As enacted

Contents

Companies Act 2007 · As enacted · Part XII · Winding Up

368. Voidable charge

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

A charge over any property or undertaking of a company is voidable on the application of the liquidator, if the charge was given within the specified period, unless—

(a)

the charge secures—

(i)

money actually advanced or paid, or the actual price or value of property sold or supplied to the company, or any other valuable consideration given in good faith by the grantee of the charge at the time of, or at any time after the giving of the charge; and

(ii)

any interest payable on an amount referred to in sub-paragraph (i);

(b)

immediately after the charge was given, the company was able to pay its debts as they fell due; or

(c)

the charge is in substitution for a charge given before the specified period.

(2)

Unless the contrary is proved, a company giving a charge within the restricted period is presumed to have been unable to pay its debts as they fell due immediately after giving the charge.

(3)

The provisions of paragraph (c) of subsection (1) shall not apply to the extent that —

(a)

the amount secured by the substituted charge exceeds the amount secured by the existing charge;

(b)

the value of the property subject to the substituted charge at the date of the substitution, exceeds the value of the property subject to the existing charge at that date.

(4)

Nothing in subsection (1) shall apply to a charge given by a company that secures the unpaid purchase price of property and any interest payable on that amount, whether or not the charge is given over that property, if the instrument creating the charge is executed not later than thirty days after the sale of the property or in the case of the sale of an estate or interest in land, not later than thirty days after the final settlement of the sale.

(5)

For the purposes of paragraph (a) of subsection (1)

and subsection (4), where any charge was given by the company within the period specified in subsection (1), all payments received by the grantee of the charge after it was given shall be deemed to have been appropriated so far as may be necessary—

(a)

towards repayment of money actually advanced or paid by the grantee to the company on or after the giving of the charge;

(b)

towards payment of the actual price or value of property sold by the grantee to the company on or after the giving of the charge;

(c)

towards payment of any other liability of the company to the grantee in respect of any other valuable consideration given in good faith on or after the giving of the charge; or

(d)

towards interest payable on any amount referred to in paragraphs (a), (b) or (c).

Read on from s 369

Part XIII

Administrators Appointment of Administrator

Read on from Part XIII

Part XIV

Floating Charges

Read on from Part XIV

Part XV

Receivers and Managers

Read on from Part XV

Part XVI

Registrar-General of Companies and Registration Appointment of Officers

Read on from Part XVI

Part XVII

Application of Act to Existing Companies

Read on from Part XVII

Part XVIII

Overseas Companies

Read on from Part XVIII

Part XIX

Advisory Commission

Read on from Part XIX

Part XX

Companies Disputes Board

Read on from Part XX

Part XXI

Offences Miscellaneous Offences

Read on from Part XXI

Part XXII

Miscellaneous Prohibition of Partnership with More Than Twenty Members

Read on from Part XXII

Part XXIII

Repeals and Amendments

Read on from Part XXIII