Schemes of Arrangement
Companies Act
Interpretation (Chapter 1)
449. (1) In this Chapter—
“arrangement”, in relation to a company, includes a reorganisation of the share capital of the company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both those methods;
“debenture trustees”, in relation to a company, means the trustees of a deed securing the issue of debentures by the company;
“new company” shall be read in accordance with section 455 (1)(b)(ii); “old company” shall be read in accordance with section 455 (1)(b)(ii); “scheme circular” shall be read in accordance with section 452 (1)(a);
“scheme meeting” means a meeting of creditors (or any class of creditors) or of members (or any class of members) for the purpose of their considering, and voting on, a resolution proposing that the compromise or arrangement concerned be agreed to;
“scheme order” means an order of the court under section 453 (2)(c) sanctioning a compromise or arrangement referred to in section 450 ;
“special majority” means a majority in number representing at least 75 per cent in value of the creditors or class of creditors or members or class of members, as the case may be, present and voting either in person or by proxy at the scheme meeting.
(2) A reference in this Chapter to a compromise or arrangement that is proposed between a company and its creditors (or any class of them) or its members (or any class of them) includes a reference to circumstances in which a compromise or arrangement is proposed between a company and both—
(a) its creditors (or any class of them), and
(b) its members (or any class of them),
and, accordingly, the powers under this Chapter are exercisable, and the duties under this Chapter are to be carried out, in the latter circumstances as in the former.
Scheme meetings — convening of such by directors and court’s power to summon such meetings
450. (1) Where a compromise or arrangement is proposed between a company and—
(a) its creditors or any class of them, or
(b) its members or any class of them,
the directors of the company may convene—
(i) the appropriate scheme meetings of the creditors or the class concerned of them, or
(ii) the appropriate scheme meetings of the members or the class concerned of them.
(2) References in subsections (1) and (5) to the appropriate scheme meetings of creditors or members, as the case may be, are references to either—
(a) separate scheme meetings of the particular creditors or members (as appropriate) who fall into the separate classes that, under the general law, are required to be constituted for the purpose of voting on the proposals for the compromise or arrangement, or
(b) where, under the general law, no such separate classes are required to be constituted for that purpose, a single scheme meeting of the creditors or members (as appropriate).
(3) Where a compromise or arrangement referred to in subsection (1) is proposed and the directors of the company do not exercise the powers under that subsection, the court may, on the application, at any time, of any of the following persons, order a scheme meeting or scheme meetings of the creditors or members (or, as the case may be, the class of either of them concerned) to be summoned in such manner as the court directs.
(4) The persons referred to in subsection (3) are:
(a) the company;
(b) any creditor or member of the company;
(c) in the case of a company being wound up, the liquidator.
(5) Without prejudice to the court’s jurisdiction under section 453 (2)(c) to determine whether the scheme meetings that have been held comply with the general law referred to in subsection (2), the court, in exercising its jurisdiction to summon meetings under subsection (3), may, in its discretion, where it considers just and convenient to do so, give directions as to what are the appropriate scheme meetings that must be held in the circumstances concerned.
(6) If the compromise or arrangement is proposed between the company and a class of its creditors or members, then—
(a) the reference in subsection (2) to creditors or members, where it first occurs, is a reference to that class of creditors or members, as appropriate (the “predicate class”), and
(b) the references in paragraphs (a) and (b) of that subsection to separate classes of creditors or members are references to separate classes of creditors or members, as appropriate, who fall within the predicate class.
Court’s power to stay proceedings or restrain further proceedings
451. (1) This section applies where one or more scheme meetings is convened under section 450 (1) or an application is made under section 450 (3) in relation to a company.
(2) Where this section applies the court may, on the application of any of the following persons, on such terms as seem just, stay all proceedings or restrain further proceedings against the company for such period as the court sees fit.
(3) The persons referred to in subsection (2) are:
(a) the company;
(b) the directors of the company;
(c) any creditor or member of the company;
(d) in the case of a company being wound up, the liquidator.
Information as to compromises or arrangements with members and creditors
452. (1) Where a scheme meeting is convened or summoned under section 450 there shall—
(a) with every notice convening or summoning the meeting which is sent to a creditor or member of the company concerned, be sent also a circular (in this section referred to as a “scheme circular”)—
(i) explaining the effect of the compromise or arrangement,
(ii) 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 thereon of the compromise or arrangement, in so far as it is different from the effect on the like interests of other persons,
(iii) where the compromise or arrangement affects the rights of debenture holders of the company, giving the like explanation in relation to the debenture trustees as it is required under subparagraph (ii) to give in relation to the company’s directors,
(b) in every notice convening or summoning the meeting which is given by advertisement, be included the scheme circular or a notification of the place at which and the manner in which creditors or members entitled to attend the meeting may obtain copies of the scheme circular.
(2) Where a notice given by advertisement includes a notification that copies of the scheme circular can be obtained by creditors or members entitled to attend the scheme 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 scheme circular.
(3) Each director and debenture trustee shall provide the company in writing with the information concerning such director or debenture trustee, as the case may be, that is required for the scheme circular.
(4) Subject to subsection (6), if a company fails to comply with any requirement of this section, the company and any officer of it who is in default shall be guilty of a category 3 offence.
(5) For the purpose of subsection (4), any liquidator of the company and any debenture trustee of the company shall be deemed to be an officer of the company.
(6) In any proceedings against a person in respect of an offence under subsection (4), it shall be a defence to prove that the default was due to the refusal of any other person, being a director or debenture trustee, to supply the necessary particulars as to his or her interests.
(7) References in this section to directors include references to shadow directors and to de facto directors.
Circumstances in which compromise or arrangement becomes binding on creditors or members concerned
453. (1) If the following conditions are satisfied, a compromise or arrangement shall be binding, with effect from the date of delivery referred to in section 454 (1), on all the creditors or class of creditors referred to in section 450 (1)(a) or all the members or class of members referred to in section 450 (1)(b) (or both as the case may be) and also on—
(a) the company, or
(b) in the case of a company in the course of being wound up, on the liquidator and contributories of the company.
(2) The conditions referred to in subsection (1) are:
(a) a special majority at the scheme meeting, or, where more than one scheme meeting is held, at each of the scheme meetings, votes in favour of a resolution agreeing to the compromise or arrangement;
(b) notice—
(i) of the passing of such resolution or resolutions at the scheme meeting or scheme meetings, and
(ii) that an application will be made under paragraph (c) to the court in relation to the compromise or arrangement,
is advertised once in at least 2 daily newspapers circulating in the district where the registered office or principal place of business of the company is situated; and
(c) the court, on application to it, sanctions the compromise or arrangement.
(3) Section 192 shall apply to any such resolution as is mentioned in subsection (2)(a) which is passed at any adjourned scheme meeting.
(4) Where a State authority is a creditor of the company, such authority shall be entitled to accept proposals under this section notwithstanding—
(a) that any claim of such authority as a creditor would be impaired under the proposals, or
(b) any other enactment.
(5) In subsection (4) “State authority” means the State, a Minister of the Government, a local authority or the Revenue Commissioners.
Supplemental provisions in relation to section 453
454. (1) Where a scheme order is made, the company shall cause a copy of it to be delivered to the Registrar within 21 days after the date of making of the order; the scheme order shall take effect immediately upon such delivery of that copy.
(2) The company shall attach to every copy of the constitution of the company issued by it after the scheme order has been made a copy of that order.
(3) If default is made in complying with subsection (1) or (2), the company concerned and any officer of it who is in default shall be guilty of a category 3 offence.
Provisions to facilitate reconstruction and amalgamation of companies
455. (1) Where—
(a) an application is made to the court for the sanctioning of a compromise or arrangement under section 453 (2)(c), and
(b) it is shown to the court that—
(i) the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any 2 or more companies, and
(ii) under the scheme the whole or any part of the undertaking, assets or liabilities of any company concerned in the scheme (in this section referred to as an “old company”) is to be transferred to another company (in this section referred to as the “new company”),
the court may, either by the scheme order or by any subsequent order, make provision for all or any of the matters set out in subsection (2).
(2) The matters for which the court may make such provision are:
(a) the transfer to the new company of the whole or any part of the undertaking, assets or liabilities of any old company;
(b) the allotting or appropriation by the new company of any shares, debentures, policies or other like interests in that company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person;
(c) the continuation by or against the new company of any legal proceedings pending by or against any old company;
(d) the dissolution, with or without winding up, of any old company;
(e) the provision to be made for any persons who, within such time and in such manner as the court directs, dissent from the compromise or arrangement;
(f) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation shall be fully and effectively carried out.
(3) Where the scheme order or a subsequent order under this section provides for the transfer of assets or liabilities, those assets shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of the new company, and in the case of any assets, if the order so directs, freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect.
(4) Where provision of the kind set out in subsection (2) is made by—
(a) the scheme order — every company in relation to which the order is made (other than the company the compromise or arrangement in relation to which has been sanctioned by the court), or
(b) a subsequent order — every company (without exception) in relation to which the order is made,
shall cause a copy of it to be delivered to the Registrar within 21 days after the date of making of the order.
(5) If default is made by a company in complying with subsection (4), the company and any officer of it who is in default shall be guilty of a category 3 offence.
(6) In this section, “assets” includes property, rights and powers of every description, and “liabilities” includes duties.
CHAPTER 2
Acquisitions
Interpretation (Chapter 2)
456. (1) In this Chapter—
“assenting shareholder” means a holder of any of the shares affected in respect of which a scheme, contract or offer has become binding or been approved or accepted and section 459 (8) supplements this definition;
“call notice” shall be read in accordance with section 457 (4)(a);
“dissenting shareholder” means a holder of any of the shares affected in respect of which the scheme, contract or offer has not become binding or been approved or accepted or who has failed or refused to transfer his or her shares in accordance with the scheme, contract or offer and section 459 (8) supplements this definition;
“information notice” shall be read in accordance with section 457 (6);
“offeree company” shall be read in accordance with section 457 (1);
“offeror” shall be read in accordance with section 457 (1);
“relevant scheme, contract or offer” has the meaning assigned to it by section 457 (1);
“shares affected” means the shares the acquisition of the beneficial ownership of which by an offeror is involved in the scheme, contract or offer referred to in section 457 (1).
(2) The application of this Chapter is restricted, as was the position in the case of the corresponding provisions of the Act of 1963, by the regulations made under section 3 of the European Communities Act 1972 that are referred to in paragraph 11 of Schedule 6.
Right to buy out shareholders dissenting from scheme or contract approved by majority and right of such shareholders to be bought out
457. (1) In this section “relevant scheme, contract or offer” means a scheme, contract or offer involving the acquisition by a person (in this Chapter referred to as the “offeror”) of the beneficial ownership of all the shares (other than the shares in which the offeror already has a beneficial interest) in the capital of a company (in this section referred to as the “offeree company”).
(2) This section applies where the relevant scheme, contract or offer—
(a) has become binding or been approved or accepted in respect of not less than 80 per cent in value of the shares affected, and
(b) has become so binding or been so approved or accepted not later than the date 4 months after the date of publication generally to the holders of the shares affected of the terms of such scheme, contract or offer,
but subject to section 458 as regards the right of the offeror under subsection (3) (offeror’s right of buy-out).
(3) Where this section applies, the offeror shall be entitled to acquire the beneficial ownership of all or any of the remaining shares affected from the dissenting shareholder or shareholders on—
(a) the same terms as have become binding or been approved or accepted as mentioned in subsection (2), or
(b) where an application is made under section 459 (5)(a), any different terms that the court specifies,
but only if, in either case, the following conditions are satisfied.
(4) Those conditions for such acquisition of the shares of a dissenting shareholder are:
(a) the offeror, at any time before the expiration of the period of 6 months after the date of the publication referred to in subsection (2)(b), gives notice in the prescribed form to the dissenting shareholder that the offeror desires to acquire the beneficial ownership of his or her shares (which notice is referred to in this section as the “call notice”); and
(b) either—
(i) 30 days pass after the date that the call notice was given without an application being made to the court under section 459 (5)(a) by the dissenting shareholder or, following such an application to the court by the dissenting shareholder, the court nonetheless approves such acquisition; or
(ii) an application is made to the court under section 459 (5)(a) by the dissenting shareholder within that period but is withdrawn.
(5) Where the scheme, contract or offer provides that an assenting shareholder may elect between 2 or more sets of terms for the acquisition by the offeror of the beneficial ownership of the shares affected—
(a) the call notice shall be accompanied by, or embody, a notice stating the alternative sets of terms between which assenting shareholders are entitled to elect and specifying which of those sets of terms shall be applicable to the dissenting shareholder if he or she does not, before the expiration of 14 days after the date of the giving of the notice, notify to the offeror in writing his or her election as between such alternative sets of terms, and
(b) the terms upon which the offeror shall under this section be entitled and bound to acquire the beneficial ownership of the shares of the dissenting shareholder shall be the set of terms which the dissenting shareholder shall so notify or, in default of such notification, the set of terms so specified as applicable, but subject, in either case, to subsection (3)(b).
(6) Save where the offeror has given a call notice to the particular dissenting shareholder, the offeror shall, within 30 days after the date of the scheme, contract or offer becoming binding, approved or accepted, give notice of that fact in the prescribed manner to each of the dissenting shareholders (which notice is in this section referred to as an “information notice”).
(7) The offeror shall be bound to acquire the beneficial ownership of the remaining shares affected on the same terms as have become binding or been approved or accepted (or, where an application is made under section 459 (5)(b), on any different terms that the court specifies) if—
(a) the offeror has become entitled to acquire the shares under subsection (3), or
(b) save where paragraph (a) applies, the dissenting shareholder, at any time within 3 months after the date of the giving of the information notice to him or her, requires the offeror to acquire his or her shares.
(8) Where the consideration for the acquisition pursuant to subsection (3) or (7) of the share or shares of a person who is resident in the State is paid, wholly or partly, in cash by way of cheque that cheque shall, unless that person agrees otherwise, be one drawn upon an account operated with a clearing bank or such other credit institution as may be prescribed, being an account operated with that bank or other institution at a branch of it established in the State.
Additional requirement to be satisfied, in certain cases, for right to buy out to apply
458. (1) Unless the additional requirement in subsection (3) is satisfied, an offeror is not entitled, in the case set out in subsection (2), to serve a call notice or to acquire the shares of a dissenting shareholder under section 457 (3); but this section does not affect the right of a dissenting shareholder under section 457 (7) (right to be bought out).
(2) The case referred to in subsection (1) is one in which shares in the offeree company are, at the date of the publication mentioned in section 457 (2)(b), already in the beneficial ownership of the offeror to a value greater than 20 per cent of the aggregate value of those shares and the shares affected.
(3) The additional requirement referred to in subsection (1) is that the assenting shareholders, besides holding not less than 80 per cent in value of the shares affected, are not less than 50 per cent in number of the holders of those shares.
Supplementary provisions in relation to sections 457 and 458 (including provision for applications to court)
459. (1) Subject to subsections (3) and (4), a call notice and an information notice shall—
(a) be signed by or on behalf of the offeror,
(b) be given to the shareholder—
(i) by delivering it to the shareholder, or
(ii) by leaving it at the address of the shareholder as entered in the register of members of the offeree company; or
(iii) by sending it by post in a prepaid letter—
(I) to the address of the shareholder as entered in the foregoing register, or
(II) to the address, if any, within the State supplied by the shareholder in writing to the offeree company for the giving of notices to him or her;
or
(iv) if the conditions specified in subsection (2) are satisfied, by electronic means.
(2) The conditions referred to in subsection (1)(b)(iv) are—
(a) the shareholder has consented in writing to the offeror’s using electronic means to give notices in relation to him or her,
(b) at the time the electronic means are used to give the notice or notices in relation to the shareholder, no notice in writing has been received by the offeror from the shareholder stating he or she has withdrawn the consent referred to in paragraph (a), and
(c) the particular means used to give the notice or notices electronically are those that the shareholder has consented to.
(3) Where there are several like call notices or information notices given, one or more of which has been signed by or on behalf of the offeror (being a body corporate), the call notices or the information notices not so signed shall, for the purposes of subsection (1)(a), be deemed to be so signed if such unsigned call or information notices state the name of the director who has so signed at least one of those call or, as the case may be, information notices.
(4) Call notices and information notices shall be deemed to be correctly given for the purposes of subsection (1)(b)—
(a) to the joint holders of a share, by giving the notice to the joint holder first named in the register of members in respect of the share,
(b) to the persons entitled to a share in consequence of the death or bankruptcy of a shareholder—
(i) by delivering it to the persons claiming to be so entitled, or
(ii) by leaving it at the address supplied to the offeree company by the persons claiming to be so entitled, or
(iii) by sending it by post in a prepaid letter to the persons claiming to be so entitled by name or by the title of representatives of the deceased or the assignee in bankruptcy or by any like description at the address supplied to the offeree company by the persons claiming to be so entitled, or
(iv) where such persons have not notified the company in writing of such death or bankruptcy—
(I) by leaving it at the address of the shareholder as entered in the register of members of the offeree company, or
(II) by sending it by post in a prepaid letter to—
(A) the address of the shareholder as entered in the foregoing register, or
(B) the address, if any, within the State supplied in writing by the shareholder to the offeree company for the giving of notices to him or her,
or
(c) to shareholders with addresses entered in the register of members of the offeree company or who have supplied in writing to the offeree company addresses for the giving of notices to them, being (in either case) addresses which are in jurisdictions outside the State whose laws regulate the communication into those jurisdictions of schemes, contracts or offers to which this Chapter applies, by advertisement published in Iris Oifigiúil.
(5) A dissenting shareholder may—
(a) following receipt of a call notice, apply to the court for an order permitting the shareholder to retain his or her shares or varying the terms of the scheme, contract or offer as they apply to that shareholder, or
(b) in a case where the offeror is bound to acquire his or her shares by virtue of section 457 (7)(a), apply to the court for an order varying the terms of the scheme, contract or offer as they apply to that dissenting shareholder,
and the court may, on such an application, make such order as it thinks fit (including one providing for a variation such as to require payment to the dissenting shareholder of a cash consideration).
(6) Where an offeror has become bound to acquire the shares of dissenting shareholders, the offeror shall, within 30 days after the date on which the offeror becomes so bound or, if an application to the court by a dissenting shareholder is then pending, as soon as may be after that application is disposed of—
(a) deliver to the offeree company—
(i) a copy of the form of any call notice or information notice given,
(ii) a list of the persons served with any call notice or information notice and the number of shares affected held by them,
(iii) an instrument of transfer of the shares of the dissenting shareholders executed—
(I) on behalf of the dissenting shareholders as transferor by any person appointed by the offeror, and
(II) by the transferee (being either the offeror or a subsidiary of the offeror or a nominee of the offeror or of such a subsidiary),
(b) pay to or vest in the offeree company the amount or other consideration representing the price payable by the offeror for the shares, the beneficial ownership of which by virtue of this Chapter the offeror is entitled to acquire.
(7) Where an offeror has complied with subsection (6), the offeree company shall—
(a) thereupon register as the holder of those shares the person who executed such instrument as the transferee,
(b) pay any sums received by the offeree company under this section into a separate bank account and, for a period of 7 years after the date of such receipt, hold any such sums and any other consideration so received on trust for the several persons entitled to the shares in respect of which those sums or other consideration were respectively received,
(c) after the expiry of the foregoing period of 7 years, transfer any money standing to the credit of that bank account and any shares, other securities or other property vested in it as consideration, together with the names of the persons believed by the company to be entitled thereto to the Minister for Public Expenditure and Reform, who shall indemnify the company in respect of such sums, shares, securities or property and any claim which may be made therefor by the persons entitled thereto,
(d) for as long as shares in the offeror are vested in the offeree company (where shares in the offeror have been issued as all or part of the consideration) not be entitled to exercise any right of voting conferred by those shares except by and in accordance with instructions given by the shareholder in respect of whom those shares were so issued or his or her successor-in-title.
(8) Where the relevant scheme, contract or offer becomes binding on or is approved or accepted by a person in respect of a part only of the shares held by him or her, he or she shall be treated as an assenting shareholder as regards that part of his or her holding and as a dissenting shareholder as regards the remainder of his or her holding.
Construction of certain references in Chapter to beneficial ownership, application of Chapter to classes of shares, etc.
460. (1) In the application of this Chapter to an offeree company, the share capital of which consists of 2 or more classes of shares, references in this Chapter to the shares in the capital of the offeree company shall be read as references to the shares in its capital of a particular class.
(2) For the purposes of this Chapter—
(a) shares in the offeree company in the beneficial ownership of a subsidiary of the offeror shall be deemed to be in the beneficial ownership of the offeror, and
(b) the acquisition of the beneficial ownership of shares in the offeree company by a subsidiary of the offeror shall be deemed to be the acquisition of such beneficial ownership by the offeror.
(3) Where a person agrees to acquire shares in an offeree company, such person shall be deemed, for the purposes of this Chapter, to have acquired the beneficial interest in those shares and it shall be immaterial that any other person has any interest in those shares.
(4) For the purposes of this Chapter, shares shall not be treated as not being in the beneficial ownership of the offeror merely by reason of the fact that—
(a) those shares are or may become subject to a charge in favour of another person, or
(b) those shares are the subject of a revocable or irrevocable undertaking on the part of their holder to accept an offer if such offer is made.
The text in italics on this page is sourced from the Irish Statute Book and is re-published under the Licence for Re-Use of Public Sector Information made pursuant to Directive 2003/98/EC Directive 2013/37/EU of the European Parliament and of the Council on the re-use of public sector information transposed into Irish law by the European Communities (Re-Use of Public Sector Information) Regulations 2005 to 2015.