes of all proceedings for determining
and all proceedings prior to the final determination of the persons
who are to be deemed contributories, includes any person alleged
to be a contributory.

170. The liability of a contributory shall constitute a debt
accruing due from him at the time when his liability commenced,
but payable at the times when calls are made for enforcing the
liability.

171. (1) If a contributory dies before or after he has been
placed on the list of contributories then either –

(a) his executor shall, as such, be placed on the list of
contributories in his stead and be liable accordingly; or

(b) if his estate has passed into the hands of his heirs or
legatees they shall be liable for his contribution to
such extent and in such proportions as they would, by
law, respectively be liable for debts of the estate
payable but unprovided for at the time of distribution
thereof, and shall be placed on the list of
contributories accordingly.

(2) If a contributory becomes insolvent or assigns his estate
under the law relating to insolvent estates, either before or after
he has been placed on the list of contributories, the –

Circumstance
in which
company may
be wound up by
court

(a) his trustee in insolvency or his assignee, as the
case may be, shall represent him for all the
purposes of the winding up, and shall be a
contributory accordingly; and

(b) there may be proved against the estate of the
insolvent or of the debtor who has assigned his
estate the estimated value of his liability to future
calls, as well as calls already made.

172. A company shall be deemed to be unable to pay its
debts –
(a) if a creditor, by cession or otherwise, to whom
the company is indebted in a sum exceeding
one hundred rand then due, has served on the
company a demand requiring it to pay the sum
so due by leaving the demand at its registered
office, and if the company has for three weeks
thereafter neglected to pay the sum, or to
secure or compound for it to the reasonable
satisfaction of the creditor; or

(b) if the execution of other process issued, on a
judgement, decree or order of any competent
court that the company is unable to pay its
debts, and in determining whether a company is
unable to pay its debts, the court shall take into
account the contingent and prospective
liabilities of the company.

(c) If it is proved to the satisfaction of the court
that the company is unable to pay its debts, and
in determining company is unable to pay its
debts, the court, shall take into account the
contingent and prospective liabilities.

Winding up by the Court

173. A company may be wound up by court –

(a) if the company has by special resolution resolved
that the company be wound up the court;

(b) if default is made in lodging the statutory report
or in holding the statutory meeting;

(c) if the company does not commence its business
within a year from its incorporation, or suspends

When a
company
deemed unable
to pay its debts

Petition for
winding up a
company

its business for a whole year;

(d) if the number of members is reduced, in the case
of a private company, below two, or, in the case
of any other company, below seven;
(e) if seventy-five percent of the paid up share capital
of the company has been lost, or has become
useless for the business of the company;

(f) if the company is unable to pay its debts;

(g) if the court is of opinion that it is just and
equitable that the company should be wound up.

174. (1) An application to the court for the winding up of a
company shall be by petition presented (subject to the provisions
of this section) by the company or by any creditor or creditors),
contributory or contributories or by all or any of those parties
together or separately or, in a case falling within sub-section (2) of
section one hundred and thirty-three, by the Minister
accompanied, save in the case of a petition by the Minister, by a
certificate of the Master that due security has been found for
payment of all fees and charges necessary for the prosecution of
all proceedings until the appointment of a liquidator.

Provided that:-
(i) a contributory shall not be entitled to present a
petition for a winding up a company unless –

(a) the number of members is reduced in the case of a
private company below two, or in the case of any
other company below seven; or

(b) the shares in respect of which he is contributory,
or some of them, either were originally allotted to
him or have been held by him and registered in
his name, for at least six months during the
eighteen months before the commencement of the
winding up, or have devolved upon him through
the death of a former holder;

(ii) a petition for winding up a company on the ground
of default in lodging the statutory report or in
holding the statutory meeting shall not be
presented by any person except a member, nor
before the expiration of fourteen days after the
last day on which the meeting ought to have been
held; and

(ii) the court shall not grant a petition for winding up
a company by a contingent or prospective

creditor until a Prima facie case for winding up
has been established to the satisfaction of the
court.

(2) Where a company is being wound up voluntarily, a
petition may be presented by the Master, or by any other person
authorised in that behalf under the other provisions of this section,
but the court shall not make a winding-up order on the petition
unless it is satisfied that the voluntary winding up cannot be
continued with due regard to the interests of the creditors or
contributories.

175. (1) On hearing the petition the court may dismiss it with
or without costs, or adjourn the hearing conditionally or
unconditionally, or make any interim order or any other order that
it deems just, but eh court shall not refuse to make a winding-up
order on the ground only that the assets of the company have been
hypothecated to an amount equal to or in excess of those assets,
or that the company also no assets.

(2) Where the petition is presented by members of the
company as contributories on the ground that it is just and
equitable that the company should be wound up the court if it is
of the opinion –

(a) that the petitioners are entitled to relief either by
winding up the company or by some other means or

(b) that in the absence of any other remedy it would be
just and equitable that the company should be
wound up;

shall make a winding-up order, unless it is also of the opinion
both that some other remedy is available to the petitioners and
that they are acting unreasonably in seeking to have the company
wound up instead of pursuing that other remedy.

(3) Where the petition is presented on the ground of default
in delivering the statutory report to the Registrar or in holding
statutory meeting, the court may –

(a) instead of making a winding-up order, direct that the
statutory report shall be delivered or that a meeting
shall be held; and

(b) order the costs to be paid by any persons who, in the
opinion of the court, are responsible for the default.

176. At any time after the presentation of a petition for

Powers of
court on
hearing
petitions

Court may stay
or restrain
proceedings
against
company

Commence-
ment of
winding up by
court

Court may
adopt
proceedings of
voluntary
winding up

Effect of
winding-up
order

winding up and before a winding-up order has been made, the
company or any creditor or contributory may –

(a) where any action or proceeding by or against the company
is pending in any court of law in Lesotho, apply to such
court for a stay of proceedings therein; and

(b) where any other action or proceeding is being or about to
be instituted against the company, apply to the court to
which the petition for winding up has been presented for
an order restraining further proceedings in the action or
proceeding;

and the court to which application is so made may, as the
case may be stay or restrain the proceedings accordingly
on such terms as it thinks fit.

177. (1) Where before the presentation of a petition for the
winding up of a company by the court a resolution has been
passed by the company for voluntary winding up, the winding up
of the company shall be deemed to have commenced at the time of
the passing of the resolution.

(2) In Any other case, the winding up of a company by the
court shall be deemed to commence at the time of the presentation
of the petition for the winding up.

178. Where a company is being would up voluntary, and an
order is made for its winding up the court, the court may, if it
thinks fit, by the same or any subsequent order, confirm all or any
subsequent order, confirm all or any of the proceedings in the
voluntary winding up.

Consequences of winding up Order

179. An order for winding up a company shall operate in
favour of all the creditors and of all the contributories of the
company as if the petition had been presented by all creditors and
contributories jointly.

180. In a winding up by the court –

(a) no action or proceeding shall be proceeded with
or commenced against the company except by
leave of the court and subject to such terms as the
court may impose;

Action stayed
and avoidance
of certain
attachments,

(b) any attachment or execution put in force against
the assets of the company after the
commencement of the winding up shall be void;

(c) every disposition of the property (including rights
of action) of the company, and every transfer of
shares or alteration in the status of its members,
made after the commencement of the winding up
shall, unless the court otherwise orders, be void.

181. (1) The Registar of the court shall forth with transmit a
copy of every provisional and final winding-up order, and of every
order amending or setting aside the same to the Registrar, to the
Master and to the Sheriff of Lesotho, and –

(a) in respect of any right in immovable property
within Lesotho which appears to be an asset of
the company, to the Registrar of Deeds; and

(b) to the messenger of every subordinate court by
the order whereof it appears that property of the
company is under attachment:

Provided that when the assets of the company
are under four hundred rand and value, and the court
so orders, the movable assets may remain in the
custody of such person as the court may order upon
such terms as to security as the court may direct, and
in that case it shall not be necessary to transmit a copy
of any order to the Sheriff or any messenger.

(2) Upon receipt by the Registrar of Deeds of winding-up
order he shall enter a caveat against the transfer of any right in
immovable property or the cancellation or cession of any bond
registered in the name of or belonging to the company.

(3)Every such public officer concerned shall register every
copy of an order transmitted to him and note thereon the day and
hour when it is received.

(4) Upon receipt of a copy of any winding-up order, the
Master shall give notice thereof in the Gazette.

182. (1) Where the court has made a winding-up order,
there shall be made and submitted to the Master a statement in
duplicate as to the affairs of the company in the prescribed form,
if any, showing as at the date of the winding-up order or such
other convenient date as the Master shall allow, the particulars of
its assets, debts and liabilities, the names, addresses and
occupations of its creditors, the securities held by them executions and
dispositions
and alteration
of status

Transmission
of winding-up
order to certain
officers

Statement of
company’s
affairs to
Master

respectively, the dates when the securities were respectively
given, and such further or other information as the Master shall
transmit the duplicate of such statement to the liquidator on his
appointment.

(2) The statement shall be submitted and verified by
affidavit by one or more of the persons who are at the relevant
date directors and by the person who is at that date the secretary of
the company, or by such of the persons hereinafter in this sub-
section mentioned as the Master 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 relevant date;

© who are in the employment of the company, or have
been in the employment of a company which and are
in the opinion of the Master 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, an officer of the company to which the
statement relates.

(3) The statement shall be submitted within fourteen days
from the date of the order, or within such extended time as the
master or the court may for special reasons allow.

(4) Any person making or concurring in making the
statement and the affidavit required by this section shall be
allowed, and shall be paid out of the assets of the company, such
costs and expenses incurred in and about the preparation and
making of the statement and affidavit as the Master may consider
reasonable.

(5) If any person, without reasonable excuse, makes default
in complying with the requirements of this section, he shall be
guilty of an offence and liable on conviction to a fine not
exceeding twenty rand for every day during which the offence
continues.

(6) Any person shall be entitled by himself or by his agent
at all reasonable times, on payment of the prescribed fee, to
inspect the statement submitted in pursuance of this section, and
to a copy thereof or extract therefrom.

183. Where the court has made a winding-up order the

Master may, if he thinks fit, make a report to the court, stating the
manner in which the company was formed and whether in his
opinion any fraud has been committed by any person in its
promotion or formation, or by any director or other officer of the
company in relation to the company or its creditors since the
formation thereof and any other matters which in his opinion it is
desirable to bring to the notice of the court.

Provisions Specially applicable in a Winding up
by the Court

184. The provisions contained in sections one hundred and
eighty-five to two hundred and eight, inclusive, shall apply in
relation to the winding up of a company by the court.

185. (1) For the purpose of conducting the proceedings in a
winding up by the court the Master shall, subject to the provisions
of sections one hundred and eighty-six and two hundred and
forty-one, appoint a liquidator or liquidators.

(3) On a winding-up or being made or thereafter when, for
whatever cause, there is no person acting as liquidator of the
company –

(a) all the property of the company shall be deemed to be
in the custody or control of the Master until a
liquidator or provisional liquidator is appointed and is
capable of acting as such;

(b) subject to the provisions of section two hundred and
forty-one the Master may appoint any fit person or
shall appoint any person whom the court has directed
to be appointed as a provisional liquidator of the
company to hold office until the appointment of a
liquidator, and may, or shall, as so ordered by the
court, restrict his powers by the terms of his letter of
appointment.

(3) When a vacancy occurs in the office of liquidator the Master
shall fill the vacancy by making an appointment under the
provisions of section one hundred eighty-six and two hundred and
forty-one.

186. (1) When a final winding-up order has been made by the
court, the Master shall summon separate meetings –

(a) of the creditors of the company for the proof of
claims against the company and for the purpose of
determining the person or persons whose names
shall be submitted for appointment as liquidator or

Report by
Master

Application of
sections

Custody of
property and
appointment of
liquidator

Meetings of
creditors and
contributories

Proof of
claim

Powers of
Liquidator

liquidators; and

(b) of the contributories of the company for the purpose
of determining the person or persons whose names
shall be submitted for appointment as liquidator or
liquidators.

(2) Where in regard to the said appointment there is no
difference between the determination of the meetings of the
creditors and contributories, or where there is a determination of
the meeting of the creditors only or of the meeting of the
contributories only, the Master may make any appointment
required to give effect to any such determination.

(3) Where there is a difference between the
determinations of the meeting of the creditors and of the
contributories the Master shall call a joint meeting of the creditors
and contributories with a view to reaching an agreement and, if no
agreement is reached the master shall make such appointment as
he may think fit. Any such appointment shall be subject to an
appeal within fourteen days to a judge in chambers, made by the
creditors or contributories or both. On any such appeal a judge
may make such order thereon and as to costs as he may think fit.

(4) Meetings of creditors and contributories shall, unless
otherwise in this Act specially provided, be convened and held in
the manner prescribed in the rules framed under section three
hundred and eleven.

187. (1) All claims against a company being wound up by
the court shall be proved at a meeting of creditors called and held
as nearly as possible in the manner provided by the law relating to
insolvent estates for the proof of claims against an insolvent estate
and subject to the provisions of section two hundred and fifty-
four.

(2) The Master, on the application of the liquidator, may
fix a time or times within which creditors of the company are to
prove their claims or to be excluded from the benefit of any
distribution under any account lodged with the Master before
those debts are proved.

188. (1) The liquidator in a winding up by the court shall
have the following powers:-

(a) to execute in the name and on behalf of the company
all deeds, receipt and other documents, and for that
purpose to use the company’s seal;

(b) to prove a claim in the estate of any contributory or
debtor and receive payment in full or a dividend in

respect thereof;

© to draw, accept, make and endorse any bill of exchange
or promissory note in the name and on behalf of the
company, but so as not, except with the leave of the
court or the authority mentioned in sub-section (4) of
this section or for the purpose of carrying on the
business of the company in terms of paragraph (e) of
sub-section (2) of the is section, to impose any
additional liability upon the company.

(2) He shall have power, with the leave of the court or with
the authority mentioned in sub-section (4) of this section.

(a) to bring or defend in the name and on behalf of the
company any action or other legal proceeding of a civil
nature, and subject to the provisions of any law relating
to criminal procedure any criminal proceeding:
Provided that immediately upon the appointment of a
liquidator or a provisional liquidator, the Master may
authorise upon such terms as he thinks fit legal
proceedings for the recovery of any outstanding
accounts, the collection of which appears to him to be
urgent;

(b) to agree to any offer of composition made to the
company by any debtor or contributory, and take any
reasonable part of the debt in discharge of the whole or
give reasonable time, regard being had to the provisions
of section two hundred and forty-six;

© to compromise or admit any claim or demand against the
company, including an unliquidated claim;

(d) to submit to the determination of arbitrators any dispute
concerning the company or any claim or demand by or
upon the company;

(e) to carry on or discontinue any part of the business for
the company in so far as may be necessary for the
beneficial winding up thereof: Provided that if
necessary the liquidator may carry on or discontinue the
same before he has obtained the leave of the court or
the authority aforesaid, but it shall not then be
competent for him as between himself and the creditors
or contributories to charge the winding up with the cost
of any goods purchased by him unless the same have
been necessary for the immediate purpose of carrying
on the business and there are funds available for
payment of the same after providing for the cost of
winding up or unless the court otherwise orders;

(f) in the case of a company unable to pay its debts, to elect
to adopt or to abandon any contract entered into by the
company before the commencement of the winding up
to by or receive in exchange any immovable property,
transfer of which has not been effected in favour of the
company:

Provided that –
(i) if the liquidator does not make his election within
six weeks after being required in writing to do so,
the person entitled under the contract may apply
by motion to the court for cancellation of the
contract and delivery of possession of the
immovable property and the court may make such
order as it thinks fit;

(ii) nothing in this paragraph contained shall affect
any concurred claim against the company for
damages for non-fulfilment of the contract;

(e) to terminate any lease entered into by the company as
lessee by notice in writing to the lessor, subject however
to the following terms and conditions:-

(i) nothing in this paragraph contained shall affect
any claim by the lessor against he company for
damages he may have sustained by reason of
the non-performance of the terms of the lease;

(ii) if the liquidator does not within three months of
his apparent notify the lessor that he is prepared
to continue the lease on behalf of the company,
he shall be deemed to have terminated the lease
at the end of such three months;

(iii) the rent due under any lease so terminated from
the date of the commencement of the winding
up to the termination of the lese by the
liquidator shall be included in the costs of
administration;

(iv) the fact that a lease has been terminated by the
liquidator shall deprive him of any right to
compensation for improvements made during
the period of the lease.

(h) to sell, by public auction or otherwise, deliver or
transfer the movable and immovable property of the
company.

(3) He shall have power, with the leave of the court, to raise
money on the security of the assets of the company or to do any
other thing which the court may consider necessary for winding
up the affairs of the company and distributing its assets.

(4) he may, with the authority of a resolution of creditors and
contributories, duly passed at a joint meeting thereof, do any act
or exercise any power for which he is not by this Act expressly
required to obtain the leave of the court.

189. (1) The liquidator of a company which is being wound
up by the court shall, in the administration of the assets of the
company, take into account any directions that may be given by
resolution of the creditors or resolution of the contributories at any
general meeting.

(2) In regard to any matter which has been submitted by the
liquidator for the directions of creditors and contributories in
general meeting, but as to which no directions have been given or
as to which there is a difference between the direction of creditors
and contributories, the liquidator may apply to the court for
directions and the court shall decide the matter and may make
such order therein as it shall think fit.

(3) Any persons aggrieved by any act or decision of the
liquidator may apply to the court after notice of motion to the
liquidator and thereupon the court may make such order as it
thinks fit.

190. (1) The Master shall take cognisance of the conduct
of liquidators of companies which are being wound up by the
court, and if a liquidator does not faithfully perform his duties and
duly observe all the requirements imposed on him by statute,
rules, or otherwise with respect to the master by any creditor or
contributory in regard thereto the Master shall enquire into the
matter and take such action thereon as he may think expedient.

(2) The Master may at any time require any liquidator of
a company which is being wound up by the court to answer any
enquiry in relation to any winding up in which such liquidator is
engaged, and may, if he thinks fit, examine such liquidator or any
other person on oath concerning the winding up.

(3) The master may also direct an investigation to be
made of the books and vouchers of the liquidator.

(4) Any expenses incurred by the Master in carrying out
any provision of this section shall be part of the costs of the
winding up, but the court may order the liquidator to pay such
expenses to the company de bonis propriis.

Exercise of
liquidator’s
powers

Control by
Master over
liquidator

Release of
liquidator
191. (1) Immediately after his appointment the liquidator
of a company which is being wound up by the court shall open an
account in the name of the company in liquidation, with a bank
within Lesotho and shall deposit therein to the credit of the
company from time to time all moneys received by him on its
behalf. All cheques or orders which may be drawn upon the
account shall contain the name of the payee and the cause of
payment and shall be drawn to order and signed by the liquidator
or by his agent.

(2) Immediately after opening the account the liquidator
shall give the Master written particulars of the bank and the
branch of the bank with which the account has been opened, and
he shall not, without the written permission of the Master, transfer
the account from that branch.

(3) The Master and any surety for the liquidator or any
person authorised by such surety shall have the same right to
information in regard to the account as the liquidator himself
possesses and may examine all vouchers in relation thereto
whether in the hands of the bank or of the liquidator.

(4) The Master may after notice to the liquidator direct
the manager of the said branch of the bank, in writing, to pay into
the Guardian’s Fund all money standing to the credit of the
account at the time of the receipt, by the said manager, of that
direction and all moneys which may thereafter be paid into the
account and the said manager shall carry out such directions.

(5) If any liquidator, without lawful excuse, retains any
sum of money belonging to the company exceeding forty rand or
knowingly permits his co-liquidator to retain such a sum of money
longer than the earliest day after its receipt on which it was
reasonable for him or his co-liquidator to pay the money into the
bank or uses or knowingly permits his co-liquidator to use any
assets of the company except for the benefit thereof he shall, in
addition to any other penalty to which he may be liable, be liable
to pay to the company an amount not exceeding double the sum so
retained or double the value of the assets so used.

The amount which the liquidator is so liable to pay may be
recovered by action in any competent court at the instance of his
co-liquidator, the Master or any creditor or contributory.

192. (1) When the liquidator of a company which is being
wound up by the court has realised all the assets of the company
and has distributed a final dividend, if any, to the creditors, and
adjusted the rights of the contributories among themselves, and
made a final return, if any, to the contributories, he may apply to
the Master for release, and upon such liquidator giving by
advertisement in the Gazette not less than three weeks’ prior

Banking
account

notice of his application, the Master shall take into consideration
any objection to the release of the liquidator lodged by any
creditor, contributory or other person interested and upon
consideration of the objections, if any, the Master may either grant
or withhold the release.

(2) The release of the liquidator by the Master shall
discharge the liquidator from all liability in respect of any act
done or default made by him in the administration of the affairs of
the company, or otherwise in relation to his conduct as liquidator,
but any such release may be revoked on proof that it was obtained
by fraud or by suppression or concealment of any material fact.

(3) Where the liquidator has not previously resigned or
been removed, his release shall operate as a removal of him from
his office.

(193) (1) In a winding up by the court every liquidator
shall be entitled to a reasonable remuneration for his services, to
be taxed by the Master according to the table of fees prescribed in
the Seventh Schedule:

Provided that the Master may for good cause
reduce or increase his remuneration; provided further,
that the Master may disallow his remuneration either
wholly or in part on account of any failure or delay in
the discharge of his duties.

(2) No person who employs or is a fellow-employee of
or is in the ordinary employment of the liquidator shall be entitled
to receive any remuneration out of the assets of the company for
services rendered in the winding up, and no liquidator shall be
entitled either by himself or by his partner to receive out of the
assets of the company any remuneration for his services except the
remuneration to which under this Act he is entitled.

General Powers of the Court in Case of a
Winding up by the Court

194. The court may at any time after the making of an
order for winding up, on the application of the liquidator or of any
creditor or contributory, and on proof to the satisfaction of the
court that all proceedings in relation to the winding up ought to be
stayed or set aside, make an order staying or setting aside the
proceedings on such terms and conditions as the court deems fit.

195. (1) As soon as may be after making a winding-up
order, the court shall settle a list of contributories with power to
rectify the register of members in all cases where such
rectification is required in pursuance of this Act:

Remuneration
of liquidator

Court may stay
or set aside
winding up

Requiring
delivery of
property

Ordering
payment of
debt by
contributory

Making calls
and ordering
payment

Ordering
Provided that, where it appears to the court that it will not
be necessary to make calls on or adjust the rights of contributories,
the court may dispense with the settlement of a list of
contributories.

(2) In settling the list of contributories, the court shall
distinguish between persons who are contributories directly and
persons who are contributories as being representatives of or
liable for the debts of others.

196. The court may at any time after making a winding-
up order require any contributory for the time being settled on the
list of contributories, and any trustee, banker, agent or officer of
the company, to pay, deliver, convey surrender or transfer
forthwith, or within such time as the court directs, to the liquidator
any money, property or books and papers in his hands to which
the company is prima facie entitled.

197. (1) The court may, at any time after making a
winding-up order make an order on any contributory settled on the
list of the contributories to pay, in manner directed by the order,
any money due form him, or from the estate of the person whom
he represents, to the company exclusive of any money payable by
him or the estate by virtue of any call in pursuance of this Act.

(2) When all the creditors are paid in full, any money
due on any account whatever to a contributory from the company
may be allowed to him by way of set-off against any subsequent
call.

198. (1) The court may, at any time after making a
winding-up order, and either before or after it has ascertained the
sufficiency of the assets of the company, make call on and order
payment thereof by all or any of the contributories settled on the
list of the contributories to the extent of their liability, for payment
of any money which the court considers necessary to satisfy the
debts and liabilities of the company, and the costs, charges and
expenses of winding up, and for the adjustment of the rights of
contributories among themselves.

(2) In making a call, the court may take into
consideration the probability that some of the contributories may
partly or wholly fail to pay the call.

199. (1) The court may order any contributory, purchaser
or other person from whom money is due to the company to pay
the amount due into a bank to be named by the court, to the
account of the liquidator instead of to the liquidator, and such
order be enforced in the same manner as if it had directed payment
to the liquidator.
Settlement of
list of
contributories

payment into
Bank

Order on
contributory
conclusive
evidence

(2) All moneys and securities paid or delivered into a
bank as aforesaid in the event of a winding up by the court shall
be subject in all respects to the orders of the court.

200. (1) An order made by the court on a contributory
shall subject to any right of appeal, be conclusive evidence that
the money, if any, thereby appearing to be due or ordered to be
paid is due.

(2) All other pertinent matters stated in such order shall be
taken prima facie as truly stated as against all persons and in all
proceedings whatsoever.

201. The court shall adjust the rights of contributories
among themselves, and apportion any surplus among the persons
entitled thereto.

202. (1) The court may, at any time after making a
winding-up order, make such order for inspection of the books
and papers of the company by creditors and contributories as the
court thinks just, and any books and papers in the possession of
the company may be inspected by creditors or contributories
accordingly but not further or otherwise.

(2) Nothing in this section shall be taken to exclude or
restrict any statutory rights of a government department or of a
person acting under the authority of a government department

203. (1) When the affairs of a company have been
completely wound up, the court shall upon the application of the
Master make an order that the company be dissolved from the date
of the order, and the company shall be dissolved accordingly.

(3) A copy of the order shall forthwith be transmitted by
the Registrar of the court –

(a) to the Registrar, who shall make a minute in his
books of the dissolution of the company and shall
public notice thereof in the Gazette; and
(b) to the Master.

(3) An application made the Master under this section may be
by way of a report submitted to the court through the Registrar
thereof.

(4) Notwithstanding any dissolution in terms of this section,
in the event of any property thereafter becoming available which
would have accrued to the company if not dissolved the Master
shall give instructions for the realisation thereof and for the
distribution of the proceeds, less the cost of the realisation and

Court to adjust
rights of
contributories

Inspection of
books by
Creditors and
contributories

Dissolution of
company

Ordering public
examination of
promoters,
directors, etc.

distribution to such persons as would have been entitled thereto in
the winding up; and the same shall apply to any moneys becoming
so available.

204. (1) The court may, after it has made a winding-up order,
summon before it any officer of the company or person known or
suspected to have in his possession any property of the company or
supposed to be indebted to the company, or any person whom the
court deems capable of giving information concerning the
promotion, formation, trade, dealings, affairs, or property of the
company.

(2) The court may examine him on oath, either orally or be
written interrogatories, and may reduce his answers to writing and
require him to sign them.

(3) The court may require him to produce any books and
papers in his custody or power relating to the company, but where
he claims any lien on books or papers produced by him, the
production shall be without prejudice to such lien, and the court
shall have jurisdiction in the winding up to determine all
questions relating to that lien.

(4) If any person so summoned, after being tendered a
reasonable sum for his expenses, fails to come before the court at
the time appointed without reasonable excuse, made known to the
court at the time of its sitting and allowed by it, the court may
cause him to be apprehended and brought before the court for
examination.

205. (1) When an order has been made for winding up a
company by the court, and the Master has made a report under
this Act, showing that in his opinion a fraud has been committed
by any person in the promotion or formation of the company, or
by a director or officer of the company, in relation to the company
or any creditor thereof since its formation, the court may direct
that any person who has taken part in the promotion or formation
of the company, or has been a director or officer of the company,
shall attend before the court on a day appointed by the court for
that purpose, and be publicly examined as to the promotion or
formation, or the conduct of the business of the company, or as to
his conduct and dealings as director or officer thereof.

(2) The Master may take part in the examination, and for
that purpose may employ an attorney or counsel.

(3) The liquidator, and any creditor of contributory, may
also take part in the examination, either personally or by attorney
or counsel.

(4) The person ordered to be examined on oath and shall
answer all such questions as the court may put or allow to be put
to him notwithstanding that any answer may tend to incriminate

Summoning
persons
suspected of
having
property of
company

him.

(5) A person ordered to be examined under this section
shall, before his examination, be furnished at his request with a
copy of the Master’s report, and may at his own cost employ an
attorney or counsel, who shall be a t liberty to put to him such
questions as the court may deem just for the purpose of enabling
him to explain or qualify any answers given by him:

Provided that, if he is, in the opinion of the court, exculpate
from any charges made or suggested against him, the court may
allow him such costs as in its discretion it may think fit.

(6) Notes of the examination shall be taken down in writing,
and shall be read over to or by and signed by the person
examined, and may thereafter be used in evidence against him,
and shall be open to the inspection of any creditor or contributory
at all reasonable times.

206. The court, at any time before or after making a winding-
up order, on proof that there is reason to believe that a
contributory is about to quit Lesotho or otherwise to abscond, or
to remove or conceal any property for the purpose of evading
payment of call or of avoiding examination respecting the affairs
of the company, may cause the contributory to be arrested, and his
books and papers and movable property to be seized, and him and
them to be safely kept until such time as the court may order.

207. Any powers by this Act conferred on the court shall be
deemed to be in addition to and not in restriction of any existing
powers of instituting proceedings against any contributory or
debtors of the company, or the estate of any contributory or
debtor, for the recovery of any call or other sums.

Appeal from Orders

208. An appeal from any order or decision made or given
fro or in the winding up of a company by the court under this Act
shall lie in the same manner and subject to the same conditions as
an appeal from any order or decision of the court in cases within
its ordinary jurisdiction

Voluntary Winding up of
Company

209. A company may be wound up voluntarily –

(a) when the period, if any, fixed for the duration
of the company by the article expires, or the
event, if any, occurs on the occurrence of
which the articles provide that the company is
to be dissolved, and the company in general

Arrest of
absconding
contributory

Powers to be
cumulative

Appeal from
any Order

Circumstances

Commence-
ment of
voluntary
winding up

Effect of
voluntary
winding up on
business and
status of
company

Provision and
effect of
security

meeting has passed a resolution requiring the
company to be wound up voluntarily.

(b) if the company resolves by special resolution
that the company be wound up voluntarily.

210. (1) When a company has passed a resolution for
voluntary winding up, it shall, within fourteen days after the
passing thereof –

(a) give notice of the resolution by advertisement in
the Gazette;

(b) give written notice of the resolution to the Master,
to the Registrar and, if any right in immovable
property within Lesotho appears to be an asset of
the company, to the Registrar of Deeds.

(2) If default is made by a company in complying with the
requirements of this section, the company and every officer of the
company who is in default, shall be guilty of an offence and liable
on conviction to a fine not exceeding ten rand for every day
during which the offence continues and for the purposes of this
sub-section the liquidator of the company shall be deemed to be
an officer of the company.

211. A voluntary winding up shall be deemed to
commence at the time of the passing of the resolution for
voluntary winding up.

212. When a company is wound up voluntarily the
company shall, from the commencement of the winding up, cease
to carry on its business, except in so far as may be required for the
beneficial winding up thereof:

Provided that the corporate state and corporate
powers of the company shall, notwithstanding anything
in its articles, continue until it is dissolved.

Provision and Effect of Security for Payment of Debts

213. (1) If it is proposed to wind up a company voluntarily,
the directors of the company may, prior to the date of the notices
of the meeting at which the resolution for the winding up of the
company is to be proposed, furnish security to the satisfaction of
the Master for the payment of the debts of the company within a
period not exceeding twelve months from the commencement of
the winding up, and may recover from the company any costs
reasonably incurred by them in furnishing such security:

Provided that the Master may dispense with such
security if the majority of the directors of the company
furnish him with a sworn statement supported by a in which
company may
be wound up
voluntarily

Notice of
resolution for
voluntary
winding up

Application of
sections

Appointment,
powers and
remuneration of
liquidator

certificate from the auditors of the company that the
company has no liabilities.

(2) A winding up in the case of which such security has
been furnished or dispensed with in accordance with this section is
in this Act referred to as a members’ voluntary winding up, and a
winding up in the case of which security has neither been
furnished nor dispensed with as aforesaid is in this Act referred to
as a creditor’s voluntary winding up.

Provisions Specially Applicable to a Member’s
Voluntary Winding up

214. The provisions contained in sections two hundred and
fifteen to two hundred and seventeen, inclusive, shall apply in
relation to a members’ voluntary winding up.

215. (1) The company in general meeting shall, subject to
the provisions of section two hundred and forty-one, appoint
one or more liquidators for the purpose of winding up the affairs
and distributing the assets of the company, and may fix the
remuneration to be paid to him or them. If the company fails to
fix the remuneration, the provisions of section one hundred and
ninety-three shall apply.

(2) On the appointment of a liquidator in terms of this
section all the powers of the directors shall cease except so far as
the liquidator or the company in general meeting sanctions their
continuance.

(3) The liquidator may, without the sanction of the court,
exercise all the powers given by section one hundred and eighty-
eight to the liquidator in a winding up by the court, subject to such
directions as may be given by the company in general meeting.

216. (1) If a vacancy occurs by death, resignation or
otherwise in the office of liquidator appointed by the company,
the company in general meeting may, subject to the provisions of
section two hundred and fifteen, fill the vacancy.

(2) For that purpose a general meeting may be convened by
any contributory, or by the continuing liquidator or liquidators, if
any.

(3) The meeting shall be held in the manner prescribed by
the articles or in such manner as may, on application by any
contributory or by the continuing liquidator or liquidators, be
determined by the court.

217. (1) Where a company is proposed to be or is being
wound up voluntarily and the whole or part of its business or
property is proposed to be transferred or sold to another company,
whether registered under this Act or not (in this section called the

Power to fill
vacancy in
office of
liquidator

Application of
sections

transferee company) the liquidator of the first-mentioned (in this
section called the transferor company) may, with the sanction of a
special resolution of that company conferring either a general
authority on the liquidator or an authority in respect of any
particular arrangement, receive in compensation or part
compensation for the transfer or sale, shares, policies, or other like
interests in the transferee company, for distribution among the
members of the transferor company, or may enter into any other
arrangement whereby the members of the transferor company may
in lieu of receiving cash, shares, policies or other like interests, or
in addition thereto, participate in the profits of or receive any other
benefit from the transferee company.

(2) Any sale or arrangement made in pursuance of this
section shall be binding on the members of the transferor
company.

(3) If any member of the transferor company, who did not
vote in favour of the special resolution, expresses his dissent
therefrom in writing addressed to the liquidator and left at the
registered office of the company within seven days after passing
of the resolution, he may require the liquidator either to abstain
from carrying the resolution into effect or to purchase his interest
at a price to be determined by agreement or by arbitration under
the provisions of any law in force in Lesotho concerning
arbitration.

(4) If the liquidator elects to purchase the member’s
interest, the purchase price shall be paid before the company is
dissolved, and be raised by the liquidator in such manner as may
be determined by special resolution.

(5) A special resolution shall not be invalid for the
purposes of this section by reason that it is passed before or
concurrently with a resolution for voluntary winding up or for
appointing liquidators, but if an order is made within a year for
winding up the company by the court, the special resolution shall
not be valid unless sanctioned by the court.

Provisions Specially Applicable to a Creditors
Voluntary Winding

218. The provisions contained in sections two hundred and
nineteen to two hundred and twenty-one, inclusive, shall apply
in relation to a creditors’ voluntary winding up.

219. (1) The company shall cause a meeting of the creditors
of the company to be summoned for the day, or the day next
following the day, on which thee is to be held the meeting at
which the resolution for voluntary winding up is to be proposed,
and shall cause the notices of the said meeting of creditors to be
sent by post to the creditors simultaneously with the sending of
the notices of the said meeting of the company.

Liquidator may
accept shares,
etc., as
consideration
for sale of
property of
company

Meeting of
creditors and
appointment of
liquidator

(2) The company shall cause not less than seven days’ notice
of the meeting of the creditors to be advertised once in the Gazette
and once at least in a newspaper circulating in the Gazette and
once at least in a newspaper circulating in the district where the
registered office or principal place of business of the company is
situate.

(3) The directors of the company shall –

(a) cause a full statement of the position of the
company’s affairs together with a list of the
creditors of the company and the estimated
amount of their claims to be laid before the meting
of creditors to be held as aforesaid; and

(b) appoint one of their number to preside at the said
meeting, and it shall be his duty to do so.

(4) If the meeting of the company, at which the resolution for
voluntary winding up is to be proposed, is adjourned and the
resolution is passed at an adjourned meeting, any resolution
passed at the meeting of the creditors held in pursuance of sub-
section (1) of this section shall have effect as if it had been passed
immediately after the passing of the resolution for winding up the
company.

(5) If default is made –

(a) by the company in complying with sub-section (1)
or (2) of this section.

(b) by any director of the company in complying with
sub-section (3) of this section.
the company or director, as the case may be, shall be guilty of an
offence and liable on conviction to a fine not exceeding two
hundred rand.

(6) The creditors and the company at their respective
meetings mentioned in this section may nominate a person to be
liquidator subject to the provisions of section two hundred and
forty-one for purpose of winding up the affairs and distributing
the assets of the company, and if the creditors and the company
nominate different persons, the person nominated by the creditors
shall be liquidator, subject to the provisions of section two
hundred and forty-one as aforesaid:

Provided that in the case of different persons being
nominated any director, member, or creditor of the
company may, within seven days after the date on which
the nomination was made by the creditors, apply to the
court for an order directing that the person nominated as
liquidator by the company shall be liquidator instead of or

Application of
Sections

Consequences
of voluntary
winding up

jointly with the person nominated by the creditors, or
appointing some other person to be liquidator instead of
the person appointed by the creditors, and the court may
thereupon make such order as it thinks fit.

(7) If a vacancy occurs by death resignation or otherwise in
the office of a liquidator appointed by the creditors on a creditors’
voluntary winding up, the vacancy shall be filled in the same
manner as is provided in sub-section (6) of this section.

(8) The provisions of section one hundred and ninety-
three shall apply to every liquidator appointed in a creditor’s
voluntary winding up.

220. (1) All the powers of the directors shall cease except so
far as the liquidator or the creditors of the company sanction their
continuance.

(2) The liquidator may, without the sanction of the court and
without requiring the authority of the contributories, exercise all
powers given by section one hundred and eighty-eight to the
liquidator in a winding up by the court, subject to such directions
as may be given by the creditors.

221. The provisions of section two hundred and seventeen
shall apply in the case of a creditors’ voluntary winding up as in
the case of a members’ voluntary winding up with the
modification that the powers of the liquidator under the said
section shall not be exercised save with the consent of three-
fourths in number and according to the value of their claims, of
the creditors present or represented at a meeting called by the
liquidator for that purpose and of which at least fourteen days’
notice has been given or with the sanction of the court.

Provisions Applicable to Both Modes of
Voluntary Winding up

222. The provisions contained in sections two hundred and
twenty-three to two hundred and thirty-two, inclusive, shall
apply in relation to both modes of voluntary winding up.

223. The following consequences shall ensue on the
voluntary winding up of a company:-

(a) the property of the company shall, subject to the
provisions of section two hundred and fifty-six and unless the
articles otherwise provide, be distributed amongst the members
according to their rights and interest in the company;

(b) the liquidator may exercise the powers of the court under
this Act of settling a list of contributories and of making calls, and
shall adjust the rights of the contributories among themselves;

Powers of
liquidator

Application of
Section 217

Avoidance of
transfers after
commencement
of winding up

Notice by
liquidator of his
appointment

(c) the list of the contributories shall be prima facie
evidence of the liability of the persons named therein to be
contributories;

(d) when several liquidators are appointed, every power
hereby given may be exercised by such one or more of them as
may be determined at the time of their appointment, or, in default
of such determination, by any number not less than two;

(e) if from any cause whatever there is no liquidator acting,
the Master may, on the application of a contributory, or creditor,
and subject to the provisions of section two hundred and forty-
one, appoint a provisional liquidator.

224. In a voluntary winding up, every transfer of shares,
except transfers made to or with the sanction of the liquidator, and
every alteration in the status of the members of the company,
made after the commencement of the winding up, shall be void.

225. Every person appointed liquidator, whether alone or
jointly with any other person or persons, in a voluntary winding
up shall, within seven days after his appointment, lodge with the
Master a notice of his appointment in the prescribed form.

If he fails to comply with the requirement of this section he
shall be guilty of an offence and liable on conviction to a fine not
exceeding ten rand for every day during which the offence
continues.

226. (1) In a voluntary winding up, all claims against the
company shall be proved to the satisfaction of the liquidator, by
affidavit, as nearly as may be in the form of and containing the
particulars prescribed by rules made under section three hundred

and eleven. If the claim is rejected by the liquidator, the claimant
may apply to the court by motion to set aside the rejection.

(2) The liquidator may with the approval of the Master fix a
time or times within which creditors of the company are to prove
their claims or to be excluded from any distribution under any
account lodged with the Master before those claims are proved.

227. (1) Any arrangement entered into between a company
about to be, or being, wound up voluntarily and creditors shall,
subject to any right of review under this section, be binding on the
company if sanctioned by a special resolution, and on the creditors
if acceded to be three-fourths in value of the creditors present or
represented at a meeting duly called by the liquidator for that
purpose.

(2) Any creditor or contributory may, within twenty-eight
days from the completion of the arrangement, bring it under

Proof of
claims

Arrangement
when binding
on company

Notice to
Registrar of
confirmation of
final account

review by the court, and the court may thereupon, as it thinks fit,
amend, vary, set aside or confirm the arrangement.

228. In a voluntary winding up, meetings of creditors and
contributories shall, unless otherwise in this Act specially
provided, be convened and held in the manner prescribed by rules
made under section three hundred and eleven.

229. (1) Where a company is being wound up voluntarily,
the liquidator or any contributory or creditor of the company may
apply to the court to determine any question arising in the winding
up, or to exercise, as respects the enforcing of calls or any other
matter, all or any of the powers which the court might exercise if
the company were being wound up by the court.

(2) The court, if satisfied that the determination of the
question or the required exercise of power will be just and
beneficial, may accede wholly or partially to the application on
such terms and conditions as the court thinks fit, or may make
such other order on the application as the court thinks fit

230. (1) Where a company is being wound up voluntarily,
the liquidator may summon general meetings of the company for
the purpose of obtaining the sanction of the company by special
resolution or for any other purposes he may think fit.

(2) In the event of the winding up continuing for more than
six months, the liquidator shall summon a general meeting of the
company and a meeting of creditors each to be held within thirty
days after the expiration of the first six months from the
commencement of the winding up and within thirty days after the
expiration of each succeeding period of six months and shall lay
before the meeting an account of his acts and dealings and of the
progress of the winding up during the preceding period of six
months.

(3) If the liquidator fails to comply with sub-section (2) of
this section, he shall be guilty of an offence and liable on
conviction to a fine not exceeding ten rand for every day during
which the office continues.

231. Immediately after the confirmation of the final account
the Master shall give notice thereof in writing to the Registrar,
who shall forthwith register it, and on the expiration of three
months from the registration of the notice the company shall be
deemed to be dissolved, but without prejudice to the duties of the
liquidator or the powers of the Master under sections two
hundred and fifty-one and two hundred and fifty-two:

Provided that the court may, on the application of the
liquidator or of any other person who appears to the court to be
interested, make an order deferring the date at which the
dissolution of the company is to take effect from such time as the and creditors

Meetings of
creditors and
contributories

Power to apply
to court

Duty of
liquidator to
call meetings
of company

Saving of rights
of creditors and
contributories

Application of
sections

Summoning
directors and
others to attend
meetings of
creditors

court thinks fit: Provided further that, notwithstanding any
dissolution as aforesaid, in the even of any property thereafter
becoming available the Master shall give instructions for the
realisation thereof and the distribution of the proceeds, less the
cost of realisation and distribution, to such persons as would have
been entitled thereto in the winding up; and the same shall apply
to any moneys becoming so available.

232. The voluntary winding up of a company shall not bar the
right of any creditor or contributory at any time before its
dissolution to have it wound up by the court, but in the case of an
application by a contributory the court shall be satisfied that the
rights of the contributory will be prejudiced by a voluntary
winding up.

Provisions Applicable to Every Mode of Winding up a
Company unable to pay its Debts

233. The provisions contained in sections two hundred and
thirty-four to two hundred and thirty-seven, inclusive, shall
apply in relation to a company being wound up and unable to pay
its debts.

234. (1) In every winding up of a company unable to pay its
debts, all the directors of the company, including, if the Master so
directs, any person who has been a director within a period of six
months preceding the date on which the winding up commenced,
shall, if required so to do by the Master in writing, attend the first
and second meetings of creditors and every adjourned first and
second such meetings.

The directors shall also attend any subsequent meeting of
creditors if required to do so by written notice from the liquidator.

(2) The Master or other officer in the public service who is
to preside or presides at any meeting of creditors may summon
any person, who is known or, on reasonable grounds, believed to
be in possession of any property which belongs or belonged to the
company or to be indebted to the company or any person who in
the opinion of the Master or such other officer may be able to give
any material information concerning the company or its affairs,
whether before or after the commencement of the winding up, to
appear at such meeting or adjourned meeting for the purpose of
being interrogated under section two hundred and thirty-five.

(3) The Master or such other officer may also summon any
person, who is known or, upon reasonable grounds, believed to
have in his possession, custody or under his control any book or
document containing any such information as is mentioned in sub-
section (2) of this section, to produce that book or document or an
extract therefrom at any such meeting of creditors.

(4) Any person summoned by the Master or other officer in
terms of sub-section (2) or (3) of this section who fails without
valid excuse.

(a) to attend any meeting to which he has been so
summoned; or

(b) to produce any book or document or extract from any
book or document in his possession, custody or control; shall be
guilty of contempt of the court.

235. (1) At any meeting of creditors of a company being
wound up and unable to pay its debts, the Master or other officer
in the public service presiding thereat may call and administer the
oath to any director and any other person present at the meeting,
who was or might have been summoned in terms of sub-section
(2) of section two hundred and thirty-four, and the Master, such
other officer, the liquidator and any creditor, who has proved a
claim against the company or the agent of any of them, may
interrogate al person so called and sworn concerning all matters
relating to the company or its business or affairs, whether before
or after the commencement of the winding up, and concerning any
property belonging to the company:

Provided that the presiding officer shall disallow any question
which is irrelevant and may disallow any question which would
prolong the interrogation unnecessarily.

(2) In connection with the production of any book or
document in compliance with a summons issued under sub-
section (3) of section two hundred and thirty-four or at an
interrogation of a person under sub-section (1) of this section, the
law relating to privilege as applicable to a witness summoned to
produce a book or document or giving evidence in a court of law,
shall apply:

Provided that a banker at whose bank the company in
question keeps or at any time kept an account, shall be obliged to
produce, if summoned to do so under sub-section (3) of section
two hundred and thirty-four, any cheque, promissory note or
bill of exchange in his possession which was drawn or accepted
by the company within one year before the commencement of the
winding up, or if any cheque, promissory note or bill of exchange
so drawn is not available, then any cheque, promissory note or bill
of exchange which may be available to him, or a copy of such a
record and, if called upon to do so, to give any other information
available to him in connection with such cheque, promissory note
or bill of exchange or the account of the company.

(3) The presiding officer shall reduce to writing or cause to
be reduced to writing the statement of any person given evidence
under this section.

Examination of
directors and
others at
meeting of
creditors

Voidable and
undue
preferences

(4) Any evidence given under this section shall be
admissible in any proceedings instituted against the person who
gave evidence.

(5) Any person called upon to give evidence under this
section may be represented at his interrogation by an accountant
or by an attorney or counsel.

(6) Any person summoned to attend a meeting of creditors
for the purpose of being interrogated under this section (other than
the directors or other officers of the company) shall be entitled to
such witness fees, to be paid out of the funds of the company, as
he would be entitled to if he were a witness in any civil
proceedings in a subordinate court.

(7) If any director or other officer of the company is called
upon to attend any meeting of creditors, he shall, if the Master so
approves and subject to a right of appeal to the court, be entitled to
an allowance out of the funds of the company to defray his
necessary expenses in connection with such attendance.

(8) Any person interrogated under the provisions of this
section who refuses, on any ground other than that the answer may
tend to incriminate him, to answer any question (save any
question which the presiding officer may see fit to disallow) put to
him, shall be guilty of contempt of court.

236. (1) Every disposition of its property which, if made by
an individual, could for any reason be set aside in the event of his
insolvency, may, if made by a company, be set aside in the event
of the company being wound up and unable to pay its debts, and
the provisions of the law relating to insolvent estates shall mutatis
mutandis apply to any such disposition.

(2) For the purposes of this section the event which shall be
deemed to correspond with the sequestration order in the case of
an individual shall be –

(a) in the case of a winding up by the court, the presentation
of the petition, unless that winding up has superseded a
voluntary winding up, when it shall be the passing of the
resolution to wind up the company;

(b) in the case of a voluntary winding up, the passing of the
resolution to wind up.

(3) Any cession or assignment by a company of all its
property to trustees for the benefit of all its creditors shall be void.

237. In the case of every winding up of a company unable to
pay its debts a secured creditor and the liquidator shall have the
same right respectively to take over such creditor’s security as a
secured creditor and a trustee would have under the law relating to

insolvent estates.

Provisions Applicable to every Mode of Winding up

238. The provisions contained in sections two hundred and
thirty-nine to two hundred and sixty-three, inclusive, shall
apply in relation to every company being wound up by whatever
mode.

239. (1) Each of the following persons shall be disqualified
for being elected or appointed a liquidator of a company that is
being wound up:-

(a) an insolvent;
(b) a minor;
(c) any other person under legal disability;
(d) a body corporate;

(e) a person declared under sub-section (2) of section two
hundred and forty to be incapacitated for appointment
as liquidator while such incapacity lasts;

(f) a person who is the subject of an order under this Act
disqualifying him as a director of any company;

(g) a person who has, by reason of misconduct, been
removed by the court from an office of trust;

(h) any person who, in order to obtain, or I return for the
vote of any creditor or contributory, or in order to
exercise any influence upon his election as liquidator of
the company has –

(i) procured or allowed the wrongful insertion or
omission of the name of any person in or from
any list or schedule by the Act required; or

(ii) procured or allowed the wrongful or inaccurate
statement of the claim of any creditor or
contributory; or

(iii) directly or indirectly given or agreed to give any
person any consideration; or

(iv) offered or agreed with any person to abstain
from investigating any transactions of or relating
to the company or of any of its officers; or

(v) been guilty of or allowed the splitting of claims
in such manner as to increase the number or
value of votes of the person whose claim has
been so split;

Application of
certain
provisions of
the insolvency
proclamation

Application of
Sections

Persons
disqualified for
appointment as
liquidator

Power of court
to declare
person
disqualified for
being liquidator
or to remove a
liquidator

(i) a person who has at any time been convicted (whether in
Lesotho or elsewhere) of theft, fraud, forgery or uttering
a forged document or of perjury and has been sentenced
therefore to serve a term of imprisonment without the
option of a fine or to fine exceeding one hundred rand.

(2) Any person who in order to obtain or in return for the
vote of any creditor or contributory or in order to exercise any
influence upon his election as a liquidator of a company does nay
of the acts mentioned in sub-paragraph (i), (ii), (iii), (iv) or (v) of
paragraph (h) of sub-section (1) of this section shall be guilty of
an offence and liable on conviction to a fine not exceeding two
hundred rand or to imprisonment for a period not exceeding six
months, or to both such fine and such imprisonment.

(3) Any person who procures or tries to procures or tries to
procure the appointment as liquidator of any person, knowing that
such person is disqualified for such appointment under the terms
of sub-section (1) of this section shall be guilty of an offence and
liable on conviction to a fine not exceeding two hundred rand or to
imprisonment for a period not exceeding two hundred rand or to
imprisonment for a period not exceeding six months, or to both
such fine and such imprisonment.

240. (1) The court, on the application of the Master or any
person have an interest in the winding up –

(a) may declare that any person proposed or
appointed as liquidator is disqualified under the
provisions of section two hundred and thirty-
nine for holding the office and if he has been
appointed may remove him therefrom;

(b) may remove any liquidator from his office upon
any of the following grounds:-

(i) ill-health or any other factor tending to
interfere with the performance of his duties
as liquidator;

(ii) that he has accepted or offered or agreed to
accept or has solicited from any auctioneer,
agent or other person employed on behalf of
the company any share of the commission or
remuneration or of any other benefit
whatever accruing to such auctioneer, agent
or other person;

(iii) misconduct, including any failure to satisfy
a lawful demand of the Master or of a
commissioner appointed by the court;

(iv) failure to perform any of the duties imposed
on him by the Act; or

(v) any other good cause.

(2) The court may, in respect of any person removed by it –

(a) under the provisions of paragraph a) of sub-
section (1) of this section as a person disqualified
for reasons set out in paragraph (h) of sub-section
(1) of section two hundred and thirty-nine; or

(b) under the provisions of sub-paragraphs (ii), (iii)
or (iv) of paragraph (b) of sub-section (1) of this
section;
declare such person to be incapable of being appointed a
liquidator, under this Act during his lifetime or any other period.

(3) The Master shall given notice in the Gazette of the
removal of any liquidator from his lifetime or any other period.

241. (1) In every winding up a company each liquidator,
including a co-liquidator or a provisional liquidator, shall furnish
security to the satisfaction of the Master for the due performance
of his duties as such and shall choose some address for service
within Lesotho. Until he has complied with the foregoing
conditions he shall not be capable of acting as liquidator, co-
liquidator or provisional liquidator as the case may be; and if these
conditions are not complied with within a time to be fixed by the
Master he shall be deemed to have resigned his office:

Provided that no such security will be required in the
case of a member’s voluntary winding up if the company
so resolves.

(2) The cost of giving the aforesaid security, provided it is
furnished in the prescribed form, if any, by a fidelity company or
an association approved by the Master, shall be a cost in the
winding up.

(3) When a liquidator has, in the course of winding up a
company, accounted to the Master to his satisfaction for any
property belonging to the company the Master may consent to a
reduction of the security mentioned in sub-section (1) of this
section if he is satisfied that the reduced security will suffice to
indemnify the company, its creditors and contributories against
any maladministration by the liquidator of the remaining property
belonging to the company.

242. (1) The Master may, whenever he deems it desirable,
appoint a co-liquidator to act jointly with any other liquidator.

Liquidator to
give security,
and to choose
address for
service

Co-liquidator

Title and Acts
of liquidators

General
meetings to
hear
liquidator’s
report

(2) When two or more liquidators have been appointed
they shall act jointly in performing their functions as liquidators
and each of them shall be jointly and severally liable for every act
performed by them jointly.

243. (1) A liquidator shall be described by the style of the
liquidator of the particular company in respect of which he is
appointed and not by his individual name.

(2) The liquidator shall proceed forthwith to recover and
reduce into possession all the assets and property of the company,
movable and immovable.

(3) Every liquidator shall give the Master such information
and such access to and facilities for inspecting the books and
documents of the company and generally such aid as may be
requisite for enabling that officer to perform his duties under this
Act.

(4) The acts of a liquidator shall be valid notwithstanding
any defects that may afterwards be discovered in his appointment
or qualification.

244. The liquidator shall, as soon as practicable, and unless
with the consent of the Master, not later than three months after
the date of his appointment, submit to general meetings of
creditors and contributories a report –

(a) as to the amount of capital issued, subscribed and paid
up and the estimated amount of assets and liabilities;

(b) if the company has failed, as to the cause of the failure;

(c) whether in his opinion further enquiry is desirable as to
any matter relating to the promotion, formation or
failure of a company or the conduct of its business;

(d) whether the company has kept the books and accounts
required by section one hundred and twelve, and if
not in what respect such requirement has not been
complied with;

(e) as to the progress and prospects of the liquidation; and

(f) as to any other matter which he may think fit or in
regard to which he may desire the directions of the
creditors or the contributories.

245. (1) From the beginning of his appointment and during
the whole period of his office the liquidator shall punctually keep
proper books and records of all transactions of the liquidation.

(2) The Master may at any time in writing order the
liquidator to produce the said books or records for inspection.

(3) Any creditor or contributory may, at all reasonable
times, personally or by his agent, but subject to the control of the
Master inspect such books or records.

Liquidator’s Accounts

246. (1) Every liquidator shall, unless he receives an
extension of time as hereinafter provided, frame and lay before the
Master, not later than six months after his appointment, an account
of his receipts and payments and a plan of distribution, or, if there
is a liability among creditors to contribute towards the costs in the
winding up, a plan of contribution apportioning their liability. If
the account is not the final account, the liquidator shall from time
to time, and as the Master may direct, but at least once in every six
months (unless he receives an extension of time), frame and lay
before the Master a further account and plan of distribution.

(2) The account shall be in the prescribed form, shall be made in
duplicate, shall be fully supported by vouchers, including the
liquidator’s bank statement or a certified extract from his bank
account, and shall be verified by an affidavit in the prescribed
form.

(3) The Master may require the liquidator to lay a duplicate of
the account before an officer of the public service appointed in
that behalf by the Master.

247. (1) The Master, at any time when he considers that the
liquidator has funds in hand that ought to be distributed, and the
Master or any person interested in the company when a full and
true account has not been lodged within the periods prescribed for
the lodging of such an account, may apply to the court for an order
compelling the liquidator to lodge his account:
Provided that –
(i) the Master or that other person shall, not later than
fourteen days before making the application, require
the defaulting liquidator by notice in writing to lodge
his account in accordance with this Act;

Books to be
kept by
liquidator and
inspection
thereof

Liquidator to
lodge with
Master
accounts in
winding up

Application to
court to
compel
liquidator to
lodge account

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