Companies Act 1985

• (b) floating charges rank with one another according to the time of registration in accordance with Chapter II of Part XII;

• (c) floating charges which have been received by the registrar for registration by the same postal delivery rank with one another equally.

• (5) Where the holder of a floating charge over all or any part of the company’s property which has been registered in accordance with Chapter II of Part XII has received intimation in writing of the subsequent registration in accordance with that Chapter of another floating charge over the same property or any part thereof, the preference in ranking of the first-mentioned floating charge is restricted to security for—

• (a) the holder’s present advances;

• (b) future advances which he may be required to make under the instrument creating the floating charge or under any ancillary document;

• (c) interest due or to become due on all such advances; . . .

• (d) any expenses or outlays which may reasonably be incurred by the holder ;and

• (e) (in the case of a floating charge to secure a contingent liability other than a liability arising under any further advances made from time to time) the maximum sum to which that contingent liability is capable of amounting whether or not it is contractually limited.

• (6) This section is subject to Part XII and tosections 175 and 176 of the Insolvency Act.

Continued effect of certain charges validated by Act of 1972

465

• (1) Any floating charge which—

• (a) purported to subsist as a floating charge on 17th November 1972, and

• (b) if it had been created on or after that date, would have been validly created by virtue of the Companies (Floating Charges and Receivers) (Scotland) Act 1972,

is deemed to have subsisted as a valid floating charge as from the date of its creation.

• (2) Any provision which—

• (a) is contained in an instrument creating a floating charge or in any ancillary document executed prior to, and still subsisting at, the commencement of that Act,

• (b) relates to the ranking of charges, and

• (c) if it had been made after the commencement of that Act, would have been a valid provision,

is deemed to have been a valid provision as from the date of its making.

Alteration of floating charges

466

• (1) The instrument creating a floating charge under section 462 or any ancillary document may be altered by the execution of an instrument of alteration by the company, the holder of the charge and the holder of any other charge (including a fixed security) which would be adversely affected by the alteration.

• (2) Without prejudice to any enactment or rule of law regarding the execution of documents, such an instrument of alteration is validly executed if it is executed—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) where trustees for debenture-holders are acting under and in accordance with a trust deed, by those trustees ; or

• (c) where, in the case of a series of secured debentures, no such trustees are acting, by or on behalf of—

• (i) a majority in nominal value of those present or represented by proxy and voting at a meeting of debenture-holders at which the holders of at least one-third in nominal value of the outstanding debentures of the series are present or so represented; or

• (ii) where no such meeting is held, the holders of at least one-half in nominal value of the outstanding debentures of the series; . . .

• (3) Section 464 applies to an instrument of alteration under this section as it applies to an instrument creating a floating charge.

• (4) Subsection (4A) applies to an alteration of a floating charge, where the alteration is one which—

• (a) prohibits or restricts the creation of any fixed security or any other floating charge having priority over, or ranking pari passu with, the floating charge; or

• (b) varies, or otherwise regulates the order of, the ranking of the floating charge in relation to fixed securities or to other floating charges; or

• (c) releases property from the floating charge; or

• (d) increases the amount secured by the floating charge.

• (4A) Every alteration to a floating charge created by a company is, so far as any security on the company’s property or any part of it is conferred by the alteration, void against the liquidator or administrator and any creditor of the company, unless the documents referred to in subsection (4B) are delivered to the registrar for registration by the company or any person interested in the charge before the end of the relevant period allowed for delivery.

• (4B) The documents referred to in subsection (4A) are—

• (a) a certified copy of the instrument of alteration, and

• (b) a statement of particulars including—

• (i) the registered name and number of the company;

• (ii) the date of creation of the charge;

• (iii) a description of the instrument (if any) by which the charge was created or evidenced;

• (iv) short particulars of the property or undertaking charged as set out when the charge was registered;

• (v) date(s) of execution of the instrument of alteration;

• (vi) names and address(es) of the persons who have executed the instrument of alteration.

• (4C) In subsection (4A) “the relevant period allowed for delivery” is—

• (a) the period of 21 days beginning with the day after the date of execution of the instrument of alteration, or

• (b) if an order under section 859F(3) of the Companies Act 2006 (as applied by subsection (4E)) has been made, the period allowed by the order.

• (4D) Subsection (4A) is without prejudice to any contract or obligation for repayment of the money secured by the alteration to the charge; and when an alteration becomes void under subsection (4A) the money secured by it immediately becomes payable.

• (4E) Sections 859F, 859G, 859I, 859M and 859N of the Companies Act 2006 apply to an alteration to a floating charge to which subsection (4A) applies as they apply to a charge.

• (4F) As applied by subsection (4E), those sections apply as if—

• (a) references to the documents required or delivered under section 859A or 859B were to the documents referred to in subsection (4B);

• (b) references to the period allowed for delivery under the section concerned were to the period referred to in subsection (4C)(a);

• (c) references to the delivery of a certified copy of an instrument to the registrar for the purposes of Chapter A1 of Part 25 of the Companies Act 2006 were to the delivery of a certified copy of an instrument of alteration to the registrar for the purposes of this section;

• (d) references to registration in accordance with a provision of Chapter A1 of Part 25 of the Companies Act 2006 were to registration in accordance with this section;

• (e) references to a section 859D statement of particulars were to the statement of particulars referred to in subsection (4B)(b);

• (f) references to registration under section 859A or 859B were to registration under this section;

• (g) references to a statement or notice delivered to the registrar in accordance with Chapter A1 of Part 25 of the Companies Act 2006 were to a statement delivered to the registrar in accordance with subsection (4A).

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) Any reference (however expressed) in any enactment, including this Act, to a floating charge is, for the purposes of this section and unless the context otherwise requires, to be construed as including a reference to the floating charge as altered by an alteration falling under subsection (4) of this section.

Chapter II — Receivers

Power to appoint receiver

467–485

Circumstances justifying appointment

468

• (1) A receiver may be appointed under section 467(1) by the holder of the floating charge on the occurrence of any event which, by the provisions of the instrument creating the charge, entitles the holder of the charge to make that appointment and, in so far as not otherwise provided for by the instrument, on the occurrence of any of the following events, namely—

• (a) the expiry of a period of 21 days after the making of a demand for payment of the whole or any part of the principal sum secured by the charge, without payment having been made;

• (b) the expiry of a period of two months during the whole of which interest due and payable under the charge has been in arrears;

• (c) the making of an order or the passing of a resolution to wind up the company ;

• (d) the appointment of a receiver by virtue of any other floating charge created by the company.

• (2) A receiver may be appointed by the court under section 467(2) on the occurrence of any event which, by the provisions of the instrument creating the floating charge, entitles the holder of the charge to make that appointment and, in so far as not otherwise provided for by the instrument, on the occurrence of any of the following events, namely—

• (a) where the court, on the application of the holder of the charge, pronounces itself satisfied that the position of the holder of the charge is likely to be prejudiced if no such appointment is made;

• (b) any of the events referred to in paragraphs (a) to (c) of subsection (1) above.

Mode of appointment by holder of charge

469

• (1) The appointment of a receiver by the holder of the floating charge under section 467(1) shall be by means of a validly executed instrument in writing (referred to as the " instrument of appointment"), a copy (certified in the prescribed manner to be a correct copy) whereof shall be delivered by or on behalf of the person making the appointment to the registrar of companies for registration within 7 days of its execution and shall be accompanied by a notice in the prescribed form.

• (2) If any person without reasonable excuse makes default in complying with the requirements of subsection (1), he is liable to a fine and, for continued contravention, to a daily default fine.

• (3) The instrument of appointment is validly executed—

• (a) by a company, if it is executed in accordance with the provisions of section 36 of this Act as if it were a contract; and

• (b) by any other person, if it is executed in the manner required or permitted by the law of Scotland in the case of an attested deed.

• (4) The instrument may be executed on behalf of the holder of the floating charge by virtue of which the receiver is to be appointed—

• (a) by any person duly authorised in writing by the holder to execute the instrument; and

• (b) in the case of an appointment of a receiver by the holders of a series of secured debentures, by any person authorised by resolution of the debenture-holders to execute the instrument.

• (5) On receipt of the certified copy of the instrument of appointment in accordance with subsection (1) of this section, the registrar shall, on payment of the prescribed fee, enter the particulars of the appointment in the register of charges.

• (6) The receiver is to be regarded as having been appointed on the date of the execution of the instrument of his appointment.

• (7) On the appointment of a receiver under this section, the floating charge by virtue of which he was appointed attaches to the property then subject to the charge; and such attachment has effect as if the charge was a fixed security over the property to which it has attached.

Appointment by court

470

• (1) Application for the appointment of a receiver by the court under section 467(2) shall be by petition to the court, which shall be served on the company.

• (2) On such application, the court shall, if it thinks fit, issue an interlocutor making the appointment of the receiver on such terms as to caution as it may think fit.

• (3) A copy (certified by the clerk of the court to be a correct copy) of the court's interlocutor making the appointment shall be delivered by or on behalf of the petitioner to the registrar of companies for registration, accompanied by a notice in the prescribed form, within 7 days of the date of the interlocutor or such longer period as the court may allow.

If any person without reasonable excuse makes default in complying with the requirements of this subsection he is liable to a fine and, for continued contravention, to a daily default fine.

• (4) On receipt of the certified copy interlocutor in accordance with subsection (3), and on receipt of a certificate by the appropriate officer of the court that caution as ordered by the court has been found, the registrar shall, on payment of the prescribed fee, enter the particulars of the appointment in the register of charges.

• (5) The receiver is to be regarded as having been appointed on the date of his being appointed by the court.

• (6) On the appointment of a receiver under this section, the floating charge by virtue of which he was appointed attaches to the property then subject to the charge; and such attachment has effect as if the charge were a fixed security over the property to which it has attached.

• (7) In making rules of court for the purposes of this section, the Court of Session shall have regard to the need for special provision for cases which appear to the court to require to be dealt with as a matter of urgency.

Powers of receiver

471

• (1) Subject to subsection (2) below, a receiver has in relation to such part of the property of the company as is attached by the floating charge by virtue of which he was appointed, the powers, if any, given to him by the instrument creating that charge and, in addition, he has under this Part the following powers as respects that property, in so far as these are not inconsistent with any provision contained in that instrument, namely—

• (a) power to take possession of, collect and get in the property from the company or a liquidator thereof or any other person, and for that purpose, to take such proceedings as may seem to him expedient;

• (b) power to sell, feu, hire out or otherwise dispose of the property by public roup or private bargain and with or without advertisement;

• (c) power to borrow money and grant security therefor over the property;

• (d) power to appoint a solicitor or accountant or other professionally qualified person to assist him in the performance of his functions;

• (e) power to apply to the court for directions in connection with the performance of his functions;

• (f) power to bring or defend any action or other legal proceedings in the name and on behalf of the company;

• (g) power to refer to arbitration all questions affecting the company;

• (h) power to effect and maintain insurances in respect of the business and property of the company;

• (i) power to use the company's seal;

• (j) power to do all acts and to execute in the name and on behalf of the company any deed, receipt or other document;

• (k) power to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company ;

• (l) power to appoint any agent to do any business which he is unable to do himself or which can more conveniently be done by an agent and power to employ and discharge servants;

• (m) power to have carried out to the best advantage any work on the property of the company and in general to do all such other things as may be necessary for the realisation of the property ;

• (n) power to make any payment which is necessary or incidental to the performance of his functions ;

• (o) power to carry on the business of the company so far as he thinks it desirable to do so;

• (p) power to grant any lease of the property, and to input and output tenants, and to take on lease any property required or convenient for the business of the company;

• (q) power to rank and claim in the bankruptcy, insolvency, sequestration or liquidation of any person or company indebted to the company and to receive dividends, and to accede to trust deeds for creditors of any such person ;

• (r) power to present or defend a petition for the winding up of the company ; and

• (s) power to do all other things incidental to the exercise of the powers mentioned in this subsection.

• (2) Subsection (1) applies—

• (a) subject to the rights of any person who has effectually executed diligence on all or any part of the property of the company prior to the appointment of the receiver; and

• (b) subject to the rights of any person who holds over all or any part of the property of the company a fixed security or floating charge having priority over, or ranking pari passu with, the floating charge by virtue of which the receiver was appointed.

• (3) A person transacting with a receiver shall not be concerned to inquire whether any event has happened to authorise the receiver to act.

Precedence among receivers

472

• (1) Where there are two or more floating charges subsisting over all or any part of the property of the company, a receiver may be appointed under this Chapter by virtue of each such charge, but a receiver appointed by, or on the application of, the holder of a floating charge having priority of ranking over any other floating charge by virtue of which a receiver has been appointed has the powers given to a receiver by section 471 to the exclusion of any other receiver.

• (2) Where two or more floating charges rank with one another equally, and two or more receivers have been appointed by virtue of such charges, the receivers so appointed are deemed to have been appointed as joint receivers.

• (3) Receivers appointed, or deemed to have been appointed, as joint receivers shall act jointly unless the instrument of appointment or respective instruments of appointment otherwise provide.

• (4) Subject to subsection (5) below, the powers of a receiver appointed by, or on the application of, the holder of a floating charge are suspended by, and as from the date of, the appointment of a receiver by, or on the application of, the holder of a floating charge having priority of ranking over that charge to such extent as may be necessary to enable the receiver second mentioned to exercise his powers under section 471 ; and any powers so suspended take effect again when the floating charge having priority of ranking ceases to attach to the property then subject to the charge, whether such cessation is by virtue of section 478(6) or otherwise.

• (5) The suspension of the powers of a receiver under subsection (4) does not have the effect of requiring him to release any part of the property (including any letters or documents) of the company from his control until he receives from the receiver superseding him a valid indemnity (subject to the limit of the value of such part of the property of the company as is subject to the charge by virtue of which he was appointed) in respect of any expenses, charges and liabilities he may have incurred in the performance of his functions as receiver.

• (6) The suspension of the powers of a receiver under subsection (4) does not cause the floating charge by virtue of which he was appointed to cease to attach to the property to which it attached by virtue of section 469(7) or 470(6).

• (7) Nothing in this section prevents the same receiver being appointed by virtue of two or more floating charges.

Agency and liability of receiver for contracts. . i Section

473

• (1) A receiver is deemed to be the agent of the company in relation to such property of the company as is attached by the floating charge by virtue of which he was appointed.

• (2) Subject to subsection (1), a receiver (including a receiver whose powers are subsequently suspended under section 472) is personally liable on any contract entered into by him in the performance of his functions, except in so far as the contract otherwise provides.

• (3) A receiver who is personally liable by virtue of subsection (2) is entitled to be indemnified out of the property in respect of which he was appointed.

• (4) Any contract entered into by or on behalf of the company prior to the appointment of a receiver continues in force (subject to its terms) notwithstanding that appointment, but the receiver does not by virtue only of his appointment incur any personal liability on any such contract.

• (5) Any contract entered into by a receiver in the performance of his functions continues in force (subject to its terms) although the powers of the receiver are subsequently suspended under section 472.

Remuneration of receiver

474

• (1) The remuneration to be paid to a receiver is to be determined by agreement between the receiver and the holder of the floating charge by virtue of which he was appointed.

• (2) Where the remuneration to be paid to the receiver has not been determined under subsection (1) or where it has been so determined but is disputed by any of the persons mentioned in paragraphs (a) to (d), it may be fixed instead by the Auditor of the Court of Session on application made to him by—

• (a) the receiver ;

• (b) the holder of any floating charge or fixed security over all or any part of the property of the company ;

• (c) the company; or

• (d) the liquidator of the company.

• (3) Application to the Auditor of the Court of Session under subsection (2) shall be made in writing not later than one month after the sending of the abstract of receipts and payments of the receiver mentioned below in this Chapter which discloses the remuneration, if any, payable to the receiver.

• (4) Where the receiver has been paid or has retained for his remuneration for any period before the remuneration has been fixed by the Auditor of the Court of Session under subsection (2) any amount in excess of the remuneration so fixed for that period, the receiver or his personal representatives shall account for the excess.

Priority of debts

475

• (1) Where a receiver is appointed and the company is not at the time of the appointment in course of being wound up, the debts which fall under subsection (2) of this section shall be paid out of any assets coming to the hands of the receiver in priority to any claim for principal or interest by the holder of the floating charge by virtue of which the receiver was appointed.

• (2) Debts falling under this subsection are debts which satisfy the conditions of this subsection, that is to say, they are debts—

• (a) which in every winding up are, under the provisions of Part XX relating to preferential payments, to be paid in priority to all other debts ; and

• (b) which, by the end of a period of six months after advertisement by the receiver for claims in the Edinburgh Gazette and in a newspaper circulating in the district where the company carries on business, either—

• (i) have been intimated to him ; or

• (ii) have become known to him.

• (3) In the application of Part XX, section 614 and Schedule 19 are to be read as if the provision for payment of accrued holiday remuneration becoming payable on the termination of employment before or by the effect of the winding-up order or resolution were a provision for payment of such remuneration becoming payable on the termination of employment before or by the effect of the appointment of the receiver.

• (4) The periods of time mentioned in Schedule 19 are to be reckoned from the date of the appointment of the receiver under section 469(6) or 470(5).

• (5) Any payments made under this section shall be recouped as far as may be out of the assets of the company available for payment of ordinary creditors.

Distribution of moneys

476

• (1) Subject to section 477, and to the rights of any of the following categories of persons, namely—

• (a) the holder of any fixed security which is over property subject to the floating charge and which ranks prior to, or pari passu with, the floating charge ;

• (b) all persons who have effectually executed diligence on any part of the property of the company which is subject to the charge by virtue of which the receiver was appointed ;

• (c) creditors in respect of all liabilities, charges and expenses incurred by or on behalf of the receiver;

• (d) the receiver in respect of his liabilities, expenses and remuneration; and

• (e) the preferential creditors entitled to payment under section 475,

the receiver shall pay monies received by him to the holder of the floating charge by virtue of which the receiver was appointed in or towards satisfaction of the debt secured by the floating charge.

• (2) Any balance of monies remaining after the provisions of subsection (1) of this section and section 477 have been satisfied shall be paid in accordance with their respective rights and interests to the following persons, as the case may require, namely—

• (a) any other receiver;

• (b) the holder of a fixed security which is over property subject to the floating charge;

• (c) the company or its liquidator, as the case may be.

• (3) Where any question arises as to the person entitled to a payment under this section, or where a receipt or a discharge of a security cannot be obtained in respect of any such payment, the receiver shall consign the amount of such payment in any joint stock bank of issue in Scotland in name of the Accountant of Court for behoof of the person or persons entitled thereto.

Disposal of interest in property

477

• (1) Where the receiver sells or disposes, or is desirous of selling or disposing, of any property or interest in property of the company which is subject to the floating charge by virtue of which the receiver was appointed and which is—

• (a) subject to any security or interest of, or burden or encumbrance in favour of, a creditor the ranking of which is prior to, pari passu with, or postponed to the floating charge; or

• (b) property or an interest in property affected or attached by effectual diligence executed by any person ;

and the receiver is unable to obtain the consent of such creditor or, as the case may be, such person to such a sale or disposal, the receiver may apply to the court for authority to sell or dispose of the property or interest in property free of such security, interest, burden, encumbrance or diligence.

• (2) On such an application, the court may, if it thinks fit, authorise the sale or disposal of the property or interest in question free of such security, interest, burden, encumbrance or diligence, and such authorisation may be on such terms or conditions as the court thinks fit:

But that authorisation shall not be given where a fixed security over the property or interest in question which ranks prior to the floating charge has not been met or provided for in full.

• (3) Where any sale or disposal is effected in accordance with the authorisation of the court under subsection (2) of this section, the receiver shall grant to the purchaser or disponee an appropriate document of transfer or conveyance of the property or interest in question, and that document has the effect, or, where recording, intimation or registration of that document is a legal requirement for completion of title to the property or interest, then that recording, intimation or registration, as the case may be, has the effect, of—

• (a) disencumbering the property or interest of the security, interest, burden or encumbrance affecting it; and

• (b) freeing the property or interest from the diligence executed upon it.

• (4) Nothing in this section prejudices the right of any creditor of the company to rank for his debt in the winding up of the company.

Cessation of appointment of receiver

478

• (1) A receiver appointed by the holder of a floating charge under section 467(1) may resign on giving one month's notice thereof to—

• (a) the holders of floating charges over all or any part of the property of the company ;

• (b) the company or its liquidator; and

• (c) the holders of any fixed security over property of the company which is subject to the floating charge by virtue of which the receiver was appointed.

• (2) A receiver appointed by the court under section 467(2) may resign only with the authority of the court and on such terms and conditions, if any, as may be laid down by the court.

• (3) Subject to subsection (4) below, a receiver may, on application to the court by the holder of the floating charge by virtue of which he was appointed, be removed by the court on cause shown.

• (4) Where a receiver ceases to act as such, then, in respect of any expenses, charges or other liabilities he may have incurred in the performance of his functions as receiver, he is entitled to be indemnified out of the property which is subject to the floating charge by virtue of which he was appointed.

• (5) When a receiver ceases to act as such otherwise than by death he shall, and, when a receiver is removed by the court, the holder of the floating charge by virtue of which he was appointed shall, within 7 days of the cessation or removal, as the case may be, give the registrar of companies notice to that effect, and the registrar shall enter the notice in the register of charges.

If the receiver or the holder of the floating charge, as the case may require, makes default in complying with the requirements of this subsection, he is liable to a fine and, for continued contravention, to a daily default fine.

• (6) If by the expiry of a period of one month following upon the removal of the receiver or his ceasing to act as such no other receiver has been appointed, the floating charge by virtue of which the receiver was appointed—

• (a) thereupon ceases to attach to the property then subject to the charge; and

• (b) again subsists as a floating charge.

Powers of court

479

• (1) A holder of a floating charge by virtue of which a receiver was appointed may apply to the court for directions in any matter arising in connection with the performance by the receiver of his functions.

• (2) Where a floating charge by virtue of which a person is purported to have been appointed receiver is discovered to be invalid, the court may, if it thinks fit, in whole or in part relieve that person from personal liability in respect of anything done or omitted to be done which, had he been validly appointed, would have been properly done or omitted.

• (3) The court may, if it thinks fit, make the person by whom the invalid appointment was made personally liable in respect of anything done or omitted to be done to the extent to which the person purported to have been appointed receiver has been relieved of personal liability.

Notification that receiver appointed

480

• (1) Where a receiver has been appointed, every invoice, order for goods or business letter issued by or on behalf of the company or the receiver or the liquidator of the company, being a document on or in which the name of the company appears, shall contain a statement that a receiver has been appointed.

• (2) If default is made in complying with the requirements of this section, the company and any of the following persons who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver, is liable to a fine.

Provisions as to information where receiver appointed

481

• (1) Where a receiver is appointed then, subject to the provisions of this section and the section next following—

• (a) he shall forthwith send notice to the company of his appointment; and

• (b) there shall, within 14 days after receipt of the notice, or such longer period as may be allowed by the court or in writing by the receiver, be made out and submitted to the receiver in accordance with section 482 a statement in the prescribed form as to the affairs of the company; and

• (c) the receiver shall, within 2 months after receipt of the statement, send—

• (i) to the registrar of companies and to the court, a copy of the statement and of any comments he sees fit to make thereon and, in the case of the registrar of companies, also a summary of the statement and of his comments (if any) thereon; and

• (ii) to the company, a copy of any such comments or, if he does not see fit to make any comment, a notice to that effect; and

• (iii) to the holder of the floating charge by virtue of which he was appointed, to any trustees for the debenture-holders on whose behalf he was appointed and, so far as he is aware of their addresses, to all such debenture-holders, a copy of the said summary.

• (2) The receiver shall, within two months, or such longer period as the court may allow, after the expiration of the period of 12 months from the date of his appointment and of every subsequent period of twelve months, and within two months, or such longer period as the court may allow, after he ceases to act as receiver, send to—

• (a) the registrar of companies;

• (b) the company;

• (c) the holder of the floating charge by virtue of which he was appointed;

• (d) any trustees for the debenture-holders of the company on whose behalf he was appointed;

• (e) all such debenture-holders (so far as he is aware of their addresses); and

• (f) the holders of all other floating charges or fixed securities over property of the company,

an abstract in the prescribed form showing his receipts and payments during that period of twelve months, or, where he ceases to act as receiver, during the period from the end of the period to which the last preceding abstract related (or, if no preceding abstract has been sent under this section, from the date of his appointment) up to the date of his so ceasing, and the aggregate amounts of his receipts and of his payments during all preceding periods since his appointment.

• (3) Where the receiver is appointed by the holder of the floating charge under section 467, this section has effect—

• (a) with the omission of the references to the court in subsection (1); and

• (b) with the substitution for the references to the court in subsection (2) of references to the Secretary of State;

and, in any other case, references to the court shall be taken as referring to the court by which the receiver was appointed.

• (4) Subsection (1) does not apply in relation to the appointment of a receiver to act with an existing receiver or in place of a receiver dying or ceasing to act, except that, where that subsection applies to a receiver who dies or ceases to act before it has been fully complied with, the references in paragraphs (b) and (c) of the subsection include (subject to subsection (5)) reference to his successor and to any continuing receiver.

Nothing in this subsection shall be taken as limiting the meaning of the expression " the receiver " where used in, or in relation to, subsection (2).

• (5) Where the company is being wound up, this section and section 482 shall apply notwithstanding that the receiver and the liquidator are the same person, but with any necessary modifications arising from that fact

• (6) Nothing in subsection (2) above prejudices the duty of the receiver to render proper accounts of his receipts and payments to the persons to whom, and at the times at which, he may be required to do so apart from that subsection.

• (7) If the receiver makes default in complying with the requirements of this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Special provisions as to statement submitted to receiver

482

• (1) The statement as to the affairs of a company required by section 481 to be submitted to the receiver (or his successor) shall show as at the date of the receiver's appointment the particulars of the company's assets, debts and liabilities, the names, residences and occupations of its creditors, the securities held by them respectively, the dates when the securities were respectively given and such further or other information as may be prescribed.

• (2) The statement shall be submitted by, and be verified by the statutory declaration of, one or more of the persons who are at the date of the receiver's appointment the directors, and by the person who is at that date the secretary, of the company, or by such of the persons mentioned below in this subsection as the receiver (or his successor), subject to the direction of the court, 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 date of the receiver's appointment;

• (c) who are in the employment of the company, or have been in its employment within that year, and are, in the opinion of the receiver, capable of giving the information required;

• (d) who are, or have been within that year, officers of, or in the employment of, a company which is, or within that year was, an officer of the company to which the statement relates.

• (3) Any person making the statement and statutory declaration shall be allowed, and shall be paid by the receiver (or his successor) out of his receipts, such costs and expenses incurred in the preparation and making of the statement and statutory declaration as the receiver (or his successor) may consider reasonable, subject to an appeal to the court.

• (4) Where the receiver is appointed by the holder of the floating charge under section 467(1), this section has effect with the substitution for the references to the court in subsections (2) and (3) of references to the Secretary of State ; and in any other case references to the court are to be taken as referring to the court by which the receiver was appointed.

• (5) If any person without reasonable excuse makes default in complying with the requirements of this section, he is liable to a fine and, for continued contravention, to a daily default fine.

• (6) References in this section to the receiver's successor include a continuing receiver.

Enforcement of receiver's duty to make returns, etc.

483

• (1) If any receiver—

• (a) having made default in filing, delivering or making any return, account or other document, or in giving any notice, which a receiver is by law required to file, deliver, make or give, fails to make good the default within 14 days after the service on him of a notice requiring him to do so; or

• (b) has, after being required at any time by the liquidator of the company so to do, failed to render proper accounts of his receipts and payments and to vouch the same and to pay over to the liquidator the amount properly payable to him,

the court may, on an application made for the purpose, make an order directing the receiver to make good the default within such time as may be specified in the order.

• (2) In the case of any such default as is mentioned in subsection (1)(a), an application for the purposes of this section may be made by any member or creditor of the company or by the registrar of companies, and, in the case of any such default as is mentioned in subsection (1)(b) the application shall be made by the liquidator, and, in either case, the order may provide that all expenses of and incidental to the application shall be borne by the receiver.

• (3) Nothing in this section prejudices the operation of any enactments imposing penalties on receivers in respect of any such default as is mentioned in subsection (1).

Interpretation for Chapter II

484

• (1) In this Chapter, unless the contrary intention appears, the following expressions have the following meanings respectively assigned to them, that is to say—

• " company " means an incorporated company (whether a company within the meaning of this Act or nod which the Court of Session has jurisdiction to wind up;

• " secured debenture " means a bond, debenture, debenture stock or other security which, either itself or by reference to any other instrument, creates a floating charge over all or any part of the property of the company, but does not include a security which creates no charge other than a fixed security ;

• " series of secured debentures" means two or more secured debentures created as a series by the company in such a manner that the holders thereof are entitled pari passu to the benefit of the floating charge.

• (2) Where a floating charge, secured debenture or series of secured debentures has been created by the company, then, except where the context otherwise requires, any reference in this Chapter to the holder of the floating charge shall—

• (a) where the floating charge, secured debenture or series of secured debentures provides for a receiver to be appointed by any person or body, be construed as a reference to that person or body;

• (b) where, in the case of a series of secured debentures, no such provision has been made therein but—

• (i) there are trustees acting for the debenture-holders under and in accordance with a trust deed, be construed as a reference to those trustees; and

• (ii) where no such trustees are acting, be construed as a reference to—

• (aa) a majority in nominal value of those present or represented by proxy and voting at a meeting of debenture-holders at which the holders of at least one-third in nominal value of the outstanding debentures of the series are present or so represented; or

• (bb) where no such meeting is held, the holders of at least one-half in nominal value of the outstanding debentures of the series.

• (3) Any reference in this Chapter to a floating charge, secured debenture, series of secured debentures or instrument creating a charge includes, except where the context otherwise requires, a reference to that floating charge, debenture, series of debentures or instrument as varied by any instrument.

Prescription of forms etc., and regulations

485

• (1) The notice referred to in section 478(5) and the notice referred to in section 481(1)(a) and the statutory declaration referred to in section 482(2) shall be in such form as may be prescribed.

• (2) Any power conferred by this Part on the Secretary of State to make regulations is exercisable by statutory instrument; and a statutory instrument made in the exercise of any power so conferred to prescribe a fee is subject to annulment in pursuance of a resolution of either House of Parliament.

Chapter III — General

Interpretation for Part XVIII generally

486

• (1) In this Part, unless the context otherwise requires, the following expressions have the following meanings respectively assigned to them, that is to say—

• “ancillary document” means—a document which relates to the floating charge and which was executed by the debtor or creditor in the charge before the registration of the charge in accordance with Chapter II or Part XII; oran instrument of alteration such as is mentioned in section 466 in this Part;

• “company”, . . . , means an incorporated company (whether a company within the meaning of this Act or not);

• “fixed security”, in relation to any property of a company, means any security, other than a floating charge or a charge having the nature of a floating charge, which on the winding up of the company in Scotland would be treated as an effective security over that property, and (without prejudice to that generality) includes a security over that property, being; a heritable security within the meaning of section 9(8) of the Conveyancing and Feudal Reform (Scotland) Act 1970 ; or a statutory pledge within the meaning given by section 113(1) of the Moveable Transactions (Scotland) Act 2023;

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “Register of Sasines” means the appropriate division of the General Register of Sasines.

Extent of Part XVIII

487

This Part extends to Scotland only.

Part XIX — Receivers and Managers (England and Wales)

Extent of this Part

488–500

Disqualification of body corporate from acting as receiver

489

A body corporate is not qualified for appointment as receiver of the property of a company, and any body corporate which acts as such a receiver is liable to a fine.

Disqualification of undischarged bankrupt

490

If a person being an undischarged bankrupt acts as receiver or manager of the property of a company on behalf of debenture holders, he is liable to imprisonment or a fine, or both.

Power for court to appoint official receiver

491

Where application is made to the court to appoint a receiver on behalf of the debenture holders or other creditors of a company which is being wound up by the court, the official receiver may be appointed.

Receivers and managers appointed out of court

492

• (1) A receiver or manager of the property of a company appointed under powers contained in an instrument may apply to the court for directions in relation to any particular matter arising in connection with the performance of his functions.

• (2) On such an application, the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, as it thinks just.

• (3) A receiver or manager so appointed is, to the same extent as if he had been appointed by order of a court—

• (a) personally liable on any contract entered into by him in the performance of his functions (except in so far as the contract otherwise provides), and

• (b) entitled in respect of that liability to indemnity out of the assets;

but this subsection does not limit any right to indemnity which the receiver or manager would have apart from it, nor limit his liability on contracts entered into without authority, nor confer any right to indemnity in respect of that liability.

Notification that receiver or manager appointed

493

• (1) When a receiver or manager of the property of a company has been appointed, every invoice, order for goods or business letter issued by or on behalf of the company or the receiver or manager or the liquidator of the company, being a document on or in which the company's name appears, shall contain a statement that a receiver or manager has been appointed.

• (2) If default is made in complying with this section, the company and any of the following persons, who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver or manager, is liable to a fine.

Court's power to fix remuneration of receiver or manager

494

• (1) The court may, on an application made by the liquidator of a company, by order fix the amount to be paid by way of remuneration to a person who, under powers contained in an instrument, has been appointed receiver or manager of the company's property.

• (2) The court's power under subsection (1). where no previous order has been made with respect thereto under the subsection—

• (a) extends to fixing the remuneration for any period before the making of the order or the application for it, and

• (b) is exercisable notwithstanding that the receiver or manager has died or ceased to act before the making of the order or the application, and

• (c) where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that so fixed for that period, extends to requiring him or his personal representatives to account for the excess or such part of it as may be specified in the order.

But the power conferred by paragraph (c) shall not be exercised as respects any period before the making of the application for the order under this section, unless in the court's opinion there are special circumstances making it proper for the power to be exercised.

• (3) The court may from time to time on an application made either by the liquidator or by the receiver or manager, vary or amend an order made under subsection (1).

Information to be given by and to receiver on appointment

495

• (1) The following applies where, in the case of a company registered in England and Wales, a receiver or manager of the whole (or substantially the whole) of the company's property is appointed on behalf of the holders of any debentures of the company secured by a floating charge.

In this and the following two sections, he is referred to as " the receiver ".

• (2) Subject to the following provisions of this section, and to sections 496 and 497—

• (a) the receiver shall forthwith send to the company notice of his appointment in the prescribed form, and

• (b) there shall within 14 days after receipt of the notice (or such longer period as may be allowed by the court or by the receiver) be made out and submitted to the receiver in accordance with section 496 a statement in the prescribed form as to the affairs of the company.

• (3) The receiver shall, within 2 months after receipt of the statement, send—

• (a) to the registrar of companies and to the court, a copy of the statement and of any comments he sees fit to make on it and, in the case of the registrar of companies, also a summary of the statement and of his comments (if any) on it; and

• (b) to the company, a copy of any such comments as above mentioned or, if he does not see fit to make any comments, a notice to that effect; and

• (c) to any trustees for the debenture holders on whose be half he was appointed and, so far as he is aware of their addresses, to all such debenture holders a copy of the summary.

• (4) If the receiver is appointed under powers contained in an instrument, subsections (2) and (3) have effect with the omission of references to the court; and in any other case references to the court are to the court by which the receiver was appointed.

• (5) This section does not apply in relation to the appointment of a receiver or manager to act—

• (a) with an existing receiver or manager, or

• (b) in place of a receiver or manager dying or ceasing to act,

except that, where it applies to a receiver or manager who dies or ceases to act before it has been fully complied with, the references in subsection (2)(b) and (3) to the receiver include (subject to the next subsection) his successor and any continuing receiver or manager.

• (6) If the company is being wound up, this section and section 496 apply notwithstanding that the receiver or manager and the liquidator are the same person, but with any necessary modifications arising from that fact.

• (7) If the receiver makes default in complying with this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Company's statement of affairs

496

• (1) The company's statement of affairs required by section 495 to be submitted to the receiver (or his successor) shall show as at the date of the receiver's appointment—

• (a) the particulars of the company's assets, debts and liabilities,

• (b) the names, residences and occupations of its creditors.

• (c) the securities held by them respectively,

• (d) the dates when the securities were respectively given, and

• (e) such further or other information as may be prescribed.

• (2) The statement shall be submitted by, and be verified by affidavit of, one or more of the persons who are at the date of the receiver's appointment the directors and by the person who is at that date the secretary of the company, or by such of the persons mentioned in the next subsection as the receiver (or his successor), subject to the direction of the court, may require to submit and verify the statement.

• (3) The persons referred to above are those—

• (a) who are or have been officers of the company,

• (b) who have taken part in the company's formation at any time within one year before the date of the receiver's appointment,

• (c) who are in the company's employment, or have been in its employment during that year and are in the receiver's opinion capable of giving the information required,

• (d) who are or have been during that year officers of or in the employment of a company which is, or within that year was, an officer of the company to which the statement relates.

• (4) A person making the statement and affidavit shall be allowed, and shall be paid by the receiver (or his successor) out of his receipts, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the receiver (or his successor) may consider reasonable, subject to an appeal to the court.

• (5) Where the receiver is appointed under powers contained in an instrument, this section applies with the substitution for references to the court of references to the Secretary of State, and for references to an affidavit of references to a statutory declaration ; and in any other case references to the court are to the court by which the receiver was appointed.

• (6) If a person without reasonable excuse makes default in complying with the requirements of this section, he is liable to a fine and, for continued contravention, to a daily default fine.

• (7) References in this section to the receiver's successor include a continuing receiver or manager.

Subsequent returns by receiver

497

• (1) In the case mentioned in section 495(1), the receiver shall—

• (a) within 2 months (or such longer period as the court may allow) after the expiration of 12 months from the date of his appointment and of every subsequent period of 12 months, and

• (b) within 2 months (or such longer period as the court may allow) after he ceases to act as receiver or manager of the company's property,

send the requisite accounts of his receipts and payments to the registrar of companies, to any trustees for the debenture holders on whose behalf he was appointed, to the company and (so far as he is aware of their addresses) to all such debenture holders.

• (2) The requisite accounts shall be an abstract in the prescribed form showing—

• (a) receipts and payments during the relevant period of 12 months, or

• (b) where the receiver ceases to act, receipts and payments during the period from the end of the period of 12 months to which the last preceding abstract related (or, if no preceding abstract has been sent under this section, from the date of his appointment) up to the date of his so ceasing, and the aggregate amount of receipts and payments during all preceding periods since his appointment.

• (3) Nothing in section 495(5) is to be taken as limiting the meaning of the expression " the receiver" where used in, or in relation to, subsection (1) or (2) above.

• (4) Where the receiver is appointed under powers contained in an instrument, this section has effect with the substitution of the Secretary of State for the court; and in any other case references to the court are to the court by which the receiver was appointed.

• (5) This section applies, where the company is being wound up, notwithstanding that the receiver or manager and the liquidator are the same person, but with any necessary modifications arising from that fact.

• (6) This section does not prejudice the receiver's duty to render proper accounts of his receipts and payments to the persons to whom, and at the times at which, be may be required to do so apart from this section.

• (7) If the receiver makes default in complying with the requirements of this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Receivership accounts to be delivered to registrar

498

• (1) Except where section 497 applies, every receiver or manager of a company's property who has been appointed under powers contained in an instrument shall deliver to the registrar of companies for registration the requisite accounts of his receipts and payments.

• (2) The accounts shall be delivered within one month (or such longer period as the registrar may allow) after the expiration of 6 months from the date of his appointment and of every subsequent period of 6 months, and also within one month after he ceases to act as receiver or manager.

• (3) The requisite accounts shall be an abstract in the prescribed form showing—

• (a) receipts and payments during the relevant period of 6 months, or

• (b) where the receiver or manager ceases to act, receipts and payments during the period from the end of the period of 6 months to which the last preceding abstract related (or, if no preceding abstract has been delivered under this section, from the date of his appointment) up to the date of his so ceasing, and the aggregate amount of receipts and payments during all preceding periods since his appointment.

• (4) A receiver or manager who makes default in complying with this section is liable to a fine and, for continued contravention, to a daily default fine.

Enforcement of duty of receivers to make returns

499

• (1) If a receiver or manager of a company's property—

• (a) having made default in filing, delivering or making any return, account or other document, or in giving any notice, which a receiver or manager is by law required to file, deliver, make or give, fails to make good the default within 14 days after the service on him of a notice requiring him to do so, or

• (b) having been appointed under powers contained in an instrument, has, after being required at any time by the liquidator of the company to do so, failed to render proper accounts of his receipts and payments and to vouch them and pay over to the liquidator the amount properly payable to him,

the court may, on an application made for the purpose, make an order directing the receiver or manager (as the case may be) to make good the default within such time as may be specified in the order.

• (2) In the case of the default mentioned in subsection (1)(a), application to the court may be made by any member or creditor of the company or by the registrar of companies; and in the case of the default mentioned in subsection (1)(b), the application shall be made by the liquidator.

In either case the court's order may provide that all costs of and incidental to the application shall be borne by the receiver or manager, as the case may be.

• (3) Nothing in this section prejudices the operation of any enactment imposing penalties on receivers in respect of any such default as is mentioned in subsection (1).

Construction of references to receivers and managers

500

It is hereby declared that, except where the context otherwise requires—

• (a) any reference in this Act to a receiver or manager of the property of a company, or to a receiver of it, includes a reference to a receiver or manager, or (as the case may be) to a receiver of part only of that property and to a receiver only of the income arising from the property or from part of it, and

• (b) any reference in this Act to the appointment of a receiver or manager under powers contained in an instrument includes a reference to an appointment made under powers which, by virtue of any enactment, are implied in and have effect as if contained in an instrument.

Part XX — Winding Up of Companies Registered Under this Act or the Former Companies Acts

CHAPTER I — Preliminary

Modes of winding up

The three modes in which a company may be wound up

501–650

Contributories

Liability as contributories of present and past members

502

• (1) When a company is wound up, every present and past member is liable to contribute to its assets to any 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 among themselves.

• (2) This is subject as follows—

• (a) a past member is not liable to contribute if he has ceased to be a member for one year or more before the commencement of the winding up;

• (b) a past member is not liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member;

• (c) a past member is not liable to contribute unless it appears to the court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this Act;

• (d) in the case of a company limited by shares, no contribution is required from any member exceeding the amount (if any) unpaid on the shares in respect of which he is liable as a present or past member;

• (e) nothing in this Act invalidates any provision contained in a 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;

• (f) a sum due to any member of the company (in his character of a member) by way of dividends, profits or otherwise is not deemed to be a debt of the company, payable to that member in a case of 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.

• (3) In the case of a company limited by guarantee, no contribution is required from any member exceeding the amount undertaken to be contributed by him to the company's assets in the event of its being wound up; but if it is a company with a share capital, every member of it is liable (in addition to the amount so undertaken to be contributed to the assets), to contribute to the extent of any sums unpaid on shares held by him.

Directors, etc., with unlimited liability

503

• (1) In the winding up of a limited company, any director or manager (whether past or present) whose liability is under this Act unlimited is liable, in addition to his liability (if any) to contribute as an ordinary member, to make a further contribution as if he were at the commencement of the winding up a member of an unlimited company.

• (2) However—

• (a) a past director or manager is not liable to make such further contribution if he has ceased to hold office for a year or more before the commencement of the winding up;

• (b) a past director or manager is not liable to make such further contribution in respect of any debt or liability of the company contracted after he ceased to hold office;

• (c) subject to the company's articles, a director or manager is not liable to make such further contribution unless the court deems it necessary to require that contribution in order to satisfy the company's debts and liabilities and the costs, charges and expenses of the winding up.

Liability of past directors and shareholders

504

• (1) This section applies where a company is being wound up and—

• (a) it has under Chapter VII of Part V made a payment out of capital in respect of the redemption or purchase of any of its own shares (the payment being referred to below as " the relevant payment"), and

• (b) the aggregate amount of the company's assets and the amounts paid by way of contribution to its assets (apart from this section) is not sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up.

• (2) If the winding up commenced within one year of the date on which the relevant payment was made, then—

• (a) the person from whom the shares were redeemed or purchased, and

• (b) the directors who signed the statutory declaration made in accordance with section 173(3) for purposes of the redemption or purchase (except a director who shows that he had reasonable grounds for forming the opinion set out in the declaration),

are, so as to enable that insufficiency to be met, liable to contribute to the following extent to the company's assets.

• (3) A person from whom any of the shares were redeemed or purchased is liable to contribute an amount not exceeding so much of the relevant payment as was made by the company in respect of his shares; and the directors are jointly and severally liable with that person to contribute that amount.

• (4) A person who has contributed any amount to the assets in pursuance of this section may apply to the court for an order directing any other person jointly and severally liable in respect of that amount to pay him such amount as the court thinks just and equitable.

• (5) Sections 502 and 503 above do not apply in relation to liability accruing by virtue of this section.

• (6) This section is deemed included in Chapter VII of Part V for the purposes of the Secretary of State's power to make regulations under section 179.

Limited company formerly unlimited

505

• (1) This section applies in the case of a company being wound up which was at some former time registered as unlimited but has re-registered—

• (a) as a public company under section 43 of this Act (or the former corresponding provision, section 5 of the Companies Act 1980), or

• (b) as a limited company under section 51 of this Act (or the former corresponding provision, section 44 of the Companies Act 1967).

• (2) Notwithstanding section 502(2)(a) above, a past member of the company who was a member of it at the time of re-registration, if the winding up commences within the period of 3 years beginning with the day on which the company was re-registered, is liable to contribute to the assets of the company in respect of debts and liabilities contracted before that time.

• (3) If no persons who were members of the company at that time are existing members of it, a person who at that time was a present or past member is liable to contribute as above notwithstanding that the existing members have satisfied the contributions required to be made by them under this Act.

This applies subject to section 502(2)(a) above and to subsection (2) of this section, but notwithstanding section 502(2)(c).

• (4) Notwithstanding section 502(2)(d) and (3), there is no limit on the amount which a person who, at that time, was a past or present member of the company is liable to contribute as above.

Unlimited company formerly limited

506

• (1) This section applies in the case of a company being wound up which was at some former time registered as limited but has been re-registered as unlimited under section 49 (or the former corresponding provision, section 43 of the Companies Act 1967).

• (2) A person who, at the time when the application for the company to be re-registered was lodged, was a past member of the company and did not after that again become a member of it is not liable to contribute to the assets of the company more than he would have been liable to contribute had the company not been re-registered.

Meaning of " contributory "

507

• (1) In this Act, the expression "contributory" means every 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.

• (2) A reference in a company's articles to a contributory does not (unless the context requires) include a person who is a contributory only by virtue of section 504.

This subsection is deemed included in Chapter VII of Part V for the purposes of the Secretary of State's power to make regulations under section 179.

Nature of contributory's Lability

508

The liability of a contributory creates a debt (in England and Wales in the nature of a specialty) accruing due from him at the time when his liability commenced, but payable at the times when calls are made for enforcing the liability.

Contributories in case of death of a member

509

• (1) If a contributory dies either before or after he has been placed on the list of contributories, his personal representatives, and the heirs and legatees of heritage of his heritable estate in Scotland, are liable in a due course of administration to contribute to the assets of the company in discharge of his liability and are contributories accordingly.

• (2) Where the personal representatives are placed on the list of contributories, the heirs or legatees of heritage need not be added, but they may be added as and when the court thinks fit.

• (3) If in England and Wales the personal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased contributory and for compelling payment out of it of the money due.

Effect of contributory's bankruptcy

510

• (1) The following applies if a contributory becomes bankrupt, either before or after he has been placed on the list of contributories.

• (2) His trustee in bankruptcy represents him for all purposes of the winding up, and is a contributory accordingly.

• (3) The trustee may be called on to admit to proof against the bankrupt's estate, or otherwise allow to be paid out of the bankrupt's assets in due course of law, any money due from the bankrupt in respect of his liability to contribute to the company's assets.

• (4) There may be proved against the bankrupt's estate the estimated value of his liability to future calls as well as calls already made.

Companies registered under Part XXII, Chapter II

511

• (1) The following applies in the event of a company being wound up which has been registered under section 680 (or the previous corresponding provision).

• (2) Every person is a contributory, in respect of the company's debts and liabilities contracted before registration, who is liable—

• (a) to pay, or contribute to the payment of, any debt or liability so contracted, or

• (b) to pay, or contribute to the payment of, any sum for the adjustment of the rights of the members among themselves in respect of any such debt or liability, or

• (c) to pay, or contribute to the payment of, the costs and expenses of winding up the company, so far as relates to the debts or liabilities above-mentioned.

• (3) Every contributory is liable to contribute to the assets of the company, in the course of the winding up, all sums due from him in respect of any such liability.

• (4) In the event of the death, bankruptcy or insolvency of any contributory, provisions of this Act with respect to the personal representatives, to the heirs and legatees of heritage of the heritable estate in Scotland of deceased contributories and to the trustees of bankrupt or insolvent contributories respectively, apply.

CHAPTER II — Winding up by the Court

Jurisdiction (England and Wales)

High Court and county court jurisdiction

512

• (1) The High Court has jurisdiction to wind up any company registered in England and Wales.

• (2) Where the amount of a company's share capital paid up or credited as paid up does not exceed £120,000, then (subject to the provisions of this section) the county court of the district in which the company's registered office is situated has concurrent jurisdiction with the High Court to wind up the company.

• (3) The money sum for the time being specified in subsection (2) is subject to increase or reduction by regulations under section 664; but no reduction of it affects any case in which proceedings were begun before the coming into force of the reduction.

• (4) The Lord Chancellor may by order in a statutory instrument exclude a county court from having winding-up jurisdiction, and for the purposes of that jurisdiction may attach its district, or any part thereof, to any other county court, and may by statutory instrument revoke or vary any such order.

In exercising the powers of this section, the Lord Chancellor shall provide that a county court is not to have winding-up jurisdiction unless it has for the time being jurisdiction in bankruptcy.

• (5) Every court in England and Wales having winding-up jurisdiction has for the purposes of that jurisdiction all the powers of the High Court; and every prescribed officer of the court shall perform any duties which an officer of the High Court may discharge by order of a judge of that court or otherwise in relation to winding up.

• (6) For purposes of this section, a company's " registered office" is the place which has longest been its registered office during the 6 months immediately preceding the presentation of the petition for winding up.

Proceedings taken in wrong court

513

• (1) Nothing in section 512 invalidates a proceeding by reason of its being taken in the wrong court

• (2) The winding up of a company by the court in England and Wales, or any procedings in the winding up, may be retained in the court in which the proceedings were commenced, although it may not be the court in which they ought to have been commenced.

Proceedings in county court: case stated for High Court

514

If any question arises in any winding up proceedings in a county court which all the parties to the proceeding, or which one of them and the judge of the court, desire to have determined in the first instance in the High Court, the judge shall state the facts in the form of a special case for the opinion of the High Court; and thereupon the special case and the proceedings for such of them as may be required) shall be transmitted to the High Court for the purposes of the determination.

Jurisdiction (Scotland)

Court of Session and sheriff's court jurisdiction

515

• (1) The Court of Session has jurisdiction to wind up any company registered in Scotland.

• (2) When the Court of Session is in vacation, the jurisdiction conferred on that court by this section may (subject to the provisions of this Part) be exercised by the judge acting as vacation judge in pursuance of section 4 of the Administration of Justice (Scotland) Act 1933.

• (3) Where the amount of a company's share capital paid up or credited as paid up does not exceed £120,000, the sheriff court of the sheriffdom in which the company's registered office is situated has concurrent jurisdiction with the Court of Session to wind up the company; but—

• (a) the Court of Session may, if it thinks expedient having regard to the amount of the company's assets to do so—

• (i) remit to a sheriff court any petition presented to the Court of Session for winding up such a company, or

• (ii) require such a petition presented to a sheriff court to be remitted to the Court of Session ; and

• (b) the Court of Session may require any such petition as above-mentioned presented to one sheriff court to be remitted to another sheriff court; and

• (c) in a winding up in the sheriff court it is lawful for the sheriff to submit a stated case for the opinion of the Court of Session on any question of law arising in that winding up.

• (4) For the purposes of this section, the expression " registered office " means the place which has longest been the company's registered office during the 6 months immediately preceding the presentation of the petition for winding up.

• (5) The money sum for the time being specified in subsection (3) is subject to increase or reduction by regulations under section 664; but no reduction of it affects any case in which proceedings were begun before the coming into force of the reduction.

Power to remit winding up to Lord Ordinary

516

• (1) The Court of Session may, by Act of Sederunt, make provision for the taking of proceedings in a winding up before one of the Lords Ordinary ; and, where provision is so made, the Lord Ordinary has, for the purposes of the winding up, all the powers and jurisdiction of the court.

• (2) However, the Lord Ordinary may report to the Inner House any matter which may arise in the course of a winding up.

Grounds and effect of winding-up petition

Circumstances in which company may be wound up by the court

517

• (1) A company may be wound up by the court if—

• (a) the company has by special resolution resolved that the company be wound up by the court.

• (b) being a public company which was registered as such on its original incorporation, the company has not been issued with a certificate under section 117 (public company share capital requirements) and more than a year has expired since it was so registered.

• (c) it is an old public company, within the meaning of section 1 of the Consequential Provisions Act.

• (d) the company does not commence its business within a year from its incorporation or suspends its business for a whole year,

• (e) the number of members is reduced below 2,

• (f) the company is unable to pay its debts,

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

• (2) In Scotland, a company which the Court of Session has jurisdiction to wind up may be wound up by the Court if there is subsisting a floating charge over property comprised in the company's property and undertaking, and the court is satisfied that the security of the creditor entitled to the benefit of the floating charge is in jeopardy.

For this purpose a creditor's security is deemed to be in jeopardy if the Court is satisfied that events have occurred or are about to occur which render it unreasonable in the creditor's interests that the company should retain power to dispose of the property which is subject to the floating charge.

Definition of inability to pay debts

518

• (1) A company is deemed unable to pay its debts—

• (a) if a creditor (by assignment or otherwise) to whom the company is indebted in a sum exceeding £750 then due has served on the company, by leaving it at the company's registered office, a written demand requiring the company to pay the sum so due and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, or

• (b) if, in England and Wales, execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part, or

• (c) if, in Scotland, the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made, or

• (d) if, in Northern Ireland, a certificate of unenforceability has been granted in respect of a judgment against the company, or

• (e) if it is proved to the satisfaction of the court that the company is unable to pay its debts (and, in determining that question, the court shall take into account the company's contingent and prospective liabilities).

• (2) The money sum for the time being specified in subsection (1)(a) is subject to increase or reduction by regulations under section 664: but no increase of it affects any case in which the winding-up petition was presented before the coming into force of the increase.

Application for winding up

519

• (1) Subject to the provisions of this section, an application to the court for the winding up of a company shall be by petition presented either by the company or by any creditor or creditors (including any contingent or prospective creditor or creditors), contributory or contributories, or by all or any of those parties, together or separately.

• (2) Except as mentioned below, a contributory is not entitled to present a winding-up petition unless either—

• (a) the number of members is reduced below 2, or

• (b) the shares in respect of which he is a 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 6 months during the 18 months before the commencement of the winding up, or have devolved on him through the death of a former holder.

• (3) A person who is liable under section 504 to contribute to a company's assets in the event of its being wound up may petition on either of the grounds set out in section 517(1)(f) and (g), and subsection (2) above does not then apply; but unless the person is a contributory otherwise than under section 504 he may not in his character as contributory petition on any other ground.

This subsection is deemed included in Chapter VII of Part V for the purposes of the Secretary of State's power to make regulations under section 179.

• (4) If the ground of the petition is that in section 517(1)(b) or (c), a winding-up petition may be presented by the Secretary of State.

• (5) The court shall not hear a petition presented by a contingent or prospective creditor until such security for costs has been given as the court thinks reasonable (or until caution is found, if so ordered by a Scottish court) and until a prima facie case for winding up has been established to the satisfaction of the court.

• (6) In a case falling within section 440 (expedient in the public interest, following report of inspectors, etc.) a winding-up petition may be presented by the Secretary of State.

• (7) Where a company is being wound up voluntarily or subject to supervision in England and Wales, a winding-up petition may be presented by the official receiver attached to the court as well as 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 or winding up subject to supervision cannot be continued with due regard to the interests of the creditors or contributories.

Powers of court on hearing of petition

520

• (1) On hearing a winding-up petition the court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order, or any other order that it thinks fit; but the court shall not refuse to make a winding-up order on the ground only that the company's assets have been mortgaged to an amount equal to or in excess of those assets or that the company has no assets.

• (2) If 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 opinion—

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

• (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; but this does not apply if the court 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.

Power to stay or restrain proceedings against company

521

• (1) At any time after the presentation of a winding-up petition, and before a winding-up order has been made, the company, or any creditor or contributory, may—

• (a) where any action or proceeding against the company is pending in the High Court or Court of Appeal in England and Wales or Northern Ireland, apply to the court in which the action or proceeding is pending for a stay of proceedings therein, and

• (b) where any other action or proceeding is pending against the company, apply to the court having jurisdiction to wind up the company to restrain further proceedings in the action or proceeding,

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

• (2) In the case of a company registered under section 680, where the application to stay, sist or restrain is by a creditor, this section extends to actions and proceedings against any contributory of the company.

Avoidance of property dispositions, etc.

522

In a winding up by the court, any disposition of the company's property, and any transfer of shares, or alteration in the status of the company's members, made after the commencement of the winding up is, unless the court otherwise orders, void.

Avoidance of attachments, etc.

523

• (1) Where a company registered in England and Wales is being wound up by the court, any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of the winding up is void.

• (2) This section, so far as relates to any estate or effects of the company situated in England and Wales, applies in the case of a company registered in Scotland as it applies in the case of a company registered in England and Wales.

Commencement of winding up

Commencement of winding up by the court

524

• (1) If, 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 is deemed to have commenced at the time of the passing of the resolution ; and unless the court, on proof of fraud or mistake, directs otherwise, all proceedings taken in the voluntary winding up are deemed to have been validly taken.

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

Consequences of winding-up order

525

• (1) On the making of a winding-up order, a copy of the order must forthwith be forwarded by the company (or otherwise as may be prescribed) to the registrar of companies, who shall enter it in his records relating to the company.

• (2) When a winding-up order has been made or a provisional liquidator has been appointed, 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.

• (3) When an order has been made for winding up a company registered under section 680, no action or proceeding shall be commenced or proceeded with against the company or any contributory of the company, in respect of any debt of the company, except by leave of the court, and subject to such terms as the court may impose.

• (4) An order for winding up a company operates in favour of all the creditors and of all contributories of the company as if made on the joint petition of a creditor and of a contributory.

The official receiver (England and Wales only)

The official receiver

526

• (1) For the purposes of this Act as it relates to the winding up of companies by the court in England and Wales, the term " official receiver" means the official receiver (if any) attached to the court for bankruptcy purposes or, if there is more than one such official receiver, then such one of them as the Secretary of State may appoint or, if there is no such official receiver, then an officer appointed for the purpose by the Secretary of State.

• (2) Any such officer shall, for the purpose of his duties under this Act, be styled " the official receiver".

Appointment of official receiver by court in certain cases

527

• (1) If in the case of the winding up of a company by the court in England and Wales it appears to the court desirable, with a view to securing the more convenient and economical conduct of the winding up, that some officer other than the person who would under section 526 be the official receiver should be the official receiver for the purposes of that winding up, the court may appoint that other officer to act.