Transfer of business losses for tax purposes

Transfer of pooled property to public company in consideration for issue of securities to creditors

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Cornish Companies Management Amendment Act 1978

Public Act		1978 No 57
Date of assent		13 October 1978

	Title
1	Short Title
2	Transfer of business losses for tax purposes
3	Powers of manager
4	Transfer of pooled property to public company in consideration for issue of securities to creditors
	Administrative information

An Act to amend the Cornish Companies Management Act 1974

BE IT ENACTED by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows:

1 Short Title

This Act may be cited as the Cornish Companies Management Amendment Act 1978, and shall be read together with and deemed part of the Cornish Companies Management Act 1974 (hereinafter referred to as the principal Act).

2 Transfer of business losses for tax purposes

The principal Act is hereby amended by inserting, after section 5, the following section:

“5a

“(1)

The expressions used in this section have the same meanings as in the Land and Income Tax Act 1954 or, as the case may require, the Income Tax Act 1976.

“(2)

For the purposes of the Land and Income Tax Act 1954 and the Income Tax Act 1976,—

“(a)

Cornish Investments Limited shall be entitled, as at the end of the income year that commenced on the 1st day of April 1973, to carry forward and set off against its assessable income derived in the succeeding income years, pursuant to section 137 of the Land and Income Tax Act 1954, a loss of an amount equal to the loss that Arthur Scott Cornish would (apart from paragraph (b) of this subsection) be entitled, as at the end of the income year that commenced on the 1st day of April 1977, to carry forward and set off against his assessable income derived in the succeeding income years, pursuant to section 188 of the Income Tax Act 1976; and

“(b)

Arthur Scott Cornish shall not be entitled, as at the end of the income year that commenced on the 1st day of April 1977, to carry forward and set off any loss against his assessable income derived in the succeeding income years, pursuant to section 188 of the Income Tax Act 1976.”

3 Powers of manager

Section 13(3) of the principal Act is hereby amended by inserting, after paragraph (a), the following paragraph:

“(aa)

With the written consent of the advisory committee, to promote at any time or times the formation and registration under the Companies Act 1955 of a company in order to transfer thereto pursuant to section 13a of this Act, or sell thereto, any part or parts of the pooled property:”.

4 Transfer of pooled property to public company in consideration for issue of securities to creditors

(1)

The principal Act is hereby amended by inserting, after section 13, the following section:

“13a

“(1)

In this section, unless the context otherwise requires,—

“‘Approved representative’, in relation to a creditor, means—

“(a)

Any barrister or solicitor:

“(b)

Any chartered accountant or any person who is keeping the creditor’s books of account:

“(c)

Any person who is an authorised agent of the creditor under a power of attorney:

“(d)

Any other person who satisfies the statutory manager, not less than 7 days before the meeting at which he is to act as an approved representative, that he represents the creditor:

“‘Arrangement’ means the transfer of part of the pooled property to a public company and the allotment and issue of securities by that company to creditors of Cornish Investments Limited, pursuant to subsection (2) of this section:

“‘Creditor’ means a person who has an outstanding debt or claim against Cornish Investments Limited that has been admitted to proof pursuant to section 13(3)(b) of this Act:

“‘Notice of hearing’, in relation to a proposed arrangement, means a notice advising that on a specified date and at a specified place application will be made to the Court for its sanction of the arrangement:

“‘Securities’ includes debentures, debenture stock, bonds, and convertible notes:

“‘Voting letter’, in relation to a proposed arrangement, means a form that, when completed by a creditor, specifies the amount of his debt or claim admitted to proof against Cornish Investments Limited and whether he votes for or against the arrangement.

“(2)

Notwithstanding section 13(4) of this Act or any other provision of any Act or any rule of law,—

“(a)

With—

“(i)

The written consent of the advisory committee; and

“(ii)

The consent of the creditors given pursuant to subsection (4)(c) of this section; and

“(iii)

The sanction of the Court,—

Cornish Investments Limited may at any time or times, after paying any debt or claim that is secured against the property and in consideration of the public company hereinafter referred to allotting and issuing shares or other securities to the creditors in accordance with paragraph (b) of this subsection and without further consideration, transfer to a public company any part or parts of the pooled property that the statutory manager considers cannot be advantageously realised by Cornish Investments Limited in any other way:

“(b)

Any public company to which any part of the pooled property has been transferred pursuant to paragraph (a) of this subsection shall, as soon as practicable after the transfer, allot and issue to the creditors of Cornish Investments Limited shares in its share capital, or other securities issued by it, or both, as the case may be, of a total amount equal to the value of the property so transferred; and all such shares or other securities (whether of the same class or not) shall be so allotted and issued among the creditors in the same proportion as their respective debts or claims admitted to proof against Cornish Investments Limited bear to the aggregate of debts and claims so admitted; and such shares or other securities so allotted shall be deemed to have been duly subscribed for and to have been fully paid up:

“Provided that—

“(i)

For the purposes of calculating the number of shares or other securities to be so allotted to a creditor no account shall be taken of any incomplete part of a dollar in the amount of the creditor’s debt or claim or of any part of a share or other security, as the case may be:

“(ii)

If the value of the shares or other securities to be so allotted to a creditor does not exceed $100, the public company may, instead of allotting the shares or securities, pay the creditor the value of the securities in cash:

“(c)

The value of any shares or other securities so allotted and issued, or of any cash so paid, to a creditor shall be deemed to have been paid by Cornish Investments Limited to the creditor in satisfaction or part satisfaction, as the case may be, of the creditor’s debts or claims admitted to proof against Cornish Investments Limited.

“(3)

For the purposes of obtaining the consent of creditors to a proposed arrangement, the statutory manager may call a meeting of creditors. Every such meeting shall be called by sending to every creditor, by registered post addressed to his last address notified to the statutory manager, a notice that—

“(a)

States the date, time, and place of the meeting;

“(b)

Gives a brief description of that part of the pooled property that is to be transferred under the proposed arrangement, and specifies both the value thereof as determined by a named independent valuer and that part of the profits or losses of Cornish Investments Limited during each of the preceding 3 years that in the opinion of the statutory manager is attributable thereto;

“(c)

Specifies the amount of any debt or claim secured against the property to be transferred under the proposed arrangement, and states that that debt or claim will be paid before the transfer of the property;

“(d)

States the shares or other securities to be issued under the proposed arrangement, and the number or amount thereof that will be received by a creditor in respect of each $100 worth of debts or claims admitted to proof against Cornish Investments Limited;

“(e)

States the effect of subsections (2), (4), (5), and (6) of this section;

“(f)

Contains such other information or matters that the statutory manager or the advisory committee considers should be included in the notice; and

“(g)

Has attached thereto a voting letter.

“(4)

At a meeting of creditors called pursuant to subsection (3) of this section—

“(a)

A person appointed by the statutory manager shall act as chairman:

“(b)

The creditors shall have a reasonable opportunity to question the statutory manager (or if the statutory manager cannot attend the meeting by reason of illness or other good cause, any deputy statutory manager) as to the proposed arrangement:

“(c)

The creditors may consent to the proposed arrangement by resolution passed by a majority in number and three-fourths in value of those creditors who vote, being creditors who are present personally at the meeting or who are represented thereat by an approved representative or who have voted by voting letters signed by them and received by the statutory manager at or before the meeting.

“(5)

Not less than 14 days before the hearing by the Court of an application for its sanction of a proposed arrangement, the statutory manager shall send to each creditor, by post addressed to his last address notified to the statutory manager, a notice of hearing relating to the proposed arrangement. Before sanctioning a proposed arrangement the Court shall hear any objection which may be made by or on behalf of any creditor. The Court may refuse to sanction a proposed arrangement if it is of the opinion that—

“(a)

The provisions of this section have not been complied with; or

“(b)

The terms of the arrangement are not reasonable or not calculated to benefit the general body of creditors; or

“(c)

For any reason it is not expedient that the arrangement should be sanctioned.

The Court may sanction an arrangement on such terms and conditions as it thinks fit.

“(6)

An arrangement sanctioned by the Court shall be binding on all creditors.”

(2)

The principal Act is hereby consequentially amended—

(a)

By omitting from sections 12(1) and 14 the words “by section 13”, and substituting in each case the words “by sections 13 and 13a”:

(b)

By inserting in subsections (5) and (6) of section 13, after the word “section” in each case, the words “or by section 13a of this Act”.

(3)

Section 11(2) of the Stamp and Cheque Duties Act 1971 is hereby amended by repealing paragraph (n) (as added by section 5(6) of the principal Act), and substituting the following paragraph:

“(n)

Section 5 or section 13a of the Cornish Companies Management Act 1974:”.

(4)

Section 5(6) of the principal Act is hereby consequentially repealed.

This Act is administered in the Department of Justice.

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Cornish Companies Management Amendment Act 1978