Section 716

(1) Where a meeting of creditors or any class of creditors or of members or any class of members is summoned under section 715 of this Act, there shall -

(a) with every notice summoning the meeting which is sent to a creditor or member, be sent also a statement explaining the effect of the compromise or arrangement and in particular stating any material interests of the directors of the company, whether as directors or as members or as creditors of the company or otherwise, and the effect of the compromise or arrangement in so far as it is different from the effect on the like interest of other persons; and

(b) in every notice summoning the meeting which is given by advertisement, be included such a statement, or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement.

(2) Where the compromise or arrangement affects the rights of debenture holders of the company, the statement shall give the like explanation as respects the trustees of any deed for securing the issue of the debenture as it is required to give as respects the company's directors.

(3) Where a notice given by advertisement includes a notification that copies of a statement explaining the effects of the compromise or arrangement proposed can be obtained by creditors or members entitled to attend the meeting, every such creditor or member shall, on making application in the manner indicated by the notice, be furnished by the company free of charge with a copy of the statement.

(4) Where a company makes default in complying with any requirement of this section, the company and every officer of the company are liable to a penalty as prescribed by the Commission in the regulations and for the purpose of this subsection any liquidator of the company and any trustee of a deed for securing the issue of debentures of the company shall be deemed to be an officer of the company:

Provided that a person is not liable under this subsection, if that person shows that the default was due to refusal of any other person, being a director or trustee for debenture holders, to supply the necessary particulars as to his interests.

(5) A director of the company and any trustee for debenture holders of the company shall give notice to the company of such matters relating to himself as may be necessary for the purpose of this section, and any person who defaults in complying with this subsection is liable to a penalty as prescribed by the Commission in the regulations.

717. (1) No winding up petition or enforcement action by a creditor (secured or unsecured) shall be entertained against any company or its assets that has commenced a process of arrangement and compromise with its creditors for six months from the time that the company by way of affidavit provides the following documents to the Court:

(a) a document setting out the terms intended to be proposed to the creditors in an arrangement or compromise;

(b) a statement of the company's affairs containing the particulars of the company's creditors and its debts and other liabilities and of its assets;

(c) such other information as the Court may require; and

(d) a statement that the company desires a protection from a winding up process pending the completion of the arrangement or compromise.

(2) Notwithstanding the provisions of subsection (1), a secured creditor may, by application to the Court filed within 30 days of notice of the arrangement and compromise, discharge the six months moratorium period provided in subsection (1) if -

(a) the asset of the company sought to be enforced by the creditor does not form part of the company's pool of assets to be considered under the arrangement and compromise proceeding;

(b) the asset sought to be enforced by the creditor is a perishable goods or commodities which may depreciate or dissipate before expiration of the six months moratorium period;

(c) the secured creditor enforces its security over the assets before receiving notice of the company's proposed arrangement and compromise; or

(d) the company consents in writing for a secured creditor to enforce its right over the company's asset within the six months moratorium period:

Provided that the company, upon the approval or consent shall file a further affidavit updating the Court of the dissipation of the said asset.