124. Power of Company to compromise with Creditors and Shareholders

(1) This section applies if a compromise or arrangement is proposed between a Company and:

• (a) its Creditors or a class of its Creditors; or
• (b) its Shareholders or a class of its Shareholders.

(2) The Court may, on the application of:

• (a) the Company; or
• (b) a Creditor or Shareholder of the Company; or
• (c) for a Company being wound up—its liquidator; order that a meeting of the Creditors or class of Creditors, or of the Shareholders or class of Shareholders, be held as the Court directs.

(3) The Court may, by order, sanction a compromise or arrangement, but only if a majority in number representing:

• (a) 3/4 in value of the Creditors or that class of Creditors; or
• (b) 3/4 of the voting rights of the Shareholders or that class of Shareholders; as the case may be, present and voting either in person or by proxy at the meeting, agree to the compromise or arrangement.

(4) If the Court sanctions a compromise or arrangement under subsection (3), the compromise or arrangement is binding on:

• (a) all the Creditors or that class of Creditors; or
• (b) all the Shareholders or that class of Shareholders; as the case may be, and also on the Company or, if the Company is being wound up, on the liquidator and contributories of the Company.

(5) The Person on whose application the Court makes an order under subsection (3) must give a copy of the order, duly certified by the Registrar of the Court, to the Registrar as soon as practicable and, in any case, within 7 days after the day the order is made.

(6) The Court order under subsection (3) has no effect, until a duly certified copy of that order is given to the Registrar by the Person on whose application the order was made or the Company.

(7) The Registrar must, as soon as practicable after receiving a duly certified copy of the Court’s order referred to in subsection (5), include the order in the Company’s Articles of Association.

(8) Contravention of subsection (5) is punishable by a fine.

125. Information relating to compromise to be circulated

(1) This section applies if a meeting of Creditors or a class of Creditors, or of Shareholders or a class of Shareholders, of a Company is called under section 124 (Power of Company to compromise with Creditors and Shareholders).

(2) The notice calling for the meeting of Creditors or Shareholders must include a statement containing the following:

• (a) an explanation of the effect of the compromise or arrangement;
• (b) any material interests of Directors in the compromise or arrangement, including interests as an Officer, Creditor or Shareholder of the Company;
• (c) if there any Debt Securities issued by the Company - how the arrangement or compromise would affect the rights of the Debt Security holders;
• (d) any other matter that has a material impact on the Company, and its Creditors and Shareholders and Debt Security holders, resulting from the compromise or arrangement.

(3) If the notice calling the meeting is given by advertisement, the advertisement must include either the statement referred to in subsection (2), or a notification of where or how the Creditors or Shareholders entitled to attend the meeting may obtain copies of the statement.

(4) If a notice given by advertisement includes a notification that copies of the statement referred to in subsection (2) can be obtained by Creditors or Shareholders entitled to attend the meeting, the Company must give a Creditor or Shareholder, on application, a copy of the statement free of charge.

(5) The Company, and each Officer of the Company, must ensure that every requirement of this section is complied with.

(6) Contravention of subsection (5) by the Company or an Officer of the Company is punishable by a fine.

126. Provisions for facilitating Company reconstruction or amalgamation

If an application is made to the Court under section 124 (Power of Company to compromise with Creditors and Shareholders) for the sanctioning of a compromise or arrangement proposed between a Company and any Persons mentioned in that section, the Court may make any orders as it considers appropriate to facilitate the compromise or arrangement, including a reconstruction of the Company, or an amalgamation of the Company with any other Company. In this section: Company may be taken to include a Body Corporate incorporated outside the AIFC.