Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - SCHEDULE 8

Schemes of arrangement under Part 5.1 of the Act

(regulation 5.1.01)

Chapter 5 -- External administration

Part 1 -- Interpretation and application

8101            In this Schedule:

internal creditor means:

                     (a)  a creditor who is a member of the company; or

                     (b)  a relative or spouse of a member; or

                     (c)  a relative of the spouse of a member.

Scheme means the proposed compromise or arrangement.

scheme creditors means the creditors or class of creditors of a company, to whom the Scheme would apply.

scheme members means the members or class of members of a company, to whom the Scheme would apply.

8102            This Schedule applies to a Part 5.1 body that is not a company as if:

                     (a)  references to a company were references to a Part 5.1 body that is not a company; and

                     (b)  references to a director were references to an office bearer, committee member or other office holder of the body; and

                     (c)  references to entitlements to voting shares were references to an ability to exercise a percentage of the total votes that could be exercised by members of the body.

Part 2 -- Prescribed information relating to proposed compromise or arrangement with creditors or class of creditors

8201            The statement must set out:

                     (a)  the expected dividend that would be available to scheme creditors if the company were to be wound up within 6 months after the date of the hearing of the application to the Court for an order under subsections 411(1) and (1A) of the Act; and

                     (b)  if a composition of debts is proposed--the expected dividend that would be paid to scheme creditors if the Scheme were put into effect as proposed; and

                     (c)  a list of the names of all known scheme creditors and the debts owed to those creditors; and

                     (d)  if a scheme creditor is known to be a guaranteed creditor--the name of the creditor and the amount of the debt owed; and

                     (e)  if a scheme creditor is known to be an internal creditor--the name of the creditor and the amount of the debt owed.

8202            The statement must contain a statement that an order under subsections 411(1) and (1A) of the Act is not an endorsement of, or any other expression of opinion on, the Scheme.

8203            The statement must contain or have annexed to it:

                     (a)  a report on the affairs of the company in accordance with Form 507, showing the financial position of the company as at a day within one month of the date on which it is intended to apply to the Court for an order under subsections 411(1) and (1A) of the Act;

                     (b)  a copy, certified by a director or by a secretary of the company to be a true copy, of all financial statements, required to be lodged with the ASIC by the company, together with a copy of every document required by law to be annexed to the financial statements;

                     (c)  if the company the subject of the Scheme is a trustee, a statement:

                              (i)  of the number of trusts administered by the trustee; and

                             (ii)  whether the trustee carries on any business separate from that of the trust; and

                            (iii)  how the scheme creditors may obtain a copy of the relevant trust deed, free of charge, prior to the date of the meeting; and

                     (d)  if the person (if any) who would be appointed to manage the Scheme proposes to charge for his or her services and for the services of his or her staff in accordance with a particular scale of charges, that scale of charges.

Part 3 -- Prescribed information relating to proposed compromise or arrangement with members or a class of members

8301            The statement must set out:

                     (a)  unless the company the subject of the Scheme is in the course of being wound up or is under official management, in relation to each director of the company:

                              (i)  whether the director recommends the acceptance of the Scheme or recommends against acceptance and, in either case, his or her reasons for so recommending; or

                             (ii)  if the director is not available to consider the Scheme--that the director is not so available and the cause of his or her not being available; or

                            (iii)  in any other case--that the director does not desire to make, or does not consider himself or herself justified in making, a recommendation and, if the director so requires, his or her reasons for not wishing to do so; or

                     (b)  if the company is in the course of being wound up or is under official management--in relation to each liquidator or each official manager:

                              (i)  whether he or she recommends acceptance of the Scheme or recommends against acceptance and, in either case, his or her reasons for so recommending; or

                             (ii)  in any other case--that the liquidator or official manager does not wish to make a recommendation and his or her reasons for not wishing to do so.

8302            The statement must set out:

                     (a)  the number, description and amount of marketable securities of the company the subject of the Scheme held by or on behalf of each director of the company or, if none are held by or on behalf of a director, a statement to that effect; and

                     (b)  for each director of the company by whom or on whose behalf shares in that company are held, whether:

                              (i)  the director intends to vote in favour of, or against, the Scheme; or

                             (ii)  the director has not decided whether he or she will vote in favour of, or against, the Scheme; and

                     (c)  if the other party to the proposed reconstruction or amalgamation is, or includes, a corporation, whether any marketable securities of the corporation are held by, or on behalf of, any director of the company the subject of the Scheme and, if so, the number, description and amount of those marketable securities; and

                     (d)  particulars of any payment or other benefit that is proposed to:

                              (i)  be made or given to any director, secretary or executive officer of the company the subject of the Scheme as compensation for loss of, or as consideration for or in connection with his or her retirement from, office in that company or in a related body corporate; or

                             (ii)  be made or given to any director, secretary or executive officer of any related body corporate as compensation for the loss of, or as consideration for or in connection with his or her retirement from, office in that body corporate or in the company the subject of the Scheme; and

                     (e)  if there is any other agreement or arrangement made between a director of the company the subject of the Scheme and another person in connection with or conditional on the outcome of the Scheme--particulars of the agreement or arrangement; and

                      (f)  if the object of the Scheme is for a corporation to acquire control of another corporation that is a company, particulars of the nature and extent of any interest of a director of that company in any contract entered into by the corporation seeking control; and

                     (g)  if the shares of the company the subject of the Scheme are not granted official quotation on a securities exchange, all the information that the company has as to the number of shares that have been sold in the 6 months immediately before the date on which the statement is lodged, the amount of those shares and the prices at which they were sold; and

                     (h)  whether, within the knowledge of the directors of the company the subject of the Scheme, or, if the company is in liquidation or under official management, the knowledge of the liquidator or the official manager, the financial position of the company has materially changed since the date of the last balance sheet laid before the company in general meeting or sent to shareholders in accordance with section 314 or 317 of the Act and, if so, full particulars of any change; and

                      (i)  any other information material to the making of a decision in relation to the Scheme, being information that is within the knowledge of any director, liquidator or official manager of a company the subject of the Scheme or of a related company and that has not previously been disclosed to the Scheme members.

8303            If:

                     (a)  the other party to the proposed reconstruction or amalgamation of the company the subject of the Scheme has a prescribed shareholding in the company; or

                     (b)  a director of any corporation that is the other party to the proposed reconstruction or amalgamation is a director of a company the subject of the Scheme;

the statement must be accompanied by a copy of a report made by an expert who is not associated with the corporation that is the other party, stating whether or not, in his or her opinion, the proposed Scheme is in the best interest of the members of the company the subject of the Scheme and setting out his or her reasons for that opinion.

8304            If the company the subject of the Scheme obtains 2 or more reports, each of which could be used for clause 3, the statement must be accompanied by a copy of each report.

8305            If:

                     (a)  the company the subject of the Scheme obtains a report for clause 3; and

                     (b)  the report contains:

                              (i)  a forecast of the profits or profitability of the company; or

                             (ii)  a statement that the market value of an asset or assets of the company or of a related body corporate differs from an amount at which the value of the asset or assets is shown in the books of the company or the related body corporate;

that report must not accompany the statement except with the consent in writing of ASIC and in accordance with such conditions (if any) as are stated by ASIC.

8306            For clause 3:

                     (a)  a person has a prescribed shareholding in a company if he or she is entitled to not less than 30% of the voting shares in the company; and

                     (b)  a person has a prescribed shareholding in a company in which the voting shares are divided into 2 or more classes of shares, if he or she is entitled to not less than 30% of the shares in one of those classes.

8307            If the consideration to be offered to scheme members consists, in whole or in part, of marketable securities issued, or to be issued, by a corporation, the statement must set out the formula to be applied to find out the number of marketable securities to be issued to each scheme member, and the basis on which that formula was developed.

8308            If marketable securities of the same class as those mentioned in clause 7 are granted official quotation on a securities exchange, the statement must state the fact, specify the securities exchange concerned, and set out:

                     (a)  the latest recorded sale price before the date on which the statement is lodged for registration; and

                     (b)  the highest and lowest recorded sale prices during the 3 months immediately before that date and the dates of the relevant sales; and

                     (c)  if the Scheme has been the subject of a public announcement in newspapers or by any other means before the statement has been registered by ASIC--the latest recorded sale price immediately before the public announcement.

8309      (1)  If the marketable securities mentioned in clause 8 are granted official quotation on more than one securities exchange, it is sufficient compliance with paragraphs 8(a) and (c) if information on the marketable securities is given for the securities exchange at which there has been the greatest number of recorded dealings in the securities in the 3 months immediately before the date on which the statement is lodged for registration.

             (2)  If the securities have not been granted official quotation on a securities exchange, the statement must set out all the information that a director, liquidator or official manager of the company the subject of the Scheme or of a related body corporate has about the number of securities that have been sold in the 3 months immediately before the date on which the explanatory statement was prepared and the price of those securities or, if that information or any part of that information cannot be ascertained, a statement to that effect.

8310            The statement must set out particulars of the intentions of the directors of the company the subject of the Scheme regarding:

                     (a)  the continuation of the business of the company or, if the undertaking, or any part of the undertaking, of a company is to be transferred, how that undertaking or part is to be conducted in the future; and

                     (b)  any major changes to be made to the business of the company, including any redeployment of the fixed assets of the company; and

                     (c)  the future employment of the present employees of the company.

Part 4 -- Prescribed information relating to proposed compromise or arrangement with members or class of members for transfer to a trustee

8401            The statement must set out:

                     (a)  in detail, the basis on which units in the unit trust are to be issued to scheme members; and

                     (b)  if the issue of units in the unit trust is based on the asset backing of shares held by scheme members--full valuation details of those assets.

8402            A copy of the trust deed must be annexed, or set out in a schedule, to the statement.

8403            If the effect of the proposed compromise or arrangement will be the merger of 2 companies without substantial common membership, the explanatory statement must, so far as practicable, state the matters, and be accompanied by the documents and reports, mentioned in Part 3.




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