ACT No. XI of 2017 AN ACT to amend to the Companies Act, Cap. 386.

I assent.

M ARIE- L OUISE

(L.S.)

C OLEIRO P RECA

President

21st March, 2017

ACT No. XI of 2017

AN ACT to amend to the Companies Act, Cap. 386.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

The short title of this Act is the Companies (Amendment)

Act, 2017, and this Act shall be read and construed as one with the

Companies Act, hereinafter referred to as "the principal Act".

In the definition ''shareholder'' in sub-article (1) of article 2

of the principal Act, the words ''or the bona fide holder of a share

warrant referred to in article 121" shall be deleted.

Article 72 of the principal Act shall be amended as follows

(a) sub-article (4) thereof shall be deleted; and

(b) sub-articles (5) and (6) thereof shall be renumbered as

sub-articles (4) and (5) respectively.

In the proviso to sub-article (3) of article 88 of the principal

Act, the words ''where the public company has not issued share

warrants,'' shall be deleted.

In sub-article (3) of article 118 of the principal Act, for the Amendment of

118 of

words ''shares or debentures of a public company'', there shall be article

the principal

substituted the words ''shares or debentures of a company''.

Act.

Article 121 of the principal Act shall be substituted by the Substitution of

article 121 of

following

the principal

Act.

'' Prohibition of

121. No company may issue a share warrant to

share warrants.

bearer notwithstanding anything contained in its

memorandum and articles of association.''.

Immediately after article 121 of the principal Act there Addition of new

article 121A to

shall be added the following new article 121A

the principal

Act.

'' Transitory

121A. (1) A holder of a share warrant shall,

provisions

before the expiry of nine months from the coming

relating to

into force of the Companies (Amendment) Act,

amendments to

the Companies

2017 surrender the share warrant to the company

Act made by the

Companies

which had issued such warrant.

(Amendment)

Act 2017.

(2) Upon the surrender of a share warrant

the company shall

(a)

cancel any share warrant issued

by it;

(b) enter in its register of members

the name of the persons requesting that their

names and addresses be entered in the

register of members in lieu of share warrants

surrendered, and in this regard the

provisions of article 123(1)(a), (1)(b) and

(2) shall apply; and

(c)

notify the Registrar of any

changes in the register of members made

consequently to that provided in sub-article

(1) and paragraphs (a) and (b).

(3) Any share warrant which is not

surrendered to the issuing company as aforesaid

by the end of the period mentioned in sub-article

(1) shall, after the end of the said period, no

longer be recognised by the company and such

share warrants shall be deemed to have been

cancelled.''.

Article 122 of the principal Act shall be amended as Amendment of

article 122 of

follows

the principal

Act.

(a)

in sub-article (1) thereof -

(i)

the first proviso thereof shall be deleted; and

(ii) in the second proviso thereof, for the words

''Provided further that'' there shall be substituted the

words ''Provided that''; and

(b)

in sub-article (16) thereof -

(i) for the words ''of the pledge of a share warrant

or'', there shall be substituted the words ''of the pledge'';

(ii) for the words ''The pledge of a share warrant or

of a debenture warrant'', there shall be substituted the

words ''The pledge of a debenture warrant''; and

(iii) for the words ''of the share warrant or debenture

warrant'', there shall be substituted the words ''of the

debenture warrant''.

In sub-article (1) of article 126A of the principal Act for

the words ''debentures of a public company'', there shall be substituted

the words ''debentures of a company''.

Article 139 of the principal Act shall be amended as

(a) sub-article (3) thereof shall be deleted; and

(b) sub-articles (4) and (5) thereof shall be renumbered as

sub-articles (3) and (4) respectively.

Sub-article (2) of article 209 of the principal Act shall be

amended as follows

(a) in paragraph (b) thereof, for the words "offers made to

the public", there shall be substituted the words "offers of

securities made to the public"; and

(b) in paragraph (c) thereof, for the words ''any of its

securities to be admitted to listing'', there shall be substituted the

words ''any of its equity securities to be admitted to listing''.

Sub-article (2) of article 258 of the principal Act shall be

amended as follows

(a)

paragraphs (d), (e), (f), (g), (h), (i) and (j) thereof

shall be renumbered as paragraphs (f), (g), (h), (i), (j), (k) and (l)

respectively;

(b) immediately after paragraph (c) thereof there shall

be added the following new paragraphs

"(d) any necessary disbursements by the special

controller in the course of his office in terms of articles

329A and 329B;

(e) the remuneration of the special controller;"; and

(c)

immediately after paragraph (l) thereof, as re-

numbered, there shall be added the following new paragraph

"(m) any new financing granted to the company for

the purpose of a recovery procedure in terms of articles

329A and 329B.".

Article 327 of the principal Act shall be amended as Amendment of

article 327 of

the principal

Act.

(a) sub-article (1) thereof shall be substituted by

the following

"(1) Where a compromise or arrangement

is proposed between a company and its creditors,

or any class of them, or between the company and

its members, or any class of them

(a) the court may, on the application

of the company or any creditor or member

of it or, in the case of a company being

wound up, the liquidator, order a meeting

of the creditors, or of the members of the

company or class of members, as the case

may be, to be summoned in such manner as

the court directs; or

(b) the company or any creditor, with

the sanction of not less than two-thirds of

the creditors or class of creditors, may seek

the appointment of a mediator in terms of

article 20 of the Mediation Act, and such

mediation shall organise a meeting of the

creditors, or class of creditors, as the case

may be, in order for such creditors and the

company to reach a compromise or

arrangement. The principles under the

Mediation Act shall apply.";

(b) sub-article (2) thereof shall be amended as

follows

(i)

the current sub-article shall be re-

numbered as paragraph (a) thereof;

(ii) for the words "representing three-

fourths", there shall be substituted the words

"representing two-thirds";

(iii) immediately after the words "or by

proxy at the meeting", there shall be added the

words "called in terms of sub-article (1)(a)";

(iv) immediately after paragraph (a)

thereof there shall be added the following new

paragraph

"(b) If all the creditors, as a result of

the mediation process, execute a written

agreement containing a compromise or

arrangement in terms of sub-article (1)(b),

such arrangement shall be binding on all

creditors, and also on the company or, in

the case of a company in the course of

being wound up, on the liquidator."; and

(c) sub-article (3) thereof shall be substituted by

the following

"(3) The court’s order, compromise or

agreement reached during mediation in terms of

sub-article (2) shall have no effect until a copy of

every such order, compromise or arrangement has

been delivered to the Registrar for registration in

accordance with article 329(5); and a copy of

every such order, compromise or arrangement

shall be annexed to every copy of the company’s

memorandum issued after order, compromise or

arrangement has been made.".

In sub-article (1) of article 328 of the principal Act, for the Amendment of

words "under article 327" there shall be substituted the words "or article

the principal

where a mediator is appointed in terms of article 327".

Act.

Article 329B of the principal Act shall be amended as Amendment of

article 329B of

the principal

Act.

(a)

sub-article (1) thereof shall be amended as follows

(i) in paragraph (b)(ii) thereof, immediately after

the words "board of directors" there shall be added the

words "whenever, following a notice to convene a

general meeting in terms of article 329A, the general

meeting does not convene, or a quorum is not present at

the said meeting, or a resolution with regard to the filing

of a recovery application is not passed due to an

unresolved tie following a vote";

(ii) in paragraph (b)(iii) thereof, for the word

"creditors." there shall be substituted the words

"creditors; or"; and

(iii) immediately after paragraph (b)(iii) thereof

there shall be added the following new sub-paragraph

"(iv) by creditors forming part of a class of

creditors if such creditors represent more than half

in value of the company’s creditors in that class.";

(iv) paragraph (c) thereof shall be substituted by the

following

"(c) (i) Creditors with different interests

should be treated in separate classes which reflect

those interests.

(ii) Where both secured and unsecured

creditors exist, they shall be treated as separate

classes.";

(v) paragraphs (d) and (e) thereof shall be

renumbered as paragraphs (e) and (f) respectively; and

(vi) immediately after paragraph (c) thereof there

shall be added the following new paragraph

"(d) The appointment of a special controller

shall be made for a period not exceeding four

months; provided that, at any time during which the

company recovery procedure is in force, the court

may, upon good cause being shown, extend the

period by further periods of four months, provided

that the aggregate additional periods do not exceed

a further eight months.";

(b) in paragraph (b)(ii) of sub-article (2) thereof, for the

words "and addresses" there shall be substituted the words "and

addresses, including electronic mail addresses,";

(c)

sub-article (3) thereof shall be amended as follows

(i) in paragraph (c)(i) thereof, for the words

"creditors, shareholders" there shall be substituted the

words "creditors, regard being had to the different

classes of creditors, of the shareholders"; and

(ii) in paragraph (e) thereof, for the words "twenty

working days" there shall be substituted the words "forty

working days";

(d)

sub-article (4) thereof shall be amended as follows

(i) the current sub-article shall be re-numbered as

paragraph (ii) thereof, and immediately before the said

paragraph there shall be added the following new

paragraph

"(i) The provisions of this article shall not

apply with respect to any new financing given to

the company for the purpose of implementing a

recovery plan

Provided that new financing under this Act

shall exclude financing, debts or obligations which

already existed at the time of the recovery order,

even if such financing, debts, or obligations are

restructured in any manner in order to be included

with any financing obtained or to be obtained after

the recovery order.";

(ii) in paragraph (f) thereof, for the words "shall be

made against the company or any property of the

company" there shall be substituted the words "shall be

made or continued against the company or any property

of the company, including any warrant in terms of article

312 of the Code of Organization and Civil Procedure";

(iii) paragraph (g) thereof shall be renumbered as

paragraph (h); and

(iv) immediately after paragraph (f) thereof there

shall be added the following new paragraph

"(g) no arbitration proceeding shall be made

or continued against the company or any property

of the company; and"; and

(v) in paragraph (h) thereof, as re-numbered, for the

words "no judicial proceedings" there shall be

substituted the words "notwithstanding anything

contained in this sub-article, no judicial proceedings";

(e)

sub-article (5) thereof shall be amended as follows

(i) in paragraph (a)(i) thereof, for the words "and to

carry" there shall be substituted the words "for a period

as specified in sub-article (1)(c). The special controller

shall carry";

(ii) in paragraph (a)(ii) thereof, for the words "and

assets" there shall be substituted the words "and assets,

and in terms of any applicable regulations made by the

Minister";

(iii) in paragraph (a)(iii) thereof, for the words "to

his appointment." there shall be substituted the words "to

his appointment:", and immediately thereafter there shall

be added the following proviso

"Provided that the court may order that the

remuneration and the disbursements of the special

controller are initially paid out of a fund

established by regulations in terms of sub-article

(15), which expense shall be recoverable from the

company in accordance with this article. On the

making of such order, a copy thereof shall

forthwith be forwarded by the Registrar of Courts

to the Official Receiver.

The expense paid out pursuant to this proviso

shall be notified in writing to the company.

The company shall effect payment without

delay, and in the event that the company is or has

been dissolved, the Official Receiver shall, in

regard to the said expense, enjoy the same

preferential ranking as expenses properly incurred

by a liquidator in accordance with this Act.

A copy of the aforementioned notice served

by means of a judicial act on the company or its

officers, shall constitute an executive title for all

effects and purposes of Title VII of Part I of Book

Second of the Code of Organization and Civil

Procedure."; and

(iv) in paragraph (b) thereof, immediately after the

words "to his appointment." there shall be added the

words "The court may appoint as the special controller

an individual from the list of individuals eligible to

occupy the office of special controller held by the

Official Receiver.";

(f)

in paragraph (c) of sub-article (6) thereof, for the

words "of the company" there shall be substituted the words "of

the company, and any proposals made by the applicant in terms

of sub-article (2)(a) as to how the financial and economic

situation of the company can be improved,";

(g)

sub-article (7) thereof shall be amended as follows

(i) in paragraph (a) thereof, for the words "and

members," there shall be substituted the words "and

members, or classes thereof,";

(ii) immediately after paragraph (a)(ii) thereof,

there shall be added the following new sub-paragraph

"(iii) discussing the proposals for the future

prospects and management of the company, to be

presented to the court.";

(iii) in paragraph (b) thereof, for the words "fourteen

days notice shall be given of the holding of any such

meeting or meetings" there shall be substituted the

words "seven days notice shall be given of the holding of

the first meeting of creditors and members, or classes

thereof";

(iv) in paragraph (c) thereof, for the words

"meetings of creditors and members in a daily

newspaper circulating wholly or mainly in Malta, not

later than fourteen" there shall be substituted the words

"first meeting of creditors and members, or classes

thereof, in a daily newspaper circulating wholly or

mainly in Malta, not later than seven"; and

(v) immediately after paragraph (d) thereof, there

shall be added the following paragraph

"(e) The special controller shall ensure that

any notice convening the first meeting of creditors

or members, or classes thereof, shall also be given

to known creditors residing or based abroad, and

such foreign creditors shall also be given the

opportunity to participate in any such meeting, and

any voting rights may be exercised by means of

electronic communication.".

(g)

sub-article (11) thereof shall be amended as follows

(i) paragraph (a) thereof shall be re-numbered as

paragraph (a)(i);

(ii) in paragraph (a)(i) thereof, as re-numbered, for

the words "every period of four months commencing

from the date of the making of the order until the

termination of his appointment" there shall be

substituted the words "the original period of

appointment or at the end of each extension";

(iii) immediately after paragraph (a)(i) thereof, as

re-numbered, there shall be added the following new

sub-paragraph

"(ii) The special controller may, if he deems it

is reasonably necessary, together with the said

report, present an application to the court for a one

time extension of his appointment for a further

period of four months up to a maximum period of

appointment not exceeding twelve months."; and

(iv) immediately after paragraph (b) thereof, there

shall be added the following new paragraphs

"(c) The court shall within a period not

exceeding twenty working days from the

termination of the period of appointment of the

special controller, including any extension thereof,

declare the termination of the company recovery

procedure, and that the company has recovered, or

that it shall be dissolved and wound up,

irrespective whether it has received the said report

from the special controller. The court shall make

such provisions and conditions, as it may consider

necessary in the circumstances of the case.

(d) Any creditor or member or the Registrar

or the Official Receiver may at any time after the

lapse of the twenty working days mentioned in

paragraph (c) apply to the court for a declaration of

the termination of the recovery procedure.";

(h)

sub-article (12) thereof shall be amended as follows

(i) in paragraph (e) thereof, immediately after the

words "in whole or in part," there shall be added the

words "regard being had to the interests of the creditors,

the company and its members, and the particular classes

of members and creditors,"; immediately after the words

"to financial resources," there shall be added the words

"including new financing"; and for the words "by all the

creditors." there shall be substituted the words "by all

the creditors, and shall include the position of the

creditors with regard to the said proposals."; and

(ii) immediately after paragraph (g) thereof, there

shall be added the following new paragraphs

"(h) Where the court accepts the proposed

recovery plan, with or without amendments, the

dissenting creditors may apply to the Court of

Appeal (Inferior Jurisdiction) constituted in terms

of article 41(6) of the Code of Organization and

Civil Procedure, if they consider that their rights

are likely to be reduced to a level which is lower

than what they would be granted had the company

been dissolved and wound up at the time of the

recovery application in terms of sub-article (1)(b).

In the interest of the creditors supporting the plan,

such appeal shall not automatically suspend the

implementation of the recovery plan and

procedures, and remedies shall be limited to

compensation for the loss suffered by the applicant

as a result of the recovery procedure.

(i) Where the proposed recovery plan seeks

new financing, the providers thereof shall, in the

absence of any fraudulent actions, be exempt from

civil and criminal liability relating to the recovery

procedure.".

Paragraph (h) of article 425 of the principal Act shall be Amendment of

article 425 of

the principal

Act.

Article 2 of Part II of the First Schedule to the principal Act Amendment of

the First

shall be amended as follows

Schedule to the

principal Act.

(a)

in paragraph (b) thereof, for the words ''to fifty;'',

there shall be substituted the words ''to fifty; and'';

(b) in paragraph (c) thereof, for the words ''of the

company is prohibited; and'', there shall be substituted the

words ''of the company is prohibited.''; and

(c)

paragraph (d) thereof shall be deleted.

Passed by the House of Representatives at Sitting No. 495 of the

15 th March, 2017.

A NĠLU F ARRUGIA

Speaker

R AYMOND S CICLUNA

Clerk of the House of

Representatives

€1.26