THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.1 - ARRANGEMENTS AND RECONSTRUCTIONS

SECTION 412   INFORMATION AS TO COMPROMISE WITH CREDITORS  

412(1)  [Explanatory statement]  

Where a meeting is convened under section 411, the body shall:

(a)  with every notice convening the meeting that is sent to a creditor or member, send a statement (in this section called the `` explanatory statement ''):

(i) explaining the effect of the compromise or arrangement and, in particular, stating any material interests of the directors, whether as directors, as members or creditors of the body or otherwise, and the effect on those interests of the compromise or arrangement in so far as that effect is different from the effect on the like interests of other persons; and

(ii) setting out such information as is prescribed and any other information that is material to the making of a decision by a creditor or member whether or not to agree to the compromise or arrangement, being information that is within the knowledge of the directors and has not previously been disclosed to the creditors or members; and

(b)  in every notice convening the meeting that is given by advertisement, include either a copy of the explanatory statement or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of the explanatory statement.

412(2)  [Debt not exceeding $200]  

In the case of a creditor whose debt does not exceed $200, paragraph (1)(a) does not apply unless the Court otherwise orders but the notice convening the meeting that is sent to such a creditor shall specify a place at which a copy of the explanatory statement can be obtained on request and, where the creditor makes such a request, the body shall as soon as practicable comply with the request.

412(3)  [Where rights of debenture holders affected]  

Where the compromise or arrangement affects the rights of debenture holders, the explanatory statement shall specify any material interests of the trustees for the debenture holders, whether as such trustees, as members or creditors of the body or otherwise, and the effect on those interests of the compromise or arrangement in so far as that effect is different from the effect on the like interests of other persons.

412(4)  [Copies of statement]  

Where a notice given by advertisement includes a notification that copies of the explanatory statement can be obtained in a particular manner, every creditor or member entitled to attend the meeting shall, on making application in that matter, be furnished by the body free of charge with a copy of the explanatory statement.

412(5)  [Notice by director or trustee for debenture holders]  

Each person who is a director or trustee for debenture holders shall give notice to the body of such matters relating to the person as are required to be included in the explanatory statement.

412(6)  [Registration of copy with Commission]  

In the case of a compromise or arrangement that is not, or does not include, a compromise or arrangement between a Part 5.1 body and its creditors or any class of them, the body shall not send out an explanatory statement pursuant to subsection (1) unless a copy of that statement has been registered by the Commission.

412(7)  [Limitation on Court order]  

Where an explanatory statement sent out under subsection (1) is not required by subsection (6) to be registered by the Commission, the Court shall not make an order approving the compromise or arrangement unless it is satisfied that the Commission has had a reasonable opportunity to examine the explanatory statement and to make submissions to the Court in relation to that statement.

412(8)  [Preconditions to registration]  

Where a copy of an explanatory statement is lodged with the Commission for registration under subsection (6), the Commission shall not register the copy of the statement unless the statement appears to comply with this Law and the Commission is of the opinion that the statement does not contain any matter that is false in a material particular or materially misleading in the form or context in which it appears.

412(9)  [Contravention of section]  

Where a body contravenes this section, a person involved in the contravention contravenes this subsection.

412(10)  [Defence to prosecution]  

It is a defence to a prosecution for a contravention of this section if it is proved that the contravention was due to the failure of a person (other than the defendant), being a director of the body or a trustee for debenture holders of the body, to supply for the purposes of the explanatory statement particulars of the person's interests.