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International Companies Amendment Act 1986-87

COOK ISLANDS

INTERNATIONAL COMPANIES AMENDMENT ACT 1986-87

ANALYSIS

Title

1. Short Title
2. Interpretation
3. Registers
4. Alteration of Memorandum
5. Currency of Shares, Interest

- Bearing Shares, Redeemable Shares, Shares with special Rights and Gift Shares
6. Dealing by a Company in its Own Shares
7. Alteration of Share Capital
8. Rights of Holders of Preference Shares to be set out in Articles
9. New Division as to Debenture
10. Table B Amended
11. Validation of Existing Debenture
12. Distribution of Assets
13. Proof and Ranking of Claims
14. Proper Law
15. Application of Other Acts to International Companies
16. Shares Expressed in other Currencies

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1986-87, No. 26

An Act to amend the International Companies Act 1981-82

(15 April 1987

BE IT ENACTED by the Parliament of the Cook Islands in Session assembled and by the authority of the same as follows:

1. Short Title - This Act may be cited as the International Companies Amendment Act 1986-87 and shall be read together with and deemed part of the International Companies Act 1981-82 (herein referred to as "the principal Act")

2. Interpretation - Section 2 of the principal Act is hereby amended:

(a) by inserting after the definition of "Audit period" the following new definition:

""Bearer debenture" means any debenture of an international company which is either payable to or enforceable by or both payable to and enforceable by any person who for the time being lawfully has possession of that debenture;"

(b) by inserting after the definition of "Official liquidator" the following new definition:

""Ordinary debenture" means any debenture of an international company which is not a bearer debenture;"

(c) by inserting after the definition of "Person" the following new definition:

""Post" includes communication by mail, courier, freight, telex or facsimile;"

(d) by inserting after the definition of "Resident secretary" the following new definition:

""Secured debenture" means:

(i) any debenture which is stated on its face to be a secured debenture; or

(ii) any debenture which is issued on terms affording the holder of that debenture rights and powers to vote and to demand a poll in respect of the business and undertaking of the company (whether in addition to the rights of members of the company or in substitution for those rights)."

3. Registers - Subsection (2) of Section 12 of the principal Act is amended by inserting after the words "a good and cogent reason for doing so" the words "(not being a reason inconsistent with the objectives of this Act)".

4. Alteration of memorandum - Section 19 of the principal Act is repealed and the following section substituted:

"19. Mode in which objects of company may be altered - (1) Subject to this section an international company, if so authorised by its articles, may by special resolution alter its memorandum with respect to the objects of the company.

(2) Where an international company proposes to so alter its memorandum it shall give by post 21 days' written notice of the proposed special resolution and the intention to submit it for passing to a meeting of the company to be held on a day specified in the notice.

(3) The notice shall be given to members and registered debenture holders.

(4) The Court may, in the case of any person or class of persons for such reasons as seem sufficient to it, dispense with the notice required by subsection (2).

(5) An application may be made to the Court for the cancellation of such a resolution-

(a) by the holders of not less than 10 per centum in the aggregate of the nominal value of the company's issued share capital or any class of that capital where the international company has issued only par value shares; or

(b) by not less than 10 per centum of the international company's members; or

(c) by the holders of not less than 10 per centum in nominal value of the company's debentures,

and the resolution shall not have effect except in so far as it is confirmed by the Court or, if no application shall be made to the Court then, until that day being 21 days after the day on which the resolution was passed.

(6) The application shall be made within 21 days after the date on which the resolution was passed, and may be made on behalf of the persons entitled to make the application by such one or more of their number as they appoint in writing for the purpose.

(7) On the application the Court -

(a) shall have regard to the rights and interests of the members of the company or of any class of them as well as to the rights and interests of the creditors,

(b) may if it thinks fit adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interests of dissident members;

(c) may give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement; and

(d) may make an order cancelling the resolution or confirming the resolution either wholly or in part and on such terms and conditions as it thinks fit.

(8) Notwithstanding any other provision of this Act a copy of a resolution altering the objects of an international company shall not be lodged with the Registrar before the expiration of 21 days after the passing of the resolution or if any application to the Court has been made before the application has been determined by the Court (whichever is the later).

(9) A copy of the resolution shall be lodged with the Registrar by the international company within 14 days after the expiration of the 21 days referred to in subsection (8), but if an application has been made then the resolution shall be lodged with the Registrar together with a sealed copy of the order of the Court within 14 days after the application has been determined by the Court."

5. Currency of Shares, Interest - Bearing Shares, Redeemable Shares, Shares with Special Rights and Gift Shares - The principal Act is amended by omitting from paragraph d of subsection (3) of section 43 the words "at a fixed rate".

6. Dealing by a Company in its own Shares - Subsection (1) of Section 46 of the principal Act is repealed and the following subsection substituted:

"(1) An international company may provide financial assistance whether directly or indirectly for the purpose of or in connection with the purchase of its own shares, the shares of any subsidiary or of any holding company."

7. Alteration of Share Capital - Paragraph (a) of subsection (1) of Section 52 of the principal Act is repealed and the following paragraph substituted:

"(a) (i) increase its share capital by the creation of new shares of such par value as it thinks expedient.

(ii) increase the number of its shares having no par value.

(iii) in the case of an international company with existing shares having a par value add to its capital shares having no par value.

(iv) in the case of an international company with existing shares having no per value add to its capital shares having a par value."

8. Rights of Holders of Preference Shares to be set out in Articles - Subsection l of Section 56 of the principal Act is amended by inserting after the words "set out" the words "or provided for".

9. New Division as to Debentures - Division 2 of Part IV of the principal Act is repealed an the following new Division substituted:

"DIVISION 2 - Debentures

57. Power to issue Debentures - (1) Subject to this Division and to the terms and conditions of its memorandum or articles an international company shall have power to issue debentures on such terms and conditions as it thinks fit and in particular but without limiting the generality of the foregoing may issue debentures:

(a) constituting a charge on any or all the assets of the company;

(b) as bearer debentures;

(c) convertible from bearer debentures to ordinary debentures;

(d) convertible from debentures into shares in the company;

(e) as secured debentures.

(2) The debt payable under any debenture whether sealed or signed on behalf of the company shall be a speciality debt of the company and where issued by a branch of a company shall be located at that branch.

(3) Every secured debenture issued by an international company so far as it does not exclude or modify the terms contained in Table B shall be deemed to have been issued upon the terms and conditions contained in Table B and the following provisions of this subsection shall, subject to the terms of the debenture, have effect -

(a) the holders of such debentures shall have a right and power to vote and to demand a poll and thereby to determine all those matters in respect of which the members had the right and power to vote and to demand a poll before those rights and powers of the members became suspended or modified;

(b) every holder of such a debenture, or the trustee for any such holder, shall have one vote for each whole dollar, or its equivalent in any other currency, of the principal sum the subject of the debenture outstanding at the time when the votes are counted;

(c) the holders of such debentures may cast their votes by proxy in writing without attending a meeting;

(d) a resolution in writing signed by a majority in value of the holders of such debentures shall be as effectual as would a resolution passed by a similar majority at a meeting duly convened and held for the purpose;

(e) the memorandum and articles of the company may not be altered;

(f) any provision in this Act or the articles of the company by which anything is required or permitted to be done by general meeting or by a resolution of the members shall be construed as requiring or permitting the same to be done by a resolution of those debenture holders in whom the right and power to vote are for the time being vested, passed by such a majority of votes as would, if the votes were votes of members, be the majority necessary to pass the resolution;

(g) subject to paragraph (d) notice of a meeting of those debenture holders, in whom the right and power to vote are for the time being vested shall be given to such debenture holders and their trustees, if any, in the same manner as notice of a meeting of members is required to be given to members;

(h) unless it is otherwise provided by the terms of the debenture, the quorum for any meeting of the holders of such debentures shall be 2; and

(i) upon the redemption of any such debenture the rights and powers referred to above of the holders of such debentures shall cease and determine.

(4) Every secured debenture of an international company shall bear a serial number, shall be sealed or signed on behalf of the company or the branch of the company which issues it and shall contain:

(a) the name of the company;

(b) the date of issue of the debenture;

(c) a statement of the quorum for meetings of debenture holders, which if it differs from that provided for in Table B shall be a sufficient statement of the exclusion of that part of Table B;

(d) a statement of the name of the debenture holder where the debenture is not issued to bearer;

(e) a statement of the amount of principal (if any) for which such debenture is issued;

(f) the date upon which such principal is due and payable, if not payable on demand;

(g) the currency or currencies in which the principal and interest are payable; and

(h) the rate of interest, if any, per annum payable thereon.

(5) Where the provisions of this Act and of the articles of an international company which give the members of the company the right and power to vote and to demand a poll have been suspended or have otherwise been modified pursuant to the terms of a secured debenture then (subject to there being no other unredeemed secured debenture under the terms of which such provisions are to remain suspended) those provisions shall upon redemption of that secured debenture resume full force and effect in respect of that company in the same manner and to the same extent as before those provisions were suspended or were modified. Where such provisions resume full force and effect in any other circumstances then in the absence of any provision to the contrary in the articles or in any relevant secured debenture they shall likewise resume full force and effect in the same manner and to the same extent as before those provisions were suspended or modified.

(6) Subject to the provisions of section 58 (17) any bearer debenture issued by an international company may be converted by the holder into an ordinary debenture unless the terms of the debenture or the articles as at the date of issue of the debenture by the company otherwise provide.

(7) Regulations may be made -

(a) restricting the right of an international company or any particular class of companies to issue debentures which may be converted into shares; and

(b) prescribing the terms and conditions or the event or events upon which conversion shall or may take place.

58. Company to maintain Register of Debentures - (1) Subject to the provisions of this section every international company which issues secured debentures shall keep and maintain -

(a) a register of secured debentures at the registered office of the company in the Cook Islands,

(b) a copy of all the terms of secured debentures issued by the company with the register of holders of secured debentures at that registered office.

and if the terms of a secured debenture incorporate in whole or in part the provisions of Table B of Schedule 2 or terms provided for in the articles of association of the company or prescribed as being the form which may or shall be adopted in a particular case, the copy of the terms kept with the register may disclose such terms by reference to that Table or regulation or those articles.

(2) Where any register of debentures (secured or otherwise) issued by an international company is kept by that company then that register shall, except when lawfully closed, be open to the inspection of every registered holder of shares and every holder of registered debentures in that company and shall contain in the case of ordinary debentures particulars of the names and addresses of the debenture holders and of the number of debentures held by each of them.

(3) For the purposes of this section, a register of debentures shall be deemed to be lawfully closed in accordance with the provisions contained in the articles or in the debentures or debenture stock certificates or in the trust deeds or other documents relating to or securing the debentures during such periods, not exceeding in the aggregate 30 days in any calendar year, as are therein specified.

(4) Every holder of registered debentures issued by an international company and every holder of shares in an international company shall, at his request, be supplied by the company with a copy of the register of the holders of debentures of the company or any part thereof on payment of the sum of $5 but the copy need not include any particulars as to any registered debenture holder other than his name and address and the debentures held by him.

(5) A copy of any trust deed relating to or securing any issue of debentures by an international company shall be forwarded by the company to a holder of those debentures at his request on payment of the sum of $5 or such lesser sum as is fixed by the company.

(6) If inspection is refused, or a copy is refused or not forwarded within a reasonable time, being not more than 42 days, after a request has been made to an international company pursuant to this section, the company and every officer of the company who is in default shall be guilty of an offence against this Act.

(7) An international company may cause to be kept in any place outside the Cook Islands a branch register of debentures.

(8) An international company which keeps such a branch register shall lodge with the Registrar notice of the situation of the office where the branch register of debentures is kept and of any change in its situation and, if it is discontinued, of its discontinuance, and any such notice shall be lodged within 1 month after the opening of the office or of the change or discontinuance, as the case may be.

(9) A branch register of an international company shall be kept in the same manner in which the principal register is by this Act required to be kept.

(10) An international company may discontinue a branch register and thereupon all entries in that register shall be transferred to some other branch register kept by the company or to the principal register.

(11) Where a debenture is registered on a branch register the debenture and all rights arising therefrom shall be situated in the place where it is registered and unless otherwise expressed in the debenture the principal and interest is payable in the money of the place of registration calculated at the exchange rate at noon on the date on which it becomes due and payable.

(12) An international company shall transmit to the office at which its principal register is kept a copy of every entry in its branch register as soon as practicable after the entry is made, and shall cause to be kept at that office duly entered up from time to time a duplicate of its branch register.

(13) A debenture registered in a branch register may be distinguished from a debenture registered in the principal register.

(14) The costs of maintaining branch registers shall, unless the debenture otherwise provides, be borne ratably according to the number of debentures registered thereon by the holders of those debentures.

(15) No debenture holder may transfer a debenture issued by an international company from one register to another but the company may transfer a debenture from one register to another. Any international company wishing to so transfer a debenture shall first obtain the written consent of the debenture holder to such transfer (provided that the company shall not be obliged to obtain such consent from the holder for the time being of a bearer debenture unless the holder shall in writing have advised the company of his address for notice) which consent shall not be unreasonably withheld.

(16) Every international company which has issued secured debentures shall, until every such debenture has been redeemed and cancelled lodge with the Registrar at least once in every calendar year a return of secured debentures setting out the prescribed particulars.

(17) Any secured debenture issued to bearer may be converted to an ordinary debenture and in the absence of any provision to the contrary contained in that debenture or in the articles as at the date of issue of that debenture then the conversion shall be effected in the following manner:

(a) a photographic copy of the bearer debenture or the negotiable documents in respect of the same as the case may be shall be delivered to the registered office of the company in the Cook Islands together with a direction as to the name and address of the person who is to be recorded as the holder of the debenture;

(b) thereupon the directors of the company shall resolve to record on the register the person so named as the holder of the debenture;

(c) recording pursuant to such a resolution shall be undertaken upon receipt by the company of the original bearer debenture or the negotiable documents in respect of the same as the case may be within the time specified in paragraph (e) and shall have effect as from the date of the director's resolution;

(d) upon the resolution of the directors referred to in paragraph (b) the original bearer debenture shall cease to be a security of the company but in the event of the same or the negotiable documents in respect of the same as the case may be not being received within the time specified in paragraph (e) the original bearer debenture shall become a security of the company once more ranking from the original date of issue;

(e) upon the original bearer debenture or the negotiable documents in respect of the same as the case may be being received by the company for cancellation within 1 month of the passing of the resolution the company shall issue a certificate to the person entitled thereto in respect of the ordinary debenture into which the bearer debenture has been converted; and

(f) should the original bearer debenture or the negotiable documents in respect of the same as the case may be not be received by the company for cancellation within 1 month of the passing of the resolution the original bearer debenture shall be deemed to have remained as a security and the resolution for recording and any recording in respect of the conversion shall be deemed to be cancelled.

(18) An international company shall be responsible for any loss incurred by any person by reason of the company recording in its register of debentures the name of the holder of any bearer debenture without the original bearer debenture or the negotiable documents in respect of the same as the case may be being surrendered to that company and cancelled prior to or contemporaneously with that entry.

(19) Upon the surrender to an international company of a registered debenture the company shall enter in the appropriate register of debentures the fact and date of its surrender.

59. Perpetual Debentures - (1) A condition contained in a debenture or in a deed for securing a debenture shall not be invalid by reason only that the debenture is thereby made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long, any rule of law or equity to the contrary notwithstanding.

(2) Subject to subsection (3), notwithstanding anything in any debenture or trust deed, the security for a debenture issued by an international company which is irredeemable or redeemable only on the happening of a contingency shall, if the Court so orders, be enforceable forthwith or at such other time as the Court directs if, on the application of the trustee for the holder of the debenture or, where there is no trustee, on the application of the holder of the debenture, the Court is satisfied that -

(a) at the time of the issue of the debenture the assets of the international company which constituted or were intended to constitute the security therefor were sufficient to discharge the principal debt and any interest thereon;

(b) the security, if realised under the circumstances existing at the time of the application, would be likely to bring not more than 60 per centum of the principal sum of moneys outstanding, regard being had to all prior charges and charges ranking pari passu, if any; and

(c) the assets covered by the security, on a fair valuation on the basis of a going concern, after allowing a reasonable amount for depreciation are worth less than the principal sum and the international company is not making sufficient profit to pay the interest due on the principal sum or, where no definite rate of interest is payable, interest thereon at such rate as the Court considers would be a fair rate to expect from a similar investment.

(3) Subsection (2) shall not affect any power to vary rights or accept any compromise or arrangement created by the terms of a debenture or the relevant trust deed or under a compromise or arrangement between the international company and its creditors.

60. Reissue of Redeemed Debentures - (1) Where an international company has redeemed any debentures:

(a) unless any provision to the contrary, whether express or implied, is contained in any contract entered into by the company; or

(b) unless the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled,

that company shall have power to reissue the debentures, either by reissuing the same debentures or by issuing other debentures in their place, but the reissue of a debenture or the issue of one debenture in place of another under this subsection shall not be regarded as the issue of a new debenture for the purpose of any provision limiting the amount or number of debentures that may be issued by the company.

(2) After the reissue the person entitled to the debenture shall have and shall be deemed always to have had the same priorities as if the debentures had never been redeemed.

(3) Where an international company has deposited any of its debentures to secure advances on current accounts or otherwise the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debt while the debentures remain so deposited."

10. Table B Amended - Clause 5 of Table B in the 2nd Schedule to the principal Act is hereby amended by omitting the word "void" and substituting the word "suspended".

11. Validation of Existing Debentures and of Exercise of Company Powers - (1) Every debenture issued by an international company prior to the coming into force of this section shall be deemed to comply and to have at all times complied with every provision of Section 57(24) (as that subsection had effect prior to its repeal and substitution by the provisions of Section 9).

(2) Every debenture issued by an international company prior to the coming into force of this Act which:

(a) did not state that the provisions of Table B of Schedule 2 of this Act shall apply without modification or exclusion; or

(b) did not state that the provisions of Table B of Schedule 2 of this Act shall apply with modification or exclusion;

shall be deemed to be issued and at all times to have been issued upon the term and condition that the terms and conditions of Table B of Schedule 2 of this Act are excluded in whole.

(3) Notwithstanding the provisions of subsection (2) any international company may at any time before 30 June 1987 apply to the Minister to have excluded from the operation of that subsection any debenture issued by the company prior to the coming into force of this section, and the Minister may if he is satisfied that at the time of its issue the company the debenture holder and every other interested party desired and intended the provisions of section 57(23) (as Section 57 (23) had effect prior to its repeal and substitution by the provisions of Section 9) to have effect in respect of that debenture exclude from the same from the operation of subsection (2).

(4) Every exercise by the members of every international company of the right and power to vote and to demand a poll pursuant to the Act and to the articles of the Company which prior to the coming into force of this section would have been void and of no effect as being exercised otherwise than in accordance with the provisions of Table B and with the provisions of Section 57 (12) (as that subsection had effect prior to its repeal and substitution by the provisions of Section 9) shall be deemed to be and to have at all times been as valid and effectual and of the same full force and effect as if Table B and the provisions of that Section 57 (12) had no effect or application to that exercise.

12. Distribution of Assets - Section 154 of the principal Act is amended by inserting after the words "section 153" the words "and section 156".

13. Proof and Ranking of Claims - Section 156 of the principal Act is repealed and the following section substituted:

"156. Proof and Ranking of Claims - (1) In the winding up of an insolvent international company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force or provided for in respect of the winding up of a domestic company and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the international company may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section.

(2) Regulations may be made by the Queens Representative to provide for the proof of claims in a winding up of an international company but in the absence of such regulations the procedure to be followed shall be that which is for the time being provided for the proof of claims in the winding up of a domestic company."

14. Proper Law - Section 245 of the principal Act is repealed and the following section substituted:

"245. Proper Law - Where an international company has offered debentures to the public for subscription or purchase under this Act and issues such debentures in the Cook Islands then notwithstanding any provisions therein to the contrary such debentures and the relevant trust deed relating to such debentures shall be governed by the law of the Cook Islands."

15. Application of Other Acts to International Companies - Section 249 of the principal Act is amended:

(a) by repealing subsection (3) and substituting the following new subsection:

“(3) Every international company and every foreign company may sue and be sued in the Court and accordingly shall be subject to the Judicature Act 1980-81 and to every regulation by-law or rule made under that Act and to all other rules of procedure of the Court whether provided for under or by virtue of statute or made by the Court in its inherent jurisdiction.”

(b) by omitting from subsection (4) the words "An international company" and substituting the following new words "Any international company or foreign company".

16. Shares Expressed in other Currencies - Where any international company has adopted special articles of association pursuant to regulation 3 of the International Companies (Shares Expressed in other Currencies) Regulations 1982 every reference in such articles to "The National Bank of New Zealand Limited in Rarotonga" shall be deemed with effect from 27th day of October 1986 to be a reference to the "Bank of New Zealand at Wellington, New Zealand".

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This Act is administered by the Cook Islands Monetary Board.