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Botswana Companies Act

Companies Act in Botswana

An Act to update and consolidate the law relating to Companies.

PART I — Preliminary

Short title

1. This Act may be cited as the Companies Act, 2003, and shall come into operation on such date as the Minister may, by Order published in the Gazette, appoint.

Interpretation

2. (1) In this Act, unless the context otherwise requires —

"accounting records" means the accounting records referred to in section 189;

"accounting period" means, in relation to a company or another body corporate, the period in respect of which the financial statements of the company or other body corporate are made up, whether that period is a year or not;

"annual meeting" means the meeting of a company required to be held by section 105;

"annual report" means the report required to be made by section 212;

"annual return" means the return required to be made by section 217 and includes any document attached to or intended to be read with the return;

"arrangement" includes a re-organization of the share capital of a company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both these methods;

"articles" —

(a) means the articles of association of an existing company; and

(b) includes, so far as they apply to the company,the provisions contained in Table A or Table C of the First Schedule to the repealed Act;

"balance sheet date" has the meaning assigned to it in section 210;

"Board" and "board of directors" have the meanings assigned to them in section 126;

"banking company" means a bank licensed under the Banking Act; Cap. 46:04

"benefits" in relation to a director -

(a) includes a fee, percentage or other payment, and the money value of any consideration, allowance or perquisite, given directly or indirectly, to him in relation to the management or direction of the affairs of the company or of a related company,whether as a director or otherwise; but

(b) does not include an amount given in payment or reimbursement of out-of-pocket expenses incurred for the benefit of the company;

"book" includes any account, deed, writing or document,and any other record of information however compiled, recorded or stored;

"borrowing company" means a company that is or will be under a liability to repay any money received or to be received by it in response to an invitation to the public to subscribe for or purchase debentures;

"branch register" means -

(a) in relation to a company, a branch register of members referred to in section 84; and

(b) in relation to an external company, a branch register of shareholders required to be kept under Part XXW;

"carrying business" for the purposes of Part XXIV has the meaning given in section 344;

"certified" means -

(a) in relation to a copy or extract of a document,certified in the prescribed manner to be a true copy or extract of the document; and

(b) in relation to a translation of a document, certified in the prescribed manner to be a correct translation of the document into the English language;

"charge" means -

(a) a mortgage or a mortgage bond;

(b) a deed of hypothecation;

(d) a deposit of a share or debenture certificate made by way of charge;

(e) a pledge of shares or debentures;

(f) a pledge or cession over motor vehicles or plant and equipment;

(g) a cession of book debts;

(h) a charge on a ship or aircraft; and

(i) an agreement to give a charge;

"class" in relation to a class of shares for the purposes of section 104 means a class of shares having attached to them the same rights, privileges, limitations and conditions;

"close company" means a company which is registered as a close company in accordance with Part XIX;

"company" means a company formed and registered under Part II or registered under Part XXIV or an existing company;

"company limited by guarantee" means a company formed on the principle of having the liability of its members limited by the constitution to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up;

"company limited by shares" means a company formed on the principle of having the liability of its shareholders limited, by the constitution, to any amount unpaid on the shares respectively held by the shareholders;

"constitution" means a document referred to in section 40;

"contributory" means a person liable to contribute to the assets of a company in the event of its being wound up, and for the purposes of all proceedings for determining, and all proceedings prior to the final determination of, the persons who are deemed to be contributories, includes any person alleged to be a contributory under section 366;

"corporation" -

(a) means a body corporate, including an external company or a foreign company or a partnership formed or existing in Botswana or elsewhere, but

(b) does not include

(i) a statutory corporation,

(ii) a corporation sole,

(iii) a registered co-operative society,

(iv) a trade union, or

(v) a registered association;

"court" means the High Court of Botswana and in relation to any offence against this Act, includes a Magistrate’s Court having jurisdiction in respect of that offence;

"creditors’ voluntary winding up" has the meaning assigned to it by section 409(3);

"date of incorporation" means the date of registration of a company;

"debenture" means

(a) a written acknowledgment of indebtedness issued by a company in respect of a loan made or to be made to it or to any other person or money deposited or to be deposited with the company or any other person or the existing indebtedness of the company or any other person whether constituting a charge on any of the assets of the company or not;

(b) includes

(i) debenture stock,

(ii) convertible debenture,

(iii) a bond or an obligation,

(iv) loan stock,

(v) an unsecured note, or

(vi) any other instrument executed, authenticated, issued or created in consideration of such a loan or existing indebtedness; and

(i) a bill of exchange,

(ii) a promissory note,

(iii) a letter of credit,

(iv) an acknowledgment of indebtedness issued in the ordinary course of business for goods or services supplied,

(v) a policy of insurance, or

(vi) a deposit certificate, pass book or other similar document issued in connection with a deposit or current account at a banking company;

"debenture trust deed"

(a) means a deed executed by a company and a trustee for debenture holders in relation to the issue of debentures; and

(b) includes a supplemental document, resolution or scheme of arrangement modifying the terms of the deed and a deed substituted therefor;

"debenture stock" means

(a) a debenture by which a company or a trustee for debenture holders’ acknowledges that the holder of the stock is entitled to participate in the debt owing by the company under a debenture trust deed; and

(b) includes loan stock;

"declared company" has the meaning assigned to it in section 282;

"director" has the meaning set out in section 126;

"distribution" in relation to a distribution by a company to a shareholder, means

(a) the direct or indirect transfer of money or property, other than the company’s own shares, to or for the benefit of the shareholder; or

(b) the incurring of a debt to or for the benefit of the shareholder, in relation to shares held by that shareholder, and whether by means of a purchase of property, the redemption or other acquisition of shares, a distribution of indebtedness, or by some other means, but shall not include a distribution of assets to shareholders upon a winding up;

"dividend" has the meaning set out in section 60;

"document" means a document in any form, and includes

(a) any writing on any material;

(b) information recorded or stored by means of a tape-recorder, computer, or other device, and material subsequently derived from information so recorded or stored;

(d) a photograph, film, negative, tape, or other device in which one or more visual images are embodied so as to be capable (with or without the aid of equipment) of being reproduced;

"dormant company" means a company recorded by the Registrar as being a dormant company under Part XXVIII;

"entitled person", in relation to a company, means

(a) a shareholder; and

(b) a person upon whom the constitution confers any of the rights and powers of a shareholder;

"employee" means a person who has entered into a contract of employment for the hire of his labour;

"executive director" means a director who is involved in the day to day management of the company;

"executor" means a person who is appointed by the Master of the High Court to administer the estate of a deceased person;

"exempt private company" has the meaning assigned to it in subsection (3) of this section;

"existing company" means a body corporate registered or deemed to be registered under Part II of this Act or under the repealed Act;

"expert" means a person holding himself out to be such whose professional or technical training gives authority to a statement made by him;

"external company" means a body corporate, other than a corporation sole, which is registered or incorporated outside Botswana and that is required to be registered under Part XXIV;

"external country" means any state, dominion, country, colony or territory other than Botswana;

"external register" means the register of bodies corporate that are incorporated outside Botswana kept pursuant to Part XXIV;

"financial statements" has the meaning assigned to it in section 211(1);

"financial year" means, in relation to any body corporate, the period in respect of which any profit and loss account of the body corporate laid before it in general meeting is made up, whether that period is a year or not;

"firm" means the association formed by persons who enter into a partnership not registered under this Act or the repealed Act;

"foreign company" means a body of persons formed outside Botswana which

(a) is a body corporate in its place of incorporation; or

(b) under the law of its place of formation may sue and be sued, or hold property in the name of an officer of the body duly appointed for that purpose;

"functional currency" with reference to a company means the currency of the country in which the company operates;

"group financial statements" has the meaning set out in section 211(3);

"group of companies" or "group" has the meaning set out in section 207;

"holding company" has the meaning assigned to it section 6(2);

"inspector" means a qualified person in terms of section 281 who is appointed to carry out an investigation under Part XXI;

"insurance company" means a company registered as an insurer under the Insurance Industry Act;

"interested", in relation to a director, has the meaning set out in section 134;

"interests register" means the register kept under sections 135 and 186 (1)(c);

"International Financial Reporting Standards"

(a) means the International Financial Reporting Standards issued by the International Accounting Standards Board; and

(b) includes

(i) the interpretations of the International Reporting Standards issued by the International Financial Reporting Interpretation Committee;

(ii) International Accounting Standards still in force according to the International Accounting Standards Board; and

(iii) any other entity to which the responsibility for setting accounting standards has been assigned by the International Accounting Standards Board;

"International Standards on Auditing" means the International Standards on Auditing issued by the International Federation of Accountants;

"investment company with variable capital" means an investment company with variable capital which is licensed under the Collective Investment Undertakings Act;

"Judicial Manager" means a person appointed in terms of section 472;

"legal practitioner" means a person who is enrolled as a legal practitioner under the Legal Practitioners Act; "limited company" means a company limited by shares or by guarantee;

"liquidator" means the person appointed under Part XXVI as liquidator of a company and includes any co-liquidators or provisional liquidators so appointed and also includes the Master acting as the liquidator;

"listed company" means a company the shares or a class of shares of which have been admitted to quotation on the official list of a stock exchange;

"major transaction" has the meaning assigned to it in section 128(2);

"manager" means the principal executive of a company, whether or not that person is a director;

"Master" means the Master of the High Court of Botswana or any person acting in that capacity;

"member" means, in the case of a company limited by shares, a shareholder within the meaning of section 90 and in the case of a close company means a person who is designated as a member in the application for registration as a close company or who becomes a member on being admitted as a member, and in the case of a company limited by guarantee, means a person whose name is entered in or who is entitled to have his name entered in the register of members;

"members voluntary winding up" has the meaning assigned to it by section 409(2);

"memorandum" means the memorandum of association of an existing company;

"nominee" means a person who, in exercising a right in relation to a share, debenture or other property, is entitled to exercise that right only in accordance with instructions given by some other person either directly or through the agency of one or more persons, and a person is the nominee of another person where he is entitled to exercise such a right only in accordance with instructions given by that other person;

"non-executive director" means a director who has no involvement in the day to day management of the company;

"offer" includes an invitation to make an offer;

"officer", in relation to a company means a director, a secretary or manager;

"one person company" means a private company in which the only shareholder is also the sole director of the company, and for the avoidance of doubt, a company of which the only shareholder is a corporation controlled by the person who is the sole director of the company is not a one person company;

"ordinary resolution" has the meaning assigned to it in section 95(2);

"parent company" means a company that has one or more subsidiaries;

"partnership" means any partnership not registered as a company under this Act or the repealed Act;

"person concerned" in relation to a company, includes

(a) a person who is or has been employed by a corporation as a director, banker, auditor, attorney-at-law, notary or otherwise;

(b) a person who, or in relation to whom there are reasonable grounds for suspecting that he

(i) has in his possession any property of the corporation,

(ii) is indebted to the corporation, or

(iii) is able to give information concerning the promotion, formation, management, dealing, affairs or property of the corporation;

"pre-emptive rights" means the rights conferred on shareholders under section 52;

"private company" is a company which is incorporated as a private company or is registered as a private company having the characteristics referred to in Part XVIII;

"records" means the documents required to be kept by a company under section 186(1);

"redeemable" has the meaning assigned to it in section 72;

"register" or "register of companies" means the register required to be kept under section 11(1)(a);

"register of external companies" means the register required to be kept under section 11(1)(b);

"registered" means registered under this Act or the repealed Act;

"registered co-operative society" has the meaning assigned to it in the Co-operative Societies Act;

"registered office" has the meaning assigned to it in section 182;

"Registrar" means the Registrar of Companies appointed in accordance with section 10;

"related company" has the meaning assigned to it in section 6(7);

"related corporation" has the meaning assigned to it in section 6(7);

"relative", in relation to any person, means

(a) any parent, spouse, child, brother or sister of that person;

(b) any parent, child, brother or sister of a spouse of that person; or

"relevant interest" has the meaning assigned to it in section 141;

"repealed Act" means the Companies Act repealed under section 526;

"resolution in lieu of meeting" means a resolution signed by all members or shareholders in accordance with section 107;

"secure electronic" signature means an electronic signature that results from the use of an electronic documents system;

"secured creditor", in relation to a company, means a person entitled to a charge on or over property owned by that company;

"securities" has the meaning assigned to it in the Botswana Stock Exchange Act;

"share" means a share in the share capital of a company;

"shareholder" has the meaning assigned to it in section 90;

"share register" means the share register required to be kept under section 83;

"signed" means subscribed by a person under his hand with his signature, and includes that person’s secure electronic signature;

"solvency test" has the meaning assigned to it in section 4;

"special meeting" means a meeting called in accordance with section 106;

"special resolution" means a resolution approved by a majority of 75 per cent or, if a higher majority is required by the constitution, that higher majority, of the votes of those shareholders entitled to vote and voting on a question;

"spouse", in relation to a person, means a person to whom that person is married;

"stated capital" has the meaning assigned to it in section 5;

"statutory corporation" means a body corporate established under an Act of Parliament; "subsidiary" has the meaning assigned to it in section 6; "Stock Exchange" means a stock exchange established under the Botswana Stock Exchange Act or any other stock exchange outside Botswana which is regulated by the laws of the jurisdiction in which it is situated and is recognized by the Minister for the purposes of this Act; "stock market" means such primary and secondary or other stock market as may be established under the Botswana Stock Exchange Act or may be established by any other Stock Exchange recognized by the Minister for the purposes of this Act; "surplus assets" means the assets of a company remaining after the payment of creditors’ claims and available for distribution in accordance with section 455 prior to its removal from the register of companies; "trade union" has the same meaning as in the Trade Unions and Employers Organizations Act; "trustee for debenture holders" means a person designated as such in a debenture trust deed; "unable to pay its debts", in relation to a company, has the meaning assigned to it in section 368 and, in relation to an unregistered association, has the meaning assigned to it by section 484(4)(b); "unanimous resolution" means a resolution which has the assent of every shareholder entitled to vote on the matter which is the subject of the resolution and either (a) given by voting at a meeting to which notice to propose the resolution has been duly given and of which the minutes of the meeting duly record that the resolution was carried unanimously; or (b) where the resolution is signed by every shareholder or his agent duly appointed in writing signed by him, and such resolution may consist of one or more documents in similar form (including letters, telegrams, cables, facsimiles, telex messages, electronic mail or similar forms of communication) in each case signed by the shareholder concerned or his agent on his behalf duly authorised in writing signed by him; "unregistered association" has the meaning assigned to it in section 483;

"virtually wholly owned subsidiary" has the meaning given by section 6(6);

"wholly owned subsidiary" has the meaning assigned to it in section 6(5);

"winding-up resolution" means a resolution passed for the winding up of a company;

"winding up order" means any order whereby a company is placed under liquidation or provisional liquidation when such order for provisional liquidation has not been set aside;

"working day" means a day of the week other than Saturday, Sunday or a public holiday;

"writing" includes

(a) the recording of words in a permanent or legible form; and

(b) the display of words by any form of electronic or other means of communication in a manner that enables the words to be readily stored in a permanent form and with or without the aid of any equipment to be retrieved and read;

"year" means a calendar year.

(2)* A reference in this Act to an address means

(a) in relation to an individual, the full address of the place where that person usually lives;

(b) in relation to a company its registered office;

(c) in relation to any other body corporate, its registered office or, if it does not have a registered office, its principal place of business.

(3) A company shall be an "exempt private company" where it is a private company which, in respect of its last preceding financial year, satisfied all of the following criteria

(a) the total assets of the company are less than such amounts as may be prescribed in Regulations made under this Act;

(b) the annual turnover of the company is less than such amounts as may be prescribed in Regulations made under this Act; and

(4) A private company which is not an exempt private company is a non-exempt private company.

(5) In determining the "total assets" of the company for the purposes of subsection (3), regard shall be had to the total assets of the company as shown in the most recent financial statements of the company prepared on the basis of generally accepted accounting principles.

(6) In the application of subsections (3), (4) and (5) to any period which is a financial year of a company but not in fact a year, the maximum figure for turnover in subsection (3)(ii) shall be proportionately adjusted.

(7) A private company which is incorporated after the commencement of this Act shall qualify as an exempt private company in respect of its first financial year if it satisfies all the relevant qualifying criteria in respect of that year.

3. Public notice

Where, pursuant to this Act, public notice is required to be given of any matter affecting a company, that notice shall be given by publishing notice of the matter

(a) in at least one issue of the Government Gazette; and

(b) in at least one issue of a newspaper with wide circulation in Botswana.

4. Meaning of "solvency test"

(1) For the purposes of this Act, a company satisfies the solvency test if

(a) the company is able to pay its debts as they become due in the normal course of business; and

(b) the value of the company’s assets is greater than the sum of

(i) the value of its liabilities, and

(ii) the company’s stated capital.

(2) In determining for the purposes of this Act (other than sections 224 and 225 which relate to amalgamations) whether the value of a company’s assets is greater than the value of its liabilities, the Board may take into account

(a) in the case of a public company or a non-exempt private company, the most recent financial statements of the company prepared in accordance with International Accounting Standards;

(b) in the case of an exempt private company, the most recent financial statements prepared on the basis of generally accepted accounting principles that are applicable to private or close companies; and

(3) Without limiting sections 224 and 225, in determining, for the purposes of those sections whether the value of the amalgamated company’s assets will be greater than the sum of the value of its liabilities and its stated capital, the directors of each amalgamating company

(a) shall have regard to

(i) financial statements that are prepared in accordance with International Accounting Standards or generally accepted accounting principles that are prepared as if the amalgamation had become effective, and

(ii) all other circumstances that the directors know or ought to know would affect, or may affect, the value of the amalgamated company’s assets and the value of its liabilities;

(b) may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.

5. Stated capital

(1) Subject to section 59, stated capital in relation to a company means the total of all amounts received by the company or due and payable to the company

(a) in respect of the issue of the shares; and

(b) in respect of calls on the shares.

(2) Where a share is issued for consideration other than cash, the Board shall, in accordance with section 53, determine the cash value of that consideration for the purposes of subsection (1).

(3) Where a share has attached to it an obligation other than an obligation to pay calls, and that obligation is performed by the share holder

(a) the Board shall determine the cash value, if any, of that performance; and

(b) the cash value of that performance shall be deemed to be a call which has been paid on the share for the purposes of subsection (1).

(4) A company shall not reduce its stated capital except in the manner provided by this Act.

6. Meaning of "holding company" and "subsidiary"

(1) In this section and in sections 7 and 8, the expression "company" includes a corporation.

(2) For the purposes of this Act, a company is a subsidiary of another company if

(a) that other company

(i) controls the composition of the Board of the company,

(ii) is in a position to exercise, or control the exercise of, more than one-half the maximum number of votes that can be exercised at a meeting of the company,

(iii) holds more than one-half of the issued shares of the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital, or

(iv) is entitled to receive more than one-half of every dividend paid on shares issued by the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

(b) the company is a subsidiary of a company that is a subsidiary of another company.

(3) For the purposes of this Act, a company is another company’s holding company if that other company is its subsidiary.

(4) For the purposes of this Act

(a) a company is the "ultimate holding company" of another company if

(i) the other company is a subsidiary of the first mentioned company, and

(ii) the first mentioned company is not itself a subsidiary of any company;

(b) "the ultimate holding company in Botswana", in relation to a company incorporated in Botswana, means a holding company which is not a subsidiary of a company incorporated in Botswana.

(5) A company shall be deemed to be the wholly owned subsidiary of another corporation if the members of the company do not include any person apart from

(a) that other corporation;

(b) a nominee of that other corporation;

(c) a subsidiary of that other corporation being a subsidiary the members of which do not include any person apart from that other corporation or a nominee of that other corporation; or

(d) a nominee of such a subsidiary.

(6) A company shall be deemed to be the virtually wholly owned subsidiary of another corporation (known as "the parent") if the parent owns 90 per cent or more of the voting power in that company.

(7) Where a body corporate is

(a) a holding company of another body corporate;

(b) a subsidiary of another body corporate; or

(c) a subsidiary of a holding company of another body corporate, the first mentioned body and the other body are related to each other and are "related corporations", and

"related company" has a corresponding meaning where the body in question is a company.

(8) For the purposes of subsection (7), a company within the meaning of section 2 of the repealed Act is related to another company if, were it a company within the meaning of subsection (1), it would be related to that other company.

7. Definition of "control"

For the purposes of section 6, without limiting the circumstances in which the composition of a company’s Board is to be taken to be controlled by another company, the composition of the Board is to be taken to be so controlled if the other company, by exercising a power exercisable (whether with or without the consent or concurrence of any other person) by it, can appoint or remove all the directors of the company, or such number of directors as together hold a majority of the voting rights at meetings of the Board of the company, and for this purpose, the other company is to be taken as having power to make such an appointment if

(a) a person cannot be appointed as a director of the company without the exercise by the other company of such a power in the person’s favor; or

(b) a person’s appointment as a director of the company follows necessarily from the person being a director or other officer of the other company.

8. Certain matters to be disregarded

In determining whether a company is a subsidiary of another company

(a) shares held or a power exercisable by that other company only as a trustee are not to be treated as held or exercisable by it;

(b) subject to paragraphs (c) and (d) of this section, shares held or a power exercisable

(i) by a person as a nominee for that other company, except where that other company is concerned only as a trustee, or

(ii) by, or by a nominee for, a subsidiary of that other company, not being a subsidiary which is concerned only as a trustee-are to be treated as held or exercisable by that other company;

(c) shares held or a power exercisable by a person under the provisions of debentures of the company or of a debenture trust deed shall be disregarded; and

(d) shares held or a power exercisable by, or by a nominee for, that other company or its subsidiary (not being held or exercisable in the manner described in paragraph (c) of this section) are not to be treated as held or exercisable by that other company if

(i) the ordinary business of that other company or its subsidiary, as the case may be, includes the lending of money, and

(ii) the shares are held or the power is exercisable by way of security only for the purposes of a transaction entered into in the ordinary course of that business.

9. Act binds the State

This Act binds the State.

10. The Registrar

(1) There shall be a Registrar of Companies who shall be a public officer, and who shall, subject to the control of the Minister, be responsible for the administration of this Act and who shall perform such functions and exercise such powers as may be conferred on him by this Act or any other enactment.

(2) The Registrar shall be appointed in accordance with the provisions of the Public Service Act.

(3) There shall also be a Deputy Registrar of Companies who shall be a public officer and who shall likewise be appointed in accordance with the provisions of the Public Service Act, and who shall have the power to do any act or thing which may be lawfully done under this Act or any other enactment by the Registrar.

(4) The seal of the office of the Registrar shall be such device as may be determined by the Minister and shall be kept by the Registrar to be affixed on all documents, including duplicates, pertaining to the registration of a company under this Act.

(5) Without derogating from the generality of the provisions of subsection (1), the Registrar shall

(a) take charge of, and be responsible for the safe custody of, all documents lodged with the Registrar under this Act;

(b) examine and register all returns and other documents lodged with the Registrar; and

(c) exercise any other powers conferred on the Registrar by this or any other Act or which the Minister may by Regulations prescribe.

11. Registers

(1) The Registrar shall ensure the maintenance of a register of

(a) companies registered or deemed to be registered under this Act;

(b) external companies registered or deemed to be registered under Part XXIV; and

(2) The register of companies and the register of external companies may be kept in such manner as the Registrar considers appropriate including, either wholly or partly, by means of a device or facility

(a) that records or stores information electronically or by other means; and

(b) that permits the information so recorded or stored to be readily inspected or reproduced in usable form.

(3) The Minister may make regulations for the purposes of this section

(a) authorising the destruction of any documents which have been recorded or stored electronically or by other means;

(b) providing that any document stored and reproduced electronically or by other means by the Registrar shall for all purposes be treated as if it were the original document, notwithstanding any law to the contrary;

(c) otherwise giving full effect to, and ensuring the efficient operation of, any device or facility of the kind referred to in subsection (2).

12. Registration of documents

(1) On receipt of a document for registration under this Act, the Registrar shall

(a) subject to subsection (2), register the document in the register of companies or the register of external companies, as the case may be; and

(b) give written advice of the registration to the person from whom the document was received.

(2) If a document received by the Registrar for registration under this Act

(a) is not in the prescribed form, if any;

(b) does not comply with this Act or regulations made under this Act;

(d) where the register of companies or the register of external companies is kept wholly or partly by means of a device or facility referred to in section 11(2), the document is not received by the Registrar in a form that enables particulars to be entered directly by electronic or other means in the device or facility;

(e) has not been properly completed;

(f) contains matter contrary to law;

(g) contains any error, alteration or erasure; or

(h) contains material that is not clearly legible, the Registrar may refuse to register the document.

(3) Where the Registrar refuses to register the document under subsection (2) he shall request either

(a) that the document be appropriately amended or completed and submitted for registration again; or

(b) that a fresh document be submitted in its place.

(4) For the purposes of this Act, a document is registered when

(a) the document itself is constituted part of the register of companies or the register of external companies; or

(b) particulars of the document are entered in any device or facility referred to in section 11(2).

(5) Neither registration nor refusal of registration of a document, by the Registrar, affects or creates a presumption as to, the validity or invalidity of the document or the correctness or otherwise of the information contained in it.

13. Inspection and evidence of registers

(1) A person may, on payment of the prescribed fee, inspect

(a) any document that constitutes part of the register of companies or the register of external companies;

(b) particulars of any registered document that have been entered on any device or facility referred to in section 11(2); or

(c) any registered document particulars of which have been entered in any such device or facility, during the hours when the office of the Registrar is open to the public for the transaction of business on a working day.

(2) A person may, on payment of the prescribed fee require the Registrar to give or certify

(a) a certificate of incorporation of a company;

(b) a copy of, or extract from, a document that constitutes part of the register of companies or the register of external companies;

(c) particulars of any registered document that have been entered in any device or facility referred to in section 11(2); or

(d) a copy of, or extract from, a registered document particulars of which have been entered in any such device or facility.

(3) Nothing in subsections (1) and (2) shall apply to

(a) any report by an inspector appointed under Part XXI, unless the Registrar directs otherwise;

(b) a report filed by a liquidator or judicial manager of a company unless the person applying to inspect the document or requiring a copy or extract of it is a shareholder or creditor of that company;

(4) A process to compel the production of

(a) a registered document kept by the Registrar; or

(b) evidence of the entry of particulars of a registered document in any device or facility referred to in section 11(2), shall not issue from the court without the leave of the court and, a statement shall be attached stating that it is issued with the leave of the court.

(5) A copy of, or extract from, a registered document

(a) that constitutes part of the register of companies or the register of external companies; or

(b) particulars of which have been entered in any device or facility referred to in section 11(2), certified to be a true copy or extract by the Registrar is admissible in evidence in legal proceedings to the same extent as the original document.

(6) An extract certified by the Registrar as containing particulars of a registered document that have been entered in any device or facility referred to in section 11(2) is, in the absence of proof to the contrary, conclusive evidence of the entry of those particulars.

14. Registrar’s powers of inspection

(1) For the purpose of ascertaining whether a company or an officer is complying with this Act or any subsidiary enactment made under this Act, the Registrar may, on giving 72 hours written notice to the company, call for the production of or inspect any book required to be kept by the company.

(2) A person shall not obstruct or hinder the Registrar or a person authorized by the Registrar while exercising a power conferred by subsection (1).

(3) Any person who fails to comply with subsection (1) shall be guilty of an offence and liable to the penalty set out in section 492(2).

(4) In this section "Company" includes an external company.

15. Appeals from Registrar’s decisions

(1) A person who is aggrieved by an act or decision of the Registrar under this Act may appeal to the court within 15 working days after the date of notification of the act or decision, or within such further time as the court may allow.

(2) On hearing the appeal, the court may approve the Registrar’s act or decision or may give such directions or make such determination in the matter as the court considers appropriate.

16. Enforcement of duty on companies to make return to Registrar

(1) Where a person makes default in complying with a requirement of this Act relating to the filing of a document or the giving of a notice and still fails to make good the default within 14 days from the service on the person of a notice requiring it to be done, the court may, on the application of the Registrar or the Master or, if the person making default is a company on the application of a member or creditor, make an order directing the person, or if the person making default is a corporation, the corporation or any officer, to make good the default within such time as may be specified in the order.

(2) Any order under subsection (1) may provide that all costs of, and incidental to, the application and the order thereon shall be borne by the company or by any officers of the company responsible for the default.

(3) Nothing in this section shall be taken to prejudice the operation of any enactment imposing penalties on a company or its officers in respect of any such default.

17. Lost documents

(1) Where a constitution or any other document relating to a company required to be filed has been lost or destroyed, the company may apply to the Registrar for leave to file a copy of the document.

(2) On receipt of an application under subsection (1), the Registrar may direct that a notice in that behalf shall be given to such person and in such manner as the Registrar considers appropriate.

(3) The Registrar may, on being satisfied

(a) that the original document has been lost or destroyed,

(b) of the date of the filing of the original document, and

(c) that the copy of the document produced to him is a correct copy, certify on that copy that the Registrar is so satisfied and direct that the copy be filed in the same manner as the original document.

(4) The copy shall, on being filed, from such date as is mentioned in the certificate as the date of the filing of the original, have the same force and effect as the original.

18. Extension of time

Where a person is required by this Act to do any act within a specified time, he may be granted an extension of time within which the act is required to be done by the

(a) Registrar, for a period not exceeding 60 days; and

(b) court, upon expiry of the 60 days extension under paragraph (a), in accordance with section 518(4) on good cause being shown.

PART II - Incorporation - Essential Requirements (ss 19-24)

19. Essential requirements and types of company

(1) A company shall have

(a) a name;

(b) one or more shares in the case of a company limited by shares;

(d) one or more directors in the case of a private company and two or more directors in the case of a public company; and

(e) a secretary in the case of all companies other than a close company and an accounting officer in the case of a close company.

(2) A company shall be

(a) a company limited by shares;

(b) a close company; or

(3) Every company limited by shares or by guarantee shall be either a private company or a public company.

(4) Every company limited by shares or by guarantee shall be a public company unless it is stated in its application for incorporation or its constitution that it is a private company.

20. Right to apply for registration

Any person may, either alone or together with another person, apply for the registration of a company under this Act.

21. Application for registration

(1) An application for the registration of a company under this Act shall be made to the Registrar, and shall be

(a) in the prescribed form;

(b) signed by each applicant;

(c) accompanied, in the case of a company other than a close company, by a document in the prescribed form signed by every person named as a director or secretary, containing his consent to be a director or secretary and a certificate that he is not disqualified from being appointed or holding office as a director or secretary of a company and providing the identity number of the director; and

(d) accompanied by

(i) in the case of a company having a share capital, a document in the prescribed form signed by every person named as a shareholder, or by an agent of that person authorized in writing, containing that person’s consent to being a shareholder and to taking the class and number of shares specified in the document and stating the consideration to be provided by that shareholder for the issue of those shares,

(ii) in the case of a close company, a document in the prescribed form signed by every person named as a member, containing that person’s consent to being a member and stating the particulars required by section 248(4),

(iii) in the case of a company limited by guarantee, a document signed by each person named as a member, or by an agent of that person authorized in writing, containing that person’s consent to be a member and stating a named amount up to which the member undertakes to contribute to the assets of the company, in the event of its being wound up while that person is a member, or within one year after ceasing to be a member, for payment of the debts and liabilities of the company contracted before that person ceases to be a member, and of the costs, charges and expenses of the winding up, and for the adjustments of the rights among themselves of the other members who are similarly required to contribute, or

(iv) if the document has been signed by an agent, the instrument authorizing the agent to sign it; and

(e) accompanied by a notice given under section 32(3) reserving a name for the proposed company; and

(f) accompanied by a document certified by at least one applicant as the company’s constitution, if the proposed company is to have a constitution apart from the Act.

(2) Without limiting the provisions of subsection (1), the application shall state

(a) the full name and address of each applicant;

(b) the full name and residential address of every director and of the secretary of the proposed company;

(c) the full name and residential address of every shareholder or member of the proposed company, and in the case of a company limited by shares, the number of shares to be issued to every shareholder and the amount to be paid or other consideration to be provided by that shareholder for the issue of those same shares;

(d) whether the company is a private company;

(e) whether a company is a close company;

(f) the registered office of the proposed company; and

(g) the physical address of the principal place of business or other activity of the proposed company.

(3) The application shall also be accompanied by a declaration made by a person engaged in the formation of the company, who shall be one of the persons referred to in subsection (4), stating that the application complies with the provisions of this Act.

(4) The person who may make the declaration of compliance referred to in subsection (3) shall be

(a) a legal practitioner;

(b) a member of the Botswana Institute of Accountants;

(d) such other class of person as the Minister may prescribe.

22. Registration

On receipt of a properly completed application for registration of a company, the Registrar shall

(a) enter the particulars of the company on the register;

(b) assign a unique number to the company as its company number; and

*22A. Delegation of powers by the Registrar Registrar may, in writing, delegate to any officer at or above the level of Principal Commercial Officer in the office of the Registrar of Companies, the power to sign and issue certificates of incorporation.

23. Certificate of incorporation

A certificate of incorporation of a company issued under section 22 is conclusive evidence that

(a) all the requirements of this Act as to registration have been complied with; and

(b) on and from the date of incorporation stated in the certificate, the company is incorporated under this Act.

24. Separate legal personality

A company incorporated under this Act shall be a body corporate with the name by which it is registered from time to time and shall continue in existence until it is removed from the register of companies.

PART III - Capacity, Powers, and Validity of Actions (ss 25-28)

25. Capacity and powers

(1) Subject to this Act, any other enactment, and the general law, a company has, both within and outside Botswana

(a) full capacity to carry on or undertake any business or activity, do any act which it may by law do, or enter into any transaction; and

(b) for the purposes of paragraph (a), full rights, powers and privileges.

(2) The constitution of a company may contain a provision relating to the capacity, rights, powers, or privileges of the company if the provision restricts the capacity of the company or those rights, powers and privileges.

26. Validity of actions

(1) If the constitution of a company sets out the objects of a company, there is deemed to be a restriction in the constitution on carrying on any business or activity that is not within those objects, unless the constitution expressly provides otherwise.

(2) If the constitution of a company provides for any restriction on the business or activities in which the company may engage

(a) the capacity and powers of the company shall not be affected by that restriction; and

(b) no act of the company and no contract or other obligation entered into by the company and no transfer of property to or by the company is invalid by reason only that it was done in contravention of that restriction.

(3) Subsection (2) does not limit

(a) section 165, relating to interdicts to restrain conduct by a company that would contravene its constitution;

(b) section 166 relating to derivative actions by directors and shareholders;

(d) section 172 relating to actions by shareholders to require the directors of a company to take action under the constitution or this Act.

27. Dealings between company and other persons

(1) A company or a guarantor of an obligation of a company may not assert against a person dealing with the company or with a person who has acquired property, rights, or interests from the company that

(a) this Act (in so far as it provides for matters of company meetings and internal procedure) or the constitution of the company has not been complied with; or

(b) a person named as a director or secretary of the company in the most recent notice received by the Registrar under section 155

(i) is not a director or secretary of a company,

(ii) has not been duly appointed, or

(iii) does not have authority to exercise a power which a director or secretary of a company carrying on business of the kind carried on by the company customarily has authority to exercise;

(i) has not been duly appointed, or

(ii) does not have authority to exercise a power which a director, secretary, employee,or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise;

(d) a person held out by the company as a director, secretary, employee, or agent of the company with authority to exercise a power which a director, secretary, employee, or agent of a company carrying on business of the kind carried on by the company does not customarily have authority to exercise, does not have authority to exercise that power; or

(e) a document issued on behalf of a company by a director, secretary, employee, or agent of the company with actual or usual authority to issue the document is not valid or not genuine, unless the person has, or ought to have, by virtue of his position with or relationship to the company, knowledge of the matters referred to in any of paragraphs (a), (b), (c), (d), or (e), as the case may be, of this subsection and in that case subsection (3) applies.

(2) Subsection (1) of this section applies even though a person of the kind referred to in paragraphs (b) to (e) of that subsection acts fraudulently or forges a document that appears to have been signed on behalf of the company, unless the person dealing with the company or with a person who has acquired property, rights, or interests from the company has actual knowledge of the fraud or forgery.

(3) Where the person dealing with the company has, by virtue of his position with or relationship with the company, knowledge of any of the matters referred to in paragraphs (a), (b), (c), (d), or (e) of subsection (1), the company shall not be precluded from asserting against that person that the state of the particular matter of which that person has knowledge in fact accords with the knowledge of that person.

(4) A person is a person who is "dealing with the company" for the purposes of this section if that person is a party to any transaction or other act to which the company is a party.

28. No constructive notice

No person shall be deemed to have notice or knowledge of the contents of the constitution of, or any other document relating to, a company by reason only of the fact that the constitution or document has been registered by the Registrar; or it is available for inspection at an office of the company.

PART IV - Company Names (ss 29-36)

29. Name to be reserved

The Registrar shall not register a company under a name or register a change of the name of a company unless the name has been reserved.

30. Name of company if liability of shareholders limited and if a private company

(1) Unless a licence has been granted under section 31, the registered name of a company other than a close company, shall end with the word "Limited" .

(2) If the company is a private company, the word "Proprietary" shall be added before the word "Limited" .

(3) If the company is a close company the designation CC in capital letters shall be added to the name of the close company.

31. Power to dispense with "Limited"

(1) Where it is proved to the satisfaction of the Minister that an association about to be formed as a company is to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object, and intends to apply its profits or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Minister may direct that the association be registered as a company, without the addition of the word "Limited" to its name, and the association may be registered accordingly.

(2) A direction under this section may be granted on such conditions (including the maximum area of land the company may hold) as the Minister considers appropriate, and those conditions shall be binding on the association, and shall, if the Minister so directs, be inserted in the constitution.

(3) The association shall, on registration, enjoy all the privileges of limited companies, and be subject to all their obligations, except those of using the word "Limited" as any part of its name, and of publishing its name, and of sending lists of members and directors and managers to the Registrar.

(4) A direction under this section may at any time be revoked by the Minister, and upon revocation the Registrar shall enter the word "Limited" at the end of the name of the association in the register, and the association shall cease to enjoy the exemptions and privileges granted by this section.

(5) No direction under this section may be revoked unless the Minister has given to the association notice in writing of his intention and has afforded the association an opportunity of being heard in opposition to the revocation.

(6) Where, as a result of a direction given under subsection (1), the constitution includes a provision that the constitution shall not be altered except with the consent of the Minister, the company may not, by special resolution alter any provision of the constitution.

(7) Where a direction under this section is revoked, the constitution may be altered by special resolution so as to remove any provision in, or to the effect that, the constitution may be altered only with the consent of the Minister.

(8) A private company which has been the subject of a direction under this section need not include the word "Proprietary" in its name.

32. Application for reservation of name

(1) The Registrar shall, on written application by the applicant, reserve a name pending registration of a company or a change of name of an existing company; and such reservation shall be for a period of 30 days or such longer period not exceeding 60 days as the Registrar may, for special reasons, allow.

(2) An application for the reservation of the name of a company shall be made to the Registrar in the prescribed form.

(3) The Registrar may not reserve a name and no company may be registered by a name

(a) the use of which would contravene the Banking Act or any other enactment;

(b) that is identical or almost identical to, the name of a registered company or a registered external company or a statutory corporation, or to a name registered under the Registration of Business Names Act, unless the registered company, the registered external company or the business is in liquidation or insolvency and signifies its consent to the registration in such manner as the Registrar may require;

(c) that is identical or almost identical to a name that the Registrar has already reserved under this Act or the repealed Act and that is still available for registration; or

(d) that, in the opinion of the Registrar, is calculated to mislead the public or cause offence to a person or any class of persons or is suggestive of blasphemy or indecency.

(4) The Registrar shall, within 10 working days of the date the application was received, advise the applicant by notice in writing

(a) whether or not he has reserved the name; and

(b) If the name has been reserved, that unless the reservation is sooner revoked by the Registrar, the name is available for registration of a company with that name or on a change of name, for the period of time stated in the notice.

33. Name of company

Except with the Minister’s written consent, no company, including an external company, shall be registered under a name which includes

(a) the word "Authority", "Commonwealth", "co-operative", "Government", "National", "President", "Presidential", "Regional" or "State",

(b) the combined words "United Nations"; or

(c) any other word which, in the Registrar’s opinion suggests, or is likely to sugge st, that it enjoys the patronage of the Government or of a statutory corporation, or of the Government of any other State or of a department of any such Government or of the General Assembly of the United Nations.

34. Change of name

(1) An application to change the name of a company shall

(a) be in the prescribed form;

(b) be accompanied by a notice reserving the name; and

(c) subject to the constitution of the company, be made by a director of the company, with the approval of a special resolution of the company.

(2) Subject to its constitution, an application to change the name of a company is not an amendment of the constitution of the company for the purposes of this Act.

(3) The Registrar shall not enter a change of name in the register until 14 days after he has publicized, by notice in the Gazette, the application made to him for the change of name of the company.

(4) At the expiry of the 14 days after publication of the Gazette under subsection (3), the Registrar shall

(a) enter the new name of the company in the register of companies; and

(b) issue a certificate of incorporation for the company recording the change of name of the company.

(5) A change of name of a company

(a) takes effect from the date of the certificate issued under subsection (4); and

(b) does not affect the rights or obligations of the company, or legal proceedings by or against the company, and legal proceedings that might have been continued or commenced against the company under its former name may be continued or commenced against it under its new name.

35. Direction to change name

(1) If the Registrar believes on reasonable grounds that the name under which a company is registered should not have been reserved, he may serve written notice on the company to change its name by a date specified in the notice, being a date not less than 20 working days after the date on which the notice is served.

(2) If the company does not change its name within the period specified in the notice, the Registrar may enter, on the register of companies, a new name for the company selected by the Registrar, being a name under which the company may be registered under this Part.

(3) If the Registrar registers a new name under subsection (2)

(a) he shall issue a certificate of incorporation for the company recording the new name of the company, and section 34(4) of this Act shall apply in relation to the registration of the new name as if the name of the company had been changed under that section;

(b) he shall, within 14 days of the date of entry of the new name in the register, publicise the new name of the company by notice in the Gazette; and

36. Use of Company name

(1) A company shall ensure that its name is clearly stated in

(a) every written communication sent by, or on behalf of, itself; and

(b) every document issued or signed by, or on behalf of, itself that evidences or creates a legal obligation of the company.

(2) Where

(a) a document that evidences or creates a legal obligation of a company is issued or signed by or on behalf of the company; and

(b) the name of the company is incorrectly stated in the document, every person who issued or signed the document is liable to the same extent as the company if the company fails to discharge the obligation.

(3) Liability under subsection (2) shall not be applicable where

(a) the person who issued or signed the document proves that the person in whose favor the obligation was incurred was aware at the time the document was issued or signed that the obligation was incurred by the company; or

(b) the court is satisfied that it would not be just and equitable for the person who issued or signed the document to be so liable.

(4) For the purposes of subsections (1), (2) and (3) and of section 177, relating to the manner in which a company may enter into contracts and other obligations, a company may use a generally recognized abbreviation of a word or words in its name if it is not misleading to do so and in particular may use the abbreviation ‘‘Ltd’’ and ‘‘Pty’’ for the words ‘‘Limited’’ and ‘‘Proprietary’’ .

(5) If, within the period of 12 months immediately preceding the giving by a company of any public notice, the name of the company was changed, the company shall ensure that the notice states

(a) that the name of the company was changed in that period; and

(b) the former name or names of the company.

(6) If a company fails to comply with subsection (1) or subsection (4)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

PART V - Company Constitution (ss 37-44)

37. No requirement for company to have constitution Except where required by any other Act, a company including a close company may, but does not need to, have a constitution.

38. Effect of Act on company having constitution

(1) If a company other than a close company has a constitution, the company, the Board, each director, and each shareholder of the company shall have the rights, powers, duties, and obligations set out in this Act except to the extent that they are negated or modified, in accordance with this Act, by the constitution of the company.

(2) If a close company has a constitution, the members of the close company shall have the rights, powers, duties and obligations set out in Part XIX except to the extent that they are negated or modified, in accordance with that Part, by the constitution of the company.

39. Effect of Act on company not having constitution

If a public company does not have a constitution, the company, the Board, each director, and each shareholder of the company have the rights, powers, duties, and obligations set out in this Act.

40. Form of constitution

The constitution of a company, if it has one, is

(a) in the case of a company registered under Part II, a document certified by the applicant for registration of the company as the company’s constitution;

(b) in the case of a private company other than a close company registered under Part II, if no constitution is registered under paragraph (a), the constitution in the First Schedule;

(c) in the case of a company registered under the repealed Act, the memorandum and articles of association as originally registered or as altered in accordance with the repealed Act, including so far as they apply to the company the regulations contained in Table A, Table B, Table C or Table D in the First Schedule to the repealed Act:

Provided that any statement of objects in the memorandum shall, from the commencement of this Act, have the effect stated in section 25;

(d) a document that is adopted by the company as its constitution under section 43;

(e) a document described in section 44 of this Act; or

(f) a document described in any of the preceding paragraphs of this section as altered by the company under section 43 or varied by the court under section 175.

41. Contents of constitution

Subject to section 25(2), the constitution of a company may contain

(a) matters contemplated by this Act for inclusion in the constitution of a company; and

(b) such other matters as the company wishes to include in its constitution.

42. Effect of constitution

(1) The constitution of a company has no effect to the extent that it contravenes, or is inconsistent with, this Act.

(2) Subject to this Act, the constitution of a company is binding as between

(a) the company and each shareholder; and

(b) shareholders, in accordance with its terms.

43. Adoption, alteration and revocation of constitution

(1) The shareholders of a company that does not have a constitution may, by special resolution, adopt a constitution for the company.

(2) Subject to subsection (3), and without limiting section 104 (which relates to variation of shareholders’ rights) and section 174 (which relates to the right of a shareholder to apply to the court for relief in cases of prejudice), but subject to section 31(6) (which relates to a direction made by the Minister under section 31) and to section 64 (which relates to the reduction of shareholders’ liability), the shareholders of a company may, by special resolution, alter or revoke the constitution of the company.

(3) An existing company which has, as its constitution pursuant to section 40(c), a memorandum of association and articles of association, shall not alter any of the provisions in its existing memorandum of association or articles of association unless it replaces its memorandum of association and its articles of association by a single document into which it consolidates its constitution.

(4) Within 10 working days of the adoption of a constitution by a company, or the alteration or revocation of the constitution of a company, as the case may be, the Board shall ensure that a notice in the prescribed form of the adoption of the constitution or of the alteration or revocation of the constitution is delivered to the Registrar for registration.

(5) If the Board of a company fails to comply with subsection (4) of this section, every director of the company commits an offence and is liable, on conviction, to the penalty set out in section 493 (1).

(6) A company to which subsection (3) would otherwise apply may apply to the Registrar for dispensation from the requirement in subsection (3) that the memorandum and articles of association be replaced at that time by a constitution into which it consolidates its existing memorandum and articles, and where the Registrar considers that the requirement may impose undue hardship on the company, the Registrar may grant a dispensation to the company from the application of subsection (3) on such conditions as the Registrar considers appropriate. The conditions imposed by the Registrar may include a condition that the company register such a constitution within such period of time as the Registrar may stipulate.

(7) Notwithstanding the provisions of section 522 and the Eleventh Schedule, the Registrar shall not, during a period of three years from the commencement of this Act, require the payment of any fee which would otherwise be payable on the presentation by a company, registered under the repealed Act, for registration of a constitution which replaces its memorandum and articles.

44. New form of constitution

(1) A company may, from time to time, deliver, to the Registrar, a single document that incorporates the provisions of a document referred to in any of the paragraphs of section 40, together with all amendments to it.

(2) The Registrar may, if he considers that by reason of the number of amendments to a company’s constitution it would be desirable for the constitution to be contained in a single document, by notice in writing, require a company to deliver to him a single document that incorporates the provisions of a document referred to in any of the paragraphs of section 40 together with the amendments to it.

(3) Within 20 working days of receipt by a company of a notice under subsection (2), the Board shall ensure that the document required by that subsection is received by the Registrar for registration.

(4) The Board shall ensure that a document delivered to the Registrar under this section is accompanied by a certificate signed by a person authorized by the Board that the document complies with subsection (1) or subsection (2), as the case may be, of this section.

(5) As soon as the Registrar receives a document certified in accordance with subsection (4), he shall register the document.

(6) If the Board of a company fails to comply with subsection (3) or subsection (4), every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

PART VI - Shares (ss 45-79)

45. Legal nature and rights and powers attaching to shares

(1) A share in a company is movable property and is transferable in accordance with section 48.

(2) Subject to subsection (3), a share in a company confers on the holder

(a) the right to one vote on a poll at a meeting of the company on any resolution;

(b) the right to an equal share in dividends authorised by the Board;

(3) Subject to section 60, the rights specified in subsection (2) may be negated, altered, or added to by the constitution of the company or in accordance with the terms on which the share is issued under section or section 50, as the case may be.

46. Types of shares

(1) Subject to the constitution of the company, different classes of shares may be issued in a company.

(2) Without limiting subsection (1), shares in a company may

(a) be redeemable within the meaning of section 72;

(b) confer preferential or limited rights to distributions of capital or income;

(d) not confer voting rights.

47. No par value shares

(1) All shares created or issued after the commencement of this Act shall be shares of no par value.

(2) All shares issued prior to the commencement of this Act shall be deemed to be converted into shares of no par value but such conversion shall not affect the rights and liabilities attached to such shares and in particular, but without prejudice to the generality of this provision, such conversion shall not affect

(a) any unpaid liability on such shares; or

(b) the rights of the holders thereof in respect of dividends, voting or repayment on winding up or a reduction of capital.

(3) Subsection (2) shall apply notwithstanding any statement in a share certificate relating to the shares that describes the shares by reference to a par value.

(4) On the commencement of this Act, the stated capital of a company which has issued shares prior to the commencement of this Act shall be the whole of the company’s called up issued share capital and its share premium account.

(5) Notwithstanding the provisions of subsection (1), the Registrar may, in exceptional circumstances where he is satisfied that a company registered under this Act is a wholly owned subsidiary of a company registered outside Botswana and that for the purposes of the company’s reporting obligations outside Botswana it is necessary for the company to be formed with shares carrying a par value, the Registrar may grant a dispensation from the provisions of subsection (1) and permit the issue of a class or classes of par value shares, on such terms and conditions as he may consider appropriate:

Provided that all the ordinary shares or all the preference shares shall consist of either one or the other, and any premiums received on any issue of shares shall be transferred into an account called a share premium account to which, together with the company’s nominal issued share capital, the provisions of section 59 relating to reduction of capital shall apply.

(6) Shares of par value issued under subsection (5) may, with the approval of the Registrar where the functional currency of the company is a foreign currency, be designated in that foreign currency, but shall otherwise be designated in the currency of Botswana.

48. Transferability of shares

(1) Subject to any limitation or restriction on the transfer of shares in the constitution, a share in a company is transferable.

(2) A share is transferred by entry in the share register in accordance with section 81.

(3) Subject to section 82, the executor of a deceased shareholder may transfer a share even though the executor is not a shareholder at the time of transfer.

49. Issue of shares on registration and amalgamation

(1) Upon the registration of the company under section 22, the company shall issue, to any person or persons named in the application for registration as a shareholder or shareholders, the number of shares specified in the application as being the number of shares to be issued to that person or those persons.

(2) Upon the issue of a certificate of amalgamation under section 227, the amalgamated company shall issue to any person entitled to a share or shares under the amalgamation proposal, the share or shares to which that person is entitled.

50. Issue of other shares

(1) Subject to this Act and the constitution of the company, the Board of a company may issue shares at any time, to any person, and in any number it considers appropriate.

(2) If the shares confer rights other than those set out in section 45(2), or impose any obligation on the holder, the Board shall, subject to

(a) the prior approval of an ordinary resolution of shareholders (unless the constitution otherwise provides); and

(b) the requirements of section 104 (dealing with a variation of class rights), approve terms of issue which set out the rights and obligations attached to the shares.

(3) The terms of issue approved by the Board under subsection (2)

(a) shall be consistent with the constitution of the company, and to the extent that they are not so consistent are invalid and of no effect; and

(b) are deemed to form part of the constitution and may be amended in accordance with section 43 subject to the requirements of section 104, providing for the variation of class rights.

(4) Within 10 working days of the issue of shares under this section, the company shall

(a) give notice to the Registrar in the prescribed form of

(i) the number of shares issued, and

(ii) the amount of the consideration for which the shares have been issued, or its value as determined by the Board under section 53 and 54; and

(iii) the amount of the company’s stated capital following the issue of the shares;

(b) deliver to the Registrar a copy of any terms of issue approved under subsection (2); and

(c) deliver to the Registrar together with the notice under paragraph (a) and the copy of any terms of issue under paragraph (b), a declaration made by any of the persons referred to in section 21(3) that the provisions of the Act in relation to the issue of shares have been complied with.

(5) If a company fails to comply with subsection (4)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every officer of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(1).

51. Alteration in number of shares

(1) A company may by ordinary resolution

(a) subdivide its shares into shares of a smaller amount if the proportion between the amount paid, and the amount, if any, unpaid on each reduced share remains the same as it was in the case of the share from which the reduced share is derived; or

(b) consolidate and divide all of its shares into shares of a larger amount than its existing shares.

(2) Where shares are consolidated, the amount paid and any unpaid liability thereon, any fixed sum by way of dividend or repayment to which such shares are entitled, shall also be consolidated.

(3) Where a company has altered its share capital in a manner specified in subsection (1), it shall, within 10 working days, file a notice to that effect with the Registrar.

(4) A notice under subsection (3) shall include particulars with respect to the classes of shares affected.

52. Pre-emptive rights to new issues

(1) Subject to the constitution, where a company issues shares which rank equally with or prior to existing shares as to voting or distribution rights, those shares shall be offered to the holders of existing shares in a manner which would, if the offer were accepted, maintain the relative voting and distribution rights of those shareholders.

(2) An offer under subsection (1) shall remain open for acceptance for a reasonable time.

53. Consideration for issue of shares

(1) Before it issues any shares the Board shall

(a) determine the amount of the consideration for which the shares shall be issued; and

(b) resolve that in its opinion the consideration is fair and reasonable to the company and to all existing shareholders.

(2) The consideration for which a share is issued may take any form and maybe cash, promissory notes, contracts for future services, real or personal property, or other securities of the company and maybe issued in part for cash and in part by way of some other form of consideration.

54. Shares not paid for in cash

(1) Shares shall be deemed not to have been paid for in cash except to the extent that the company has actually received cash in payment of the shares at the time of or subsequently to the agreement to issue the shares.

(2) Before shares are credited as fully or partly paid up other than for cash, the Board shall

(a) determine the reasonable present cash value of the consideration; and

(b) resolve that, in its opinion, the present cash value of the consideration is

(i) fair and reasonable to the company and to all existing shareholders, and

(ii) not less than the amount to be credited in respect of the shares.

(3) The directors who vote in favor of a resolution under subsection (2) shall sign a certificate

(a) describing the consideration in sufficient detail to identify it; and

(b) stating

(i) the present cash value of the consideration and the basis for assessing it,

(ii) that the present cash value of the consideration is fair and reasonable to the company and to all existing shareholders; and

(iii) that the present cash value of the consideration is not less than the amount to be credited in respect of the shares.

(4) The Board shall deliver a copy of a certificate that complies with subsection (3) to the Registrar for registration within 10 working days after it is given, and where the shares are issued to an officer or employee of the company or to any relative of such persons or to a corporation which is a related party of such persons, the certificate shall be entered in the Interests Register.

(5) For the purposes of this section, shares that are or are to be credited as paid up, whether wholly or partly, as part of an arrangement that involves the transfer of property or the provision of services and an exchange of cash or cheques or other negotiable instruments, whether simultaneously or not, shall be treated as paid up other than in cash to the value of the property or services.

(6) A director who fails to comply with subsection (3) of this section shall be guilty of an offence and liable to the penalty set out in section 492 (1).

(7) Nothing in this section applies to the issue of shares in a company on

(a) the conversion of any convertible securities; or

(b) the exercise of any option to acquire shares in the company.

(8) If the Board of a company fails to comply with subsection (4), every officer of the company shall be guilty of an offence and liable to the penalty set out in section 492(1).

55. Calls on shares

(1) Where a call is made on a share or any other obligation attached to a share is performed by the shareholder, the company shall, within 10 working days of the call being made, give notice to the Registrar in the prescribed form of

(a) the amount of the call or its value as determined by the Board under section 5(3); and

(b) the amount of the stated capital of the company following the making of the call.

(2) If a company fails to comply with subsection (1)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(1).

56. Consent to issue of shares

The issue by a company of a share that

(a) increases the liability of a person to the company; or

(b) imposes a new liability on a person to the company, is void if that person or an agent of that person authorised in writing does not consent in writing to becoming the holder of the share before it is issued.

57. Time of issue of shares

A share is issued when the name of the holder is entered on the share register.

58. Board may authorize distributions to shareholders

(1) Before a distribution is made by a company to any shareholder, that distribution

(a) shall be authorised by the Board under subsection (2); and

(b) shall, unless the constitution provides otherwise, be approved by the shareholders by ordinary resolution.

(2) The Board of a company may authorize a distribution at such time and of such amount as it considers appropriate, if it is satisfied that the company will, immediately after the distribution is made, satisfy the solvency test.

(3) The directors who vote in favor of a distribution shall sign a certificate stating that, in their opinion, the company will, immediately after the distribution, satisfy the solvency test.

(4) If after a distribution is authorized and before it is made, the Board ceases to be satisfied that the company will, immediately after the distribution is made, satisfy the solvency test, any distribution made by the company is deemed not to have been authorized.

(5) In applying the solvency test for the purpose of this section and section 63, "debts" includes fixed preferential returns on shares ranking ahead of those in respect of which a distribution is made, except where that fixed preferential return is expressed in the constitution as being subject to the power of the Board to authorize distributions.

(6) A director who fails to comply with subsection (3) of this section shall be guilty of an offence and liable to the penalty set out in section 493(2).

59. Reduction of stated capital

(1) Subject to subsection (3), a company may by special resolution reduce its stated capital to such amount as it considers appropriate.

(2) Public notice of a proposed reduction of a company’s stated capital shall be given not less than 30 days before the resolution to reduce stated capital is passed.

(3) Where a company has agreed in writing with a creditor of the company that it will not reduce its stated capital below a specified amount without the prior consent of the creditor, or unless specified conditions are satisfied at the time of the reduction, a resolution to reduce stated capital passed in breach of any such agreement is invalid and of no effect.

(4) A company shall not take any action to extinguish or reduce a liability in respect of an amount unpaid on a share or to reduce its stated capital for any purpose other than the purpose of declaring that its stated capital is reduced by an amount that is not represented by the value of its assets if there are reasonable grounds for believing that

(a) the company is, or after the taking of such action, would be unable to pay its debts as they become due; or

(b) after the taking of such action the value of the company’s assets would be less than the value of its liabilities.

(5) Where a share is redeemed at the option of the shareholder under section 74 or on a fixed date under section 75, or the company purchases a share under section 100 and the Board is satisfied that as a consequence of the redemption or purchase, the company would but for this subsection fail to satisfy the solvency test, the Board shall resolve that the stated capital of the company shall be reduced by the amount by which the company would so fail to satisfy the solvency test and the resolution of the Board shall have effect notwithstanding subsections (1) to (3).

(6) A company which has reduced its stated capital shall, within 10 working days of the reduction, give notice of the reduction to the Registrar, specifying the amount of the reduction and the reduced amount of its stated capital.

(7) If a company fails to comply with subsection (2) or subsection (6)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(2); and

(b) every officer of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(2).

60. Dividends

(1) A dividend is a distribution other than a distribution to which sections 66 and 76 apply.

(2) The Board shall not authorize a dividend

(a) in respect of some but not all the shares in a class; or

(b) of a greater amount in respect of some shares in a class than other shares in that class except where

(i) the amount of the dividend is reduced in proportion to any liability attached to the shares under the constitution, or

(ii) a shareholder has agreed in writing to receive no dividend, or a lesser dividend than would otherwise be payable.

61. Shares in lieu of dividends

Subject to the constitution of the company, the Board may issue shares to any shareholders who have agreed to accept the issue of shares, wholly or partly, in lieu of a proposed dividend or proposed future dividends if (a) the right to receive shares, wholly or partly, in lieu of the proposed dividend or proposed future dividends has been offered to all shareholders of the same class on the same terms;

(b) in the event that all shareholders elect to receive the shares in lieu of the proposed dividend, the relative voting or distribution rights in relation to the shares would be maintained;

(d) the shares issued to each shareholder are issued on the same terms and subject to the same rights as the shares issued to all shareholders in that class who agree to receive the shares; and

(e) the provisions of section 50 are complied with by the Board.

62. Shareholder discounts

(1) The Board may resolve that the company offer shareholders discounts in respect of some or all of the goods sold or services provided by the company.

(2) The Board may approve a discount scheme under subsection (1) only if it has previously resolved that the proposed discounts are

(a) fair and reasonable to the company and to all shareholders; and

(b) to be available to all shareholders or all shareholders of the same class on the same terms.

(3) A discount scheme may not be approved or continued by the Board unless it is satisfied on reasonable grounds that the company satisfies the solvency test.

(4) Subject to subsection (5), a discount accepted by a shareholder under a discount scheme approved under this section is not a distribution for the purposes of this Act.

(5) Where

(a) a discount is accepted by a shareholder under a scheme approved or continued by the Board; and

(b) at the time the scheme was approved or the discount was offered, the Board ceased to be satisfied on reasonable grounds that the company would satisfy the solvency test, the provisions of section 63 shall apply in relation to the discount with such modifications as may be necessary as if the discount were a distribution that is deemed not to have been authorized.

63. Recovery of distributions

(1) A distribution made to a shareholder at a time when the company did not, immediately after the distribution, satisfy the solvency test may be recovered by the company from the shareholder unless

(a) the shareholder received the distribution in good faith and without knowledge of the company’s failure to satisfy the solvency test;

(b) the shareholder has altered the shareholder’s position in reliance on the validity of the distribution; and

(2) If, in relation to a distribution made to shareholders

(a) the procedure set out in section 58 has not been followed; or

(b) reasonable grounds for believing that the company would satisfy the solvency test in accordance with section 58, section 74 or section 75, as the case may be, did not exist at the time the certificate was signed, a director who

(i) failed to take reasonable steps to ensure the procedure was followed, or

(ii) signed the certificate, as the case may be, is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

(3) If, by virtue of section 58(4) a distribution is deemed not to have been authorized, a director who

(a) ceased after authorization but before the making of the distribution to be satisfied on reasonable grounds for believing that the company would satisfy the solvency test immediately after the distribution is made; and

(b) failed to take reasonable steps to prevent the distribution being made, is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

(4) If, by virtue of section 62(5), a distribution is deemed not to have been authorized, a director who failed to take reasonable steps to prevent the distribution being made is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

(5) If, in an action brought against a director or shareholder under this section, the court is satisfied that the company could, by making a distribution of a lesser amount, have satisfied the solvency test, the court may

(a) permit the shareholder to retain; or

(b) relieve the director from liability in respect of, an amount equal to the value of any distribution that could properly have been made.

64. Reduction of shareholders liability

(1) If a company proposes to alter its constitution, or redeem shares under section 73 in a manner which would cancel or reduce the liability of a shareholder to the company in relation to a share held prior to that alteration, or redemption, the proposed cancellation or reduction of liability is to be treated

(a) for the purposes of section 58 as if it were a distribution; and

(b) for the purposes of section 60(2) as if it were a dividend.

(2) If a company has altered its constitution, or redeemed shares under section 73 in a manner which cancels or reduces the liability of a shareholder to the company in relation to a share held prior to that alteration, or redemption, that cancellation or reduction of liability is to be treated for the purposes of section 63 as a distribution of the amount by which that liability was reduced.

(3) If the liability of a shareholder of an amalgamating company, to that company in relation to a share held before the amalgamation is

(a) greater than the liability of that shareholder to the amalgamated company in relation to a share or shares into which that share is converted; or

(b) cancelled by the cancellation of that share in the amalgamation, the reduction of liability effected by the amalgamation is to be treated, for the purposes of section 63(1) and (3), as a distribution by the amalgamated company to that shareholder, whether or not that shareholder becomes a shareholder of the amalgamated company of the amount by which that liability was reduced.

(4) Where a company acquires shares issued by it, the provisions of section 67 shall govern the way in which the distribution to shareholders is to be treated.

65. Company may acquire or redeem its own shares

(1) A company shall not purchase or otherwise acquire any of its own shares except

(a) under section 66;

(b) under sections 98 to 103;

(d) if the company is a private company, with the unanimous agreement of all shareholders under section 247; or

(e) in accordance with an order made by the court under this Act.

(2) A company shall not redeem a share which is a redeemable share except in accordance with sections 72 to 75.

(3) Within seven days following the acquisition or redemption of shares by the company, the company shall give notice to the Registrar of the number and class of shares acquired or redeemed.

(4) Where shares are acquired by a company pursuant to subsection (1) or redeemed pursuant to subsection (2), the stated capital of the class of shares so acquired or redeemed shall be decreased by an amount derived by multiplying the number of shares of that class so acquired with the amount arrived at so as to take into account the extent to which the company’s stated capital is reduced by the company’s acquisition or redemption of its own shares.

(5) A company shall not make any payment in whatever form to acquire or redeem any share issued by the company where there are reasonable grounds for believing that the company is or would after the payment, be unable to satisfy the solvency test.

(6) Shares in the capital of a company may not be acquired or redeemed if, as a result of such acquisition or redemption, there would no longer be any shares on issue other than convertible or redeemable shares.

(7) If a company fails to comply with subsection (3) or (4)

(a) the company shall be guilty of an offence and liable, in the case of subsection (3), to the penalty set out in section 492(1) and in the case of subsection (4) to the penalty set out in section 492(3); and

(b) every officer of the company who is in default shall be guilty of an offence and liable, in the case of subsection (3), to the penalty set out in section 493(1) and in the case of subsection (4) to the penalty set out in section 493(2).

66. Purchase of own shares

(1) A company may with the approval of the Board and of an ordinary resolution of shareholders purchase or otherwise acquire its own shares:

Provided that the shares are fully paid up and its constitution does not forbid it from doing so.

(2) The approval pursuant to subsection (1) may be a general approval or a specific approval for a particular acquisition.

(3) If the approval under subsection (1) is a general approval, it shall be valid only until the next annual meeting or it may be revoked or varied by ordinary resolution by any general meeting of the company at any time prior to such annual meeting.

(4) Subject to subsection (10), before a company enters into any arrangement to purchase its own shares, the Board shall resolve that it is not aware of any information that has not been disclosed to shareholders which is material to an assessment of the value of the shares, and as a result of which the terms on which the shares are being acquired or the consideration to be provided for the shares are unfair to shareholders whose shares are to be acquired.

*(5) Save as provided by subsections (10) and (11), a company that proposes to acquire shares that are issued by it shall

(a) deliver or mail a copy of the written offer or circular to each shareholder on record as at the date of the offer in such manner as may be provided in the constitution of the company for sending any notice of meeting to shareholders, stating the number and class or kind of its issued shares which the company proposes to acquire, specifying the terms and reasons for the offer and providing the disclosure required by subsection (12); and

(b) file a copy of the offering circular with the Registrar within 15 days of the date that it is delivered or mailed to the shareholders of the company.

(6) The provisions of sections 313 to 315 shall apply so far as they reasonably extend to all documents issued in terms of subsection (5).

(7) Where in response to any offer to acquire shares, the shareholders propose to dispose of a greater number of shares than the company offered to acquire, the company shall acquire from all shareholders who offered to sell, pro rata as nearly as possible disregarding fractions:

Provided that this section shall not apply to the acquisition of shares in terms of transactions effected on a stock exchange within Botswana or to acquisition of shares by an investment company with variable capital.

(8) A company that acquires shares issued by it shall notify the Registrar within 30 days of the date of acquisition in the prescribed form of the date, number and class of shares that it has acquired.

(9) A stock exchange within Botswana may, in addition to any requirements contained in this Act, determine further requirements with which a company whose shares are listed on such exchange shall comply prior to such company acquiring its own shares.

(10) Subsections (4), (5) and (8) shall not apply to an investment company with variable capital which is licensed under the Collective Investment Undertakings Act. (11) Subsection (5) shall not apply to

(a) an offer which is made to all shareholders to acquire a proportion of their shares which,would if accepted, leave unaffected relative voting and distribution rights, and affords a reasonable opportunity to shareholders to accept the offer;

(b) an offer to which all shareholders have consented in writing;

(d) an offer made pursuant to an approval by unanimous resolution; or

(e) where the purchase or acquisition is made on a stock exchange in accordance with the rules of the stock exchange.

(12) The disclosure required for the purposes of subsection (5) is a document that sets out

(a) the nature and terms of the offer, and if made to specified shareholders only, names of those shareholders;

(b) the nature and extent of any relevant interest of any director of the company in any shares the subject of the offer; and

(c) the text of the resolution required by subsection (4), together with such further information and explanation as may be necessary to enable a reasonable shareholder to understand the nature and implications for the company and its shareholders of the proposed acquisition.

67. Liability of directors and shareholders where solvency test not satisfied

(1) The directors of a company, who, contrary to the provisions of section 65(5), are party to allowing the company to acquire any share issued by it, shall be jointly and severally liable to restore to the company any amount so paid and not otherwise recovered by the company, subject to any relief granted by the court under section 517.

(2) A director who is liable under subsection (1) may apply to the court for an order directing any shareholder or former shareholder to pay, to the company, any money that was paid to such shareholder contrary to section 65(5).

(3) Where the acquisition by the company, of shares issued by it, is in contravention of the provisions of section 66(5), any creditor who was a creditor at the time of acquisition or any shareholder may apply to the court for an order and the company may, if it thinks it equitable to do so

(a) order a shareholder or former shareholder to pay to the company any money or return any consideration that was paid or provided by the company to acquire the shares;

(b) order the company to issue an equivalent number of shares to the shareholder or former shareholder;

(4) A proceeding to enforce a liability imposed by this section shall be brought within three years after the date of completion of the acquisition.

(5) Nothing contained in this section shall limit or diminish any liability which any person may incur under this Act or any other law, or the common law.

(6) For the purposes of this section "director of a company" includes a director of a holding company of such company.

68. Cancellation of shares repurchased

(1) Subject to sections 69 and 70, shares that are acquired by a company pursuant to section 66 or section 100 are deemed cancelled immediately on acquisition.

(2) Shares are acquired for the purposes of subsection (1) on the date on which the company would, apart from this section, become entitled to exercise the rights attached to the shares.

(3) On the cancellation of a share under this section, the rights and privileges attached to that share expire; but the share may be reissued in accordance with this Part.

**69. Company may hold its own shares

(1) Shares acquired by a company pursuant to section 66 or section 98 shall not be deemed cancelled under section 68(1) if

(a) the constitution of the company expressly permits the company to hold its own shares;

(b) the Board of the company resolves that the shares concerned shall not be cancelled on acquisition; and

(c) the number of shares acquired, when aggregated with shares of the same class held by the company pursuant to this section at the time of the acquisition, does not exceed five per cent of the shares of that class previously issued by the company, excluding shares previously deemed to be cancelled under section 68(1).

(2) Shares acquired by a company pursuant to section 66 or section 98 that, pursuant to this section, are not deemed cancelled shall be held by the company in itself.

(3) A share that a company holds in itself under subsection (2) may be cancelled by the Board of the company resolving that the share is cancelled; and the share shall be deemed to be cancelled on the making of such a resolution.

(4) The rights and obligations attaching to a share that a company holds in itself pursuant to subsection (2) shall not be exercised by or against a company while it holds the share.

(5) Without limiting subsection (4), while a company holds a share in itself pursuant to this section, the company shall not

(a) exercise any voting rights attaching to the share; or

(b) make or receive any distribution authorised or payable in respect of the share.

70. Reissue of shares company holds in itself

(1) Subject to subsection (2), section 53 shall apply to the transfer of a share held by a company in itself as if the transfer were the issue of the share under section 50.

(2) Subject to subsection (1), the transfer of a share by a company in itself shall not be subject to any provisions in this Act or the company’s constitution relating to the issue of shares, except to the extent the company’s constitution expressly applies those provisions.

(3) A company shall not grant an option to acquire a share it holds in itself or enter into any obligations to transfer such a share where the company has received notice in writing of a takeover scheme or, in the case of a listed company where the stock exchange makes a public notification to the share-market that a takeover offer for more than 20 per cent of the company’s shares is to be made.

71. Enforceability of contract to repurchase shares

(1) A contract with a company providing for the acquisition, by the company, of its shares is specifically enforceable against the company except to the extent that the company would, after performance of the contract fail to satisfy the solvency test.

(2) The company has the burden of proving that performance of the contract would result in the company being unable to satisfy the solvency test.

(3) Until the company has fully performed a contract referred to in subsection (1), the other party to the contract retains the status of a claimant entitled to be paid as soon as the company is lawfully able to do so or, prior to the removal of the company from the register of companies, to be ranked subordinate to the rights of creditors but in priority to the other shareholders.

72. Meaning of "redeemable"

For the purpose of this Act, unless the constitution of the company forbids the issue of redeemable shares, a share is redeemable

(a) if the terms of the issue of the share, or where those terms of issue are contained in the constitution, the constitution makes provision for the redemption of the share

(i) at the option of the company,

(ii) at the option of the holder of the share, or

(iii) on a date specified in the terms of the issue of the share or the constitution if the terms of issue are contained in the constitution; or

(b) for a consideration that is

(i) specified,

(ii) to be calculated by reference to a formula, or

(iii) required to be fixed by a suitably qualified person who is not associated with or interested in the company.

73. Redemption at option of company

A redemption of a share at the option of the company is

(a) an acquisition by the company of the share for the purposes of section 66(4) and (5); and

(b) a distribution for the purposes of section 57.

74. Redemption at option of shareholder

(1) Subject to this section, if a share is redeemable at the option of the holder of the share, and the holder gives proper notice to the company requiring the company to redeem the share

(a) the company shall redeem the share on the date specified in the notice, or if no date is specified, on the date of receipt of the notice;

(b) the share is deemed to be cancelled on the date of redemption; and

(c) from the date of redemption the former shareholder ranks as an unsecured creditor of the company for the sum payable on redemption.

(2) A redemption under this section

(a) is not a distribution for the purposes of section 58 and 60; and

(b) is deemed to be a distribution for the purposes of subsections (1) and (5) of section 63 of this Act.

75. Redemption on fixed date

(1) Subject to this section, if a share is redeemable on a specified date

(a) the company shall redeem the share on that date;

(b) the share is deemed to be cancelled on that date; and

(c) from that date the former shareholder ranks as an unsecured creditor of the company for the sum payable on redemption.

(2) A redemption under this section

(a) is not a distribution for the purposes of sections 58 and 60; and

(b) is deemed to be a distribution for the purposes of subsections (1) and (3) of section 63.

76. Restrictions on giving financial assistance

(1) A company shall not give financial assistance directly or indirectly to any person for the purpose of or in connection with the acquisition of its own shares, other than in accordance with this section.

(2) A company may give financial assistance for the purpose of, or in connection with, the acquisition of its own shares if the Board has previously resolved that

(a) giving the assistance is in the interests of the company;

(b) the terms and conditions on which the assistance is given are fair and reasonable to the company and to any shareholders not receiving that assistance; and

(3) If the amount of any financial assistance approved under subsection (2) together with the amount of any other financial assistance given by the company which is still outstanding exceeds 10 per cent of the company’s stated capital, the company shall not give the assistance unless it first obtains from its auditor or, if it does not have an auditor, from a person qualified to act as its auditor, a certificate that

(a) the person has inquired into the state of affairs of the company; and

(b) the person is not aware of anything to indicate that the opinion of the Board as to the matters in paragraph (b) of subsection (2) is unreasonable in all the circumstances.

(4) The amount of any financial assistance under this section is not a distribution for the purposes of section 58.

(5) For the purposes of this section, the term "financial assistance" includes giving a loan or guarantee, or the provision of security.

77. Transactions not prohibited by section 76

Section 76 shall not apply to

(a) a distribution to a shareholder approved under section 58;

(b) the issue of shares by the company;

(d) anything done under a compromise under Part XV or a compromise or arrangement approved under Part XVI;

(e) a situation where the ordinary business of a company includes the lending of money by the company in the ordinary course of business.

78. Subsidiary may not hold shares in holding company

(1) Subject to this section, a subsidiary shall not hold shares in its holding company, and, subject to subsection (6), a transfer of shares in a holding company to its subsidiary shall be void and of no effect.

(2) Subject to subsection (6), an issue of shares by a holding company to its subsidiary shall be void and of no effect.

(3) Where a company that holds shares in another company becomes a subsidiary of that other company

(a) the company may, notwithstanding subsection (1), continue to hold those shares; but

(b) the exercise of any voting rights attaching to those shares shall be of no effect.

(4) Nothing in this section prevents a subsidiary holding shares in its holding company in its capacity as a personal representative or a trustee unless the holding company or another subsidiary has a beneficial interest under the trust other than an interest that arises by way of security for the purposes of a transaction made in the ordinary course of the business of lending money.

(5) This section applies to a nominee for a subsidiary in the same way as it applies to the subsidiary.

(6) Notwithstanding the provisions of this section, a subsidiary company may, in accordance with sections 69 to 70 with any necessary adjustments, acquire shares in its holding company to a maximum of 10 per cent in the aggregate of the number of issued shares of the holding company:

Provided that this subsection shall not apply to the acquisition of shares by a holding company in its subsidiary.

79. Statement of rights to be given to shareholders

(1) Every company shall issue to a shareholder, on request, a statement that sets out (a) the class of shares held by the shareholder, the total number of shares of that class issued by the company, and the number of shares of that class held by the shareholder;

(b) the rights, privileges, conditions, and limitations, including restrictions on transfer, attaching to the shares held by the shareholder; and

(2) The company is not obliged to provide a shareholder with a statement if

(a) a statement has been provided within the previous six months;

(b) the shareholder has not acquired or disposed of shares since the previous statement was provided;

(d) there are no special circumstances which would make it unreasonable for the company to refuse the request.

(3) The statement is not evidence of title to the shares or of any of the matters set out in it.

(4) The statement shall state in a prominent place that it is not evidence of title to the shares or of the matters set out in it.

(5) If a company fails to comply with subsection (1)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalties set out in section 493(1).

PART VII - Title Transfers, Share Register and Certificates (ss 80-89)

80. Lien on shares

(1) Subject to subsection (2) a company shall, unless the constitution provides otherwise, be entitled to a lien, in priority to any other claim, over every partly paid issued share, and over any dividend payable on the share, for all money due by the holder of that share to the company by way of money called or payable at a fixed time in respect of the unpaid amount owing in respect of that share.

(2) A company, other than a listed company, may, if expressly so provided in its constitution, be entitled to a lien, in priority to any other claim over all shares including fully paid up shares and over any dividend payable on those shares, for all money due by the holder of those shares to the company whether in relation to the shares or otherwise.

(3) A company may, in such manner as the directors consider appropriate, sell any share over which the company has a lien:

Provided that no sale shall be made unless

(a) a sum in respect of which the lien exists is presently payable; and

(b) until the expiry of 14 days after a written notice, stating and demanding payment of such part of the amount in respect of which the privilege or lien exists as is presently payable, has been given to the registered holder for the time of the share, or the person entitled to the share by reason of the death or bankruptcy of the registered holder.

(4) The directors may, to give effect to any sale under subsection (2), authorize a person to transfer the shares sold to the purchaser of the shares, who shall be registered as the holder of the share comprised in any such transfer, and shall not be bound to see to the application of the purchase money, nor shall the title of the purchaser to the share be affected by any irregularity or invalidity in the proceedings relating to the sale.

(5) The proceeds of the sale shall be received by the company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and any residue shall, subject to a like lien for sums not presently payable as existed upon the share before the sale, be paid to the person entitled to the share at the date of the sale.

(6) The directors may, unless the constitution provides otherwise, decline to register the transfer of a share on which the company has a lien.

81. Transfer of shares

(1) Subject to the constitution of the company and any other written law, shares in a company may be transferred by the entry of the name of the transferee on the share register in accordance with this section.

(2) For the purpose of transferring shares, a transfer form signed by the present holder of the shares or by his personal representative shall be given to

(a) the company; or

(b) an agent of the company who maintains the share register under section 83(4).

(3) The form of transfer shall be signed by the transferee if registration has the effect of imposing on the transferee as holder of the shares a liability to the company.

(4) On receipt of a form of transfer in accordance with subsection (2) and (3), the company shall forthwith enter or cause to be entered the name of the transferee on the share register as holder of the shares, unless

(a) the Act or the constitution expressly permits the Board to refuse or delay registration for the reasons stated;

(b) the Board resolves within one month of receipt of the transfer to refuse or delay the registration of the transfer, and the resolution sets out in full the reasons for doing so; and

(c) notice of the resolution, including those reasons, is sent to the transferor and to the transferee within five days of the resolution being passed by the Board.

(5) Subject to the constitution of a company, the Board may refuse or delay the registration of a transfer of shares under subsection (4) where the holder of the shares has failed to pay to the company an amount due in respect of those shares, whether by way of consideration for the issue of the shares or in respect of sums payable by the holder of the shares in accordance with the constitution.

(6) Subsections (2) to (5) shall not apply to securities traded on a stock market of a Stock Exchange under a scheme for the electronic transfer of shares approved and publicly notified by a Stock Exchange.

(7) Where a company fails to comply with subsection (4)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 491(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 492(1).

82. Transfer of shares by operation of law

(1) Shares in a company may pass by operation of law notwithstanding the constitution of the company.

(2) A transfer of the share or other interest of a deceased shareholder of a company made by his executor shall, although the executor is not himself a shareholder, be as valid as if he had been a member at the date of the transfer, subject to the Capital Transfer Act and any law relating to the administration of the estate of a deceased person.

83. Company to maintain share register

(1) A company having a share capital shall maintain a share register that records the shares issued by the company, and in the case of a public company the register shall state

(a) whether, under the constitution of the company or the terms of issue of the shares, there are any restrictions or limitations on the transfer of shares; and

(b) where any document that contains the restrictions or limitations may be inspected.

(2) The share register shall state, with respect to each class of shares -

(a) the names, alphabetically arranged, and the latest known address of each person who is, or has within the last seven years been, a shareholder;

(b) the number of shares of that class held by each shareholder within the last seven years; and

(i) issue of shares to,

(ii) repurchase or redemption of shares from, or

(iii) transfer of shares by or to, each shareholder within the last seven years, and in relation to the transfer, the name of the person to or from whom the shares were transferred.

(3) In the case of a company which does not have a share capital, including a close company, the register required to be kept by this section may be called a register of members and shall state

(a) the names and addresses of the members;

(b) the date at which each person was entered in the register as a member; and

(c) the date at which any person ceased to be a member, and the references in this Act to a share register shall be read as referring to this register of members.

(4) An agent may maintain the share register of the company provided that the agent is a person, firm or corporation which is qualified to be the secretary of a public company in accordance with section 162.

(5) Every company having more than 50 shareholders shall, unless the share register is in such a form as to constitute in itself an index, keep an index of the names of the shareholders of the company and shall, within 10 days from the day on which any alteration is made in the share register, make any necessary alteration in the index.

(6) The index shall enable the account of each shareholder in the register to be found.

(7) If a company fails to comply with subsection (1), (2) or (4)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

(8) The register required to be kept by this section may be kept in electronic form provided that the information kept on the register is available to persons entitled to inspect the register.

84. Place of share register

(1) The share register may, if expressly permitted by the constitution, be divided into two or more registers kept in different places.

(2) The principal register shall be kept in Botswana.

(3) If a share register is divided into two or more registers kept in different places

(a) notice of the place where each register is kept shall be delivered to the Registrar for registration within 10 working days after the share register is divided or any place where a register is kept is altered;

(b) a copy of every register shall be kept at the same place as the principal register, and

(c) if an entry is made in a register other than the principal register, a corresponding entry shall be made within 10 working days in the copy of that register kept with the principal register.

(4) In this section "principal register", in relation to a company means

(a) if the share register is not divided into two or more registers, the share register; or

(b) if the share register is divided into two or more registers, the register described as the principal register in the last notice sent to the Registrar and every other register shall be a "branch register".

(5) If a company fails to comply with subsections (2) and (3) (a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

85. Share register as evidence of legal title

(1) Subject to section 87, the entry of the name of a person in the share register as holder of a share is prima facie evidence that legal title to the share vests in that person.

(2) A company may treat the registered holder of a share as the only person entitled to

(a) exercise the right to vote attaching to the share;

(b) receive notices;

(d) exercise the other rights and powers attaching to the share.

86. Secretary's duty to supervise share register

(1) It is the duty of the secretary to take reasonable steps to ensure that the share register is properly kept and that share transfers are promptly entered on it in accordance with section 83.

(2) A secretary who fails to comply with subsection (1) shall be guilty of an offence and liable to the penalty set out in section 492(1).

87. Power of court to rectiy share register

(1) If the name of person is wrongly entered in, or omitted from, the share register of a company, the person aggrieved, or a shareholder, may apply to the court for

(a) rectification of the share register;

(b) compensation for loss sustained; or

(2) On an application under this section the court may order

(a) rectification of the register;

(b) payment of compensation by the company or a director of the company for any loss sustained; or

(3) On an application under this section, the court may decide

(a) a question relating to the entitlement of a person who is a party to the application to have his name entered in, or omitted from, the register; and

(b) a question necessary or expedient to be decided for rectification of the register.

88. Trust not to be entered on register

No notice of a trust, whether express, implied, or constructive, may be entered on the share register or be received by the Registrar.

89. Share certificate

(1) Subject to subsection (2), a public company shall, within 20 working days after the issue, or registration of a transfer, of shares in the company, as the case may be, send a share certificate to every holder of those shares stating

(a) the name of the company;

(b) the class of shares held by that person; and

(2) Nothing in subsection (1) applies in relation to shares which can be transferred under a system for electronic trading approved by a Stock Exchange in Botswana pursuant to a scheme which does not require a share certificate for the transfer of shares.

(3) A shareholder in a company, not being a company to which subsection (1) or subsection (2) applies, may apply to the company for a certificate relating to some or all of the shareholder’s shares in the company.

(4) On receipt of an application for a share certificate under subsection (3), the company shall within 20 working days after receiving the application -

(a) if the application relates to some but not all of the shares, separate the shares shown in the register as owned by the applicant into separate parcels, one parcel being the shares to which the share certificate relates, and the other parcel being any remaining shares; and

(b) in all cases send to the shareholder a certificate stating

(i) the name of the company,

(ii) the class of shares held by the shareholder, and

(iii) the number of shares held by the shareholder to which the certificate relates.

(5) Notwithstanding section 81, where a share certificate has been issued, a transfer of the shares to which it relates shall not be registered by the company unless the form of transfer required by that section is accompanied by the share certificate relating to the share, or by evidence as to its loss or destruction and, if required, an indemnity in a form required by the Board.

(6) Subject to subsection (1), where shares to which a share certificate relates are to be transferred, and the share certificate is sent to the company to enable the registration of the transfer, the share certificate shall be cancelled and no further share certificate issued except at the request of the transferee.

(7) If a company fails to comply with subsection (1) or subsection (4)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

PART VIII - Shareholders and their Rights and Obligations (ss 90-110)

90. Meaning of "shareholder"

In this Act, the term "shareholder", in relation to a company, means

(a) in the case of a company having a share capital

(i) a person whose name is entered in the share register as the holder for the time being of one or more shares in the company,

(ii) until the person’s name is entered in the share register, a person named as a shareholder in an application for the registration of a company at the time of registration of the company, or

(iii) until the person’s name is entered in the share register, a person who is entitled to have that person’s name entered in the share register under a registered amalgamation proposal as a shareholder in an amalgamated company;

(b) in the case of a close company or a company limited by guarantee

(i) a person, or

(ii) until the person’s name is entered in the register of members, a person named as a member in an application for the registration of the company at the time of registration of the company; and

(c) in the case of a company limited by guarantee, until the person’s name is entered in the register of members, a person who is entitled to have that person’s name entered in the share register under a registered amalgamation proposal as a member in an amalgamated company.

91. Liability of shareholders

(1) A shareholder is not liable for an obligation of the company by reason only of being a shareholder.

(2) The liability of a shareholder or member to the company is limited to

(a) in the case of a company limited by shares any amount unpaid on a share held by the shareholder;

(b) in the case of a company limited by guarantee any amount which the member has undertaken to contribute to the company in the event of its being wound up;

(c) in the case of a close company any amount which the member has contributed to the company or undertaken or agreed to contribute to the company under section 250;

(d) any liability expressly provided for in the constitution of the company;

(e) any liability under sections 130, 158 and 160;

(f) any liability to repay a distribution received by the shareholder or member to the extent that the distribution is recoverable under section 63; or

(g) any liability under section 92.

(3) Nothing in this section affects the liability of a shareholder or member to a company under a contract, including a contract for the issue of shares, or for any delict, or breach of a fiduciary duty, or other actionable wrong committed by the shareholder.

92. Liability for calls and forfeiture of shares

(1) Where a share renders its holder liable to calls, or otherwise imposes a liability on its holder, that liability attaches to the holder of the share for the time being, and not to a prior holder of the share, whether or not the liability became enforceable before the share was registered in the name of the current holder.

(2) Where

(a) all or part of the consideration payable in respect of the issue of a share remains unsatisfied; and

(b) the person to whom the share was issued no longer holds that share, liability in respect of that unsatisfied consideration does not attach to subsequent holders of the share, but remains the liability of the person to whom the share was issued, or of any other person who assumed that liability at the time of issue.

(3) The calls on shares, in respect of any amount unpaid on the shares by the shareholders, and the forfeiture of shares, where any person fails to pay on any call or any installment of a call for which such person is liable at the time appointed for payment, shall be made in accordance with the provisions of the Seventh Schedule.

93. Shareholders not required to acquire shares by alteration to constitution

Notwithstanding anything in the constitution of the company, a shareholder is not bound by an alteration of the constitution of a company that

(a) requires the shareholder to acquire or hold more shares in the company than the number held on the date the alteration is made; or

(b) increases the liability of the shareholder to the company, unless the shareholder agrees in writing to be bound by the alteration either before, on, or after it is made.

94. Exercise of powers reserved to shareholders

(1) Subject to section 247, powers reserved to the shareholders of a company by this Act may be exercised only

(a) at a meeting of shareholders pursuant to section 105 or section 106; or

(b) by a resolution in lieu of a meeting pursuant to section 107.

(2) Powers reserved to the shareholders of a company by the constitution of the company may be exercised

(a) subject to the constitution, at a meeting of shareholders pursuant to section 105 or section 106;

(b) by a resolution in lieu of a meeting pursuant to section 107; or

95. Exercise of powers by ordinary resolution

(1) Unless otherwise specified in this Act or the constitution of a company, a power reserved to shareholders may be exercised by an ordinary resolution.

(2) An ordinary resolution is a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the question.

96. Powers exercised by special resolution

(1) Notwithstanding the constitution of a company, when shareholders exercise a power to

(a) adopt a constitution or alter or revoke the company’s constitution;

(b) approve a major transaction;

(d) wind up the company, the power shall be exercised by special resolution.

(2) A special resolution pursuant to paragraph (a), (b) or (c) of subsection (1) can be rescinded only by a special resolution.

(3) A special resolution pursuant to paragraph (d) of subsection (1) cannot be rescinded in any circumstances.

(4) At any meeting at which a special resolution is submitted, a declaration of the chairman that the resolution is carried, shall unless a poll is demanded, be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favor or against the resolution.

97. Management review by shareholders

(1) Notwithstanding anything in this Act or the constitution of the company, the chairman of a meeting of shareholders of a company shall allow a reasonable opportunity for shareholders at the meeting to question, discuss, or comment on the management of the company.

(2) Notwithstanding anything in this Act or the constitution of the company, a meeting of shareholders may pass a resolution under this section which makes recommendations to the Board on matters affecting the management of the company.

(3) Unless carried as a special resolution or unless the constitution so provides, any recommendation under subsection

(2) shall not be binding on the Board.

98. Shareholder may require company to purchase shares

Where

(a) a shareholder is entitled to vote on the exercise of one or more of the powers set out in

(i) section 96(1)(a), and the proposed alteration imposes or removes a restriction on the business or activities in which the company may engage, or

(ii) section 96(1)(b) or (c);

(b) the shareholders resolved, pursuant to section 96, to exercise the power;

(c) the shareholder cast all the votes attached to shares registered in the shareholder’s name and having the same beneficial owner against the exercise of the power; or

(d) the resolution to exercise the power was passed under section 107, the shareholder did not sign the resolution, that shareholder is entitled to require the company to purchase those shares in accordance with section 99.

99. Notice requiring purchase

(1) A shareholder of a company who is entitled to require the company to purchase shares by virtue of section 98 may

(a) within 10 working days of the passing of the resolution at a meeting of shareholders; or

(b) where the resolution was passed under section 107, before the expiration of 10 working days after the date on which notice of the passing of the resolution is given to the shareholder, give a written notice to the company requiring the company to purchase those shares.

(2) Within 20 working days of receiving a notice under subsection (1), the Board shall

(a) agree to the purchase of the shares by the company;

(b) arrange for some other person to agree to purchase the shares;

(d) arrange, before taking the action concerned, for the resolution to be rescinded in accordance with section 96 or decide in the appropriate manner not to take the action concerned, as the case may be.

(3) The Board shall, within the 20 working days give written notice to the shareholder of the Board’s decision under this subsection.

100. Purchase by company

(1) Where the Board agrees under section 99(2)(a) to the purchase of the shares by the company, it shall, on giving notice under that subsection or within five working days thereafter

(a) nominate a fair and reasonable price for the shares to be acquired; and

(b) give notice of the price to the holder of those shares.

(2) A shareholder who considers that the price nominated by the Board is not fair or reasonable, shall forthwith give notice of objection to the company.

(3) If, within 10 working days of giving notice to a shareholder under subsection (1), no objection to the price has been received by the company, the company shall, on such date as the company and the shareholder agree or, in the absence of agreement, as soon as practicable, purchase all the shares at the nominated price.

(4) If, within 10 working days of giving notice to a shareholder under subsection (1), an objection to the price has been received by the company, the company shall

(a) refer the question of what is a fair and reasonable price to arbitration and nominate a suitably qualified and independent arbitrator;

(b) give notice to the shareholder of the reference to arbitration and the name and particulars of the arbitrator; and

(c) within five working days, pay a provisional price in respect of each share equal to the price nominated by the Board.

(5) A reference to arbitration under this section is deemed to be a submission to arbitration.

(6) The arbitrator shall expeditiously determine a fair and reasonable price for the shares on the day prior to the date on which the vote of the shareholders authorizing the action was taken or the date on which written consent of the shareholders without a meeting was obtained excluding any appreciation or depreciation directly or indirectly induced by the action, and that price shall be binding on the company and the shareholder for all purposes.

(7) In the case of shares which are listed on a Stock Exchange or traded on a stock market, the arbitrator shall determine the price for the shares as being the price at which such shares are traded on the Stock Exchange or stock market as at the close of business on the day prior to the date on which the vote of shareholders authorizing the action was taken or the date on which written consent of shareholders without a meeting was obtained, excluding any appreciation or depreciation directly or indirectly induced by the action, and that value shall be binding on the company and the shareholder for all purposes.

(8) The arbitrator may

(a) award interest on any balance payable or excess to be repaid under subsection (7) of this section at such rate as he considers appropriate having regard to whether the provisional price paid or the reference to arbitration, as the case may be, was reasonable;

(b) provide for interest to be paid to or by the shareholder whose shares are to be purchased; and

(9) If

(a) the company fails to refer a question to arbitration in accordance with subsection (4); or

(b) the arbitrator to whom the matter is referred by the company is not independent of the company, or is not suitably qualified to conduct the arbitration the shareholder who has given a notice of objection under subsection (2) may apply to the court to appoint an arbitrator, and the court may appoint such person as it considers appropriate to act as arbitrator for the purposes of this section.

(10) A purchase of shares by a company under this section

(a) is deemed not to be a distribution for the purposes of section 58;

(b) is deemed to be a distribution for the purposes of section 63(1) and (3).

101. Purchase of shares by third party

(1) Section 100 applies to the purchase of shares by a person with whom the company has entered into an arrangement for purchase in accordance with section 99(2)(b) subject to such modifications as may be necessary, and, in particular, as if references in that section to the Board and the company were references to that person.

(2) Every holder of shares that are to be purchased in accordance with the arrangement is indemnified by the company in respect of loss suffered by reason of the failure by the person who has agreed to purchase the shares to purchase them at the price nominated or fixed by arbitration, as the case may be.

102. Court may grant exemption

(1) A company to which a notice has been given under section 99 may apply to the court for an order exempting it from the obligation to purchase the shares to which the notice relates on the grounds that

(a) the purchase would be disproportionately damaging to the company; or

(b) the company cannot reasonably be required to finance the purchase; or

(2) On an application under this section, the court may make an order exempting the company from the obligation to purchase the shares, and may make any other order it considers appropriate, including an order

(a) setting aside a resolution of the shareholders;

(b) directing the company to take, or refrain from taking, any action specified in the order;

(d) that the company be put into liquidation.

(3) The court shall not make an order under subsection (2) on either of the grounds set out in paragraph (a) or paragraph (b) of subsection (1) unless it is satisfied that the company has made reasonable efforts to arrange for another person to purchase the shares in accordance with section 99(2)(b).

103. Court may grant exemption if company is insolvent

(1) If

(a) a notice is given to a company under section 99;

(b) the Board has resolved that the purchase by the company of the shares to which the notice relates would result in it failing to satisfy the solvency test; and

(c) the company has, having made reasonable efforts to do so, been unable to arrange for the shares to be purchased by another person in accordance with section 99(2)(b), the company shall apply to the court for an order exempting it from the obligation to purchase the shares.

(2) The court may, on an application under subsection (1), if it is satisfied that the purchase of the shares would result in the company failing to satisfy the solvency test, and the company has made reasonable efforts to arrange for the shares to be purchased by another person in accordance with section 99(2)(b), make

(a) an order exempting the company from the obligation to purchase the shares;

(b) an order suspending the obligation to purchase the shares; or

(3) For the purposes of this section, the stated capital of a company shall not be taken into account in determining whether the company will, after the purchase, fail to satisfy the solvency test provided that if a company has entered into an agreement with a creditor pursuant to section 59(3) the stated capital shall be taken into account to the extent required by that agreement unless the creditor’s prior consent is obtained.

104. Variation of class rights

(1) Where the share capital of a company is divided into different classes of shares, a company may not take action which varies the rights attached to a class of shares unless that variation is approved by a special resolution or with the consent in writing of the holders of 75 per cent of the shares of that class.

(2) Where the variation of rights attached to a class of shares is approved under subsection (1) and the company becomes entitled to take the action concerned, the holder of a share of that class, who did not consent to or cast any votes in favor of the resolution for the variation, may apply to the court for an order under section 174, or may require the company to purchase those shares in accordance with sections 98 to 103.

(3) The expression "variation" in this section includes abrogation and the expression "varied" shall be construed accordingly.

(4) A resolution which would have the effect of diminishing the proportion of the total votes exercisable at a general meeting of the company by the holders of the existing shares of a class or of reducing the proportion of the dividends or distributions payable at any time to the holders of the existing shares of a class, shall be deemed to be a variation of the rights of the class.

(5) The company shall within one month from the date of the consent or resolution referred to in subsection (1) file with the Registrar in the prescribed form the particulars of such consent or resolution, and if default is made in complying with this provision, the company, and every director and officer thereof who knowingly is a party to the default, shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(1).

105. Annual meeting of shareholders

(1) Subject to subsection (2) the Board of a company shall call an annual meeting of shareholders to be held

(a) once in each calendar year;

(b) not later than six months after the balance sheet date of the company; and

(2) A company need not hold its first annual meeting in the calendar year of its registration but shall hold that meeting within 18 months of its registration.

(3) The company shall hold the meeting on the date on which it is called to be held.

(4) The business to be transacted at an annual meeting shall, unless already dealt with by the company, include

(a) the consideration and approval of the financial statements;

(b) the receiving of any auditor’s report;

(d) the appointment of any directors whose appointment on an annual or rotational basis is required by the constitution of the company;

(e) the appointment of any auditor pursuant to section 195, where relevant; and

(f) an opportunity for shareholders to question, discuss or comment on the management of the company in accordance with section 97(1).

106. Special meetings of shareholders

(1) A special meeting of shareholders entitled to vote on an issue may be called at any time by

(a) the Board; or

(b) a person who is authorized by the constitution to call the meeting.

(2) A special meeting shall be called by the Board on the written request of shareholders holding shares carrying together not less than 10 per cent of the voting rights entitled to be exercised on the issue.

107. Resolution in lieu of meeting

(1) A company need not hold any particular meeting if all members entitled to attend that meeting agree thereto in writing and in that event a unanimous resolution shall be deemed to be a resolution passed at that meeting on the date on which the last signature to that resolution is affixed.

(2) It shall not be necessary for a private company to hold an annual meeting of shareholders under section 105 of this Act if everything required to be done at that meeting (by resolution or otherwise) is done by unanimous resolution in accordance with subsection (1).

(3) A resolution may be signed under subsection (1) without any prior notice being given to shareholders.

108. Court may call meeting of shareholders

(1) If the court is satisfied that

(a) it is impracticable to call or conduct a meeting of shareholders in the manner prescribed by this Act or the constitution; or

(b) it is in the interests of a company that a meeting of shareholders be held, the court may order a meeting of shareholders to be held or conducted in such manner as the court directs.

(2) Application to the court may be made by a director, or a shareholder, or a creditor of the company.

(3) The court may make the order on such terms as to the costs of conducting the meeting and as to security for those costs as the court considers appropriate, and the court may give such directions as it considers appropriate including the direction that the legal personal representative of any deceased member may exercise all or any of the powers that the deceased member could have exercised if he or she were present at the meeting.

109. Proceedings at meetings

(1) Subject to subsection (2) the provisions of the Second Schedule govern proceedings at meetings of shareholders of a company.

(2) The constitution of the company may make provision for any of the matters that the Second Schedule states may be subject to the constitution of the company.

110. Shareholders entitled to receive distributions, attend meetings and exercise rights

(1) Shareholders may be entitled to

(a) receive distributions;

(b) exercise pre-emptive rights to acquire shares in accordance with section 52; or

(2) The shareholders entitled under subsection (1) are

(a) if the Board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date;

(b) if the Board does not fix a date for the purpose, those shareholders whose names are registered in the share register on the day on which the Board passes the resolution concerned.

(3) A date shall not be fixed under subsection (2) that precedes by more than 20 working days the date on which the proposed action will be taken.

(4) The shareholders who are entitled to receive notice of a meeting of shareholders are -

(a) if the Board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date;

(b) if the Board does not fix a date for the purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given.

(5) A date shall not be fixed under subsection (3) that precedes by more than 30 working days or less than 10 working days the date on which the meeting is to be held.

PART IX - Debentures and Registration of Charges (ss 111-125)

111. Creation and issue of debentures

A company may create and issue secured or unsecured debentures.

112. Security for debentures

(1) The binding of movable property as security for any debenture or debentures may be effected by

(a) a deed of pledge and the delivery of the movable property concerned to one or more debenture-holders or to a trustee for debenture-holders; or

(b) a notarial bond, collateral notarial bond or notarial surety bond executed in favor of one or more debenture-holders or of a trustee for debenture-holders; or

(c) the pledging of incorporeal rights by means of cession of such rights, whether present or future, in due and proper form.

(2) The binding as aforesaid of immovable property may be effected by a mortgage bond, collateral mortgage bond or surety bond executed in favor of one or more debenture-holders or of a trustee for debenture-holders.

(3) A wholly owned subsidiary shall be deemed to have and always to have had the power to mortgage any of its property as collateral security for the issue of debentures by its holding company.

113. Bonds to be registered in deed registry; copies of documents to be annexed to bonds and deeds of pledge

(1) Any mortgage bond or notarial bond in pursuance of the provisions of section 112 and subsequent transactions relating thereto shall, subject to the laws governing the registration of mortgage bonds and notarial bonds, be registered in the Deeds Registry.

(2) If any such bond is in favor of one or more debenture-holders, a certified copy of the debenture concerned shall be annexed to the said bond.

(3) If any such bond is in favor of a trustee for debenture-holders, certified copies of the debenture concerned and of the trust deed by which the trustee is appointed and in which the trustee’s rights and duties are defined, shall be annexed to the bond.

(4) Certified copies of the debenture concerned and of any such trust deed, if any, shall be annexed to any deed of pledge where the debentures are secured by a pledge of movable property.

114. Debenture may be registered

If any debenture is executed before a notary public, it may, subject to the provisions of section 121(1), be registered in the Deeds Registry in like manner as if it were a notarial bond.

115. Trustee for debenture holders

(1) If a company issues or agrees to issue debentures of the same class to more than 10 persons, or to any one or more persons with a view to the debentures or any of them being offered for sale to more than 10 persons, the company shall before issuing any of the debentures

(a) sign under its seal a debenture trust deed; and

(b) procure the signature to the deed by a person qualified to act as a trustee for debenture holders.

(2) For the purposes of this section, debentures shall not be deemed to be of the same class if

(a) they do not rank equally for repayment when any security created by the debenture is enforced or the company is wound up; or

(b) different rights attach to them in respect of

(i) the rate of, or dates for, payment of interest,

(ii) the dates when, or the installments by which, the principal of the debentures will be repaid, unless the difference is solely that the class of debentures will be repaid during a stated period of time and particular debentures will be selected by the company for repayment at different dates during that period by drawings, ballot or otherwise,

(iii) any right to subscribe for or convert the debentures into shares or other debentures of the company or any other company or corporation, or

(iv) the powers of the debenture holders to realize any security.

(3) No debenture trust deed shall cover more than one class of debentures.

(4) The Fifth Schedule to the Act shall apply to the following

(a) the qualification, appointment and removal of a trustee for debenture holders;

(b) the naming of a successor to a trustee for debenture holders;

(d) the powers of the trustee for debenture holders;

(e) the right of the trustee for debenture holders to obtain information from the borrowing company;

(f) meetings of debenture holders;

(g) the duties of the trustee for debenture holders;

(h) repayment of loans or deposits where the purpose stated in a prospectus issued in relation to debentures, is not achieved; and

(i) release of the trustee for debenture holders.

116. Issue of debentures at different dates and ranking of preference

In any bond or deed of pledge executed in favor of a trustee for debenture-holders generally, provision may be made that the debentures thereby secured or to be secured may be issued from time to time and at different dates, as the company may determine, but all such debentures, whenever issued, shall rank in preference concurrently with one another as from the date on which the pledge was constituted or the bond was registered.

117. Rights of debenture holders

(1) Every holder of a debenture secured by a pledge or a bond executed in favor of a trustee for debenture-holders generally shall, unless it is otherwise provided by the deed of pledge, bond or trust deed and copy of the debenture annexed thereto, be entitled to enforce his rights under such debenture as soon as it has been issued to him in the same manner as if he were himself the pledgee or the holder of such bond.

(2) No notice of the cession of any such debenture shall be necessary in order to confer upon any cessionary thereof the rights of the cedent.

118. Power to reissue redeemed debenture in certain cases

(1) Where a company has redeemed any debentures previously issued, not being debentures convertible into shares of the company, it shall, unless its constitution or the conditions of issue of such debentures expressly otherwise provide or the debentures have been redeemed in pursuance of any obligation on the part of the company to redeem them, (not being an obligation enforceable only by the person to whom the redeemed debentures were issued or his successors in title) have and be deemed at all times to have had power to keep the debentures alive for the purpose of re-issue, and, where a company has purported to exercise such a power, it shall have and be deemed at all times to have had power to re-issue the debentures either by re-issuing the same debentures or by issuing other debentures in their place, and upon such a re-issue the person entitled to the debentures shall have and shall be deemed at all times to have had the same rights and priorities as if the debentures had not previously been issued.

(2) Where with the object of keeping debentures alive for the purpose of re-issue, they have been transferred to a nominee of the company, a transfer from that nominee shall be deemed to be a re-issue for the purposes of this section.

(3) Where a company had deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures shall not be deemed to have been redeemed by reason only of the account of the company having ceased to be in debit whilst the debentures remained so deposited.

(4) Nothing in this section shall prejudice any power reserved to a company by its debentures or the securities therefor, to issue debentures in the place of any debentures paid off or otherwise satisfied or extinguished.

119. Debenture to be described as secured or unsecured

No debenture, debenture certificate or prospectus relating to debentures shall be issued by a company unless the term "debenture" or such other term denoting a debenture used therein is qualified by the word "secured" or "unsecured", as the case may be.

120. Form of debentures or debenture certificates

(1) No debenture or debenture certificate shall be issued by a company unless the conditions of the debenture concerned are stated on the debenture or on the debenture certificate.

(2) Any debenture or debenture certificate shall be signed by one director of the company and an officer of the company duly authorized thereto by the directors and shall, in the case where the debenture concerned is not a bearer debenture and in the case of a debenture certificate, specify the debentures, other than bearer debentures, of that company held by the person named therein.

(3) Any signature referred to in subsection (2) may be affixed to a debenture or debenture certificate by autographic or mechanical means.

(4) Any debenture or debenture certificate issued in terms of this section shall be prima facie evidence of the title thereto of the person named therein or, in the case of a beare debenture, of the bearer thereof.

121. Register of pledges, cessions and bonds and Register of debenture holders

(1) Every company shall keep at its registered office a register of charges and enter therein all charges affecting property of the company, giving in each case a short description of the property charged and the names and addresses of the persons in whose favor any charge or to whom any pledge has been delivered.

(2) Every company shall keep at its registered office a register of debenture-holders showing the number of debentures issued and outstanding and whether or not they are payable to bearer and specifying the names and addresses of the holders, other than bearers, thereof.

(3) The provisions of section 83 relating to the share register shall apply mutatis mutandis to the registers required to be kept by this section.

122. Special powers of court

A contract with a company to take up and pay for any debentures of the company may be enforced by an order for specific performance.

123. Perpetual debentures

Notwithstanding any other law, a condition contained in a debenture or in an agency deed for securing a debenture, whether the debenture or agency deed is issued or made before or after the commencement of this Act, shall not be invalid by reason that the debentures are thereby made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period however long.

124. Debentures to bearer

(1) Subject to subsection (2) no company shall issue debentures to bearer.

(2) The Minister may grant approval to a public company to issue debentures to bearer on such terms and conditions as the Minister may require.

125. Filing of particulars of charges

(1) Every company shall, within 28 days of the creation by the company of any charge or of making any issue of debentures charged on or affecting any property of the company, file with the Registrar a statement of the particulars specified in subsection (3) or (4) in the form prescribed in the Regulations made under this Act.

(2) Where

(a) a company acquires any property which is subject to a charge referred to in subsection (1), particulars of which would, if it had been created by the company after the acquisition of the property, have been required to be filed;

(b) a registered external company has, before registration, created a charge subject to subsection (1), particulars of which would if it had been created by the company while it was registered, have been required to be filed; or

(c) a registered external company has before registration acquired property which is subject to a charge subject to subsection (1) particulars of which would, if it had been created by the company after the acquisition and while it was registered, have been required to be filed, the company shall, within 28 days after the date on which the acquisition is completed or the date of the registration of the company in Botswana, as the case may be, cause a statement of the particulars specified in the form prescribed in Regulations made under this Act.

(3) Subject to subsection (4), the particulars required to be given in the statement are

(a) if the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of the acquisition of the property;

(b) the amount secured by the charge;

(d) the rate of interest payable on the charge, and if applicable the way in which any variable rate of interest is to be calculated;

(e) the name of the person entitled to the charge; and

(f) any prohibition or restriction contained in the instrument creating the charge, or in any agency deed, on the power of the company to create any other charge or issue debentures ranking in priority to or equally with the charge or debentures in respect of which the application is made.

(4) Where the holders of a series of debentures are entitled to the benefit of a charge the particulars required to be given in the statement are

(a) the total amount secured by the whole series;

(b) the dates of the resolution authorizing the issue of the series and the date of the agency deed or other instrument by which the security is created or defined;

(d) the particulars required to be given by paragraphs (c) and (e) of subsection (3).

(5) Where a charge (including an issue of debentures), particulars of which are required to be lodged under subsection (1)

(a) is transferred by the charge-holder or trustee for debenture holders;

(b) is modified in a material respect; or

(c) has its priority altered in relation to any other charge or issue of debentures, the company or in the case of transfer, the transferee, shall lodge particulars, of the name and description of the transferee and of any material modification to the terms of the charge and of any alteration in priority, such particulars to be lodged within 28 days after the making of such transfer or modification or alteration of priority.

(6) Where, in relation to a charge the particulars of which are required to be lodged under subsection (1)

(a) the debt for which the charge was given has been paid or satisfied in whole or in part; or

(b) the property or undertaking charged has been released from the charge or has ceased to form part of the company’s property or undertaking of the company concerned, the company shall lodge a certificate of satisfaction in whole or in part, or of the fact that the property or undertaking has been released from the charge or has ceased to form part of the company’s property or undertaking, as the case may be.

(7) The certificate shall be supported by evidence sufficient to satisfy the Registrar of the payment, satisfaction, release or cessation referred to in subsection (6).

PART X - Directors and Secretaries - their Powers and Duties (ss 126-163)

126. Meaning of "director" and "Board"

(1) In this Act, "director", in relation to a company, includes

(a) a person occupying the position of director or alternate director of the company by whatever name called; and

(b) for the purposes of sections 130 to 136, 140 to 144 and 158

(i) a person in accordance with whose directions or instructions a person referred to in paragraph (a) of this subsection may be required or is accustomed to act,

(ii) a person in accordance with whose directions or instructions the Board of the company may be required or is accustomed to act, and

(iii) a person who exercises or who is entitled to exercise or who controls or who is entitled to control the exercise of powers which, apart from the constitution of the company, would fall to be exercised by the Board; and

(c) for the purposes of sections 140 to 144 a person to whom a power or duty of the Board has been directly delegated by the Board with the person’s consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the Board.

(2) Paragraphs (b) and (c) of subsection (1) do not include a person to the extent that the person acts only in a professional capacity.

(3) In this Act, the terms "Board" and "Board of directors", in relation to a company, mean

(a) directors of the company who number not less than the required quorum acting together as a Board of directors; or

(b) if the company has only one director, that director.

127. Management of company

(1) The business and affairs of a company shall be managed by, or under the direction or supervision of, the Board of the company.

(2) The Board of a company has all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

(3) Subsections (1) and (2) are subject to any modifications, exceptions, or limitations contained in this Act or in the company’s constitution.

128. Major transactions

(1) A company shall not enter into a major transaction or make a substantial gift unless the transaction is

(a) approved by special resolution; or

(b) contingent on approval by special resolution.

(2) In this section

"assets" includes property of any kind, whether tangible or intangible;

"major transaction", in relation to a company, means

(a) the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of the company’s assets before the acquisition; or

(b) the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the company’s assets before the disposition; or

(c) a transaction that has or is likely to have the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than half the value of the company’s assets before the transaction;

"substantial gift" in relation to a company means making voluntary contributions to any charitable or other fund, other than a pension fund for the benefit of employees of the company or a related corporation, of any amounts which, in any financial year, will in the aggregate exceed P100,000, or two per cent of the net profits of the company for the last preceding financial year, whichever is the lesser.

(3) Nothing in the definition of the term "major transaction" in subsection (2)(c) applies by reason only of the company giving, or entering into an agreement to give, a charge secured over assets of the company the value of which is more than half the value of the company’s assets for the purpose of securing the repayment of money or the performance of an obligation.

(4) No lender or other person dealing with a company shall be concerned to see or inquire whether the conditions of this section have been fulfilled and no debt incurred or contract entered into with the company by a person dealing with it shall be invalid or ineffectual, except in the case of actual notice to that person, at the time when the debt was incurred or the contract was entered into, that the company was acting in breach of this section.

129. Delegation of powers

(1) Subject to any restrictions in the constitution of the company, the Board of a company may delegate to a committee of directors, a director or employee of the company, or any other person, any one or more of its powers other than its powers under any of the sections of this Act set out in the Third Schedule.

(2) A Board that delegates a power under subsection (1) is responsible for the exercise of the power by the delegate as if the power had been exercised by the Board, unless the Board -

(a) believed on reasonable grounds at all times before the exercise of the power that the delegate would exercise the power in conformity with the duties imposed on directors of the company by this Act and the company’s constitution; and

(b) has monitored, by means of reasonable methods properly used, the exercise of the power by the delegate.

130. Duty of directors to act in good faith and in best interest of company

(1) Subject to this section it shall be the duty of the directors of a company

(a) to exercise their powers in accordance with this Act and with the limits and subject to the conditions and restrictions established by the company’s constitution;

(b) to obtain the authorization of a general meeting before doing any act or entering into any transaction for which the authorization or consent of a general meeting is required by this Act or by the company’s constitution;

(c) to exercise their powers honestly in good faith in the best interests of the company and for the respective purposes for which such powers are explicitly or impliedly conferred;

(d) to exercise the degree of care, diligence and skill required by section 158;

(e) not to agree to the company incurring any obligation unless the director believes at that time, on reasonable grounds that the company will be able to perform the obligation when it is required to do so;

(f) to account to the company for any monetary gain, or the value of any other gain or advantage, obtained by them in connection with the exercise of their powers, or by reason of their position as directors of the company, except remuneration, pensions provisions and compensation for loss of office in respect of their directorships of any company which are dealt with in accordance with section 159;

(g) not to make use of or disclose any confidential information received by them on behalf of the company as directors otherwise than as permitted and in accordance with section 140;

(h) not to compete with the company or become a director or officer of a competing company, unless it is approved by the company under section 133;

(i) if directors are interested in a transaction to which the company is a party to disclose such interest pursuant to sections 134 and 135;

(j) not to use any assets of the company for any illegal purpose or a purpose in breach of paragraphs (a) and (c), and not to do, or knowingly allow to be done, anything by which the company’s assets may be damaged or lost (otherwise than in the ordinary course of carrying on its business);

(k) to transfer forthwith to the company all cash or assets acquired on its behalf (whether before or after its incorporation) or as the result of employing its cash or assets, and until such transfer is effected to hold such cash or assets on behalf of the company and to use it only for the purposes of the company;

(l) to attend meetings of the directors of the company with reasonable regularity, unless prevented from so doing by illness or other reasonable excuse;

(m) to keep proper accounting records in accordance with sections 189 and 190.

(2) A director of a company that is a wholly-owned subsidiary may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company, act in a manner which the director believes is in the best interests of that company’s holding company even though it may not be in the best interests of the company.

(3) A director of a company that is a subsidiary (but not a wholly owned subsidiary) may, when exercising powers or performing duties as a director, if expressly permitted to do so by the constitution of the company and with the prior agreement of the shareholders (other than its holding company), act in a manner which the director believes is in the best interests of that company’s holding company even though it may not be in the best interests of the company.

(4) A director of a company incorporated to carry out a joint venture between the shareholders may, when exercising powers or performing duties as a director in connection with the carrying out of the joint venture, if expressly permitted to do so by the constitution of the company, act in a manner which the director believes is in the best interests of a shareholder or shareholders, even though it may not be in the best interests of the company.

(5) Subject to subsection (6) the duties imposed by this section shall be owed to the company, and not to the shareholders, debenture holders or creditors of the company.

(6) An application may be made to the court by any shareholder or in the case of a breach of paragraphs (a), (b), (j), (k) and (m) of subsection (1) by any debenture holder for a declaration that any act or transaction, or proposed act or transaction, by the directors or any director or former director involves a breach of any of their said duties, and an interdict to restrain the directors or any director or former director from doing any such proposed act or entering into any such proposed transaction; and

(7) An action for damages for breach of the said duties may be brought in the name of the company by a member under section 166.

131. Exercise of powers in relation to employees

(1) Nothing in section 130 shall limit the power of a director to make provision, for the benefit of employees of the company, in connection with the company ceasing to carry on the whole or part of its business.

(2) In this section

"employees" includes former employees and the dependants of employees or former employees; but does not include an employee or former employee who is or was a director of the company; and

"company" includes a subsidiary of a company.

132. Use of information and advice

(1) Subject to subsection (2), a director of a company, when exercising powers or performing duties as a director, may rely on reports, statements, and financial data and other information prepared or supplied, and on professional or expert advice given, by any of the following persons;

(a) an employee of the company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned;

(b) a professional adviser or expert in relation to matters which the director believes on reasonable grounds to be within the person’s professional or expert competence;

(c) any other director or committee of directors upon which the director did not serve in relation to matters within the director’s or committee’s designated authority.

(2) Subsection (1) applies to a director only if the director

(a) acts in good faith;

(b) makes proper inquiry where the need for inquiry is indicated by the circumstances; and

133. Approval of the company

(1) The approval of the company for the purposes of section 130(1)(h) and of section 140(1)(d) shall require that after full disclosure of all material facts, including the nature and extent of any interest of the director, the transaction has been specifically authorized by either

(a) a form of resolution which has been circulated to all the members and is signed by three-fourths of all members entitled to attend and vote at a general meeting; or

(b) an ordinary resolution of the company passed at a general meeting at which neither the director concerned, nor the holder of any share in which he is beneficially interested, or held by any nominee or relative of the director either directly or indirectly, has voted as member on such resolution, or if such person has voted such vote or votes are not counted.

(2) Subject to subsection (3) the approval of the company in accordance with subsection

(1) may be given either before or after the occurrence of the transaction to which it relates.

(3) A resolution approving a transaction or transactions or series of related transactions which has or have already taken place shall not be effective for purposes of subsection (1) unless it was signed or passed not later than 15 months after the date when the transaction or the first of the series of transactions took place.

134. Meaning of "interested"

(1) Subject to subsection (2), for the purposes of this Act, a director of a company is interested in a transaction to which the company is a party if, and only if, the director

(a) is a party to, or will or may derive a material financial benefit from, the transaction;

(b) has a material financial interest in another party to the transaction;

(c) is a director, officer, or trustee of another party to, or person who will or may derive a material financial benefit from, the transaction, not being a party or person that is

(i) the company’s holding company being a holding company of which the company is a wholly-owned subsidiary, or

(ii) a wholly-owned subsidiary of the company, or

(iii) a wholly-owned subsidiary of a holding company of which the company is also a wholly-owned subsidiary;

(d) is the parent, child, or spouse of another party to, or person who will or may derive a material financial benefit from, the transaction; or

(e) is otherwise directly or indirectly materially interested in the transaction.

(2) For the purposes of this Act, a director of a company is not interested in a transaction to which the company is a party if the transaction comprises only the giving by the company of security to a third party which has no connection with the director, at the request of the third party, in respect of a debt or obligation of the company for which the director or another person has personally assumed responsibility in whole or in part under a guarantee, indemnity, or by the deposit of a security.

135. Disclosure of interest

(1) A director of a company shall, forthwith after becoming aware of the fact that he or she is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register (if it is required to keep one), and, if the company has more than one director, disclose to the Board of the company and enter in the minutes of directors meetings

(a) if the monetary value of the director’s interest is able to be quantified, the nature and monetary value of that interest; or

(b) if the monetary value of the director’s interest cannot be quantified, the nature and extent of that interest.

(2) A director of a company is not required to comply with subsection (1) if

(a) the transaction or proposed transaction is between the director and the company; and

(b) the transaction or proposed transaction is or is to be entered into in the ordinary course of the company’s business and on usual terms and conditions.

(3) For the purposes of subsection (1), a general notice entered in the interests register or disclosed to the Board to the effect that a director is a shareholder, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction.

(4) A failure by a director to comply with subsection (1) does not affect the validity of a transaction entered into by the company or the director.

(5) Every director who fails to comply with subsection (1) shall be guilty of an offence and liable to the penalty set out in section 492(2).

136. Avoidance of transactions

(1) A transaction entered into by the company in which a director of the company is interested may be avoided by the company at any time before the expiration of six months after the transaction is disclosed to all the shareholders (whether by means of the company’s annual report or otherwise).

(2) A transaction cannot be avoided if the company receives fair value under it.

(3) For the purposes of subsection (2), the question whether a company receives fair value under a transaction is to be determined on the basis of the information known to the company and to the interested director at the time the transaction is entered into.

(4) If a transaction is entered into by the company in the ordinary course of its business and on usual terms and conditions, the company is presumed to receive fair value under the transaction.

(5) For the purposes of this section

(a) a person seeking to uphold a transaction and who knew or ought to have known of the director’s interest at the time the transaction was entered into has the onus of establishing fair value; and

(b) in any other case, the company has the onus of establishing that it did not receive fair value.

(6) A transaction in which a director is interested can only be avoided on the ground of the director’s interest in accordance with this section or the company’s constitution.

137. Effect on third parties

The avoidance of a transaction under section 136 does not affect the title or interest of a person in or to property which that person has acquired if the property was acquired

(a) from a person other than the company;

(b) for valuable consideration; and

(c) without knowledge of the circumstances of the transaction under which the person referred to in paragraph (a) of this section acquired the property from the company.

138. Application of sections 135 and 136 in certain cases

Nothing in section 135 and section 136 applies in relation to

(a) remuneration or any other benefit given to a director in accordance with section 157; or

(b) an indemnity given or insurance provided in accordance with section 159.

139. Interested director may vote Subject to the constitution of the company, a director of a company who is interested in a transaction entered into, or to be entered into, by the company, may

(a) vote on a matter relating to the transaction;

(b) attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purpose of a quorum;

(d) do any other thing in his capacity as a director in relation to the transaction, as if the director were not interested in the transaction.

140. Use of company information

(1) A director of a company who has information in his capacity as a director or employee of the company, being information that would not otherwise be available to him, shall not disclose that information to any person, or make use of or act on the information, except

(a) for the purposes of the company;

(b) as required by law;

(d) in any other circumstances authorized by the constitution, or approved by the company under section 133.

(2) A director of a company may, if authorized by the Board under subsection (3),and if particulars of the authorization are entered in the interests register, if the company has or is required to keep an interests register (or is otherwise disclosed to the Board and entered in the minutes of directors meetings) disclose information to

(a) a person whose interests the director represents; or

(b) a person in accordance with whose directions or instructions the director may be required or is accustomed to act in relation to the director’s powers and duties and, if the director discloses the information, the name of the person to whom it is disclosed shall be entered in the interests register or in the minutes of a directors meetings which ever is applicable, and a director if so authorised and on entering the particulars of the authorisation in the interests register or minutes of directors meetings, may otherwise disclose, make use of, or act on the information.

(3) The Board may authorise a director to disclose, make use of, or act on information if it is satisfied that to do so will not be likely to, prejudice the company.

141. Meaning of "relevant interest"

(1) For the purposes of section 143, a director of a company has a relevant interest in a share issued by the company (whether or not the director is registered in the share register as the holder of it) if the director

(a) is a beneficial owner of the share;

(b) has the power to exercise any right to vote attached to the share;

(d) has the power to acquire or dispose of the share; or

(e) has the power to control the acquisition or disposition of the share by another person; or

(f) under, or by virtue of, any trust, agreement, arrangement or understanding relating to the share (whether or not that person is a party to it)

(i) may at any time have the power to exercise any right to vote attached to the share,

(ii) may at any time have the power to control the exercise of any right to vote attached to the share,

(iii) may at any time have the power to acquire or dispose of, the share, or

(iv) may at any time have the power to control the acquisition or disposition of the share by another person.

(2) Where a person would, if that person were a director of the company, have a relevant interest in a share by virtue of subsection (1) and (a) that person or its directors are accustomed or under an obligation, whether legally enforceable or not, to act in accordance with the directions, instructions, or wishes of a director of the company in relation to

(i) the exercise of the right to vote attached to the share,

(ii) the control of the exercise of any right to vote attached to the share,

(iii) the acquisition or disposition of the share, or

(iv) the exercise of the power to control the acquisition or disposition of the share by another person;

(b) a director of the company has the power to exercise the right to vote attached to 20 per cent or more of the shares of that person;

(c) a director of the company has the power to control the exercise of the right to vote attached to 20 per cent or more of the shares of that person;

(d) a director of the company has the power to acquire or dispose of 20 per cent or more of the shares of that person; or

(e) a director of the company has the power to control the acquisition or disposition of 20 per cent or more of the shares of that person, that director has a relevant interest in the share.

(3) A person who has, or may have, a power referred to in any of paragraphs (b) to (f) of subsection (1), has a relevant interest in a share regardless of whether the power

(a) is expressed or implied;

(b) is direct or indirect;

(d) is related to a particular share or not;

(e) is subject to restraint or restriction or is capable of being made subject to restraint or restriction;

(f) is exercisable presently or in the future;

(g) is exercisable only on the fulfilment of a condition;

(h) is exercisable alone or jointly with another person or persons.

(4) A power referred to in subsection (1) exercisable jointly with another person or persons is deemed to be exercisable by either or any of those persons.

(5) A reference to a power includes a reference to a power that arises from, or is capable of being exercised as the result of, a breach of any trust, agreement, arrangement, or understanding, or any of them, whether or not it is legally enforceable.

142. Relevant interests to be disregarded in certain cases

(1) For the purposes of section 143, no account shall be taken of a relevant interest of a person in a share if

(a) the ordinary business of the person who has the relevant interest consists of, or includes, the lending of money or the provision of financial services, or both, and that\ person has the relevant interest only as security given for the purposes of a transaction entered into in the ordinary course of the business of that person;

(b) that person has the relevant interest by reason only of acting for another person to acquire or dispose of that share on behalf of the other person in the ordinary course of business of a share broker and that person is a member of a stock exchange;

(c) that person has the relevant interest solely by reason of being appointed as a proxy to vote at a particular meeting of members, or of a class of members, of the company and the instrument of that person’s appointment is produced before the start of the meeting in accordance with clause 6(4) of the Second Schedule or by a time specified in the company’s constitution, as the case may be;

(d) that person

(i) is a trustee corporation or a nominee company, and

(ii) has the relevant interest by reason only of acting for another person in the ordinary course of business of that trustee corporation or nominee company; or

(e) the person has the relevant interest by reason only that the person is a bare trustee of a trust to which the share is subject.

(2) For the purposes of subsection (1)(e), a trustee may be a bare trustee notwithstanding that he is entitled as a trustee to be remunerated out of the income or property of the trust.

143. Disclosure of share dealing by directors

(1) A person who

(a) is a director of a public company on the commencement of this Act; or

(b) becomes a director of a public company, and who has a relevant interest in any shares issued by the company shall forthwith, disclose to the Board the number and class of shares in which the relevant interest is held and the nature of the relevant interest, and ensure that the particulars disclosed to the Board are entered in the interests register.

(2) A director of a public company who acquires or disposes of a relevant interest in shares issued by the company shall, forthwith after the acquisition or disposition,

(a) disclose to the Board

(i) the number and class of shares in which the relevant interest has been acquired or the number and class of shares in which the relevant interest was disposed of, as the case may be,

(ii) the nature of the relevant interest,

(iii) the consideration paid or received, and

(iv) the date of the acquisition or disposition; and

(b) ensure that the particulars disclosed to the Board under paragraph (a) of this subsection are entered in the interests register.

144. Restrictions on share dealing by directors

(1) If a director of a company has information in that person’s capacity as a director or employee of the company or a related company, being information that would not otherwise be available to the director, but which is information material to an assessment of the value of shares or other securities issued by the company or a related company, the director may acquire or dispose of those shares or securities if

(a) in the case of an acquisition, the consideration given for the acquisition is not less than the fair value of the shares or securities; or

(b) in the case of a disposition, the consideration received for the disposition is not more than the fair value of the shares or securities.

(2) For the purposes of subsection (1), the fair value of shares or securities is to be determined on the basis of all information known to the director or publicly available at the time.

(3) Subsection (1) does not apply in relation to a share or security that is acquired or disposed of by a director only as a nominee for the company or a related company.

(4) Where a director acquires shares or securities in contravention of subsection (1)(a), the director is liable to the person from whom the shares or securities were acquired for the amount by which the fair value of the shares or securities exceeds the amount paid by the director.

(5) Where a director disposes of shares or securities in contravention of subsection (1)(b), the director is liable to the person to whom the shares or securities were disposed of for the amount by which the consideration received by the director exceeds the fair value of the shares or securities.

(6) Nothing in this section applies in relation to a company to which section 324 applies.

145. Number of directors

A public company shall have at least two directors and a private company other than a close company shall have at least one director who in each case shall be ordinarily resident in Botswana.

146. Qualifications of directors

(1) A natural person who is not disqualified by subsection (2) of this section may be appointed as a director of a company.

(2) The following persons are disqualified from being appointed or holding office as a director of a company

(a) a person who is under 18 years of age;

(b) except with the leave of the court a person whose estate is sequestrated as insolvent or who is an unrehabilitated insolvent whether in Botswana or elsewhere;

(c) a person who is prohibited from being a director or promoter of or being concerned or taking part in the management of a company under sections 500 and 501;

(d) except with the leave of the court a person who has been at any time convicted (whether in Botswana or elsewhere) of theft, fraud, forgery or uttering a forged document, or perjury and has been sentenced therefore to serve a term of imprisonment without the option of a fine or to a fine exceeding P5,000;

(e) except with the leave of the court a person who has been removed by a competent court from an office of trust on account of misconduct;

(f) a person who has been adjudged to be of unsound mind; and

(g) in relation to any particular company, a person who does not comply with any qualifications for directors contained in the constitution of that company.

(3) A person who is disqualified from being a director but who acts as a director, is a director for the purposes of a provision of this Act that imposes a duty or an obligation on a director of a company.

147. Director’s consent required

A person shall not be appointed a director of a company unless that person has consented in writing to be a director and certified that he or she is not disqualified from being appointed or holding office as a director of a company.

148. Appointment of first and subsequent directors

(1) A person named as a director in an application for registration or in an amalgamation proposal holds office as a director from the date of registration or the date the amalgamation proposal is effective, as the case may be, until that person ceases to hold office as a director in accordance with this Act.

(2) All subsequent directors of a company shall, unless the constitution of the company otherwise provides, be appointed by ordinary resolution.

149. Court may appoint directors

(1) If

(a) there are no directors of a company, or the number of directors is less than the quorum required for a meeting of the Board; and

(b) it is not possible or practicable to appoint directors in accordance with the company’s constitution a shareholder or creditor of the company may apply to the court to appoint one or more persons as directors of the company, and the court may make an appointment if it considers that it is in the interests of the company to do so.

(2) An appointment may be made on such terms and conditions as the court considers appropriate.

150. Appointment of directors to be voted on individually

(1) Subject to the constitution of a company, the shareholders of that company may vote on a resolution to appoint a director of the company only if

(a) the resolution is for the appointment of one director; or

(b) the resolution is a single resolution for the appointment of 2 or more persons as directors of the company and a separate resolution that it be so voted on has first been passed without a vote being cast against it.

(2) A resolution moved in contravention of subsection (1) is void even though the moving of it was not objected to at the time.

(3) Subsection (2) does not limit the operation of section 154.

(4) No provision for the automatic reappointment of retiring directors in default of another appointment applies on the passing of a resolution in contravention of subsection (1).

(5) Nothing in this section prevents the election of 2 or more directors by ballot or poll.

151. Removal of directors

(1) Notwithstanding anything in its constitution or in any agreement between it and a director, a director of a public company may be removed from office by an ordinary resolution passed at a meeting called for the purpose or for purposes that include the removal of a director.

(2) Subject to the constitution of a company, a director of a private company may be removed from office by special resolution passed at a meeting called for the purpose or for purposes that include the removal of the director.

(3) The notice of meeting shall state that the purpose or a purpose of the meeting is the removal of the director.

152. Director ceasing to hold office

(1) Subject to section 153, the office of director of a company shall be vacated if the person holding that office

(a) resigns in accordance with subsection (2);

(b) is removed from office in accordance with this Act or the constitution of the company;

(d) dies; or

(e) otherwise vacates office in accordance with the constitution of the company.

(2) A director of a company may resign office by signing a written notice of resignation and delivering it to the address for service of the company and such notice is effective when it is received at that address or at a later time specified in the notice.

(3) Notwithstanding the vacation of office, a person who held office as a director remains liable under the provisions of this Act that impose liabilities on directors in relation to acts and omissions and decisions made while that person was a director.

153. Resignation of last remaining director

(1) Notwithstanding section 152(1), where a company has only one director, that director may not resign office until that director has called a meeting of shareholders to receive notice of the resignation, and to appoint one or more new directors.

(2) A notice of resignation given by the sole director of a company shall not take effect, notwithstanding its terms, until the date of the meeting of shareholders called in accordance with subsection (1).

154. Validity of director’s acts

The acts of a person as a director are valid even though

(a) the person’s appointment was defective; or

(b) the person is not qualified for appointment.

155. Notice of change of directors and secretary

(1) The Board of a company shall ensure that notice in the prescribed form of

(a) a change in the directors or the secretary of a company; or

(b) a change in the name or the residential address or other particulars of a director or secretary of a company, is delivered to the Registrar for registration.

(2) A notice under subsection (1) shall

(a) specify the date of the change;

(b) include the full name and residential address of every person who is a director or secretary of the company from the date of the notice;

(c) in the case of the appointment of a new director or secretary, have attached the form of consent and certificate required pursuant to section 147; and

(d) be delivered to the Registrar within 20 working days of

(i) the change occurring, in the case of the appointment or resignation of a director or secretary, or

(ii) the company first becoming aware of the change, in the case of the death of a director or secretary or a change in the name or residential address of a director or secretary.

(3) If the Board of a company fails to comply with this section, every director and the secretary of the company shall be guilty of an offence and liable to the penalty set out in section 492(2).

156. Proceedings of board

Subject to the constitution of a company, the provisions set out in the Fourth Schedule govern the proceedings of the Board of a company.

157. Remuneration, loans and other benefits

(1) Subject to subsections (5) to (9), unless otherwise provided by the constitution

(a) the company by ordinary resolution shall approve the remuneration of the directors and any benefits payable to the directors including any compensation for loss of employment of a director or former director;

(b) the Board may determine the terms of any service contract with a managing director or other executive director; and

(c) the directors may be paid all travelling, hotel and other expenses properly incurred by them in attending any Board meetings of the company or in connection with the business of the company.

(2) Subject to subsections (3) and (4), the constitution may provide that the Board, instead of the general meeting of a company, may approve

(a) the payment of remuneration or the provision of other benefits to a director; or

(b) the payment by a company to a director or former director of compensation for loss of office, if the Board considers it is fair to the company.

(3) In any case coming under subsection (2) the Board shall ensure that forthwith after authorizing the making of the payment or the provision of the benefit as the case may be, particulars of the payment or benefit are entered in the interests register if the company has one, and in the minutes of directors’ meetings.

(4) Where a payment is made or other benefit provided to which subsection (2) applies shareholders who consider that the payment was not fair to the company and who hold between them not less than 10 per cent of the company’s voting share capital may within one month of the date on which the existence of the payment was first made known to the shareholders (whether through the annual report, production of the interests register to a shareholders’ meeting or otherwise) require the directors to call a general meeting to approve the payment by way of ordinary resolution and to the extent to which the payment is not approved by ordinary resolution, it shall constitute a debt payable by the director to the company.

(5) Subject to subsection (6) and section 247 a company shall not

(a) make a loan to a director of the company; or

(b) enter into any guarantee or provide any security in connection with a loan made by any person to a director of the company.

(6) Subsection (5) shall not prevent a company from

(a) making a loan to a related company, or entering into a guarantee or providing security in connection with a loan made by any person to a related company;

(b) making a loan to a director who is engaged in the salaried employment of the company or its holding company, in accordance with a scheme for the making of loans to employees of the company which is approved by the general meeting of the company in so far as its application to directors is concerned;

(c) making a loan in respect of a director who holds salaried employment under the company or in a holding company or subsidiary of the company;

(d) providing a director with funds to meet expenditure incurred or to be incurred by him for the purpose of the company or for the purpose of enabling him to perform his duties as an officer of the company; or

(e) making a loan in the ordinary course of the business of lending money, where that business is carried on by the company.

(7) Where a loan is made in contravention of subsection (5) the loan shall be voidable at the option of the company and the loan shall be immediately repayable upon being avoided by the company, notwithstanding the terms of any agreement relating to the loan.

(8) Where a transaction other than a loan to a director is entered into by a company in contravention of subsection (5)

(a) the director shall be liable to indemnify the company for any loss or damage resulting from the transaction; and

(b) the transaction shall be voidable at the option of the company unless

(i) the company has been indemnified under paragraph (a) for any loss or damage suffered by it, or

(ii) any rights acquired by a person other than the director in good faith and for value, without actual notice of the circumstances giving rise to the breach of this section, would be affected by its avoidance.

(9) If a company fails to comply with subsection (5)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(2); and

(b) every director of the company who authorizes or permits the company to enter into the relevant transaction shall be guilty of an offence and liable to the penalty set out in section 493(2).

158. Standard of care and civil liability of officers

(1) Every officer of a company shall exercise

(a) the powers and discharge the duties of his office honestly, in good faith and in the best interests of the company; and

(b) the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(2) Where a director of a public company also holds office as an executive the director shall exercise that degree of care, diligence and skill which a reasonably prudent and competent executive in that position would exercise.

(3) Without limiting any liability of a director under section 130, where an officer commits a breach of duties under this Part

(a) the officer and every person who knowingly participated in the breach shall be liable to compensate the company for any loss it suffers as a result of the breach;

(b) the officer shall be liable to account to the company for any profit made by the officer as a result of such breach; and

(c) any contract or other transaction entered into between the officer and the company in breach of those duties may be rescinded by the company.

159. Indemnity and insurance

(1) Except as provided in this section, a company shall not indemnify, or directly or indirectly effect insurance for, an officer or employee of the company or a related company in respect of

(a) liability for any act or omission in his capacity as an officer or employee; or

(b) costs incurred by that officer or employee in defending or settling any claim or proceeding relating to any such liability.

(2) An indemnity given in breach of this section is void.

(3) A company may, unless its constitution provides otherwise, indemnify an officer or employee of the company or a related company for any costs incurred by him in any proceedings

(a) that relate to liability for any act or omission in his capacity as an officer or employee; and

(b) in which judgment is given in his favor, or in which he is acquitted, or which is discontinued or in which he is granted relief under section 517, or where proceedings are threatened and such threatened action is abandoned or not pursued.

(4) A company, unless its constitution provides otherwise, may indemnify an officer or employee of the company or a related company in respect of

(a) liability to any person other than the company or a related company for any act or omission in his capacity as an officer or employee; or

(b) costs incurred by that officer or employee in defending or settling any claim or proceeding relating to any such liability, not being criminal liability or liability for conduct involving a reckless disregard of the interests of the company or a liability under section 160 or liability in respect of a breach, in the case of an officer, of the duty specified in section 130(1)(c).

(5) A company, unless its constitution provides otherwise, and with the prior approval of the Board, may effect insurance for an officer or employee of the company or a related company in respect of

(a) liability, not being criminal liability, for any act or omission in his capacity as an officer or employee;

(b) costs incurred by that officer or employee in defending or settling any claim or proceeding relating to any such liability; or

(i) that have been brought against the officer or employee in relation to any act or omission in that person’s capacity as an officer or employee, and

(ii) in which that person is acquitted.

(6) The Board of a company shall ensure that particulars of any indemnity given to, or insurance effected for, any officer or employee of the company or a related company are forthwith entered in the interests register, if the company has one, or otherwise in the minutes of the directors’ meeting.

(7) Where insurance is effected for an officer or employee of a company or a related company and the provisions of either subsection (5) or subsection (6) have not been complied with, the officer or employee is personally liable to the company for the cost of effecting the insurance except to the extent that the officer or employee proves that it was fair to the company at the time the insurance was effected.

(8) In this section

"effect insurance" includes pay, whether directly or indirectly, the costs of the insurance;

"employee" includes a former employee;

"indemnify" includes relieve or excuse from liability, whether before or after the liability arises; and

"indemnity" has a corresponding meaning; and

"officer" includes a former officer.

160. Duty of directors on insolvency

A director of a company who is knowingly party to the contracting of a debt by the company and had, at the time the debt was contracted, no reasonable or probable expectation, that the company would be able to pay the debt, shall, on the application of the liquidator or of the creditor concerned in the winding up of the company, be liable for the whole or any part of any loss suffered by the creditor to whom the debt was incurred.

161. Secretary

(1) Every company other than a close company shall have one or more secretaries each of whom shall, subject to subsection (6), be a natural person who has reached the age of majority and who shall ordinarily be resident in Botswana.

(2) No person shall be appointed as a secretary of a company unless that person has

(a) in the prescribed form consented to be a secretary; and

(b) the qualifications prescribed in section 162.

(3) A person named as a secretary of the company in an application for incorporation or in an amalgamation proposal shall hold office as a secretary from the date of the incorporation of the company or the date the amalgamation proposal is effective, as the case may be, until that person ceases to hold office in accordance with this Act or the constitution of the company.

(4) Unless the constitution of the company otherwise provides, the Board may appoint or remove a secretary of the company.

(5) The office of the secretary shall not be left vacant for more than three months at any time.

(6) A firm or corporation may be appointed as secretary provided that

(a) at least one member of the firm or one director of the corporation is ordinarily resident in Botswana and accepts responsibility for the work of the firm or corporation as secretary;

(b) the member of the firm or director of the corporation who accepts responsibility for the work of the firm or corporation as secretary under paragraph (a) is qualified to act as a secretary under section 162; and

(c) the names and business addresses of all partners or directors of the firm or corporation for the time being shall be provided on the request of the Registrar or any person dealing with the company.

162. Qualifications of Company Secretary

(1) The following persons shall not be qualified to be appointed and shall not act as secretary of a company

(a) a body corporate, except in accordance with section 161(6);

(b) an undischarged bankrupt;

(d) an auditor of the company.

(2) Subject to subsection (3), it shall be the duty of the directors of a company to take all reasonable steps to ensure that the secretary of the company is a person who appears to them to have the requisite knowledge and experience to discharge the functions of secretary of the company and such qualifications, if any, as may be prescribed under subsection (3) and by Regulations made under the Act.

(3) The secretary of a public company and non-exempt private company shall be

(a) either a qualified auditor, a member of the Botswana Institute of Accountants, a member of the Southern African Institute of Chartered Secretaries and Administrators, or a legal practitioner; or

(b) a member of a professional association of company secretaries approved by the Minister under subsection (2).

(4) The Minister may, for the purposes of subsection (3)(b), approve an association of company secretaries and notify such approval by publication in the Gazette.

163. Duties of Company Secretary

For the purposes of this section, the duties of a company secretary are

(a) to be responsible to the Board of the company for the preparation of all returns required to be filed with the Registrar of Companies including those under

(i) section 34 for the change of name,

(ii) sections 43(4) and 175 for the alteration of the constitution,

(iii) section 50 for the issue of shares,

(iv) section 125 for registration of particulars of charges,

(v) section 53(2) for the certificate regarding shares issued for consideration other than cash,

(vi) section 55 for the notice of call and of increase in stated capital,

(vii) section 155 for the notice of change of directors and secretary,

(viii) section 184(2) for the notice of change of registered office,

(ix) section 209 for the registration of financial statement, and

(x) section 217 for the annual return;

(b) to be responsible to the Board of the company for issuing all notices of meeting and responding to all inquiries in relation to notices of meetings;

(c) attending meetings of directors and general meetings of shareholders and keeping minutes of those meetings and together with the Chairman of Directors, signing the minutes as a true and correct record;

(d) to be responsible to the Board of directors for maintaining the register of shareholders, debenture holders, directors and secretaries, substantial shareholders and charges;

(e) ensuring, together with the directors, that the company keeps accounting records pursuant to sections 205 to 208 and that annual financial statements are prepared and presented at the Annual Meeting; and

(f) to be responsible to the Board of directors for maintaining an adequate system of record keeping in relation to the correspondence, affairs and activities of the company.

PART XI - Enforcement (ss 164-176)

164. Interpretation

In this Part, unless the context otherwise requires, the terms "entitled person", "former shareholder", and "shareholder" include a reference to the executor or other personal representative of an entitled person, former shareholder, or shareholder and a person to whom shares of any of those persons have passed by operation of law.

165. Interdict

(1) The court may, on an application under this section, make an order restraining a company that, or a director of a company who, proposes to engage in conduct that would contravene the constitution of the company or this Act, from engaging in that conduct.

(2) An application may be made by

(a) the company;

(b) a director or shareholder of the company; or

(3) If the court makes an order under subsection (1) it may also grant such consequential relief as it considers appropriate.

(4) An order may not be made under this section in relation to conduct or a course of conduct that has been completed.

(5) The court may, at any time before the final determination of an application under subsection (1), make, as an interim order, any order that it is empowered to make under that subsection.

166. Derivative actions

(1) Subject to subsection (3), the court may, on the application of a shareholder or other entitled person or director of a company, grant leave to that shareholder, entitled person or director to

(a) bring proceedings in the name and on behalf of the company or any subsidiary; or

(b) intervene in proceedings to which the company or any related company is a party for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or subsidiary, as the case may be.

(2) Without limiting subsection (1), in determining whether to grant leave under that subsection, the court shall have regard to

(a) the likelihood of the proceedings succeeding;

(b) the costs of the proceedings in relation to the relief likely to be obtained;

(d) the interests of the company or subsidiary in the proceedings being commenced, continued, defended, or discontinued, as the case may be.

(3) Leave to bring proceedings or intervene in proceedings may be granted under subsection (1), only if the court is satisfied that either

(a) the company or related company does not intend to bring, diligently continue or defend, or discontinue the proceedings, as the case may be; or

(b) it is in the interests of the company or subsidiary that the conduct of the proceedings should not be left to the directors or to the determination of the shareholders as a whole.

(4) Notice of the application shall be served on the company or subsidiary.

(5) The company or related company

(a) may appear and be heard; and

(b) shall inform the court, whether or not it intends to bring, continue, defend, or discontinue the proceedings, as the case may be.

(6) Except as provided in this section, a shareholder or other entitled person or director of a company is not entitled to bring or intervene in any proceedings in the name of, or on behalf of, a company or subsidiary.

167. Costs of derivative action to be met by company

(1) The court shall, on the application of the shareholder or other entitled person or director to whom leave was granted under section 166 to bring or intervene in the proceedings, order that the whole or part of the reasonable costs of bringing or intervening in the proceedings, including any costs relating to any settlement, compromise, or discontinuance approved under section 166, shall be met by the company unless the court considers that it would be unjust or inequitable for the company to bear those costs.

(2) A shareholder or other entitled person or director may bring an application for costs under this section at the same time as an application is brought under section 166 to bring or intervene in the proceedings, and the court may make an order on that application at the same time as the court grants leave under section 166.

168. Powers of court where leave granted

The court may, at any time, make any order it considers appropriate in relation to proceedings brought by a shareholder or other entitled person or a director or in which a shareholder or other entitled person or director intervenes, as the case may be, with leave of the court under section 166, and without limiting the generality of this section may

(a) make an order authorizing the shareholder or any other person to control the conduct of the proceedings;

(b) give directions for the conduct of the proceedings;

(c) make an order requiring the company or the directors to provide information or assistance in relation to the proceedings; or

(d) make an order directing that any amount ordered to be paid by a defendant in the proceedings shall be paid, in whole or part, to former and present shareholders or other entitled person of the company or subsidiary instead of to the company or the related company.

169. Compromise, settlement, or withdrawal of derivative action

No proceedings brought by a shareholder or other entitled person or a director or in which a shareholder or a director intervenes, as the case may be, with leave of the court under section 166, may be settled or compromised or discontinued without the approval of the court.

170. Actions by shareholders against directors

(1) A shareholder or former shareholder may bring an action against a director for breach of a duty owed to him as a shareholder.

(2) An action may not be brought under subsection (1) to recover any loss in the form of a reduction in the value of shares in the company or a failure of the shares to increase in value by reason only of a loss suffered, or a gain forgone, by the company.

(3) Without limiting subsection (1), the duties of directors set out in

(a) section 135, which relates to the duty to disclose interests; and

(b) section 143, which relates to the duty to disclose share dealings are duties owed to shareholders.

(4) Without limiting subsection (1) the duties of directors set out in

(a) section 130(1)(c), (f), (h), (j), (k) and (m), which relates to the duty of directors

(i) to act in good faith and in the best interests of the company,

(ii) not to compete with the company, and

(iii) to properly use and account for assets;

(b) section 160, which relates to the duty of directors on insolvency;

(d) section 158, which relates to a director’s duty of care;

(e) section 140, which relates to the use of company information; and

(f) section 189 and 190, which relate to keeping proper accounting records, are duties owed to the company and not to shareholders.

171. Actions by shareholders against company

A shareholder of a company may bring an action against the company for breach of a duty owed by the company to him as a shareholder.

172. Actions by shareholder to require company to act

Notwithstanding section 171, the court may, on the application of a shareholder of a company, if it is satisfied that it is just and equitable to do so, make an order requiring the company or its Board or a director of the company to take any action that is required to be taken by the constitution of the company or this Act and, on making the order, the court may grant such other consequential relief as it considers appropriate.

173. Representative actions

Where a shareholder of a company brings proceedings against the company or a director, and other shareholders have the same or substantially the same interest in relation to the subject-matter of the proceedings, the court may appoint that shareholder to represent all or some of the shareholders having the same or substantially the same interest, and may, for that purpose, make such order as it considers appropriate including, without limiting the generality of this section, an order

(a) as to the control and conduct of the proceedings;

(b) as to the costs of the proceedings; or

(c) directing the distribution of any amount ordered to be paid by a defendant in the proceedings among the shareholders represented.

174. Prejudiced shareholders

(1) A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or prejudicial to that person in that capacity or in any other capacity, may apply to the court for an order under this section.

(2) If, on an application under this section, the court considers that it is just and equitable to do so, it may make such order as it considers appropriate including, without limiting the generality of this subsection, an order

(a) requiring the company or any other person to acquire the shareholder’s shares;

(b) requiring the company or any other person to pay compensation to a person;

(d) altering or adding to the company’s constitution;

(e) appointing a receiver of the company;

(f) directing the rectification of the records of the company;

(g) putting the company into liquidation; or

(h) setting aside action taken by the company or the Board in breach of this Act or the constitution of the company.

(3) No order may be made against the company or any other person under subsection

(2) of this section unless the company or that person is a party to the proceedings in which the application is made.

175. Alteration to constitution

(1) Notwithstanding anything in this Act, but subject to the order, where the court makes an order under section 174 altering or adding to the constitution of a company, the constitution shall not, to the extent that it has been altered or added to by the court, again be altered or added to without the leave of the court.

(2) Any alteration or addition to the constitution of a company made by an order under section 174 has the same effect as if it had been made by the shareholders of the company pursuant to section 43 and the provisions of this Act shall apply to the constitution as altered or added to.

(3) Within 10 working days of the making of an order under section 43 altering or adding to the constitution of a company, the Board of the company shall ensure that a copy of the order and the constitution as altered or added to is delivered to the Registrar for registration.

(4) If the Board of a company fails to comply with subsection (3), every director of the company shall be guilty of an offence and liable to the penalty set out in section 492(1) of this Act.

176. Ratification of certain actions of directors

(1) The purported exercise by a director or the Board of a company of a power vested in the shareholders or any other person may be ratified or approved by those shareholders or that person in the same manner in which the power may be exercised.

(2) The purported exercise of a power that is ratified under subsection (1) is deemed to be, and always to have been, a proper and valid exercise of that power.

(3) The ratification or approval under this section of the purported exercise of a power by a director or the Board does not prevent the court from exercising a power which might, apart from the ratification or approval, be exercised in relation to the action of the director or the Board.

PART XII - Administration of Companies (ss 177-188)

177. Method of contracting

(1) An obligation which, if entered into by a natural person, would, by law, be required to be in writing and signed by that person and notarially executed, may be entered into on behalf of the company in writing signed under the name of the company by

(a) two or more directors of the company;

(b) if there is only one director, by that director whose signature shall be witnessed;

(c) if the constitution of the company so provides, a director, or other person or class of persons whose signature or signatures shall be witnessed; or

(d) one or more attorneys appointed by the company in accordance with section 178, and may in the same manner be varied or discharged.

(2) An obligation which, if entered into by individual persons, is, by law, required to be in writing, may be entered into on behalf of the company in writing by a person acting under the company’s express or implied authority and may in the same manner be varied or discharged.

(3) An obligation which, if entered into by individual persons, is not, by law, required to be in writing, may be entered into on the behalf of the company in writing or orally by a person acting under the company’s express or implied authority and may in the same manner be varied or discharged.

(4) Nothing in subsection (1) limits or prevents a company entering into a contract or other enforceable obligation in writing under a common seal, if it has one.

(5) Subsection (1) applies to a contract or other obligation

(a) whether or not that contract or obligation was entered into in Botswana; and

(b) whether or not the law governing the contract or obligation is the law of Botswana.

(6) All contracts made in accordance with this section shall be effectual in law, and shall bind the company and its successors and all other parties thereto.

178. Attorneys

(1) Subject to its constitution, a company may, by an instrument in writing executed in accordance with section 177(1), appoint a person as its attorney either generally or in relation to a specified matter.

(2) An act of the attorney in accordance with the instrument binds the company.

(3) The law relating to powers of attorney shall apply, with the necessary modifications, in relation to a power of attorney executed by a company to the same extent as if the company was a natural person and as if the commencement of the liquidation or, if there is no liquidation, the removal from the register, of the company was the death of a person.

179. Pre-incorporation contracts may be ratified

Any contract made in writing by a person professing to act as agent or trustee for a company not yet formed, incorporated or registered shall be capable of being ratified or adopted by or otherwise made binding upon and enforceable by such company after it has been duly registered as if it had been duly formed, incorporated and registered at the time when the contract was made if the contract or a certified copy thereof is delivered to the Registrar simultaneously with the application for incorporation in terms of section 21.

180. Warranties implied in pre-incorporation contracts

(1) Notwithstanding any enactment or rule of law, in a pre-incorporation contract, unless a contrary intention is expressed in the contract, there is an implied warranty by the person who purports to make the contract in the name of, or on behalf of, the company

(a) that the company will be incorporated within such period as may be specified in the contract, or if no period is specified, then within a reasonable time after the making of the contract; and

(b) that the company will ratify the contract within such period as may be specified in the contract, or if no period is specified, then within a reasonable time after the incorporation of the company.

(2) The amount of damages recoverable in an action for breach of a warranty implied by subsection (1) of this section is the same as the amount of damages that would be recoverable in an action against the company for damages for breach by the company of the unperformed obligations under the contract if the contract had been ratified by the company.

(3) If, after its incorporation, a company enters into a contract in the same terms as, or in substitution for, a pre-incorporation contract (not being a contract ratified by the company under section 179), the liability of a person under subsection (1) of this section (including any liability under an order made by the court for the payment of damages) is discharged.

181. Failure to ratify

(1) A party to a pre-incorporation contract that has not been ratified by the company after its incorporation may apply to the court for an order

(a) directing the company to return property, whether real or personal, acquired under the contract to that party;

(b) for any other relief in favor of that party relating to that property; or

(2) The court may, if it considers it just and equitable to do so, make any order or grant any relief it considers appropriate and may do so whether or not an order has been made under section 180(2).

182. Registered office

(1) A company shall always have a registered office in Botswana to which all communications and notices may be addressed and which shall constitute the address for service of legal proceedings on the company.

(2) Subject to section 184, the registered office of a company at a particular time is the place that is described as its registered office in the register of companies at that time.

183. Description of registered office

(1) The description of the registered office shall state the address of the registered office.

(2) Where the registered office is at the offices of any firm of a chartered accountant, attorney at law, or any other person, such description shall state

(a) that the registered office of the company is at the offices of that firm or person; and

(b) particulars of the location in any building of those offices.

**184. Change of registered office

(1) Subject to the company’s constitution and to subsection (3), the Board of a company may change the registered office of the company at any time.

(2) Notice in the prescribed form of such change shall be given to the Registrar for registration within 21 days of the change.

(3) The change in the registered office takes effect on a date stated in the notice not being a date that is earlier than five working days after the notice is registered.

185. Requirement to change registered office

(1) Subject to this section, a company shall change its registered office if it is required to do so by the Registrar.

(2) The Registrar may require a company to change its registered office by notice in writing delivered or sent to the company at its registered office.

(3) The notice shall

(a) state that the company is required to change its registered office by a date stated in the notice, not being a date that is earlier than 20 working days after the date of the notice;

(b) state the reasons for requiring the change;

(d) be dated and signed by the Registrar.

(4) A copy of the notice shall also be sent to each director of the company.

(5) The Company shall change its registered office

(a) by the date stated in the notice; or

(b) if it appeals to the court and the appeal is dismissed, within five working days after the decision of the court.

(6) If a company fails to comply with this section, every director of the company shall be guilty of an offence and liable to the penalty set out in section 492(1).

186. Company records

(1) Subject to subsection (3) and to sections 84 and 190, a company shall keep the following documents at its registered office or at such place within Botswana as is notified to the Registrar under subsection (4)

(a) the constitution of the company;

(b) minutes of all meetings and resolutions of shareholders within the last seven years;

(d) minutes of all meetings and resolutions of directors and directors’ committees within the last 10 years;

(e) certificates given by directors under this Act within the last seven years;

(f) the full names and addresses of the current directors and secretary;

(g) copies of all written communications to all shareholders or all holders of the same class of shares during the last seven years, including annual reports made under section 212;

(h) copies of all financial statements and group financial statements required to be completed by section 205 to 208 for the last seven completed accounting periods of the company;

(i) the accounting records required by section 190 for the current accounting period and for the last seven completed accounting periods of the company;

(j) the share register required to be kept under section 83;

(k) the register of charges required to be kept under section 121(1);

(l) the register of debentures required to be kept under section 121(2); and

(m) the copies of instruments creating or evidencing charges required to be registered under section 125.

(2) The references in paragraphs (b), (d), (e), and (g) of subsection (1) to seven years and the references in paragraphs (h) and (i) of that subsection to seven completed accounting periods include such lesser periods as the Registrar may approve by notice in writing to the company.

(3) Any of the records referred to in subsection (1) may be kept at a place in Botswana other than the registered office of the company only with the prior approval in writing of the Registrar provided that the accounting records may be kept at another place within Botswana provided the company complies with section 190(2).

(4) The Registrar shall record the place approved for the keeping of records under subsection (3) and that record shall be available for inspection under section 13.

(5) If a company fails to comply with subsection (1)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(2);

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2). 187. Form of records

(1) The records of a company required to be kept by section 186 shall be kept

(a) subject to subsection (3) in the English language;

(b) in written form; or

(c) in a form or in a manner that allows the documents and information that comprise the records to be easily accessible and convertible into written form.

(2) The Board shall ensure that adequate measures exist to

(a) prevent the records being falsified; and

(b) detect any falsification of them.

(3) A close company may keep the records referred to in section 186(1) (b), (d) and (g) in the English or Setswana languages.

(4) If the Board fails to comply with subsection (2) of this section, every director shall be guilty of an offence and liable to the penalty set out in section 493(2).

188. Inspection of records by directors

(1) Subject to subsection (2), every director of a company is entitled, on giving reasonable notice, to inspect the records of the company

(a) in written form; and

(b) without charge; and

(2) The court may, on application by the company, if it is satisfied that

(a) it would not be in the company’s interests for a director to inspect the records; or

(b) the proposed inspection is for a purpose that is not properly connected with the director’s duties,

(c) direct that the records need not be made available for inspection or limit the inspection of them in any manner it considers appropriate.

PART XIII - Accounting Records, Audit and Disclosure by Companies (ss 189-221)

189. Accounting records to be kept

(1) The Board of a company shall cause accounting records to be kept that

(a) correctly record and explain the transactions of the company;

(b) shall at any time enable the financial position of the company to be determined with reasonable accuracy;

(d) shall enable the financial statements of the company to be readily and properly audited.

(2) Without limiting subsection (1), the accounting records shall contain

(a) entries of money received and spent each day and the matters to which it relates;

(b) a record of the assets and liabilities of the company;

(i) a record of goods bought and sold, except goods sold for cash in the ordinary course of carrying on a retail business, that identifies both the goods and buyers and sellers and relevant invoices, and

(ii) a record of stock held at the end of the financial year together with records of any stock takings during the year; and

(d) if the company’s business involves providing services, a record of services provided and relevant invoices.

(3) The accounting records shall be kept in the English language.

(4) If the Board of a company fails to comply with the requirements of this section, every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2) of this Act.

190. Place accounting records to be kept

(1) A company shall keep its accounting records at the registered office of the company or subject to subsection (2) at such other place in Botswana as the Board shall determine.

(2) Notice of any change in the place where the accounting records are kept, shall be submitted to the Registrar within 21 days after such change.

(3) If a company fails to comply with subsection (1) or (2)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(2);

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2).

191. Appointment of auditors

(1) Subject to this section, every public company and every non-exempt private company shall, at each annual meeting, appoint an auditor to

(a) hold office from the conclusion of the meeting until the conclusion of the next annual meeting; and

(b) audit the financial statements of the company and, if the company is required to complete group financial statements, those group financial statements, for the accounting period next after the meeting.

(2) The Board of a company may fill any casual vacancy in the office of auditor, but while the vacancy remains, the surviving or continuing auditor, if any, may continue to act as auditor.

(3) If in the case of a company which is required to appoint an auditor

(a) at an annual meeting of a company no auditor is appointed or re-appointed; or

(b) a casual vacancy in the office of auditor is not filled within one month of the vacancy occurring, the Registrar may appoint an auditor.

(4) A company shall, within five working days of the power becoming exercisable, give written notice to the Registrar of the fact that the Registrar is entitled to appoint an auditor under subsection (3) of this section.

(5) If a company fails to comply with subsection (4), the company and every director of the company shall be guilty of an offence and liable to the penalties set out in section 493 (2).

192. Auditors' fees and expenses

The fees and expenses of an auditor of a company shall be fixed

(a) if the auditor is appointed at a meeting of the company, by the company at the meeting or in such manner as the company determines at the meeting;

(b) if the auditor is appointed by the directors, by the directors; or

193. Appointment of partnership as auditor

(1) A partnership may be appointed by the firm name to be the auditor of a company if

(a) at least one member of the firm is ordinarily resident in Botswana;

(b) at least one of the members of the firm including the member who is ordinarily resident in Botswana, are persons who are qualified for appointment under section 194;

(c) no member of the firm is indebted in an amount exceeding P5,000 to the company or a related corporation unless the debt is in the ordinary course of business;

(d) no member of the firm is

(i) an officer or employee of the company, or (ii) a partner, or in the employment, of a director or employee of the company or a related corporation; and

(e) except in the case of an exempt private company no officer of the company receives any remuneration from the firm or acts as a consultant to it on accounting or auditing matters.

(2) The appointment of a partnership by the firm name to be the auditor of a company is deemed, notwithstanding subsection (1) to be the appointment of all the persons who are partners in the firm from time to time whether ordinarily resident in Botswana or not at the date of the appointment.

(3) Where a partnership that includes persons who are not qualified to be appointed as auditors of a company is appointed as auditor of a company, the persons who are not qualified to be appointed as auditors shall not act as auditors of the company.

(4) Where a firm has been appointed as auditor of a company, and the members constituting the firm change by reason of the death, retirement, or withdrawal of a member or by reason of the admission of a new member, the firm as newly constituted shall, if it is not disqualified from acting as auditor of the company by virtue of subsection (1), be deemed to be appointed under this section as auditor of the company and that appointment shall be taken to be an appointment of all persons who are members of the firm as newly constituted.

194. Qualifications of auditors

(1) A person shall not be qualified to be appointed as an auditor of a company unless that person is a member of the Institute of Accountants of Botswana who is qualified under the rules of that Institute to conduct an audit and holds a valid practising certificate issued by the Institute.

(2) None of the following persons may be appointed or act as auditor of a company

(a) a director or employee of the company;

(b) a person who is a partner, or in the employment, of a director or employee of the company;

(d) a body corporate except as permitted by section 193;

(e) a person who is a director or employee of a body corporate which is an officer of the company;

(f) a person who by himself, or his partner, or his employee, regularly performs the duties of secretary or accounting officer or bookkeeper to the company;

(g) a person who is not ordinarily resident in Botswana; or

(h) a person who is indebted in an amount exceeding P5,000 to the company, or to a related company unless the debt is in the ordinary course of business.

195. Automatic reappointment

(1) An auditor of a company, other than an auditor appointed under section 196, is automatically reappointed at an annual meeting of the company unless

(a) the auditor is then not qualified for appointment;

(b) the company passes a resolution at the meeting appointing another person to replace him as auditor;

(d) the auditor has given notice to the company that he does not wish to be reappointed.

(2) An auditor is not automatically reappointed if the person who is to replace him dies, or is, or becomes incapable of, or disqualified from, appointment.

196. Appointment of first auditor

(1) The first auditor of a company may be appointed by the directors of the company before the first annual meeting, and, if so appointed, holds office until the conclusion of that meeting.

(2) If the directors do not appoint an auditor under subsection (1), the company shall appoint the first auditor at the first annual meeting of the company.

197. Replacement of auditor

(1) A company shall not appoint a new auditor in the place of an auditor who is qualified for reappointment, unless

(a) at least 20 working days’ written notice of a proposal to do so has been given to the auditor; and

(b) the auditor has been given a reasonable opportunity to make representations to the shareholders on the appointment of another person either in writing or by the auditor or his representative speaking at a shareholders’ meeting (whichever the auditor may choose).

(2) An auditor is entitled to be paid by the company reasonable fees and expenses for making the representations to shareholders.

(3) Where, on the application of the company or any other person who claims to be aggrieved by the auditor’s representation being sent out or being read out at the meeting of shareholders, the court is satisfied that the rights conferred by subsection (1) are being abused to secure needless publicity of defamatory matter, the court may order

(a) that the auditor’s representation shall not be sent out or shall not be read at the meeting of shareholders;

(b) the costs of the application to the court to be paid in whole or in part by the auditor.

198. Auditor not seeking reappointment

(1) If an auditor gives the Board of a company written notice that seeking reappointment the auditor does not wish to be reappointed, the Board shall, if requested to do so by that auditor

(a) distribute to all shareholders and to the Registrar, at the expense of the company, a written statement of the auditor’s reasons for his wish not to be reappointed; or

(b) permit the auditor or his representative to explain at a shareholders’ meeting the reasons for his wish not to be reappointed.

(2) An auditor may resign prior to the annual meeting by giving notice to the company calling on the Board to call a special meeting of the company to receive the auditor’s notice of resignation.

(3) Where a notice is given by an auditor under subsection (2), the auditor may, at the time of giving his notice to the Board, request the Board to distribute a written statement providing him or his representative with the opportunity to give an explanation on the same terms as are set out in subsection (1).

(4) Where a written statement is provided by the auditor under subsection (3) the provisions of section 202(3) shall apply to that statement and explanation.

(5) Where a notice of resignation is given by an auditor under this section, the appointment of the auditor shall terminate at that meeting and the business of the meeting shall include the appointment of a new auditor to the company.

(6) An auditor is entitled to be paid by the company reasonable fees and expenses for making the representations to shareholders.

199. Auditor to avoid conflict of interest

An auditor of a company shall ensure, in carrying out the duties of an auditor under this Part of this Act, that his judgment is not impaired by reason of any relationship with or interest in the company or any of its subsidiaries.

200. Auditor’s report

(1) The auditor of a company shall make a report in accordance with the International Standards on Auditing to the shareholders on the financial statements which have been audited.

(2) The auditor’s report shall state whether, in the auditor’s opinion, the financial statements and any group financial statements, give a true and fair view of the financial position of the company as at the balance sheet date and of the results of its operations and its cash flows for the financial year then ended and comply with International Financial Reporting Standards, and, if they do not, the respects in which they fail to do so.

201. Access to information

(1) The Board of a company shall ensure that an auditor of a company has access at all times to the accounting records and other documents of the company.

(2) An auditor of a company is entitled to require from a director or employee of the company such information and explanations as he thinks necessary for the performance of his duties as auditor.

(3) If the Board of a company fails to comply with subsection (1), every director shall be guilty of an offence and liable to the penalty set out in section 492(3).

(4) A director or employee who fails to comply with subsection (2) shall be guilty of an offence and liable to the penalty set out in section 493(2).

(5) It is a defense to a charge under subsection (4) if the employee proves that

(a) the employee did not have the information required in his possession or under his control; or

(b) by reason of the position occupied by the employee or the duties assigned to the employee, he was unable to give the explanations required, as the case may be.

202. Auditor’s attendance at shareholders’ meeting

(1) The Board of a company shall ensure that an auditor of the company

(a) is permitted to attend a meeting of shareholders of the company;

(b) receives the notices and communications that a shareholder is entitled to receive relating to a meeting of shareholders; and

(c) may be heard at a meeting of shareholders which he attends on any part of the business of the meeting which concerns him as auditor.

(2) If the Board of a company fails to comply with subsection (1), every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2).

203. Company to provide auditors report to trustee for debenture holders

The auditor of a borrowing company shall, within seven days after furnishing the company with any financial statements or any report certificate or other document which the auditor is required by this Act or by the debenture trust deed to give to the company, send a copy by post to every trustee for debenture holders.

204. Duties of auditor on becoming aware of irregularity

(1) Where, in the performance of the auditor’s duties as auditor of a company, the auditor becomes aware of

(a) any material irregularity in the conduct of the company’s financial affairs; or

(b) any matter which, in his opinion, is otherwise relevant to the exercise of the powers and duties imposed by this Act or by any debenture trust deed, on any trustee for debenture holders, the auditor shall, within seven days after becoming aware of the matter, send a report in writing of such matter to the Board of the company and a copy to the trustee.

(2) The auditor of a borrowing company shall, at the request of the trustee for debenture holders, furnish the trustee with such further information relating to the borrowing company as are within the auditor’s knowledge and which, in the auditor’s opinion, are relevant to the exercise of the powers or duties conferred or imposed on the trustee by this Act or by the trust deed.

(3) Where a report is given under subsection (1) and the matter on which the auditor has reported has not within 30 days either been remedied or reported by the Board, or in the case of a listed company to the stock exchange, or in the case of any other company to the shareholders of the company, the auditor shall forthwith provide a written report to the stock exchange or to the Registrar as the case may be.

(4) No right of action against the auditor shall be available to any person by reason only of the auditor having in good faith provided a report pursuant to subsections (1), (2) and (3).

(5) The Registrar, on receipt of the report, may require the directors to forthwith call a meeting of shareholders to be held within seven days or within such further period as the Registrar may direct, to discuss the report.

205. Obligation to prepare financial statements

(1) The Board of every company shall ensure that, within five months after the balance sheet date of the company, in the case of a public company, and within seven months after balance sheet date in the case of any other company, financial statements that comply with sections 206 to 208 are

(a) completed in relation to the company and that balance sheet date; and

(b) dated and signed on behalf of the Board by two directors of the company, or, if the company has only one director, by that director.

(2) The Registrar may, if he considers it appropriate to do so, extend the period of five or seven months specified in subsection (1) to a period not exceeding eight or 10 months respectively.

(3) If the Board fails to comply with subsection (1), every director of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(1).

206. Contents and form of financial statements

(1) The financial statements of a company shall give a true and fair view of

(a) the state of affairs of the company as at the balance sheet date;

(b) the profit and loss or income and expenditure, as the case may be, of the company for the accounting period ending on that balance sheet date; and

(2) Without limiting subsection (1), in the case of public companies and non-exempt private companies the financial statements shall

(a) be prepared in accordance with and comply with the International Financial Reporting Standards;

(b) comply with any regulations made under this Act which prescribe the form and content of financial statements for public and non-exempt private companies;

(3) Without limiting subsection (1) the financial statements of an exempt private company shall be prepared on the basis of generally accepted accounting principles which are appropriate for an exempt private company and shall comply with any regulations made under this Act which prescribe the form and content of financial statements for exempt private companies.

(4) If, in complying with the standards or regulations referred to in subsections (2) and (3), the financial statements do not give a true and fair view of the matters to which they relate, the directors shall add such information and explanations as will give a true and fair view of those matters.

207. Obligation to prepare group financial statements

(1) Subject to subsection (2), the Board of a company that has, on the balance sheet date of the company, one or more subsidiaries, shall in addition to complying with section 205, ensure that, within five months in the case of a public company, and within seven months in the case of any other company, after that balance sheet date, group financial statements that comply with section 208 are

(a) completed in relation to that group and that balance sheet date; and

(b) dated and signed on behalf of the directors by two directors of the company, or, if the company has only one director, by that director.

(2) Group financial statements are not required in relation to a company and a balance sheet date if the company is at that balance sheet date the wholly owned subsidiary of any company incorporated in Botswana.

(3) Group financial statements are not required in relation to a company and a balance sheet date if the company is at the balance sheet date a virtually owned subsidiary of any company incorporated in Botswana and the parent obtains the approval of the owners of the minority interest.

(4) In the case of a public or non-exempt private company, group accounts need not deal with a subsidiary of the company in circumstances where this would not be required by the International Financial Reporting Standards.

(5) In the case of companies other than those coming under subsection (4) group accounts need not deal with a subsidiary of the company if the company’s directors are of the opinion and the Registrar agrees that

(a) it is impracticable, or would be of no real value to members of the company to do so in view of the insignificant amount involved, or would involve expense or delay out of proportion to the value to the members of the company; and

(b) the result would be misleading or harmful to the business of the company or any of its subsidiaries.

(6) The companies required by this section to prepare group financial statements are referred to for this purpose as a "group of companies" or "group".

(7) If the Board fails to comply with subsection (1), every director of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493 (2).

208. Contents and form of group financial statement

(1) The financial statements of a group shall give a true and fair view of

(a) the state of affairs of the company and its subsidiaries as at the balance sheet date; and

(b) the profit and loss or income and expenditure, as the case may be, of the company and its subsidiaries for the accounting period ending on that balance sheet date.

(2) Without limiting subsection (1), in the case of public companies and non-exempt\ private companies the financial statements of a group shall

(a) be prepared in accordance with and comply with International Financial Reporting Standards;

(b) comply with any regulations made under this Act which prescribe the form and content of group financial statements of public companies and non-exempt private companies; and

(c) comply with any requirements which apply to the group financial statements of public companies and non-exempt private companies under any other Act.

(3) Without limiting subsection (1), the financial statements of the group in the case of an exempt private company shall comply with any regulations made under this Act which prescribe the form and content of group financial statements of exempt private companies.

(4) Where a subsidiary became a subsidiary of a company during the accounting period to which the group financial statements relate, the consolidated profit and loss statement or the consolidated income and expenditure statement for the group, shall relate to the profit or loss of the subsidiary for each part of that accounting period during which it was a subsidiary, and not to any other part of that accounting period.

(5) Subject to subsection (4), where the balance sheet date of a subsidiary of a company is not the same as that of the company, the group financial statements shall

(a) if the balance sheet date of the subsidiary does not precede that of the company by more than three months, incorporate the financial statements of the subsidiary for the accounting period ending on that date, or incorporate interim financial statements of the subsidiary completed in respect of a period that is the same as the accounting period of the company; or

(b) in any other case, incorporate interim financial statements of the subsidiary completed in respect of a period that is the same as the accounting period of the company.

(6) Subject to subsection (4), group financial statements shall incorporate the financial statements of every subsidiary of the company.

(7) If, in complying with the standards or regulations referred to in subsections (2) and

(3) the financial statements do not give a true and fair view of the matters to which they relate the directors shall add such information and explanations as will give a true and fair view of those matters.

209. Registration of financial statement

(1) Every company to which this section applies shall ensure that, statements within 20 working days after the financial statements of the company and any group financial statements are required to be signed, copies of those statements together with a copy of the auditor’s report on those statements are delivered to the Registrar for registration.

(2) The copies delivered to the Registrar under this section shall be certified to be correct copies by two directors of the company, or, where the company has only one director, by that director.

(3) This section applies to every

(a) public company;

(b) other company in which a public company holds more than 25 per cent of its share capital; and

(c) company which is required by any other enactment to deliver its financial statements to the Registrar for registration.

210. Meaning of "balance sheet date"

(1) In this Act, the term "balance sheet date", in relation to a company, means the close of the 30th day of June or of such other date as the Board of the company has adopted as the company’s balance sheet date and notified to the Registrar under subsection (7).

(2) Subject to subsections (3) and (4), a company shall have a balance sheet date in each calendar year.

(3) A company need not have a balance sheet date in the calendar year in which it is incorporated if its first balance sheet date is in the following calendar year and is not later than 18 months after the date of its formation or incorporation.

(4) If a company changes its balance sheet date, it need not have a balance sheet date in a calendar year if

(a) the period between any two balance sheet dates does not exceed 15 months; and

(b) the Registrar approves the change of balance sheet date before it is made.

(5) The Registrar may approve a change of balance sheet date for the purposes of subsection (4) with or without conditions.

(6) If a company adopts a balance sheet date other than the 30th day of June, or changes its balance sheet date, it shall, in the prescribed form, lodge with the Registrar, the balance sheet date of the company and the adoption or change of the balance sheet date shall have effect on the date on which the notice is lodged.

(7) The Board of a company shall ensure that, unless in the Board’s opinion there are good reasons against it, the balance sheet date of each subsidiary of the company is the same as the balance sheet date of the company.

(8) If the balance sheet date of a subsidiary of a company is not the same as that of the company, the balance sheet date of the subsidiary for the purposes of any particular group financial statements shall be that preceding the balance sheet date of the company.

211. Meaning of "financial statements and "group financial statements"

(1) In this Act, the term "financial statements", in relation to a company and a balance sheet date, means

(a) a balance sheet for the company as at the balance sheet date; and

(b) an income statement which shall

(i) in the case of a company trading for profit, be a profit and loss statement for the company in relation to the accounting period ending at the balance sheet date; and

(ii) in the case of a company not trading for profit, be an income and expenditure statement for the company in relation to the accounting period ending at the balance sheet date; together with any notes or documents giving information relating to the balance sheet or statement including a statement of accounting policies.

(2) In the case of companies which are required to comply with International Financial Reporting Standards the financial statements shall also include

(a) a statement of changes in equity between its last two balance sheet dates;

(b) a cash flow statement; and

(3) In this Act, the term "group financial statements", in relation to a group and a balance sheet date, means

(a) a consolidated balance sheet for the group as at that balance sheet date; and

(b) a consolidated income statement as described in subsection (2), together with any notes or documents giving information relating to the balance sheet or statement including a statement of accounting policies.

(4) In the case of companies which are required to comply with International Financial Reporting Standards the group financial statements shall also include

(a) a consolidated statement of changes in equity between the last two balance sheet dates;

(b) a consolidated cash flow statement; and

212. Obligation to prepare annual report

(1) The Board of every company shall, in the case of a public company within five months and in the case of any other company within seven months after the balance sheet date of the company, prepare an annual report on the affairs of the company during the accounting period ending on that date.

(2) If the Board of a company fails to comply with subsection (1), every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1) of this Act.

(3) This section does not apply to a one person company.

(4) The shareholders of a private company may resolve by unanimous resolution that this section and sections 213 to 220 shall not apply to the company, and from the date of that resolution the Board shall not be required to comply with these sections, provided that if any shareholder during the period of three months after balance sheet date in any year requests the Board in writing that it comply with these sections the Board shall comply with these sections in relation to the annual report next due and in relation to any subsequent year until any further unanimous resolution is passed under this section.

213. Sending of annual report to shareholders

(1) Subject to subsection (2), the Board of a company shall cause a copy of the annual report to be sent to every shareholder of the company not less than 20 working days before the date fixed for holding the annual meeting of shareholders.

(2) The Board of a company is not required to send an annual report to a shareholder if

(a) the shareholder has given notice in writing to the company waiving the right to be sent a copy of that annual report or copies of annual reports of the company generally;

(b) the shareholder has not revoked that notice; and

(3) A public company shall deliver a copy of its annual report to the Registrar for registration at the same time as delivering its financial statements for registration under section 209.

(4) If the Board of a company fails to comply with subsection (1) and subsection (3), every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

214. Sending of financial statements to shareholders who elect not to receive annual report

(1) The Board of a company shall cause to be sent to every shareholder of the company referred to in section 213(2), not less than 20 working days before the annual meeting of share holders

(a) financial statements for the most recently completed accounting period completed and signed in accordance with section 205 and any group financial statements for the most recently completed accounting period completed and signed in accordance with section 207; and

(b) any auditor’s report on those financial statements and any group financial statements.

(2) If the Board of a company fails to comply with subsection (1) of this section, every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2).

215. Contents of annual report

(1) Every annual report for a company shall be in writing and be dated and, subject to subsection (3), shall

(a) describe, so far as the Board believes is material for the shareholders to have an appreciation of the state of the company’s affairs and will not be harmful to the business of the company or of any of its subsidiaries, any change during the accounting period in

(i) the nature of the business of the company or any of its subsidiaries, or

(ii) the classes of business in which the company has an interest, whether as a shareholder of another company or otherwise;

(b) include financial statements for the accounting period completed and signed in accordance with section 205 and any group financial statements for the accounting period completed and signed in accordance with section 207;

(c) where an auditor’s report is required under Part XIII in relation to the financial statements or group financial statements, as the case may be, included in the report, include that auditor’s report;

(d) describe any change in accounting policies made during the accounting period;

(e) state particulars of entries in the interests register made during the accounting period;

(f) state, in respect of each director or former director of the company, the total of the remuneration and the value of other benefits received by that director or former director during the accounting period;

(g) state the total amount of donations made by the company and any subsidiary during the accounting period;

(h) state the names of the persons holding office as directors of the company as at the end of the accounting period and the names of any persons who ceased to hold office as directors of the company during the accounting period;

(i) state the amounts payable by the company to the person or firm holding office as auditor of the company as audit fees and, as a separate item, fees payable by the company for other services provided by that person or firm; and

(j) be signed on behalf of the Board by two directors of the company or, if the company has only one director, by that director.

(2) A company that is required to include group financial statements in its annual report shall include, in relation to its subsidiaries, the information specified in paragraphs (d) to (j) of subsection (1).

(3) The annual report of a company need not comply with any of paragraphs (a) and (d) to (i) of subsection (1) if all shareholders agree that the report need not do so, and such agreement is noted in the annual report.

216. Failure to disclose

Subject to the constitution of a company, the failure to send an annual report, notice, or other document to a shareholder in accordance with this Act does not affect the validity of proceedings at a meeting of the shareholders of the company if the failure to do so was accidental.

217. Annual return

(1) Subject to subsection (3) every company shall at least once in every year deliver to the Registrar an annual return.

(2) Subject to subsection (3) the annual return shall be completed within 28 days from the date of the annual meeting of the company or where section 107 applies, the date by which the company is required to complete the entries in its minute book relating to the matters which are required to be done at an annual general meeting.

(3) A company which keeps a branch register outside Botswana shall comply with the requirements of subsection (2) within eight weeks after the dates referred to in subsection (2).

(4) The annual return shall be signed by a director or secretary.

(5) The annual return of a company limited by shares shall contain the matters specified in the Sixth Schedule provided that if the matters required to be stated are in each case unchanged from the last preceding annual return the company may present a "No Change Return" in which it is certified by a director or secretary of the company that there is no change in any of the matters stated from the previous year.

(6) The annual return of a company limited by guarantee shall contain the matters which are prescribed by regulations under this Act.

(6A) The annual return of a close company shall be in the form to be prescribed under this Act.

(7) A company need not make an annual return in the calendar year of its registration.

(8) Where the number of members of a private company exceeds 25, the company shall send with its annual return a certificate signed by a director or the secretary of the company to the effect that the excess of the number of members of the company over 25 consists wholly of employees or former employees or of a person or persons who are joint holders and who by virtue of section 245(a) are not required to be included in computing the number of 25.

(9) A public company which

(a) has more than 500 members; and

(b) provides reasonable accommodation and facilities at a place approved by the Registrar for persons to inspect and take a list of its members and particulars of shares transferred, shall not, unless the Registrar otherwise directs, be required to include a list of members with the annual return if a certificate by the secretary is included that the company is of a kind to which this subsection applies.

(10) If the Board of a company fails to comply with subsection (1) or subsection (2), every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2).

218. Public inspection of company records

(1) A company shall keep the following records available for records inspection in the manner prescribed in section 220 by a person who serves written notice of intention to inspect on the company

(a) the certificate of incorporation or registration of the company;

(b) the constitution of the company, if it has one;

(d) the full names and residential addresses of the directors;

(e) the registered office and address for service of the company;

(f) the register of charges;

(g) copies of the instruments creating or evidencing charges which are required to be registered under section 125; and

(h) in the case of a public company the register of substantial shareholders.

(2) If a company fails to comply with subsection (1)

(a) the company commits an offence and is liable on conviction to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(1).

219. Inspection of company records by shareholders

(1) In addition to the records available for public inspection, a company shall keep the following records available for inspection in the manner prescribed in section 220 by a shareholder of the company, or by a person authorised in writing by a shareholder for the purpose, who serves written notice of intention to inspect on the company

(a) minutes of all meetings and resolutions of shareholders;

(b) copies of written communications to all shareholders or to all holders of a class of shares during the preceding 10 years, including annual reports, financial statements, and group financial statements;

(d) the interests register of the company, if it has one.

(2) If a company fails to comply with subsection (1)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(2); and

(b) every director of a company shall be guilty of an offence and liable to the penalty set out in section 493(2).

220. Manner of inspection

(1) Documents which may be inspected under section 218 or section 219 shall be available for inspection at the place at which the company’s records are required to be kept during normal working hours of each working day during the inspection period.

(2) In this section, the term "inspection period" means the period commencing on the third working day after the day on which notice of intention to inspect is served on the company by the person or shareholder concerned and ending with the eighth working day after the day of service.

221. Copies of documents

(1) A person may require a copy of, or extract from, a document which is available for inspection by that person under section 218 or section 219 to be sent to him

(a) within five working days after he or she has made a request in writing for the copy or extract; and

(b) if that person has paid a reasonable copying and administration fee prescribed by the company.

(2) If a company fails to provide a copy of, or extract from, a document in accordance with a request under subsection (1)

(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and

(b) every director of the company shall be guilty of an offence and liable to the penalty set out in section 493(2).

PART XIV - Amalgamations (ss 222-230)

222. Amalgamations

Two or more companies may amalgamate, and continue as one company, which may be one of the amalgamating companies, or may be a new company.

223. Amalgamation proposal

(1) An amalgamation proposal shall set out the terms of the amalgamation, and in particular

(a) the name of the amalgamated company, if it is the same as the name of one of the amalgamating companies;

(b) the registered office of the amalgamated company;

(c) the full name or names and residential address or addresses of the director or directors and the secretary of the amalgamated company;

(d) the address for service of the amalgamated company;

(e) the share structure of the amalgamated company, specifying

(i) the number of shares of the company, and

(ii) the rights, privileges, limitations, and conditions attached to each share of the company, if different from those set out in section 45;

(f) the manner in which the shares of each amalgamating company are to be converted into shares of the amalgamated company;

(g) if shares of an amalgamating company are not to be converted into shares of the amalgamated company, the consideration that the holders of those shares are to receive instead of shares of the amalgamated company;

(h) any payment to be made to a shareholder or director of an amalgamating company, other than a payment of the kind described in paragraph (g);

(i) details of any arrangement necessary to complete the amalgamation and to provide for the subsequent management and operation of the amalgamated company; and

(j) a copy of the proposed constitution of the amalgamated company.

(2) An amalgamation proposal may specify the date on which the amalgamation is intended to become effective.

(3) If shares of one of the amalgamating companies are held by or on behalf of another of the amalgamating companies, the amalgamation proposal

(a) shall provide for the cancellation of those shares without payment or the provision of other consideration when the amalgamation becomes effective; and

(b) shall not provide for the conversion of those shares into shares of the amalgamated company.

224. Approval of amalgamation proposal

(1) The Board of each amalgamating company shall resolve that

(a) in its opinion the amalgamation is in the best interest of the company; and

(b) it is satisfied on reasonable grounds that the amalgamated company will, immediately after the amalgamation becomes effective, satisfy the solvency test.

(2) The directors who vote in favor of a resolution required by subsection (1) shall sign a certificate stating that, in their opinion, the conditions set out in that subsection are satisfied, and the grounds for that opinion.

(3) The Board of each amalgamating company shall send to each shareholder of the company, not less than 20 working days before the amalgamation is proposed to take effect

(a) a copy of the amalgamation proposal;

(b) copies of the certificates given by the directors of each Board;

(d) a statement that a copy of the constitution of the amalgamated company will be supplied to any shareholder who requests it;

(e) a statement setting out the rights of shareholders;

(f) a statement of any material interests of the directors in the amalgamation proposal, whether in that capacity or otherwise; and

(g) such further information and explanation as may be necessary to enable a reasonable shareholder to understand the nature and implications for the company and its shareholders of the proposed amalgamation.

(4) The Board of each amalgamating company shall, not less than 20 working days before the amalgamation is proposed to take effect

(a) send a copy of the amalgamation proposal to every secured creditor of the company; and

(b) give public notice of the proposed amalgamation, including a statement that

(i) copies of the amalgamation proposal are available for inspection by any shareholder or creditor of an amalgamating company or any person to whom an amalgamating company is under an obligation at the registered offices of the amalgamating companies and at such other places as may be specified during normal business hours, and

(ii) a shareholder or creditor of an amalgamating company or any person to whom an amalgamating company is under an obligation is entitled to be supplied free of charge with a copy of the amalgamation proposal upon request to an amalgamating company.

(5) The amalgamation proposal shall be approved

(a) by the shareholders of each amalgamating company, in accordance with section 96; and

(b) if a provision in the amalgamation proposal would, if contained in an amendment to an amalgamating company’s constitution or otherwise proposed in relation to that company, require the approval of an interest group, by a special resolution of that interest group.

(6) A director who fails to comply with any of subsections (2), (3) and (4) shall be guilty of an offence and liable to the penalty set out in section 493(1).

225. Short form amalgamation

(1) A company and one or more other companies that is or that are directly or indirectly wholly owned by it may amalgamate and continue as one company (being the company first referred to) without complying with sections 223 and 224 if

(a) the amalgamation is approved by a resolution of the Board of each amalgamating company; and

(b) each resolution provides that

(i) the shares of each amalgamating company, other than the amalgamated company, will be cancelled without payment or other consideration,

(ii) the constitution of the amalgamated company, if it has one, will be the same as the constitution of the company first referred to, if it has one, and

(iii) the Board is satisfied on reasonable grounds that the amalgamated company will, immediately after the amalgamation becomes effective, satisfy the solvency test.

(2) Two or more companies, each of which is directly or indirectly wholly owned by the same company, may amalgamate and continue as one company without complying with section 223 or section 224 if

(a) the amalgamation is approved by a resolution of the Board of each amalgamating company; and

(b) each resolution provides that

(i) the shares of all but one of the amalgamating companies will be cancelled without payment or other consideration,

(ii) the constitution of the amalgamated company, if it has one, will be the same as the constitution of the amalgamating company whose shares are not cancelled, if it has one, and

(iii) the Board is satisfied on reasonable grounds that the amalgamated company will, immediately after the amalgamation becomes effective, satisfy the solvency test.

(3) The Board of each amalgamating company shall, not less than 20 working days before the amalgamation is proposed to take effect, give written notice of the proposed amalgamation to every secured creditor of the company.

(4) The resolutions approving an amalgamation under this section, taken together, shall be deemed to constitute an amalgamation proposal that has been approved.

(5) The directors who vote in favor of a resolution required by subsection (1) or (2), as the case may be, shall sign a certificate stating that, in their opinion, the conditions set out in subsection (1) or (2) are satisfied, and the grounds for that opinion.

(6) A director who fails to comply with subsections (3) and (5) shall be guilty of an offence and liable to the penalty set out in section 493(1).

226. Registration of amalgamation proposal

For the purpose of effecting an amalgamation the following documents shall be delivered to the Registrar for registration (a) the approved amalgamation proposal;

(b) any certificates required under section 224(2) or section 225(5);

(c) a certificate signed by the Board of each amalgamating company stating that the amalgamation has been approved in accordance with this Act and the constitution of the company, if it has one;

(d) if the amalgamated company is a new company or the amalgamation proposal provides for a change of the name of the amalgamated company, a copy of the notice reserving the name of the company;

(e) a certificate signed by the Board, or proposed Board, of the amalgamated company stating that, where the proportion of the claims of creditors of the amalgamated company in relation to the value of the assets of the company is greater than the proportion of the claims of creditors of an amalgamating company in relation to the value of the assets of that amalgamating company, no creditor will be prejudiced by that fact; and

(f) a document in the prescribed form signed by each of the persons named in the amalgamation proposal as a director or secretary of the amalgamated company consenting to act as a director or secretary of the company as the case may be.

227. Certificate of amalgamation

(1) Forthwith after receipt of the documents required under section 226, the Registrar shall

(a) if the amalgamated company is the same as one of the amalgamating companies, issue a certificate of amalgamation; or

(b) if the amalgamated company is a new company ?

(i) enter particulars of the company on the Register, and

(ii) issue a certificate of amalgamation together with a certificate of incorporation.

(2) If an amalgamation proposal specifies a date on which the amalgamation is intended to become effective, and that date is the same as, or later than, the date on which the Registrar receives the documents, the certificate of amalgamation, and any certificate of incorporation shall be expressed to have effect on the date specified in the amalgamation proposal.

228. Effect of certificate of amalgamation

On the date shown in a certificate of amalgamation

(a) the amalgamation is effective, if it is the same as a name of one of the amalgamating companies, the amalgamated company has the name specified in the amalgamation proposal;

(b) the Registrar shall remove the amalgamating companies, other than the amalgamated company, from the Register;

(c) the property, rights, powers, and privileges of each of the amalgamating companies continues to be the property, rights, powers and privileges of the amalgamated company;

(d) the amalgamated company continues to be liable for all the liabilities and obligations of each of the amalgamating companies;

(e) proceedings pending by, or against, an amalgamating company may be continued by, or against, the amalgamated company;

(f) a conviction, ruling, order, or judgment in favour of, or against, an amalgamating company may be enforced by, or against, the amalgamated company; and

(g) any provisions of the amalgamation proposal that provide for the conversion of shares or rights of shareholders in the amalgamating companies have effect according to their tenor.

229. Registers

(1) Where an amalgamation becomes effective, no Registrar, including the Registrar of Deeds or other person charged with the keeping of any books or registers shall be obliged, solely by reason of the amalgamation becoming effective, to change the name of an amalgamating company to that of an amalgamated company in those books or registers or in any documents.

(2) The presentation to any Registrar or other person of any instrument (whether or not comprising an instrument of transfer) by the amalgamated company

(a) executed or purporting to be executed by the amalgamated company;

(b) relating to any property held immediately before the amalgamation by an amalgamating company; and

(c) stating that property has become the property of the amalgamated company by virtue of this Part and producing the relevant certificate of amalgamation issued under section 227, shall, in the absence of evidence to the contrary, be sufficient evidence that the property has become the property of the amalgamated company.

(3) Without limiting subsection (1) or subsection (2), where any security issued by any person or any rights or interests in property of any person become, by virtue of this Part, the property of an amalgamated company, that person, on presentation of a certificate signed on behalf of the Board of the amalgamated company, stating that that security or any such rights or interests have, by virtue of this Part, become the property of the amalgamated company, shall, notwithstanding any other enactment or rule of law or the provisions of any instrument, register the amalgamated company as the holder of that security or as the person entitled to such rights or interests, as the case may be.

230. Powers of court in other cases

(1) If the court is satisfied that giving effect to an amalgamation proposal would prejudice a shareholder or creditor of an amalgamating company or a person to whom an amalgamating company is under an obligation, it may, on the application, made at any time before the date on which the amalgamation becomes effective, by that person, make any order it considers appropriate in relation to the proposal, and may, without limiting the generality of this subsection, make an order

(a) directing that effect shall not be given to the proposal;

(b) modifying the proposal in such manner as may be specified in the order; or

(2) An order may be made under subsection (1) on such conditions as the court considers appropriate.

PART XV - Compromises with Creditors (ss 231-238)

231. Interpretation

In this Part, unless the context otherwise requires "compromise" means a compromise between a company and its creditors, including a compromise

(a) cancelling all or part of a debt of the company;

(b) varying the rights of its creditors or the terms of a debt; or

(c) relating to an alteration of a company’s constitution that affects the likelihood of the company being able to pay a debt;

"creditor" includes

(a) a person who, in a liquidation, would be entitled to claim that a debt is owing to that person by the company; and

(b) a secured creditor;

"proponent" means a person referred to in section 232 who proposes a compromise in accordance with this Part. 232. Compromise proposal

(1) Any of the following persons may propose a compromise under this Part if that person has reason to believe that a company is or will be unable to pay its debts within the meaning of section 368

(a) the Board of directors of the company;

(b) a liquidator of the company; or

(2) Where the court grants leave to a creditor or shareholder under subsection (1)(c), the court may make an order directing the company to supply to the creditor or shareholder, within such time as may be specified, a list of the names and addresses of the company’s creditors showing the amounts owed to each of them or such other information as may be specified to enable the creditor or shareholder to propose a compromise.

233. Notice of proposed compromise

(1) The proponent shall compile, in relation to each class of creditors of the company, a list of creditors known to the proponent who would be affected by the proposed compromise, setting out

(a) the amount owing or estimated to be owing to each of them; and

(b) the number of votes which each of them is entitled to cast on a resolution approving the compromise.

(2) The proponent shall give to each known creditor, the company, any receiver or liquidator, and deliver to the Registrar for registration

(a) notice of a meeting of creditors, or any two or more classes of creditors, for the purpose of voting on the resolution; and

(b) a statement

(i) containing the name and address of the proponent and the capacity in which the proponent is acting,

(ii) containing the address and telephone number to which inquiries may be directed during normal business hours,

(iii) setting out the terms of the proposed compromise and the reasons for it; and why it is considered to be reasonably in the interests of the company and its creditors and to have business efficacy,

(iv) setting out the reasonably foreseeable consequences for creditors of the company of the compromise being approved,

(v) setting out the extent of any interest of a director in the proposed compromise,

(vi) explaining that the proposed compromise and any amendment to it proposed at a meeting of creditors or any classes of creditors will be binding on all creditors, or on all creditors of that class, if approved in accordance with section 234,

(vii) containing details of any procedure proposed as part of the proposed compromise for varying the compromise following its approval, and

(viii) setting out the nature of the business to be transacted at the meeting in sufficient detail to enable a creditor to make a reasoned judgement in relation to it and providing the text of any resolution to be submitted to the meeting; and

234. Approval and effect of compromise

(1) A compromise, including any amendment proposed at the meeting, is approved by creditors, or a class of creditors, if, at a meeting of creditors or that class of creditors the compromise, including any amendment, is adopted in accordance with subsection (3) (b).

(2) Subject to subsection (3), the meeting of creditors shall be conducted in accordance with the Companies Winding-Up Rules including rule 33(1) in so far as they are reasonably applicable.

(3) At any meeting of creditors held for the purposes of this section

(a) where in the case of a company in the course of winding up the liquidator or any nominee of the liquidator is present the liquidator or his nominee shall be the chairman of the meeting and in any other case the proponent of the compromise or his nominee shall be the chairman of the meeting but if neither the proponent or any nominee of the proponent is present, the creditors participating shall choose one of their number to act as chairman of the meeting:

Provided that the chairman shall not have a casting vote;

(b) a resolution is adopted if a majority in number representing 75 per cent in value of the creditors or class of creditors voting in person or by proxy vote in favour of the resolution.

(4) A compromise, including any amendment, approved by creditors or a class of creditors of a company in accordance with this Part is binding on the company and on

(a) all creditors; or

(b) if there is more than one class of creditors, on all creditors of that class to whom notice of a meeting of that class was given under section 233.

(5) If a resolution proposing a compromise, including any amendment, is put to the vote of more than one class of creditors, it is to be presumed, unless the contrary is expressly stated in the resolution, that the approval of the compromise, including any amendment, by each class is conditional on the approval of the compromise, including any amendment, by every other class voting on the resolution.

(6) The proponent shall give written notice of the result of the voting to each known creditor, the company, any receiver or liquidator, and the Registrar.

235. Variation of compromise

(1) A compromise approved under section 234 may be varied either

(a) in accordance with any procedure for variation incorporated in the compromise as approved; or

(b) by the approval of a variation of the compromise in accordance with this Part which, for that purpose, shall apply with such modifications as may be necessary as if any proposed variation were a proposed compromise.

(2) The provisions of this Part shall apply to any compromise that is varied in accordance with this section.

236. Powers of court

(1) On the application of the proponent or the company, the court may

(a) give directions in relation to a procedural requirement imposed by this Part of this Act, or waive or vary any such requirement, if satisfied that it would be just to do so; or

(b) order that, during a period specified in the order, beginning not earlier than the date on which notice was given of the proposed compromise and ending not later than 10 working days after the date on which notice was given of the result of the voting on it

(i) proceedings in relation to a debt owing by the company be stayed, or

(ii) a creditor refrain from taking any other measure to enforce payment of a debt owing by the company.

(2) Nothing in subsection (1)(b) affects the right of a secured creditor during that period but, subject to subsection (3), not thereafter, to take possession of, realize, or otherwise deal with, property of the company over which that creditor has a charge.

(3) If the court is satisfied, on the application of a creditor of a company who was entitled to vote on a compromise that

(a) insufficient notice of the meeting or of the matter required to be notified under section 233 was given to that creditor;

(b) there was some other material irregularity in obtaining approval of the compromise; or

(c) in the case of a creditor who voted against the compromise, the compromise is unfairly prejudicial to that creditor, or to the class of creditors to which that creditor belongs, the court may order that the creditor is not bound by the compromise or make such other order as it considers appropriate.

(4) An application under subsection (3) shall be made not later than 10 working days after the date on which notice of the result of the voting was given to the creditor.

237. Effect of compromise in liquidation of company

(1) Where a compromise is approved under section 234 the court may, on the application of

(a) the company; or

(b) with the leave of the court, any creditor or shareholder of the company make such order as the court considers appropriate with respect to the extent, if any, to which the compromise will, if the company is put into liquidation, continue in effect and be binding on the liquidator of the company.

(2) Where a compromise is approved under section 234 and the company is subsequently put into liquidation, the court may, on the application of

(a) the liquidator; or

(b) with the leave of the court, any creditor or shareholder of the company make such order as the court considers appropriate with respect to the extent, if any, to which the compromise will continue in effect and be binding on the liquidator of the company.

238. Costs of compromise

Unless the court orders otherwise, the costs incurred in organizing and conducting a meeting of creditors for the purpose of voting on a proposed compromise

(a) shall be met by the company;

(b) if incurred by a liquidator, are a cost of the liquidation; or

(c) if incurred by any other person, are a debt due to that person by the company and, if the company is put into liquidation, are payable in the order of priority required in the liquidation.

PART XVI - Approval of Arrangements, Amalgamations and Compromises by court (ss 239-243)

239. Interpretation

In this Part, unless the context otherwise requires

"arrangement" includes a reorganization of the share capital of a 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;

"company" means

(a) a company within the meaning of section 2; or

(b) an external company that is registered on the register of external companies.

"creditor" includes

(a) a person who, in a liquidation, would be entitled to claim that a debt is owing to that person by the company; and

(b) a secured creditor.

240. Approval of arrangements, amalgamation and compromises

(1) Notwithstanding the provisions of this Act or the constitution of a company, the court may, on the application of a company or, with the leave of the court, any shareholder or creditor of a company, order that an arrangement or amalgamation or compromise shall be binding on the company and on such other persons or classes of persons as the court may specify and any such order may be made on such terms and conditions as the court considers appropriate.

(2) Before making an order under subsection (1), the court may, on the application of the company or any shareholder or creditor or other person who appears to the court to be interested, or of its own motion, make any one or more of the following orders

(a) an order that notice of the application, together with such information relating to it as the court considers appropriate, be given in such form and in such manner and to such persons or classes of persons as the court may specify;

(b) an order directing the holding of a meeting or meetings of shareholders or any class of shareholders or creditors or any class of creditors of a company to consider and, if thought fit, to approve, the proposed arrangement or amalgamation or compromise in such manner as the court may specify and, for that purpose, may determine the shareholders or creditors that constitute a class of shareholders or creditors of a company;

(c) an order requiring that a report on the proposed arrangement or amalgamation or compromise be prepared for the court by a person specified by the court and, if the court considers appropriate, be supplied to the shareholders or any class of shareholders or creditors or any class of creditors of a company or to any other person who appears to the court to be interested;

(d) an order as to the payment of the costs incurred in the preparation of any such report; or

(e) an order specifying the persons who shall be entitled to appear and be heard on the application to approve the arrangement or amalgamation or compromise.

(3) An order made under this section has effect on and from the date specified in the order.

(4) Within 10 working days of an order being made by the court, the Board of the company shall ensure that a copy of the order is delivered to the Registrar for registration.

(5) If the Board of a company fails to comply with subsection (4), every director of the company shall be guilty of an offence and liable to the penalty set out in section 492(1).

241. Court may make additional orders

(1) Without limiting section 240, the court may, for the purpose of giving effect to any arrangement or amalgamation or compromise approved under that section, either by the order approving the arrangement or amalgamation or compromise, or by any subsequent order, provide for, and prescribe terms and conditions relating to

(a) the transfer or vesting of real or personal property, assets, rights, powers, interests, liabilities, contracts, and engagements;

(b) the issue of shares, securities, or policies of any kind;

(d) the liquidation of any company;

(e) the provisions to be made for persons who voted against the arrangement or amalgamation or compromise at any meeting called in accordance with any order made under subsection (2)(b) of that section or who appeared before the court in opposition to the application to approve the arrangement or amalgamation or compromise; and

(f) such other matters that are necessary or desirable to give effect to the arrangement or amalgamation or compromise.

(2) Within 10 working days of an order being made by the court, the Board of the company shall ensure that a copy of the order is delivered to the Registrar for registration.

(3) If the Board of a company fails to comply with subsection (2), every director of the company shall be guilty of an offence and liable to the penalty set out in section 492(1).

242. Court may approve amalgamation or compromise

The court may

(a) approve an amalgamation under section 240 even though the amalgamation could be effected under Part XIII; or

(b) approve a compromise under section 240 even though the compromise could be approved under Part XIV.

243. Application of section 237

The provisions of section 237 shall apply with such modifications as may be necessary in relation to any compromise approved under section 240.

PART XVII - Companies Limited by Guarantee (s 244)

244. Provisions which apply to a company limited by guarantee

(1) The following provisions shall not apply to a company limited by guarantee without a share capital

(a) Part VI providing for shares;

(b) sections 98 to 103 providing for minority buy out rights and interest groups;

(d) section 83(2)(b) and (c) and sections 84(1) and (3) providing in relation to share register; and

(e) Part XIV providing for amalgamations.

(2) The provisions of this Act other than those referred to in subsection (1) shall apply to a company limited by guarantee without a share capital with all necessary modifications, as if

(a) the company were a company limited by shares;

(b) references to shareholders were references to members; and

PART XVIII - Private Companies (ss 245-247)

245. Limitations and privileges of a private company

A private company

(a) shall not have more than 25 shareholders provided that where two or more of its shareholders hold one or more shares jointly they shall be deemed to be one shareholder and provided further that, in computing the number of 25, no account shall be taken of persons who are in the employment of the company, and who, having been formerly in the employment of the company were while in that employment and have continued, after the determination of that employment, to be members of the company;

(b) shall not make any offer to the public to subscribe for its shares or debentures;

(d) may dispense with the holding of shareholders meetings if resolutions which would otherwise require the holding of a meeting are passed by means of a resolution in lieu of meeting under section 107;

(e) unless its constitution otherwise requires may remove a director from office by special resolution under section 151(2);

(f) in the case of an exempt private company is pursuant to section 191 not required to appoint an auditor;

(g) in the case of an exempt private company is pursuant to section 206 not required to prepare and present its accounts in accordance with the International Financial Reporting Standards;

(h) in the case of an exempt private company is not required to appoint as secretary a person who is qualified under section 162(3);

(i) may dispense with the provision of an annual report by unanimous resolution under section 212;

(j) may by unanimous resolution under section 246 dispense with the keeping of an interests register; and

(k) may by unanimous agreement among the shareholders dispense with the observance of any of the matters referred to in section 247.

246. Private companies need not keep interests register

(1) Subject to subsection (3), a private company may by unanimous resolution of its shareholders dispense with the need to keep an interests register and while such a resolution is in force no provision of this Act which requires any matter to be entered in the interests register shall apply to a private company.

(2) A unanimous resolution under subsection (1) shall cease to have effect if any shareholder gives notice in writing to the company that the shareholder requires the company to keep an interests register.

(3) This section shall not apply to close companies and section 264 shall apply to such companies.

247. Unanimous agreement by shareholders

(1) Where all the shareholders of a private company and to the extent to which the matters referred to in this section apply to it, the members of a close company agree to or concur in any action which has been taken or is to be taken by the company

(a) the taking of that action is deemed to be validly authorised by the company, notwithstanding any provision in the constitution of the company; and

(b) the provisions of this Act referred to in the Eighth Schedule shall not apply in relation to that action.

(2) Without limiting the matters which may be agreed to or concurred in under subsection (1), that subsection shall apply where all the shareholders of a private company including, where relevant, a close company agree to or concur in

(a) the issue of shares by the company;

(b) the making of a distribution by the company;

(d) the giving of financial assistance by a company for the purpose of, or in connection with, the purchase of shares in the company;

(e) the payment of remuneration to a director (or member in the case of a close company) or the making of a loan to a director (or member) or the conferral of any other benefit on a director (or member); or

(f) the making of a contract between an interested director (or member in the case of a close company) and the company. (3) Where

(a) a distribution is made by a company under this section; and

(b) as a consequence of the making of the distribution, the company fails to satisfy the solvency test, the distribution is deemed not to have been validly made.

(4) A distribution to a shareholder which is deemed not to have been validly made may be recovered by the company from the shareholder unless

(a) the shareholder received the distribution in good faith and without knowledge of the company’s failure to satisfy the solvency test;

(b) the shareholder has altered his position in reliance on the validity of the distribution; and

(5) If reasonable grounds did not exist for believing that the company would satisfy the solvency test after the making of a distribution which is deemed not to have been validly made, each shareholder who agreed to or concurred in the making of the distribution is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from the shareholders to whom the distribution was made.

(6) If, in an action brought against a shareholder under subsection (4) or (5), the court is satisfied that the company could, by making a distribution of a lesser amount, have satisfied the solvency test, the court may

(a) permit the shareholder to retain; or

(b) relieve the shareholder from liability in respect of, an amount equal to the value of any distribution that could properly have been made.

(7) The references in subsections (4), (5) and (6) to a shareholder shall in the case of a close company be read as referring to a member.

PART XIX - Close Companies (ss 248-276)

248. Formation of close company

(1) Anyone or more persons, but not exceeding five, who qualify for membership of a close company in terms of this Act, may form a close company by making application under subsection (3)(a).

(2) Any private company having not more than five shareholders, in this Part called "members", who qualify under section 249 for membership of a close company, may apply to the Registrar for the private company to be converted into a close company by making application under section 278.

(3) The application under subsection (1) for registration as a close company shall be made by application for registration under section 21 signed by all of the applicants.

(4) The application shall state in addition to the matters referred to in section 21

(a) the size, expressed as a percentage of each member’s interest in the company;

(b) particulars of the contribution of each member in accordance with section 250 including

(i) any amounts of money, and

(ii) a description and statement of the fair value of any property (whether corporeal or incorporeal) or any service referred to in section 250(1).

(c) the name and address of the person or firm which has consented in writing to be appointed as accounting officer of the close company pursuant to section 273.

(5) The application shall provide for the designation "CC" to be added to the name of the close company.

(6) The Registrar on being satisfied that the company is entitled to be registered as a close company shall enter the company on the register of close companies and the company shall thereupon be a close company under this Act.

(7) In this Part, unless the context otherwise requires

"property" includes corporeal or incorporeal property;

249. Qualification for membership of and nature of business of a close company

**(1) Subject to subsection (2) only individuals may be members of a close company and no corporate body or trustee in that capacity shall directly or indirectly (whether through the instrumentality of a nominee or otherwise) hold a member’s interest in a close company.

(2) In the case of a member who becomes insolvent, deceased or mentally disordered or is otherwise incapable or incompetent to manage his affairs that member’s interest may be held by the trustee, administrator, executor or curator or other legal personal representative of the member.

(3) A close company may not be established for or carry on the business of banking, or insurance but may otherwise be formed for and carry on any lawful business.

(4) The provisions of this Act, with the exception of the Ninth Schedule, shall apply mutatis mutandis to a close company, and references to shareholders shall be read as referring to members and references to directors or to the board read as referring to members collectively.

250. Contributions by members

(1) Every person who is to become a member of a close company upon its registration, shall make to the company an initial contribution of money, property, or services rendered in connection with and for the purposes of the formation and incorporation of the company, and particulars of such contribution shall be stated in the application for incorporation referred to in section 248(4).

(2) The amount or value of the members’ contributions, or of the contribution of any one or more members, may from time to time by agreement among all the members

(a) be increased by additional contributions of money or property to the close company by existing members or, in terms of section 255 (1)(b), by a person becoming a member of a registered corporation; or

(b) be reduced, provided that a reduction by way of a repayment to any member shall comply with the provisions of section 258 and 259.

(3) Particulars of any increase or reduction of a member’s contribution in terms of subsection (2) shall be notified to the Registrar under section 261.

(4) Money or property referred to in subsection (1) or (2)(a) shall, in order to vest ownership thereof in the close company, be paid, delivered or transferred, as the case may be, to the company within a period of 90 days

(a) after the date of registration of the company, in the case of an initial contribution referred to in subsection (1); or

(b) after the date of the registration of any notice of additional contribution referred to in section 261.

(5) An undertaking by a member to make an initial or an additional contribution to a corporation shall be enforceable by the close company in legal proceedings.

251. Postal address and registered office

(1) Every close company shall have in Botswana a postal address and an office to which, subject to subsection (2), all communications and notices to the company may be addressed.

(2) Any

(a) notice, order, communication or other document which is in terms of this Act required or permitted to be served upon any company or member thereof, shall be deemed to have been served if it has been delivered at the registered office, or has been sent by certified or registered post to the registered office or postal address, of the company; and

(b) process which is required to be served upon any corporation or member thereof shall, subject to applicable provisions in respect of such service in any law, be served by so delivering or sending it.

252. Deregistration

(1) If the Registrar has reasonable cause to believe that a close company is not carrying on business or is not in operation, he shall serve on the company at its postal address a letter by certified post in which the company is notified thereof and informed that if the Registrar is not within 60 days from the date of his letter informed in writing that the company is carrying on business or is in operation, the company will, unless good cause is shown to the contrary, be deregistered.

(2) After the expiration of the period of 60 days mentioned in a letter referred to in subsection (1), or upon receipt from the company of a written statement signed by or on behalf of every member to the effect that the company has ceased to carry on business and has no assets or liabilities, the Registrar may, unless good cause to the contrary has been shown by the company, deregister that company.

(3) Where a company has been deregistered, the Registrar shall give notice to that effect in the Gazette, and the date of the publication of such notice shall be deemed to be the date of deregistration.

(4) The deregistration of a close company shall not affect any liability of a member of the close company to the company or to any other person, and such liability may be enforced as if the company were not deregistered.

(5) If a company is deregistered while having outstanding liabilities, the persons who are members of such company at the time of de-registration shall be jointly and severally liable for such liabilities.

(6) The Registrar may on application by any interested person, if he is satisfied that a company was at the time of its deregistration carrying on business or was in operation, or that it is otherwise just that the registration of the company be restored, restore the said registration.

(7) The Registrar shall give notice of the restoration of the registration of a company in the Gazette, and as from the date of such notice the company shall continue to exist and be deemed to have continued in existence as from the date of re-registration as if it were not deregistered.

253. Nature of member’s interest

(1) The interest of any member in a close company shall be a single interest expressed as a percentage and shall be moveable property which shall be transferable in the manner provided by this Act.

(2) Two or more persons shall not be joint holders of the same member’s interest in a close company.

254. Representation of members

(1) A minor who is a member of a close company, other than a minor over the age of 18 years whose guardian has lodged with the company a written consent to the minor’s participation in the company, shall be represented in the close company by his guardian.

(2) A married woman, whether subject to the marital power of her husband or not, shall require no representation or assistance to act as a member of a close company.

(3) A member subject to any other legal disability shall be represented in the close company by his duly appointed or authorised legal representative referred to in subsection (2) of section 249.

255. Acquisition of member’s interest by new member

(1) A person becoming a member of a close company shall acquire his member’s interest required for membership

(a) from one or more of the existing members or his or their deceased or insolvent estates; and

(b) pursuant to a contribution made by such person to the close company, in which case the percentage of his member’s interest is determined by agreement between him and the existing members, and the percentages of the interests of the existing members in the close company shall be reduced in accordance with the provisions of section 258.

(2) The contribution referred to in subsection (1)(b) may consist of an amount of money, or of any property of a value agreed upon by the person concerned and the existing members.

256. Disposal of interest of insolvent member

(1) Notwithstanding any provision to the contrary in the constitution or other agreement between members, a trustee of the insolvent estate of a member of a close company may, inthe discharge of his duties, sell that member’s interest

(a) to the close company if there are one or more members other than the insolvent member;

(b) to the members of the close company other than the insolvent member, in proportion to their member’s interests or as they may otherwise agree upon; or

(c) subject to the provisions of subsection (2), to any other person who qualifies for membership of a close company in terms of section 249.

(2) If the close company concerned has one or more members other than the insolvent, the following provisions shall apply to a sale in terms of subsection (1)(c) of the insolvent member’s interest

(a) the trustee shall deliver to the close company a written statement giving particulars of the name and address of the proposed purchaser, the purchase price and the time and manner of payment thereof;

(b) for a period of 28 days after the receipt by the close company of the written statement the close company or the members, in such proportions as they may agree upon, shall have the right, exercisable by written notice to the trustee, to be substituted as purchasers of the whole, and not a part only, of the insolvent member’s interest at the price and on the terms set out in the trustee’s written statement; and

(c) if the insolvent member’s interest is not purchased in terms of paragraph (b), the sale referred to in the trustee’s written statement shall become effective and be implemented.

(3) The provisions of this section shall apply mutatis mutandis to any attachment and sale in execution of a member’s interest in a close company.

**257. Disposal of interest of deceased member

Subject to any other arrangement in the constitution an executor of the estate of a member of a close company who is deceased shall, in the performance of his duties

(a) cause the deceased member’s interest in the close company to be transferred to a person who qualifies for membership of a close company in terms of section 249 and is entitled thereto as legatee or heir or under a redistribution agreement, if the remaining member or members of the close company (if any) consent to the transfer of the member’s interest to such person; or

(b) if any consent referred to in paragraph (a) is not given within 28 days after it was requested by the executor, sell the deceased member’s interest

(i) to the close company, if there is any other member or members than the deceased member,

(ii) to any other remaining member or members of the close company in proportion to the interests of those members in the close company or as they may otherwise agree upon, or

(iii) to any other person who qualifies for membership of a close company in terms of section 249, in which case the provisions of subsection (2) of section 256 shall mutatis mutandis apply in respect of any such sale.

258. Maintenance of aggregate of members’ interest

The aggregate of the members’ interests in a close company expressed as a percentage shall at all times be one hundred per cent, and for that purpose

(a) any transfer of the whole, or a portion, of a member’s interest shall be effected by the cancellation or the reduction, as the case may be, of the interest of the member concerned and the allocation in the name of the transferee, if not already a member, of a member’s interest of the percentage concerned, or the addition to the interest of an existing member of the percentage concerned;

(b) when a person becomes a member of a close company pursuant to a contribution made by him to the company, the percentage of his member’s interest shall be agreed upon by him or her and the existing members, and the percentages of the interests of the existing members shall be reduced proportionally or as they may otherwise agree; and

(c) any member’s interest acquired by the close company shall be added to the respective interests of the other members in proportion to their existing interests or as they may otherwise agree.

259. Payment by close company for members’ interest acquired

(1) Payment by a close company in respect of its acquisition of a member’s interest in the company shall be made only

(a) with the previously obtained written consent of every member of the company, other than the member whose interest is acquired, for the specific payment;

(b) if, after such payment is made, the company’s assets, fairly valued, exceed all its liabilities;

(d) if such payment will in the particular circumstances not in fact render the company unable to pay its debts as they become due in the ordinary course of its business.

(2) For the purposes of subsection (1) "payment" shall include the delivery or transfer of any property.

260. Financial assistance by close company in respect of acquisition of members’ interest

A close company may give financial assistance (whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise) for the purpose of, or in connection with, any acquisition of a member’s interest in that company by any person, only

(a) with the previously obtained written consent of every member of the company for the specific assistance;

(b) if, after such assistance is given, the company’s assets, fairly valued, exceed all its liabilities;

(d) if such assistance will in the particular circumstances not in fact render the company unable to pay its debts as they become due in the ordinary course of its business.

*261. Registration of changes

(1) Whenever any change has been made or has occurred in any of the following particulars the members of a close company shall within 30 days give notice in writing containing particulars of the change to the Registrar

(a) the constitution;

(b) the registered office;

(d) the name and address of any person who becomes a member and of the size expressed as a percentage of that person’s interest as a member;

(e) the name of any person ceasing to be a member;

(f) the name and address of the accounting officer;

(g) the name of the close company;

(h) the financial year;

(i) the making of any additional contribution to the close company by a member or the reduction in any contribution; and

(j) the change in the percentage of a member’s interest in the close company.

(2) If the members of a close company fail to comply with any of the requirements of subsection (1) each member shall be guilty of an offence and liable to the penalty set out in section 492(1).

262. Management

(1) A close company shall

(a) have no directors or a board and Part X, other than section 160, shall not apply to a close company; and

(b) convert to a private company under section 279 should it desire to have directors.

(2) The management of a close company shall be vested in its members which, unless otherwise provided in its constitution, shall be in proportion to the percentage of their respective interests in the close company, as adjusted from time to time to properly reflect any additional contributions or reduction of interest by the members.

(3) The members of a close company may delegate the management of the company to a manager or managers who shall be appointed by unanimous agreement of the members on the terms and conditions provided for in that agreement or in accordance with such procedure and on such terms and conditions as is provided in the constitution.

(4) Subject to subsection (5), every member of a close company shall, in relation to a person who is dealing with the company and is not a member, be an agent of the company.

(5) A close company shall be bound by any act of a member or manager of the close company, whether or not such act is performed for the carrying out of the business of the company, unless the member or manager so acting has in fact no authority to act for the company in the particular matter and the person with whom the member or manager dealt, has or ought reasonably to have, knowledge of the fact that the member or manager has no such authority.

263. Meetings

A close company may make the decisions and take any steps which are required by this Act to be made by ordinary or special resolution in any of the following ways

(a) by an ordinary or special resolution at a meeting of members called and conducted in the way required by the Act or the constitution of the company;

(b) by a resolution in lieu of meeting; or

(c) in relation to any matters which can be entered into or done by way of unanimous agreement under section 247 then by way of such unanimous agreement.

264. Fiduciary position of members

(1) Each member of a close company stands in a fiduciary relationship towards the company and his fellow members.

(2) Without prejudice to the generality of subsection (1) of this section

(a) every member of a close company is bound to render to every other member full information on all things affecting the company;

(b) every member of a close company shall account to the company for any benefit derived by him without the consent of the other members from any transaction concerning the company or from any use by him of the company’s property, name or business connection; and

(c) if a member of a close company, without the consent of the other members, directly or indirectly carries on any business of the same nature as, and competing with, that of the company, he shall account for and pay over to the company all profits made by him in that business.

(2) A close company need not keep an Interests Register.

265. Payments by close company to members

(1) Any payment by a close company to any member by reason only of his membership, may be made only

(a) if, after such payment is made, the company’s assets, fairly valued, exceed all its liabilities;

(b) if the company is able to pay its debts as they become due in the ordinary course of its business; and

(c) if such payment will in the particular circumstances not in fact render the company unable to pay its debts as they become due in the ordinary course of its business.

(2) A member shall be liable to a close company for any payment received contrary to any provision of subsection (1).

(3) For the purposes of this section

(a) without prejudice to the generality of the expression "payment by a close company to any member by reason only of his membership", that expression

(i) shall include a distribution, or a repayment of any contribution, or part thereof, to a member, but

(ii) shall exclude any payment to a member in his capacity as a creditor of the relevant close company and, in particular, a payment as remuneration for services rendered as an employee or officer of the company, a repayment of a loan or of interest thereon or a payment of rental; and

(b) "payment" shall include the delivery or transfer of any property.

266. Prohibition of loans and furnishing of security to members and others by close company

(1) A close company shall not, directly or indirectly, make a loan

(a) to any of its members;

(b) to any other company in which one or more of its members together hold more than a 50 per cent interest; or

(c) to any other company (except a close company) controlled by one or more members of the close company, and shall not provide any security to any person in connection with any obligation of any such member, or other close company, or other company.

(2) The provisions of subsection (1) shall not apply in respect of the making of any particular loan or the provision of any particular security with the express previously obtained consent in writing of all the members of a close company.

(3) Any member of a close company who authorises or permits or is a party to the making of any loan or the provision of any security contrary to any provision of this section

(a) shall be liable to indemnify the close company and any other person who had no actual knowledge of the contravention against any loss directly resulting from the invalidity of such loan or security; and

(b) shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(2).

(4) A company shall be treated for the purposes of subsection (1)(c) as being controlled by one or more members of a close company if the same factors are present as would result in a company being controlled by another company under section 7.

(5) In this section the term

(a) "loan" includes

(i) a loan of any property, and

(ii) any credit extended by a close company where the debt concerned is not payable or is not being paid in accordance with normal business practice in respect of the payment of debts of the same kind; and

(b) "security" includes a guarantee.

267. Liability of members for negligence

(1) A member of a close company shall be liable to the company for loss caused by his failure in the carrying out of the business of the company to act with the degree of care and skill that may reasonably be expected from a person of his knowledge and experience.

(2) Liability referred to in subsection (1) shall not be incurred if the relevant conduct was preceded or followed by the written approval of all the members where such members had or have knowledge of all the material facts.

268. Rules applying to internal relations in the absence of contrary agreement

The following rules shall apply to the relations between members of a close company insofar as this Act or the constitution in respect of the close company does not provide otherwise

(a) every member shall be entitled to participate in the carrying on of the business of the company;

(b) subject to the provision of section 262 and of paragraph (d), members shall have the right to participate in the management of the business of the company and in regard to the power to represent the company in the carrying on of its business:

Provided that the consent in writing of a member holding a member’s interest of at least 75 per cent, or of members holding together at least that percentage of the member’s interests, in the company, shall be required for

(i) a change in the principal business carried on by the company,

(ii) a disposal of the whole, or substantially the whole, undertaking of the company,

(iii) a disposal of all, or the greater portion of, the assets of the company, and

(iv) any acquisition or disposal of immovable property by the company;

(c) differences between members as to matters connected with a close company’s business shall be decided by majority vote at a meeting of members of the company;

(d) at any meeting of members of a close company each member shall have the number of votes that corresponds with the percentage of his interest in the close company;

(e) all the members are entitled to share in the capital and profits of the close company in proportion to their respective interests in the company;

(f) a close company shall indemnify every member in respect of expenditure incurred or to be incurred by him

(i) in the ordinary and proper conduct of the business of the company, and

(ii) in regard to anything done or to be done for the preservation of the business or property of the company; and

(g) distributions by a close company to its members by reason only of their membership in terms of section 265 shall be of such amounts and be effected at such times as the members may from time to time agree upon, and such payments shall be made to members in proportion to their respective interests in the company.

269. Disqualification of persons regarding management of close company

(1) Notwithstanding any other provision of this Act or the constitution of a close company, the following persons shall be disqualified from taking part in the management of a close company

(a) any person under legal disability, except

(i) ...... (ii) a minor who has attained at least the age of 18 years and whose guardian has lodged with the company a written consent to the minor’s participation in the management of the business of the company;

(b) save under authority of a court

(i) an un-rehabilitated insolvent,

(ii) any person removed from an office of trust on account of misconduct, and

(iii) any person who has at any time been convicted of theft, fraud, forgery or uttering a forged document, perjury, or any offence involving dishonesty or in connection with the formation or management of a company, and has been sentenced in relation to such conviction to imprisonment for at least six months without the option of a fine; and

(c) any person who is subject to any order of a court under this Act or the repealed Act disqualifying him from being a director of a company.

(2) Any person disqualified under the provisions of subsection (1)(b) or (c) who directly or indirectly takes part in or is concerned with the management of any close company, shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(2).

270. Accounting records

(1) A close company shall keep in the English language such accounting records as are necessary fairly to present the state of affairs and business of the company, and to explain the transactions and financial position of the business of the company, including

(a) records showing its assets and liabilities, members’ contributions, undrawn profits, revaluations of fixed assets and amounts of loans to and from members;

(b) a register of fixed assets showing in respect thereof the respective dates of any acquisition and the cost thereof, depreciation (if any), and where any assets have been revalued, the date of the revaluation and the revalued amount thereof, the respective dates of any disposals and the consideration received in respect thereof:

Provided that in the case of a close company which has been converted from a private company, the existing fixed asset register of the company shall be deemed to be such a register in respect of the close company, and such particulars therein shall be deemed to apply in respect of it;

(c) records containing entries from day to day of all cash received and paid out, in sufficient detail to enable the nature of the transactions and, except in the case of cash sales, the names of the parties to the transactions to be identified;

(d) records of all goods purchased and sold on credit, and services received and rendered on credit, in sufficient detail to enable the nature of those goods or services and the parties to the transactions to be identified;

(e) statements of the annual stocktaking, and records to enable the value of stock at the end of the financial year to be determined; and

(f) vouchers supporting entries in the accounting records.

(2) The accounting records relating to

(a) contributions by members;

(b) loans to and from members; and

(c) payments to members, shall contain sufficient detail of individual transactions to enable the nature and purpose thereof to be clearly identified.

(3) The accounting records referred to in subsection (1) shall be kept in such a manner as to provide adequate precautions against falsification and to facilitate the discovery of any falsification.

(4) The accounting records shall be kept at the place or places of business or at the registered office of the close company and shall, wherever kept, be open at all reasonable times for inspection by any member.

(5) Any close company which fails to comply with any provision of any of the preceding subsections of this section, and every member thereof who is a party to such failure or who fails to take all reasonable steps to secure compliance by the company with any such provision, shall be guilty of an offence and liable to the penalty set out in section 492(2).

(6) In any proceedings against any member of a close company in respect of an offence consisting of a failure to take reasonable steps to secure compliance by a close company with any provision referred to in subsection (5), it shall be a defence if it is proved that

(a) the accused had reasonable grounds for believing and did believe that a competent and reliable person was charged with the duty of seeing that any such provision was complied with;

(b) such person was in a position to discharge that duty; and

271. Financial year of close company

(1) A close company shall

(a) determine a date on which, in each year, its financial year will end; and

(b) cause the financial year of the company to be its annual accounting period.

(2) The date referred to in subsection (1)(a) may, subject to the provisions of section 261, be changed by the company to any other date:

Provided that the close company may not change the date referred to in subsection (1)(a) more than once in any financial year.

(3) Subject to any increase or reduction of the duration of a financial year by reason of the provisions of subsection (4), the duration of each financial year of a close company shall be 12 months ending on the date or other date referred to in subsection (1)(a) or (2).

(4) Notwithstanding the provisions of subsection (3)

(a) the first financial year of a close company shall commence on the date of its registration and shall end on the date referred to in subsection (1)(a) occurring not less than three nor more than 15 months after the date of registration:

Provided that the first financial year of any close company which has converted from an existing private company in terms of section 248 shall end on the date on which the financial year of the private company would have ended had it not been so converted; and

(b) in the case of a close company which has in terms of subsection (2) changed the date referred to in subsection (1)(a), the financial year shall commence at the end of the previous financial year and shall end on the date as changed occurring not less than three nor more than 18 months after the end of that previous financial year.

272. Annual financial statements

(1) The members of a close company shall within five months after the end of every financial year of the company cause annual financial statements in respect of that financial year to be made out in the English language.

(2) The annual financial statements of a close company

(a) shall consist of

(i) a balance sheet and any notes thereon, and

(ii) an income statement or any similar financial statement where such form is appropriate, and any notes thereon;

(b) shall be in conformity with generally accepted accounting principles, appropriate to the business of the company, fairly present the state of affairs of the company as at the end of the financial year concerned, and the results of its operations for that year;

(c) shall disclose separately the aggregate amounts, as at the end of the financial year, of contributions by members, undrawn profits, revaluations of fixed assets and amounts of loans to or from members, and the movements in these amounts during the year;

(d) shall be in agreement with the accounting records, which shall be summarised in such a form that

(i) compliance with the provisions of this subsection is made possible, and

(ii) an accounting officer is enabled to report to the company in terms of section 276

(1) without it being necessary to refer to any subsidiary accounting records and vouchers supporting the entries in the accounting records:

Provided that nothing contained in this paragraph shall be construed as preventing an accounting officer, if he deems it necessary, from inspecting such subsidiary accounting records and vouchers; and

(e) shall contain the report of the accounting officer referred to in section 276.

(3) The annual financial statements shall be approved and signed by or on behalf of a member holding a member’s interest of at least 51 per cent, or members together holding members’ interests of at least 51 per cent, in the company.

(4) A close company which in respect of its last preceding financial year satisfies the criteria referred to in the definition of "exempt private company" in section 2(4) shall comply with the obligations of an exempt private company in relation to its financial statements and the provisions relating to auditors in all respects as if it were a non-exempt private company and sections 2(4) and 190 to 211 shall apply to such a close company.

(5) Any member of a close company who fails to take all reasonable steps to comply or to secure compliance with any provision of this section, shall be guilty of an offence and liable on conviction to the penalty set out in section 492(2).

(6) In any proceedings against any member of a close company under subsection (5) the defence referred to in section 270(6) shall be available to him.

273. Appointment of accounting officers

(1) Subject to subsection (7) every close company shall appoint an accounting officer in accordance with the provisions of this Part.

(2) The appointment of the first accounting officer of a close company shall take effect on the date of registration of the close company.

(3) If a vacancy occurs in the office of an accounting officer, whether as a result of a removal, resignation or otherwise, the close company shall within 28 days appoint another accounting officer and comply with the provisions of this Part.

(4) A close company shall inform its accounting officer in writing of his removal from office.

(5) An accounting officer shall on resignation or removal from office forthwith inform every member of the close company thereof in writing, and shall send a copy of the letter to the last known address of the registered office of the close company and shall in addition forthwith by certified post inform the Registrar

(a) that he has resigned or been removed from office;

(b) of the date of his resignation or removal from office;

(d) whether, at the time of the resignation or removal from office of the accounting officer, that officer was aware of any matters in the financial affairs of the close company which are in contravention of the provisions of this Act, and where that accounting officer was aware of any such matter shall submit the full particulars thereof in writing to the Registrar.

(6) If an accounting officer who has been removed from office is of the opinion that he was removed for improper reasons, he shall forthwith by certified post inform the Registrar thereof, and shall send a copy of the letter to every member.

(7) Where a close company is receiving accounting advice and assistance, which includes an equivalent service to that required of an accounting officer under section 276, through a programme for small business administered or approved by the Ministry responsible for trade and industry the Registrar shall be given notice by the Director or officer from the Ministry responsible for providing the programme of the fact that such assistance is being given and until further notice is given by such Director or officer to the Registrar that this advice and assistance has been withdrawn the close company need not appoint an accounting officer under this section:

Provided that the provisions of this section shall not apply from after the expiry of the third financial year of a close company following its incorporation.

274. Qualifications of accounting officers

(1) Subject to section 273(7), no person shall be appointed as or hold the office of an accounting officer of a close company, unless that person is a member of the Botswana Institute of Accountants and is ordinarily resident in Botswana.

(2) A member or employee of a close company, or a firm whose partner or employee is a member or employee of a close company, shall not qualify for appointment as an accounting officer of such company unless all the members consent in writing to such appointment.

(3) A firm or corporation may be appointed as an accounting officer of a close company, provided that

(a) at least one member of the firm or director of the corporation is ordinarily resident in Botswana; and

(b) the members of the firm or directors of the corporation who accept responsibility for the work of the firm or corporation as accounting officer are qualified to act as accounting officer under subsection (1).

275. Right of access and remuneration of accounting officers

(1) An accounting officer of a close company shall at all times have a right of access to the accounting records and all the books and documents of the close company, and to require from members such information and explanations as he considers necessary for the performance of his duties as an accounting officer.

(2) The remuneration of an accounting officer shall be determined by agreement with the close company.

276. Duties of accounting officers

(1) The accounting officer of a close company shall, not later than three months after completion of the annual financial statements

(a) subject to the provisions of section 272, determine whether the annual financial statements are in agreement with the accounting records of the close company;

(b) review the appropriateness of the accounting policies represented to the accounting officer as having been applied in the preparation of the annual financial statements; and

(2) An accounting officer of a close company may be engaged by the company to keep the company’s books and financial records and prepare its financial statements.

(3) If during the performances of his duties an accounting officer becomes aware of any contravention of a provision of this Act, he shall describe the nature of such contravention in his report.

(4) Where an accounting officer is a member or employee of the close company, or is a firm of which a partner or employee is a member or employee of the close company, or if the accounting officer has himself assisted in or had responsibility for keeping the company’s books and financial records or preparing its financial statements, his report shall state that fact.

(5) If an accounting officer of a close company thereof, and shall send a copy of the letter to every member.

Provided that the provisions of this section shall not apply from after the expiry of the third financial year of a close company following its incorporation.

274. Qualifications of accounting officers

(3) A firm or corporation may be appointed as an accounting officer of a close company, provided that

(a) at least one member of the firm or director of the corporation is ordinarily resident in Botswana; and

275. Right of access and remuneration of accounting officers

(2) The remuneration of an accounting officer shall be determined by agreement with the close company.

276. Duties of accounting officers

(1) The accounting officer of a close company shall, not later than three months after completion of the annual financial statements

(a) subject to the provisions of section 272, determine whether the annual financial statements are in agreement with the accounting records of the close company;

(b) review the appropriateness of the accounting policies represented to the accounting officer as having been applied in the preparation of the annual financial statements; and

(2) An accounting officer of a close company may be engaged by the company to keep the company’s books and financial records and prepare its financial statements.

(3) If during the performances of his duties an accounting officer becomes aware of any contravention of a provision of this Act, he shall describe the nature of such contravention in his report.

(5) If an accounting officer of a close company -

(a) at any time knows, or has reason to believe, that the close company is not carrying on business or is not in operation and has no intention of resuming operations in the foreseeable future; or

(b) during the performance of his duties finds

(i) that any change, during a relevant financial year, in respect of any particulars mentioned in the constitution (or in the absence of a constitution are required by this Act) has not been registered,

(ii) that the annual financial statements indicate that as at the end of the financial year concerned the close company’s liabilities exceed its assets, or

(iii) that the annual financial statements incorrectly indicate that as at the end of the financial year concerned the assets of the close company exceed its liabilities, or has reason to believe that such an incorrect indication is given, he shall forthwith report in writing accordingly to the Registrar.

(6) If an accounting officer of a close company has in accordance with subparagraph (ii) or

(iii) of paragraph (b) of subsection (5) reported to the Registrar that

(a) the annual financial statements of the close company concerned indicate that as at the end of the financial year concerned the company’s liabilities exceed its assets;

(b) the annual financial statements incorrectly indicate that as at the end of the financial year concerned the assets of the company exceed its liabilities; (c) he has reason to believe that such an incorrect indication is given, and he finds that any subsequent financial statements of the company concerned indicate that the situation

(i) has changed, or

(ii) has been rectified and that the assets concerned then exceed the liabilities or that they no longer incorrectly indicate that the assets exceed the liabilities; or

(d) he no longer has reason to believe that such an incorrect indication is given, as the case may be, he may report to the Registrar accordingly.

PART XX - Alteration in Nature of Companies (ss 277-280)

277. Conversion of company limited by shares to company limited by guarantee

(1) A company limited by shares may be converted to a company limited by guarantee without a share capital where

(a) there is no unpaid liability on any of its shares;

(b) all its members agree in writing to the conversion and to the surrender to the company for cancellation of all the shares held by them immediately before the conversion; and

(2) Where

(a) a copy of the new constitution and of the special resolution adopting the constitution; and

(b) a declaration by a director and the secretary of the company stating that the requirements of subsection (1) have been complied with, are filed, the Registrar shall, subject to the other provisions of this Act, issue a certificate of the conversion.

(3) The conversion of a company under this section shall

(a) take effect on the issue of the certificate;

(b) operate so that all shares are deemed to have been validly surrendered and cancelled notwithstanding anything in Part VI;

(c) have effect so that every member who has not agreed to contribute to the assets of the company in the event of its being wound up shall cease to be a member; and

(d) not affect any right or obligation of the company except as otherwise provided in this section or render defective any proceedings by or against the company.

278. Conversion of company into close company

(1) Any private company having five or fewer members all of private whom qualify for membership of a close company in terms of section 249 may be converted into a close company, provided that every member of the company becomes a member of the close company.

(2) In respect of a conversion referred to in subsection (1) there shall be filed with the Registrar an application for conversion accompanied by any new constitution which may be filed by the company.

(3) The application for conversion shall

(a) state the size expressed as a percentage of each member’s interest in the close company;

(b) state the aggregate of the contributions of the members which shall be for an amount not greater than the excess of the fair value of the assets of the company fairly valued over its liabilities:

Provided that the company may treat any portion of such excess not reflected as members’ contributions as amounts which may be distributed to members; and

(4) If the provisions of subsections (2) and (3) have been complied with, the Registrar shall, if he is satisfied that the company concerned has complied materially with the requirements of the Act

(a) register the company as a close company; and

(b) issue to the close company a new certificate of incorporation confirming the conversion and cancel the previous certificate of incorporation and give notice in the Gazette of the conversion.

(5) The close company shall forthwith after its conversion from a private company, give notice in writing of the conversion to all creditors of the company at the time of conversion, and to all other parties to contracts or legal proceedings in which the private company was involved at the time of the conversion.

(6) A private company which converts into a close company shall within 21 days of the conversion remove the term "Proprietary" or "Pty" from its name and add the designation "CC" to its name and this shall be regarded as a change of name for the purposes of section 34(3),

(4) and (5), but not for the purposes of subsections (1) and (2) of that section.

(7) The conversion of a company under this section shall

(a) take effect on the issue of the certificate; and

(b) not affect the identity of the company or any right or obligation of the company or render defective any legal proceedings by or against the company.

279. Conversion of close company into a private company

(1) A close company may be converted into a private company limited by shares if

(a) all the members agree in writing

(i) to convert the company into such a company, and

(ii) to a share capital for the company and the division thereof into shares; and

(b) each member agrees in writing to take up a specified number of shares.

(3) The application for conversion shall state

(a) the amount of capital of the company and the division thereof into shares;

(b) the number of shares issued to each shareholder; and

(c) the full names and residential addresses of each director and the secretary and their written consents to acting as such.

(4) Where the company has complied with the preceding subsections the Registrar shall issue to the company a new certificate in the prescribed form confirming the conversion and cancel the previous certificate of incorporation and give notice in the Gazette of the conversion.

(5) A close company which converts into a private company shall within 21 days of the date of conversion remove the designation CC from its name and shall add the term "Proprietary" or "Pty" to its name and this shall be regarded as a change of name for the purposes of section 34(4) and (5) but not for the purposes of subsections (1), (2) and (3) of that section.

(6) The conversion of a company under this section shall

(a) take effect on the issue of the certificate; and

(b) not affect the identity of the company or any right or obligation of the company or render defective any proceedings by or against the company.

280. Conversion of public and private companies

(1) A public company that has not for the time being more than 25 members may convert to a private company by filing with the Registrar

(a) a copy of a special resolution passed to that effect; and

(b) a declaration by a director or secretary of the company stating the full names, addresses and descriptions of all the members, and the number of shares held by each of them respectively.

(2) A private company may, subject to its constitution, convert to a public company by filing with the Registrar a copy of a special resolution passed to that effect.

(3) A private company which converts into a public company shall within 21 days of the date of its conversion remove the term "(Proprietary)" or "(Pty)" from its name and this shall be regarded as a change of name for the purposes of section 34 (4) and (5) but not for the purposes of subsections (1), (2) and (3) of that section.

(4) Where a company has complied with subsection (1) or (2), the Registrar shall issue to the company a new certificate in the prescribed form confirming the conversion and cancel the previous certificate of incorporation.

(5) The conversion of a company under this section shall

(a) take effect on the issue of the certificate; and

(b) not affect the identity of the company or any right or obligation of the company or render defective any legal proceedings by or against the company.

PART XXI - Investigations (ss 281-294)

281. Qualifications of Inspectors

An inspector designated or appointed under this Part shall be either a qualified auditor of at least seven years experience or a person who holds or has held judicial office.

282. Declared companies and their inspection

(1) Where the Minister is satisfied that

(a) for the protection of the public, the shareholders or creditors of a company, it is desirable that the affairs of the company should be investigated;

(b) it is in the public interest that the affairs of a company should be investigated; or

(c) in the case of a foreign company, the appropriate authority of another country had made request to the Minister that a designation be made under this section in respect of the company, the Minister may, by notice published in the Gazette, designate the company or foreign company to be a declared company.

(2) The Registrar shall require an inspector to investigate the affairs of every declared company and to make a report on his investigation in such form and manner as the Registrar shall direct.

(3) The expenses of and incidental to an investigation of a declared company shall, subject to subsection (4), be paid out of public funds.

(4) Where the Minister is of the opinion that the whole or any part of the expenses of and incidental to the investigation should be paid or refunded

(a) by the company; or

(b) by the person or authority who requested the designation of a declared company, the Minister may direct that the expenses be so paid or refunded.

(5) Where a direction is made for the payment of the whole or part of the expenses by a company and the company is in liquidation or subsequently goes into liquidation the expenses shall, for the purposes of section 459, be part of the costs and expenses of the winding up.

283. Investigation of other companies

(1) The Registrar may

(a) in the case of a company having a share capital, on the application of

(i) not less than 50 shareholders,

(ii) shareholders holding not less than one-tenth of the issued shares; or

(iii) debenture holders holding not less than one-fifth in nominal value of the issued debentures; or

(b) in the case of a company limited by guarantee, on the application of not less than one-fifth in number of the persons on the share register, and where the company by special resolution or the court by order declares that the affairs of the company should be investigated, require an inspector to investigate the affairs of a company or such aspects of the affairs of a company as are specified in the instrument of appointment and in the case of a debenture trust deed, the conduct of the trustee for debenture holders, and to make a report on his investigation in such form and manner as the Registrar shall direct.

(2) An application under this section shall be supported by such evidence as the Registrar requires as to the reasons for the application and the motives of the applicants in requiring the investigation, and the Registrar may, before appointing an inspector, require the applicants to give security in such amount as he considers appropriate for payment of the costs of the investigation.

284. Inspector’s Reports

(1) An inspector who makes an investigation under section 282 or 283 may, and if so directed by the Registrar shall, make interim reports to the Registrar.

(2) Subject to section 287(3), a copy of the inspector’s final report shall be forwarded to the Registrar and to the registered office of the company, and a further copy shall, at the request of the authority who requested the designation for the declared company under section 282(1)(c) or an applicant under section 283, be delivered to the authority or the applicant.

(3) The Registrar may, if the Registrar is of the opinion that it is necessary in the public interest so to do, cause the report to be published.

(4) Where from a report of an inspector it appears to the Registrar that proceedings ought in the public interest to be brought by a company dealt with by the report

(a) for the recovery of damages in respect of any fraud, misfeasance or other misconduct

(i) in connection with the promotion or formation of that company, or

(ii) the management of its affairs; or

(b) for the recovery of any property of the company which has been misapplied or wrongly retained, he may bring proceedings for that purpose in the name of the company, and the Registrar may, unless the company is already being wound up by the court, bring a petition under section 370 for winding up by the court.

(5) Where, from a report of an inspector, it appears that any qualified auditor has been guilty of misconduct or has conducted an audit in a manner which renders him in the opinion of the inspector unfit to be a qualified auditor, the Registrar shall refer that matter to the body which is charged with the responsibility for the conduct of auditors in Botswana for it to consider the taking of disciplinary action against such auditor, and if there is no such body for the time being in Botswana then the Minister shall inquire into the conduct of that person and if he is satisfied that such person is unfit to continue to discharge the function of an auditor under this Act the Minister shall declare by notice in the Gazette that the person is no longer qualified to be an auditor under this Act and on publication of the notice he shall cease to be qualified to be an auditor under this Act.

(6) Where, from a report of an inspector, it appears to the Minister or the Registrar that in the case of any public company or non-exempt private company

(a) an agreement for the use of

(i) a holding company or subsidiary company or companies,

(ii) shares with restricted voting rights or special rights, or

(iii) any voting trust or arrangement, has been entered into by any member or members in order to confer or maintain control in that member or those members; and

(b) the control referred to in paragraph (a) unfairly discriminates against or is unfairly prejudicial to other members of the company, the Minister or the Registrar may apply to the court under section 174 for an order under that section.

285. Investigation at company's request and investigation of related corporation

(1) A company other than a declared company may, by ordinary resolution, appoint an inspector to investigate its affairs.

(2) On the conclusion of the investigation the inspector shall report his opinion in such manner and to such persons as the company in general meeting directs.

(3) Where an inspector thinks it necessary for the purposes of the investigation of the affairs of a company to investigate the affairs of a related corporation he may, with the Registrar’s written consent, investigate the affairs of that corporation.

286. Investigation of financial or other control of corporation

(1) The Registrar may, where he is of the opinion that there is reasonable ground to do so and shall, unless he is of the opinion that the request is vexatious or unreasonable, at the request of a like number of applicants as is specified in section 283(1), for the purpose of determining the true persons who are or have been financially interested in the success or failure, real or apparent, of a company or able to control or materially influence its policy, require an inspector to investigate

(a) the membership of a company and any related corporation;

(b) any other matter relating to the company or related corporation; and

(2) Subject to subsection (1), the powers of an inspector making an investigation under this section shall extend to the investigation of any circumstances which suggest the existence of an arrangement or understanding which, though not legally binding, is or was observed or likely to be observed in practice and which is relevant to the purposes of his investigation.

(3) Where the Registrar is of the opinion that there is good reason for not divulging the contents of the report or of any part thereof, the Registrar shall not be bound to furnish the company or any other person with a copy of a report by an inspector making an investigation under this section.

287. Procedure and powers of inspector

(1) Every person concerned shall, if required to do so, produce to an inspector every book in that person’s custody, control or possession and give to the inspector all assistance in connection with the investigation which the person is reasonably able to give.

(2) An inspector may by written notice require any person concerned to appear for examination on oath in relation to the business of a corporation and the notice may require the production of every book in the custody, control or possession of the person concerned.

(3) Where an inspector requires the production of a book in the custody, control or possession of a person concerned, he -

(a) may take possession of the book;

(b) may retain the book for such time as he considers necessary for the purpose of the investigation; and

(c) shall, where the book is in his possession, permit the corporation to have access, at all reasonable times, to the book.

(4) An inspector, on giving 72 hours notice to the corporation concerned, may exercise the same powers of inspection as are conferred on the Registrar under section 14.

(5) No person concerned shall refuse to answer a question which is relevant or material to the investigation on the ground that the person’s answer might tend to incriminate the person.

(6) Where the person concerned claims that the answer to a question might incriminate the person and, but for this subsection, he or she would have been entitled to refuse to answer the question, the answer to the question shall not be used in any subsequent criminal proceedings, except in the case of a charge against that person for making a false statement in answer to that question.

(7) An inspector may cause notes of any examination under this Part to be recorded and reduced to writing and to be read to or by and signed by the person examined and the notes may, subject to subsection (5)(b), thereafter be used in evidence in any legal proceedings against that person.

288. Costs of investigations

(1) Subject to subsection (4) the expenses of and incidental to an investigation by an inspector under sections 283 and 285 including the costs of any proceedings brought by the Registrar in the name of the company, shall be paid by the company investigated or if the Registrar so directs, by the applicant or in part by the company and in part by the applicant.

(2) Where a company fails to pay the whole or any part of the sum which it is liable to pay under subsection (1), the applicant shall make good the deficiency up to the amount by which the security given by him under this part exceeds any amount which he has been directed to pay under subsection (1).

(3) Any balance of the expenses not paid either by the company or the applicant shall, following reasonable steps to recover the same, be paid out of public funds.

(4) Any person who is convicted on a prosecution instituted by the Attorney-General as a result of the investigation may be directed by the court to pay by way of reimbursement to public funds, the applicant, or the company as the case may be, the said expenses either in whole or in part.

289. Report of inspector admissible in evidence

A copy of the report of an inspector certified as a true copy by the Registrar shall be admissible in any legal proceedings as evidence of the opinion of the inspector and of the facts on which his opinion is based in relation to any matter contained in the report.

290. Suspension of proceedings in relation to declared company

Where an inspector has been required to investigate a declared company, no proceeding shall, until the expiry of one month after the inspector has presented his final report, be commenced or proceeded with in any court except with the Registrar’s consent

(a) by the company on or in respect of any contract, bill of exchange or promissory note; or

(b) by the holder or any other person in respect of any bill of exchange or promissory note made, drawn or accepted by or issued, transferred negotiated or endorsed by or to the company unless the holder or other person

(i) at the time of the negotiation, transfer, issue endorsement or delivery gave adequate pecuniary consideration, and

(ii) was not at the time of the negotiation, transfer, issue, endorsement or delivery or at any time within three years before that time a shareholder, officer, person concerned or employee or the wife or husband of a member, officer, person concerned or employee.

291. Power to require information as to person interested in shares or debentures

(1) Subject to subsection (2), where the Registrar is of opinion that there is reasonable ground to investigate the ownership of any shares or debentures of any company and any related corporation including a banking company, but that it is unnecessary to require an inspector to make an investigation for that purpose, the Registrar may require any person whom the Registrar has reasonable ground to believe

(a) to be or to have been interested in the shares or debentures; or

(b) to act or to have acted in relation to the shares or debentures as the agent of someone interested therein, to give to the Registrar any information which the person has or can reasonably be expected to obtain as to the present and past interests in those shares or debentures and the names and addresses of the persons interested and of any persons who act or have acted on their behalf in relation to the shares or debentures.

(2) Nothing in subsection (1) shall, subject to the Banking Act, require a banking company to disclose to the Registrar any information as to the affairs of a customer other than a company of which it is the banker.

292. Power to impose restrictions on shares or debentures

(1) Where in connection with an investigation under section 286 or a request under section 291, it appears to the Registrar that there is difficulty in finding out the relevant facts about any shares, whether issued or to be issued, and that the difficulty is due wholly or mainly to the unwillingness of a person concerned to assist the investigation or the inquiry, the Registrar may, by notice published in the Gazette direct that

(a) any transfer of those shares or any exercise of the right to acquire or dispose of those shares or in the case of unissued shares any transfer of the right to be issued therewith and any issue thereof, shall be void;

(b) no voting rights shall be exercisable in respect of those shares;

(c) no further shares shall be issued in right of those shares or in pursuance of any offer, including any rights offer within the meaning of section 295(1) made to the holder of those shares; or

(d) except in a liquidation, no payment shall be made of any sum due from the corporation on those shares whether in respect of capital or otherwise.

(2) Where the Registrar directs that shares shall cease to be subject to the restrictions specified in subsection (1) and the notice is expressed to be made with a view to permitting a transfer of those shares, the Registrar may direct that subsection (1)(c) and (d) shall continue to apply in relation to those shares, either in whole or in part, so far as those paragraphs relate to a right acquired or an offer made before the transfer.

(3) This section shall apply in relation to debentures as it applies in relation to shares.

293. Inspectors appointed in other countries

Where

(a) under a corresponding law of another country an inspector has been appointed to investigate the affairs of a corporation; and

(b) the Registrar is of the opinion that, in connection with that investigation, it is expedient that an investigation be made in Botswana, the Registrar may by notice published in the Gazette direct that the inspector so appointed shall have the same powers and duties in Botswana in relation to the investigation as if the corporation was a declared company.

294. Saving for attorneys and bankers

Nothing in this Act shall require disclosure to the Minister or Registrar or to an inspector appointed under this Part

(a) by an attorney of any privileged communication made to him in that capacity, except as respects the name and address of his client; or 291. Power to require information as to person interested in shares or debentures

(a) to be or to have been interested in the shares or debentures; or

292. Power to impose restrictions on shares or debentures

(b) no voting rights shall be exercisable in respect of those shares;

(c) no further shares shall be issued in right of those shares or in pursuance of any offer, including any rights offer within the meaning of section 295(1) made to the holder of those shares; or

(d) except in a liquidation, no payment shall be made of any sum due from the corporation on those shares whether in respect of capital or otherwise.

(3) This section shall apply in relation to debentures as it applies in relation to shares.

293. Inspectors appointed in other countries

Where

(a) under a corresponding law of another country an inspector has been appointed to investigate the affairs of a corporation; and

294. Saving for attorneys and bankers

Nothing in this Act shall require disclosure to the Minister or Registrar or to an inspector appointed under this Part

(a) by an attorney of any privileged communication made to him in that capacity, except as respects the name and address of his client; or

(b) by a company’s bankers as such of any information as to the affairs of any of their customers other than the company.

PART XXII - Public Offering of Securities and Prospectus (ss 295-329)

295. Definitions

(1) In this Part, unless the context otherwise requires

"company" includes an external company;

"letter of allocation" means any document conferring a right to subscribe for securities in terms of a rights offer;

"offer" means an offer made in any way, including by provisional allotment or allocation, for the subscription for or sale of any securities and includes an invitation to subscribe for or purchase any securities;

"offer to the public" and any reference to offering securities to the public mean any offer to the public and include an offer of securities to any section of the public, whether selected as shareholders or debenture-holders or employees of the company concerned or as clients of the person issuing the prospectus concerned or in any other manner;

"promoter" in relation to civil and criminal liability in respect of an untrue statement in a prospectus, means a person who was a party to the preparation of the prospectus or of the portion thereof containing the untrue statement but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company or preparing the said prospectus;

"rights offer" means an offer for subscription with a right to renounce in favor of other persons, to those shareholders or debenture holders of a company who are not excluded from such offer under subsection (2), for any securities of that company or any other company, where a stock exchange within Botswana or a stock exchange recognised by the Minister on the recommendation of the committee of the Botswana Stock Exchange for the purposes of this definition by notice in the Gazette, has granted or has agreed to grant a listing for the shares which are the subject of the offer;

"securities" means any shares or debentures or any right or option in respect of any shares or debentures but does not include any securities issued by an investment company or a Collective Investment Undertaking which are regulated by the Collective Investment Undertakings Act;

"untrue statement" in relation to a prospectus or portion thereof, includes

(a) a statement which is misleading in the form and context in which it is included therein and a statement shall be deemed to be included in a prospectus if it is contained in any report or memorandum which appears on the face of the prospectus or which is by reference incorporated therein or is attached to or accompanies the prospectus on registration; and

(b) an omission from a prospectus of any matter, whether such matter is required to be included therein by this Act or not, where such an omission is calculated to mislead, and such prospectus shall be deemed in respect of such omission to be a prospectus in which an untrue statement is included.

(2) Notwithstanding anything contained in the constitution of a company, the company may, with the written approval of the Registrar and subject to such conditions as he may determine, exclude any category of shareholders or debenture holders of the company not resident within Botswana from any rights offer.

(3) An application for a written approval referred to in subsection (2) shall be accompanied by the prescribed fee.

296. Restrictions as to offers to the public

(1) No person shall offer any securities to the public otherwise than in accordance with the provisions of this Act.

"company" includes an external company;

"letter of allocation" means any document conferring a right to subscribe for securities in terms of a rights offer;

"untrue statement" in relation to a prospectus or portion thereof, includes

(3) An application for a written approval referred to in subsection (2) shall be accompanied by the prescribed fee.

296. Restrictions as to offers to the public

(1) No person shall offer any securities to the public otherwise than in accordance with the provisions of this Act.

(2) No person shall offer to the public any securities of any company or body corporate which is not a company or external company within the meaning of this Act or which is not or which has not been exempted from the provisions of this subsection by the Registrar by notice in the Gazette.

(3) Any person who contravenes the provisions of subsection (2) and, if such person is a company, any director or officer of such company who knowingly is a party to the contravention shall be guilty of an offence and liable to the penalty set out in section 492(3)

297. Offers not being offers to the public

An offer of shares in relation to an offer for the subscription for or sale of any shares, shall not be construed as an offer to the public

(a) if the offer is made to

(i) a bank registered or provisionally registered in terms of the Banking Act,

(ii) an insurer registered or provisionally registered in terms of the Insurance Industry Act, (iii) a pension fund manager or administrator registered under the Pension Funds Act, or

(iv) any other company which carries on the business of portfolio funds management and is approved for the purposes of this section by the committee of the Botswana Stock Exchange which is acting as principal, and also to a wholly owned subsidiary of such bank, or insurer or other company when it acts as agent in the capacity of authorised portfolio manager for a pension fund approved by the Minister responsible for finance and development planning, or for a Collective Investment Undertaking licensed under the Collective Investment Undertakings Act, managed by the said wholly owned subsidiary which is a management company in terms of the Collective Investment Undertakings Act;

(b) if the offer for subscription is of such a nature that the total acquisition cost of the shares for a single offeree acting as principal is at least P100,000 or such higher amount as the Minister may, by notice in the Gazette, determine in order to counter the effect of inflation;

(c) if it is a single once-off offer for subscription and the offer is accepted by not more than 20 persons acting as principals:

Provided that

(i) the aggregate subscription price (including any premium) of the shares so issued does not exceed P100,000 or such higher amount as the Minister may, by notice in the Gazette, determine in order to counter the effect of inflation,

(ii) the issue of the shares shall be finalised within six months from the date the offer was first made,

(iii) the offer shall be in writing,

(iv) particulars of the offer shall be lodged in the prescribed manner with the Registrar for registration prior to the offer being made, and

(v) the offer shall not be accompanied by or made by means of an advertisement and no selling expenses shall be incurred in connection with the offer;

(d) if it is a non-renounceable offer for the subscription of shares and the offer is made only to existing shareholders or debenture holders of that company;

(e) if it is a rights offer; or

(f) if the offer is made to any director or officer of the company, or any close relative of such director or officer:

Provided that the original offer shall for purposes of this Part be an offer to the public if the offer is renounceable in favour of a person who is not a director or officer of the company or close relative of such director or officer.

298. Offer or subscription to public without a prospectus prohibited

(1) No person shall make any offer to the public for the subscription for shares unless it is accompanied by a prospectus complying with the requirements of this Act and registered with the Registrar, and no person shall issue such a prospectus which has not been so registered.

(2) Any person who contravenes any provision of subsection (1) and, if such person is a company, any director or officer of such company who knowingly is a party to the contravention, shall be guilty of an offence, and is liable on conviction to the penalty set out in section 492(3).

299. Approval by stock exchange a requirement for letters of allocation

(1) No person shall issue, distribute or deliver or cause to be issued, distributed or delivered a letter of allocation unless it is accompanied by such documents as are required and have been approved by the stock exchange concerned.

(2) Any person who contravenes any provision of subsection (1) and, if such person is a company, any director or officer of such company who knowingly is a party to the contravention, shall be guilty of an offence and is liable on conviction to the penalty set out in section 492(3).

300. Offer for sale to the public without prospectus prohibited

(1) No person shall make any offer to the public for the sale of any securities

(a) which have been, or have been agreed to be, allotted by the company concerned with a view to all or any of them being offered to the public; or

(b) in respect of which it has been made known in any way at or about the time of, and in connection with, such offer, that the company concerned has applied or intends to apply for their listing by a stock exchange in Botswana or elsewhere, unless such offer is accompanied by a prospectus complying with the requirements of this Act and registered with the Registrar, and no person shall issue such a prospectus which has not been so registered.

(2) For the purposes of subsection (1) (a) it shall, unless the contrary is proved, be evidence that an allotment of, or an agreement to allot, shares was made with a view of the shares being offered for sale to the public if it is shown that an offer for sale to the public in respect of such shares or any of them was made within 18 months after the allotment or the agreement to allot.

(3) Any person who contravenes any provision of subsection (1) and, if such person is a company, any director or officer of such company who knowingly is a party to the contravention, shall be guilty of an offence, and is liable on conviction to the penalty set out in section 492(3).

301. Rights offers

(1) A company desiring to issue a letter of allocation shall deliver to the Registrar for registration a copy thereof together with the prescribed fee and a copy of every document referred to in section 299 and every such copy shall be certified, by not less than two directors of the company, as a true copy of the original approved by the stock exchange concerned.

(2) Every copy mentioned in subsection (1) shall be accompanied by a copy of any contract referred to in the letter of allocation and, if such contract is not in the English language, by translation of the contract into English.

(3) As soon as the Registrar has registered the documents referred to in subsection (1), he shall give notice of the registration to the company concerned or the person who lodged them with him on behalf of the company.

(4) Every letter of allocation which is issued shall

(a) state on the face of it that a copy of the letter of allocation together with copies of all other documents referred to in subsections (1) and (2) have been registered as required by this section; and

(b) be accompanied by a copy of every document lodged therewith in terms of subsection (1):

Provided that the provisions of this paragraph shall not apply to any letter of allocation issued in connection with a renunciation of part of the rights to subscribe in terms of the rights offer.

(5) The provisions of sections 304(2) and (3), 306 (1) and (4), 307 (1), (4) and (5), 311, 313, 314, 315, and 316 shall apply mutatis mutandis to the rights offer and all documents issued in connection therewith.

(6) Any person who contravenes any provision of this section, and if such person is a company, any director and officer of such company who knowingly is a party to such contravention, shall be guilty of an offence and liable on conviction to the penalty set out in section 492(2).

302. Application form for shares to be attached to prospectus

(1) No person shall issue, distribute or deliver or cause to be issued, distributed or delivered, any form of application in respect of shares of a company, unless the form

(a) is attached to a prospectus a copy of which has been registered with the Registrar; and

(b) bears on the face of it the date of registration of the prospectus:

Provided that this subsection shall not apply if it is shown that the form of application was issued either

(i) in connection with a bona fide invitation to enter into an underwriting agreement with respect to the shares, or

(ii) in relation to shares which were not offered to the public.

(2) If any person contravenes subsection (1) (a) or (b), he shall be guilty of an offence, and is liable on conviction to the penalty set out in section 492(2).

303. Matters to be stated in prospectus

(1) Every prospectus issued in terms of this Act

(a) shall be in the English language and contain a fair presentation of the state of affairs of the company, the securities of which are being offered and shall state at least the matters specified in, and set out the reports referred to in, Part I and Part II of the Tenth Schedule; and

(b) may state instead of the matters referred to in paragraph (a), at least the matters specified in Part III of the Tenth Schedule, where the intended offer relates to securities which are or are to be in all respects uniform with existing securities previously issued and a stock exchange within Botswana has not in respect of such first-mentioned securities granted or agreed to grant a listing, and such offer is made only to existing shareholders or debenture holders of any company with the right to renounce in favour of other persons.

(2) The information referred to in subsection (1) shall be set out in print or type and shall not be less conspicuous than that in which the additional matter of the prospectus is printed or typed, shall be set out in separate paragraphs under the headings provided in the Tenth Schedule and in accordance with the instructions contained in Part IV of that Schedule.

(3) Every prospectus in respect of an offer for the sale of shares under section 300 (1)(a) shall state, in addition to the matters specified in subsection (1)

(a) the net amount of the consideration received or to be received by the company in respect of the shares to which the offer relates; and

(b) the place and time at which a contract under which the said shares have been or are to be allotted to the issuer of the prospectus may be inspected.

(4) Every prospectus issued shall state on the face of it that a copy thereof has been registered as required by this Act and shall specify or refer to statements including therein specifying any documents required by section 304 to be endorsed on or attached to or to accompany a prospectus when lodged for registration.

(5) Any person who knowingly is a party to the issue of a prospectus in contravention of any provision of this section, shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(2).

304. Consent of person named as director or expert

(1) No person shall be named as a director or proposed director of a company in any prospectus relating to shares of that company unless, at any time prior to the registration of such prospectus

(a) his written consent, in the prescribed form, to act as such director has been lodged with the company; and

(b) the notice referred to in section 155 providing the relevant particulars in regard to such person, has been delivered to the Registrar.

(2) No prospectus which includes any statement or reference to any statement purporting to be made by an expert, shall be registered by the Registrar unless

(a) the expert has given, and has not before delivering of a copy of the prospectus for registration to the Registrar, withdrawn his written consent to the issue thereof with the statement or reference included in the form and context in which it is included;

(b) a statement that the expert has given and has not so withdrawn his consent appears in the prospectus; and

(c) such written consent is endorsed on or attached to the copy of the prospectus delivered for registration to the Registrar.

(3) The Registrar shall not register any prospectus which names any person as an auditor, attorney, banker or broker of a company unless it is accompanied by the consent in writing of the person so named to act in the capacity stated and to his name being stated in the prospectus.

305. Contracts and translations thereof to be attached to prospectus

(1) No prospectus shall be registered unless there is attached to it a copy of any material contract required by the Tenth Schedule to be stated in the prospectus or, in the case of such a contract not reduced to writing, a memorandum giving full particulars thereof.

(2) There shall be attached to any such contract as is mentioned in subsection (1)

(a) if it is in a foreign language, a certified translation thereof into English; or

(b) if it is partly in a foreign language, a copy thereof embodying such a certified translation of so much thereof as is in a foreign language.

306. Where the issue is underwritten

(1) No prospectus containing a statement to the effect that the whole of any portion of the issue of the securities offered to the public, has been or is being underwritten shall be registered until there is delivered to the Registrar a copy of the underwriting contract and a sworn declaration by the person named as underwriter or, if such person is a company, by each of two directors of such company, or if the company only has one director, by that director, that to the best of the deponents knowledge and belief the underwriter is and will be in a position to carry out his obligations even if no securities are applied for.

(2) If an offer of securities is made in respect of which no prospectus is required by this Act, the copy of the contract and sworn declaration referred to in subsection (1) shall be delivered to the Registrar not later than the date of the proposed offer of securities.

(3) If default is made in complying with the provisions of subsection (2), the company, and any person (including a body corporate) and every director or officer of the said company (or body corporate) who knowingly is a party to the contravention, shall be guilty of an offence, and is liable on conviction to the penalty set out in section 491(1).

(4) In the event of any underwriter being unable, when duly called upon, to carry out his obligations under the underwriting contract, any person who has in connection with that contract made a sworn declaration as required by subsection (1) shall, unless he proves that when he made the declaration he believed and had reasonable grounds for believing that the underwriter was or would be able to carry out his obligations, be guilty of an offence, and is liable on conviction to the penalty set out in section 492(3).

307. Signing, date and date of issue, of prospectus

(1) A prospectus in respect of an offer for the subscription of securities of a company shall be signed by every person named therein as a director of the company or by his agent authorised by him in writing to sign on his behalf.

(2) A prospectus in respect of any other offer of securities shall be signed by every person making such offer or by his agent authorised by him in writing to sign on his behalf or if the person making the offer is a company or firm, by two directors of such company, or if such company has only one director, by that director, or by not less than one-half of the partners in such firm or by an agent authorised by any such director or partner in writing to sign on his behalf.

(3) Where a prospectus has been signed by or on the behalf of directors of a company or partners in a firm as provided in subsections (1) and (2), every director of such company or partner in such firm shall be deemed to have authorised the issue of such prospectus notwithstanding that he has not signed it, unless he proves that it was issued without his knowledge, authority or consent.

(4) Every signature to a prospectus shall be dated and the latest of such dates shall be deemed to be the date of the prospectus.

(5) The date of registration of any prospectus in the Register of Companies shall, unless the contrary is proved, be taken as the date of the issue of prospectus.

308. Registration of prospectus

(1) No prospectus shall be registered by the Registrar unless the requirements of this Part have been complied with an dislodged with the Registrar for registration, together with such documents as are prescribed in this Part, within 14 days of the date of such prospectus.

(2) As soon as the Registrar has registered the prospectus he shall send notice of the registration to the person lodging the same or to the company.

309. Time limit for issue of prospectus

(1) No prospectus shall be issued more than three months after the date of the registration thereof, and if a prospectus is so issued, it shall be deemed to be a prospectus which has not been registered.

(2) Any person who knowingly is a party to the issue of a prospectus in contravention of subsection (1), shall be guilty of an offence and is liable on conviction to the penalty set out in section 492(2).

310. Advertising as to prospectus

(1) Every newspaper or other advertisement whatsoever offering or calling attention to an offer or intended offer of securities of a company to the public shall be deemed to be a prospectus issued by the person responsible for publishing or disseminating the advertisement (and all enactments and rules of law as to the contents of prospectuses and as to the liability in respect of statement in and omissions from prospectuses or otherwise relating to prospectuses shall apply and have effect accordingly), unless it contains no more information than the following

(a) the number and description of the securities concerned;

(b) the name and date of registration of the company;

(c) the general nature of the main business or proposed main business actually carried on or to be carried on by the company;

(d) the names and addresses of the directors;

(e) the places at and times during which copies of the prospectuses may be obtained;

(f) where all the shares which are the subject of an offer are intended to be offered only to the shareholders of a company or debenture holders, as the case may be, with or without the right to renounce in favour of other persons

(i) the issue price of such securities,

(ii) the ratio in which such securities will be offered to the shareholders or debenture holders entitled to accept the offer, and

(iii) the last day on which shareholders or debenture holders shall register as such in order to be entitled to receive the offer; and

(g) the last day for subscribing.

(2) No statement that, or to the effect that, the said advertisement is not a prospectus shall prevent the operation of this section.

311. Waiver of requirements of the Part void

Any condition requiring any applicant for shares to waive compliance with any requirements of this Part or purporting to affect him with notice of any contract, document or matter not specifically referred to in the prospectus, shall be void.

312. Variation of contract mentioned in prospectus

No company shall within one year after the date of registration of a prospectus vary or agree to the variation of the terms of a contract referred to in such prospectus unless the variation in specific terms is authorised or ratified by a general meeting of shareholders of the company of which notice has been given on a date not earlier than six months after the date of registration of the prospectus.

313. Liability for untrue statements in prospectus

(1) Where securities are offered to the public for subscription in pursuance of a prospectus, every person

(a) who is, at the time of issue of the prospectus, a director of the company;

(b) who becomes a director at any time between the issue of the prospectus and the holding of the first annual general meeting of the company at which directors are elected or appointed;

(c) who with his authority is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;

(d) who is a promoter of the company; or

(e) who has authorised the issue of the prospectus, shall be liable to pay compensation to all persons who have acquired any shares on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement therein, or in any report or memorandum appearing on the face thereof or issued therewith, or by reference incorporated therein.

(2) Where securities are offered to the public for sale in pursuance of a prospectus, every person

(a) who has made the said offer;

(b) who under section 307(3) is deemed to have authorised the issue of such prospectus; or

(c) who is in relation to the company the securities of which are so offered, is any of the persons referred to in subsection (1), shall be liable to pay compensation to all persons who have acquired any securities on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement therein, or in any report or memorandum appearing on the face thereof or issued therewith, or by reference incorporated therein.

(3) The liability provided for in subsection (1) or (2) shall not attach to any person if it is proved

(a) with respect to every such untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, that he had reasonable ground to believe, and did up to the time of the allotment of the shares or the acceptance of the offer, as the case may be, believed that the statement was true;

(b) with respect to every such untrue statement purporting to be a statement by or contained in what purports to be a copy of or extract from the report or valuation of an expert, that it fairly represented the statement or was a correct and fair copy of or extract from the report or valuation and that the defendant had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it, and that the said person had given the consent required by this Act to the issue of the prospectus of the making of the offer and had not withdrawn that consent before lodgment of a copy of the prospectus for registration or, to the defendant’s knowledge, before allotment thereunder or before the acceptance of the offer; and

(c) with respect to every such untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, that it was a correct and fair representation of the statement or copy of or extract from the document; or

(d) that having consented to become a director of the company, he withdrew his consent before the issue of the prospectus and that it was issued without his authority or consent;

(e) that the prospectus was issued without his knowledge or consent and that on becoming aware of its issue, he forthwith gave reasonable public notice that it was issued without his knowledge or consent; or

(f) that after the issue of the prospectus and before allotment or acceptance thereunder he, on becoming aware of any untrue statement therein, withdrew his consent hereto and gave reasonable public notice of the withdrawal and of the reason therefor.

(4) Where the prospectus contains the name of a person as a director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus and has not authorised or consented to the issue thereof, the directors of the company (except any without whose knowledge or consent the prospectus was issued) and any other person who issued it or authorised the issue thereof, shall be liable to indemnify the person named as aforesaid, against all damages, costs and expenses for which he may be liable by reason of his name having been so stated in the prospectus or in defending himself against any action or legal proceedings brought against him in respect thereof.

(5) Every person who by reason of his being a director or having been named as a director, or having agreed to become a director, or of his having authorised the issue of the prospectus or of his having become a director between the issue of the prospectus and holding of the first general meeting of the company at which directors are elected or appointed, has satisfied any liability to make payment under this section, may recover a contribution, as in cases of contract, from any other person, who, if sued separately, would have been liable to make the same payment, unless the person who has satisfied such liability was, and that other person was not, guilty of fraudulent misrepresentation.

314. Liability of experts and others

(1) Where the consent of any person required under section 304(2) and (3) and such person has given that consent

(a) he shall not, by reason of having given such consent, be liable as a person who has authorised the issue of the prospectus either

(i) under section 313(1) or (2) to compensate persons subscribing or purchasing on the faith of the prospectus, except in respect of any untrue statement purporting to be made by him as an expert, or

(ii) under section 313(4) to indemnify any person against liability under the said section 313(1) or (2); but

(b) he shall, in respect of any untrue statement purporting to be made by him as an expert, be liable under the said section 313(1) or (2), unless one of the following things (which shall in his case be in lieu of the grounds of defence available to others by virtue of section 313(3)), is proved, namely

(i) that having given his consent as aforesaid he withdrew it in writing before lodgement of a copy of the prospectus for registration,

(ii) that after lodgement of a copy of the prospectus for registration and before allotment there under to, or before acceptance there under by, the person complaining, he, on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal and of the reason therefor; or

(iii) that he was competent to make the statement and that he had reasonable ground to believe and did up to the time of the allotment of the shares or the acceptance of the offer, as the case may be, believe that the statement was true.

(2) Where under section 304(2) and (3) the consent of any person is required to the issue of a prospectus, and he either has not given that consent or has withdrawn it before the issue of the prospectus, he shall be entitled to indemnity under section 313 as if he had without his consent been named in the prospectus as a director of the company.

315. Offences in respect of untrue statements in prospectus

(1) Where a prospectus contains a statement which is untrue, every person referred to in section 313(1) or (2) shall, subject to the provisions of subsections (3) and (4) of this section, be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(4).

(2) Where there is published with or as part of a prospectus a report of any expert or an extract from such report and such report or extract contains a statement which is untrue, the expert shall, provided he has given his consent to the inclusion of such statement in the prospectus in the form and context in which it appears, and subject to the provisions of subsections (3) and (4), be guilty of an offence, and is liable on conviction to the penalty set out in section 492(4).

(3) In any prosecution under this section it shall be a defence if it is proved either that the untrue statement was immaterial or

(a) with respect to every such untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, that the person charged had, after reasonable investigation, reasonable ground to believe and did up to the time of the allotment of the shares or acceptance of the offer (as the case may be) believe that the statement was true, and that there was no omission to state any material fact necessary to make the statement as set out not misleading;

(b) with respect to every untrue statement purporting to be a statement by or contained in what purports to be a copy of or extract from a report or valuation of an expert, that the person charged had reasonable ground to believe and did believe that the person making the report or valuation was competent to make it; and

(4) In any prosecution under this section of any person it shall be a defence if it is proved -

(a) that having consented to become a director of the company he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent;

(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was issued without his knowledge or consent; or

(c) that after the issue of the prospectus and before allotment or acceptance there under, he, on becoming aware of any untrue statement therein, withdrew his consent thereto and gave reasonable public notice of the withdrawal, and of his reason therefor.

316. No diminution of liability under any other law or the common law Nothing in this Part shall limit or diminish any liability which any person may incur under this Act apart from this Part, or under any other law, or under the common law.

317. Time limit as to allotment or acceptance

(1) No company shall allot any shares offered to the public for subscription and no offeror shall accept any offer to purchase any shares offered for sale to the public unless the application concerned is received by the company or the offeror, as the case may be, before the expiration of a period of four months after the date of registration of the prospectus.

(2) Any director or officer of a company or any offeror of, if the offeror is a company, any director or officer of that company who knowingly contravenes or permits the contravention of subsection (1) with respect to allotment or acceptance of an offer, shall be guilty of an offence, and is liable on conviction to the penalty set out in section 493(2).

318. No allotment unless minimum subscription received

(1) No shares shall be allotted on any application made in pursuance of a prospectus for subscription unless the amount stated in that prospectus as the minimum amount which in the opinion of the directors of the company concerned has to be raised by the issue of share capital in order to provide for the matters specified in paragraph 21 of the Tenth Schedule has been subscribed and the amount so stated has been paid to and received by the company.

(2) For the purposes of subsection (1)

(a) an amount stated in any cheque received by the company shall not be deemed to have been paid to and received by it until the amount of the cheque has been unconditionally credited to its account with its banker; and

(b) any amount paid to and received by the company shall be reduced by the amount of any money, bill, promissory note or cheque which it has at any time delivered to the payer otherwise than in discharge of a debt bona fide due to him by the company.

(3) The amount so stated in the prospectus shall be reckoned exclusively of any amount payable otherwise than in cash and is in this Act referred to as "the minimum subscription".

(4) The amount paid on application shall be set apart by the directors as separate fund in a separate account with a banking institution registered under the Banking Act, and shall not be available for the purposes the company or for the satisfaction of its debts until the minimumsubscription has been made up.

(5) If the requirements prescribed in subsection (1) have not been complied with on the expiration of 60 days after the issue of the prospectus, moneys received from applicants for shares shall forthwith be repaid to them without interest, and, if any such money is not so repaid within a period of 80 days after the issue of the prospectus, the directors and officers of the company shall be jointly and severally liable to repay that money with interest at the rate of six per cent per annum reckoned from the expiration of the said period of 80 days.

(6) It shall be a defence to any claim under subsection (5), or any charge to prove that the default which is the subject of the claim or charge, was not due to any misconduct or negligence on the part of the defendant or the accused.

(7) Any director or officer of the company who knowingly contravenes or permits the contravention of any provision of this section, shall, in addition to other liability incurred under subsection (5)(a), be guilty of an offence, and be liable on conviction to the penalty set out in section 492(3).

319. No allotment or acceptance if application form not attached to prospectus

(1) No company shall allot any shares offered to the public for subscription and no offeror shall accept any offer to purchase any shares offered for sale to the public unless the subscription or offer has been made on an application form which has been attached to or accompanied by a prospectus as required by section 302 or unless it is shown that the applicant, at the time of his application, was in fact in possession of a copy of the prospectus or was aware of its contents.

(2) Any director or officer of a company or any offeror (or if the offeror is a company, any director or officer of that company) who knowingly contravenes or permits the contravention of subsection (1), shall be guilty of an offence and shall on conviction be liable to the penalty set out in section 492(2

320. Voidable allotment where section 317, 318 or 319 contravened

(1) An allotment made by a company to an applicant, or the acceptance of an offer made by an applicant, in contravention of any provision of sections 317, 318 or 319 shall be voidable at the instance of the applicant concerned within 30 days after the date of allotment or acceptance, and not later, and the right to treat as voidable such allotment shall apply notwithstanding that the company concerned may be in the course of being wound up.

(2) When an allotment or an acceptance is declared void under subsection (1), every director and every officer of the company concerned or the offeror, and if the offeror is a company, every director and every officer thereof, shall be liable to compensate the company concerned and the applicant for any loss, damages or costs which such company or the applicant may have sustained or incurred thereby:

Provided that no proceedings to recover any such loss, damages or costs shall be commenced after the expiration of two years from the date of the relevant allotment or acceptance.

321. Minimum interval before allotment or acceptance

(1) No allotment of shares or acceptance of an offer in respect of shares of a company shall be made in pursuance of a prospectus, and no proceedings shall be taken on applications made in pursuance of a prospectus, until the beginning of the third day after that on which the prospectus is first issued or such later time (if any) as may be specified in the prospectus.

(2) For the purposes of subsection (1), the reference therein to the day on which the prospectus is first issued shall be construed as a reference to the day on which it is first issued as a newspaper advertisement, or, if it is not issued as a newspaper advertisement before the third day after that on which it is first issued in any other manner, as a reference to the day on which it is first issued in such other manner.

(3) The validity of an allotment or acceptance shall not be affected by any contravention of the provisions of subsection (1), but, in the event of any such contravention, the company concerned, and every director and every officer of the company and the offeror, and, if the offeror is a company, every director and every officer thereof who knowingly is a party to the contravention, shall be guilty of an offence, and is liable on conviction to the penalty set out in section 492(3).

(4) An application for shares of a company which is made in pursuance of a prospectus shall not be revocable before the expiration of the third day after the time of the opening of the subscription lists or offer or the giving before the expiration of the said third day, of a public notice under section 304 having the effect of excluding or limiting the liability under that section of the person giving such notice.

(5) In reckoning any number of days for the purposes of this section, Saturdays, Sundays and public holidays shall not be taken into account.

(6) The "beginning of the third day" or the "later time" referred to in subsection (1) is in this Part referred to as "the time of the opening of the subscription lists or offers".

322. Conditional allotment if prospectus states shares to be listed by stock exchange

(1) No prospectus containing a statement to the effect that application has been or will be made for permission for the shares offered thereby to be dealt in on a stock exchange shall be issued unless an application has been made in accordance with the requirements of the stock exchange concerned on or before the date of issue of such prospectus and it names the particular stock exchange to which such application has been made.

(2) Any allotment of shares in pursuance of a prospectus referred to in subsection (1) shall be subject to the condition that the application for permission for the said shares to be dealt in on the stock exchange concerned, is granted or that an appeal against a refusal of such application, is upheld.

(3) Any money received in respect of applications for shares in pursuance of a prospectus referred to in subsection

(1) shall be set apart by the directors of the company as a Copyright Government of Botswan separate fund in a separate account with a banking institution registered under the Banking Act, and shall not be available for the purposes of the company or for the satisfaction of its debts so long as the company may in terms of subsection (4) become liable for the repayment thereof, and if any issue of shares in pursuance of such a prospectus is oversubscribed, the directors of the company shall forthwith repay the amounts oversubscribed to the applicants.

(4) Where the application for permission to deal in the shares on a stock exchange has been refused and no appeal has been noted or when an appeal against the refusal of an application has been dismissed or an appeal against the granting of an application has been upheld, the company shall forthwith repay all moneys received in respect of applications made in pursuance of the prospectus together with any interest earned thereon, if any.

(5) If any money required to be repaid under subsection (3) and subsection (4) is not repaid within 14 days after the company becomes liable to repay it, the directors and officers of the company, together with the company, shall be jointly and severally liable to repay that money with interest at the rate of 10 per cent per annum from the expiration of the fourteenth day.

(6) If any provision of subsection (1), (3) or (4) is contravened or not complied with

(a) the company, and every director or officer thereof who knowingly is a party to such contravention or non-compliance, shall be guilty of an offence; and

(b) it shall be a defence to any claim or charge under subsection (4) to prove that the default which is the subject of the claim of the contravention or non-compliance was not due to misconduct or negligence on the part of the defendant or the accused.

(7) The provisions of this section shall

(a) in relation to any shares agreed to be taken by a person underwriting an offer of the shares by a prospectus, have effect as if he had applied therefor in pursuance of the prospectus;

(b) in the case of a prospectus offering shares for sale, be construed, except in so far as the context otherwise indicates

(i) as if any reference therein to the allotment of shares were a reference to the acceptance of the offer in respect thereof,

(ii) subject to the provisions of subparagraph (iii), as if any reference therein to a company by which a prospectus has been issued, or a director or officer thereof, were a reference to the person by whom the shares have been offered, and

(iii) where the person by whom the shares have been offered is a company, as if the reference therein to a director or officer of a company by which a prospectus has been issued, were a reference to a director or officer of the company by which the shares have been offered for sale.

(8) In reckoning any number of days for the purpose of this section, Saturdays, Sundays and public holidays shall not be taken into account.

323. Compulsory acquisition of minority in affected transaction

(1) In this section, unless the context otherwise indicates

"acquisition", in relation to securities of any company, means the acquisition of securities in such company by any means whatsoever, including purchase or subscription;

"acting in concert" means, subject to subsection (2), acting in pursuance of an agreement, arrangement or understanding (whether formal or informal) between two or more persons pursuant to which they or any of them cooperate for the purposes of entering into or proposing an affected transaction;

"affected transaction" means any transaction (including a transaction which forms part of a series of transactions) or scheme, whatever form it may take, which, taking into account any securities held before such transaction or scheme, has or would have the effect in the event of any offers to acquire securities of a company being accepted of the transfer of all the securities included in a class of securities being transferred to the offeror;

"offeree company" means any company the securities or part of the securities of which is or is to be the subject of any affected transaction or proposed affected transaction;

"offeror" means any person or two persons acting in concert who propose any affected transaction.

(2) If an offer for the acquisition of securities under an affected transaction involving the transfer of securities or any class of securities of a company to an offeror, has within four months after the date of the making of such offer been accepted by the holders of not less than nine-tenths of the securities of any class of securities whose transfer is involved (other than securities already held at the date of the issue of the offer by, or by a nominee for, the offeror or its subsidiary), the offeror may at any time within two months after the date of such acceptance give notice in the prescribed manner to any holder of such securities who has not accepted the said offer, that he or it desires to acquire his or its securities, and where such notice is given, the offeror shall be entitled and bound to acquire those securities on the terms on which under the affected transaction the securities of the holders who have accepted the offer, were or are to be transferred to the offeror, unless on an application made by such holder within six weeks from the date on which the notice was given, the court

(a) orders that the offeror shall not be so entitled and bound; or

(b) imposes conditions of acquisition different from those of the offer.

(3) If the said offer has not been accepted to the extent necessary for entitling the offeror to give notice under subsection (2), the court may, on application by the offeror, issue an order authorising him to give notice under that subsection if the court is satisfied that

(a) the offeror has after reasonable enquiry been unable to trace one or more of the persons holding securities to which the offer relates;

(b) the securities whose transfer is involved, by virtue of acceptances of the offer, together with the securities held by the person or persons referred to in paragraph (a), amount to not less than the minimum specified in subsection (2); and

(c) the consideration offered is fair and reasonable, but the court shall not issue an order under this subsection unless it considers that it is just and equitable to do so having regard, in particular, to the number of holders of securities who have been traced but who have not accepted the offer.

(4) Where a notice has been given by the offeror under subsection (2) and the court, on an application made by a holder of the securities who has not accepted the offer, has not ordered as contemplated in subsection (2), the offeror shall, on the expiration of six weeks from the date on which the notice was given, or, if an application to the court by such holder is then pending, after the application has been disposed of, transmit a copy of the notice to the offeree company, together with an instrument of transfer executed on behalf of such holder by any person appointed by the offeror, and pay or transfer to the offeree company the amount or other consideration representing the price payable by the offeror for the securities which by virtue of this section he or it is entitled to acquire, and the offeree company shall thereupon register the offeror as the holder of those securities:

Provided that an instrument of transfer shall not be required for any security for which a share warrant is for the time outstanding.

(5) Where, in pursuance of an affected transaction referred to in subsection (2), securities of an offeree company were or are to be transferred to a person and those securities, together with any other securities of the said offeree company held by, or by a nominee for, the offeree or its subsidiary at the date of the acceptance of the offer in question comprise or include nine-tenths of the securities in the offeree company or of any class of those securities, then

(a) the offeror shall within a month from the date of such acceptance (unless he or it has already complied with this requirement under subsection (2)) give notice of that fact in the prescribed manner to the holders of the remaining securities or of the remaining securities of that class, as the case may be, who have not accepted the offer under the affected transaction in question; and

(b) any such holder may within three months from the giving of the notice to him require the offeror to acquire the securities in question, and where the holder gives notice under paragraph (b) in relation to any securities, the offeror shall be entitled and bound to acquire the conditions on which under the affected transaction the securities of the holders who have accepted the offer were or are to be transferred to him or it, or on such other conditions as may be agreed upon or as the court on the application of either the offeror or the holder may think fit to order.

(6) Any sum, and any dividend or other sum accruing from any other consideration, received by the offeree company under this section shall be paid into a separate bank account with a banking institution registered under the Banking Act, and any such sums, dividend or any other consideration so received shall be held in trust by the offeree company for the person entitled to the securities in respect of which the said sums, dividend or other consideration was received.

(7) In this section any reference to a "holder of securities who has not accepted the offer" includes any holder who has failed or refused to transfer his securities to the offeror in accordance with the affected transaction.

324. Prohibition of insider trading

(1) Any person who, whether directly or indirectly, knowingly deals in a security on the basis of unpublished price sensitive information in respect of that security, shall commit an offence if such person knows that such information has been obtained

(a) by virtue of a relationship of trust or any other contractual relationship, whether or not the person concerned is a party to that relationship; or

(b) through espionage, theft, bribery, fraud, misrepresentation or any other wrongful method, irrespective of the nature thereof, and such person shall on conviction be liable to the penalty set out in section 492(3).

(2) For the purposes of this section

(a) "unpublished price-sensitive information", in respect of a security, means information which

(i) relates to matters in respect of the internal affairs of a company or its operations, assets, earning power or involvement as offeror or offeree company in an affected transaction or proposed affected transaction,

(ii) is not generally available to the reasonable investor in the relevant markets for that security, and

(iii) would reasonably be expected to affect materially the price of such security if it were generally available;

(b) "generally available" means available in the sense that such steps have been taken, and such time has elapsed, that it can reasonably be expected that such information as referred to in paragraph (a) is or should be known to such investor as referred to in subparagraph (ii) of paragraph (a).

(3) If in criminal proceedings at which an accused is charged with an offence under subsection (1), it is proved that (a) the accused was in possession of unpublished price-sensitive information in respect of the security in question at the time of the alleged commission of the offence; or

(b) unpublished price-sensitive information was obtained in the manner contemplated in subsection (1)(a) or (b), he or it shall be deemed, unless the contrary is proved, in the case of paragraph (a), to have knowingly dealt in that security on the basis of such information, or, in the case of paragraph (b), to have known that such information was so obtained.

(4) Where an advantage is gained from a dealing in securities in contravention of the provisions of this section, any person who gained that advantage shall, whether or not any person has been prosecuted for or convicted of an offence in respect of the contravention, be liable

(a) to any other person for the amount of any loss incurred by that other person by reason of the gaining of that advantage;

(b) to the company that issued or made available those securities, for any profit that accrued by him or loss avoided by him by reason of the gaining of that advantage; and

(c) any amount which the court considers to be an appropriate pecuniary penalty provided that the amount of the pecuniary penalty shall not exceed

(i) the consideration for the securities, or

(ii) three times the amount of the gain made or loss avoided by the person in buying or selling the securities, whichever is the greater.

(5) Where a loss or profit referred to in subsection (4) is incurred by means of an advantage gained from a dealing in securities, the amount of the loss or profit shall be the difference between

(a) the price at which the dealing was effected; and

(b) the price that, in the opinion of the court before which it is sought to recover the amount of the loss or profit, would have been the market price of the securities at the time of the dealing if the specific information used to gain that advantage had been generally known at that time.

(6) The company may bring an action in the name of and for the benefit of a person for recovery of a loss or profit referred to in subsection (4).

(7) An action to recover a loss or profit referred to in subsection (4) may not be brought after the expiry of the period of

(a) two years next succeeding the dealing in securities to which the action relates; or

(b) six months next succeeding the discovery of the relevant fact by the person who suffered the loss or seeks the profit, whichever first occurs.

(8) Nothing in subsection (7) affects any other liability that a person may incur under any other law.

(9) The provisions of this section shall not apply to dealings in the members’ interest in a private company or a close company.

(10) Subject to subsection (5), the Minister may, by notice in the Gazette exempt any class of persons from the provisions of this section on such conditions and to such extent as he may deem fit, and may at any time in like manner revoke or amend any such exemption.

325. Fraudulent inducement to invest

(1) Every person who, by any fraudulent means, induces or attempts to induce another person to enter into or offer to enter into

(a) an agreement for, or with a view to, acquiring, disposing of, subscribing for or underwriting securities; or

(b) an agreement for the purpose or pretended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities, shall be guilty of an offence and liable to the penalty set out in section 492(4).

(2) For the purposes of subsection (1), "fraudulent means" shall include

(a) any statement, promise or forecast which the person knows to be misleading, false or deceptive;

(b) any dishonest concealment of material facts; or

326. False statements and transactions

Every person who knowingly or recklessly

(a) gives a fictitious price to securities by means of false rumours;

(b) obtains admission to listing on a stock exchange by means of a false statement; or

(c) makes any fictitious dealings in securities which are listed on any stock exchange, shall be guilty of an offence and liable to the penalty set out in section 492(4).

327. Misleading documents

Every person who

(a) distributes or causes to be distributed any documents which, to his knowledge contain

(i) an invitation to enter into an agreement of the kind referred to in section 325, or

(ii) information calculated to lead directly or indirectly to the entry into an agreement of the kind referred to in section 325 by the recipient of the information; or

(b) has in his possession for the purpose of distribution any documents which, to his knowledge, are such documents as are specified in paragraph (a), shall be guilty of an offence and liable to the penalty set out in section 492(4).

328. Stock market manipulation

(1) A person shall not, with the fraudulent intent to induce other persons to purchase or subscribe for securities of a body corporate or of a related corporation effect, take part in, be concerned in or carry out, either directly or indirectly, two or more transactions in securities of the body corporate, being transactions that have, or are likely to have, the effect of abnormally or artificially raising the price of securities which are being traded through a stock exchange.

(2) A person shall not, with the fraudulent intent to induce other persons to sell securities of a body corporate or of a related corporation, effect, take part in or be concerned in or carry out, either directly or indirectly, two or more transactions in securities of the body corporate, being transactions that have or are likely to have, the effect of abnormally or artificially lowering the price of securities of a body corporate the securities of which are being traded through a stock exchange.

(3) A person shall not, with the fraudulent intent to induce other persons to sell, purchase or subscribe for securities of a body corporate or of a related corporation, effect, take part in, be concerned in or carry out, either directly or indirectly, two or more transactions in securities of a body corporate, being transactions that have, or are likely to have the effect of abnormally or artificially maintaining the price of securities of the body corporate which securities are being traded through a stock exchange.

(4) A reference in this section to a transaction, in relation to securities of a body corporate, includes a reference to the making of an offer to sell or purchase such securities of the body corporate; and a reference to the making of an invitation, however expressed, expressly or impliedly invites a person to offer to sell or purchased securities of the body corporate.

(5) Every person who acts in contravention of this section shall commit an offence and shall, on conviction be liable to the penalty set out in section 492(4).

329. Disclosure of beneficial interest in securities

(1) In this section, unless the context otherwise requires

"beneficial interest" in relation to a security, means

(a) the right or entitlement to receive any dividend or interest payable in respect of that security; or

(b) the right to exercise or cause to be exercised, in the ordinary course, any or all of the voting, conversion, redemption or other rights attaching to such security, but does not include any interest held by a person in a Collective Investment undertaking under the Collective Investment Undertakings Act;

"Exchange" means the Botswana Stock Exchange established under the Botswana Stock Exchange Act;

"issuer" means a public company which has issued securities to the public which are listed;

"substantial shareholder" means a person who holds beneficial interests equal to or in excess of five per cent of the total number of securities of that class issued by the issuer.

(2) A person is deemed to have a beneficial interest in a security if

(a) the spouse of the person married in community of property or the minor children of that person have a beneficial interest in such security;

(b) that person acts in terms of an agreement with another person holding a beneficial interest and the agreement is in respect of the co-operation between them for the acquisition, disposal or any other matter relating to a beneficial interest in such security;

(d) a body corporate or trust has a beneficial interest in such security and

(i) the body corporate or its directors or the trustees are accustomed to act in accordance with the directions or instructions of that person, or

(ii) that person is entitled to exercise or control the exercise of the majority of the voting rights at general meetings of the body corporate or trust; or

(e) the security is held by another person on that person’s behalf by virtue of the official office of that other person.

(3) Where securities of an issuer are registered in the name of a person, and that person ("the registered shareholder") is not the holder of the beneficial interest in all of the securities held by the registered shareholder, the registered shareholder shall, at the end of every three month period after 30th June, 2001, disclose to the issuer the identity of each person on whose behalf the registered shareholder holds securities and the number and class of securities issued by that issuer held on behalf of each such person.

(4) The information required in terms of subsection (3) shall be furnished in writing within seven days of the end of the three month period referred to in that subsection.

(5) Where a registered shareholder who has made disclosure under subsections (3) and

(4) ceases to be a holder of such securities or there is a change in the nature and extent of the beneficial interest the registered shareholder shall forthwith give notice of that fact and in the case of any change in the particulars of that change to the issuer.

(6) An issuer may by notice in writing require a person who is a registered shareholder of, or whom the issuer knows or has reasonable cause to believe to have a beneficial interest in, securities issued by that issuer, to confirm or deny whether or not such person holds a beneficial interest in such securities, and if the security is held for another person, the person to whom the request is made shall disclose to the issuer the identity of the person on whose behalf that security is held:

Provided that the registered shareholder may levy such fee for the furnishing of information requested as may be prescribed by the Committee of the Botswana Stock Exchange from time to time.

(7) A notice under subsection (6) may, in addition, require the addressee to give particulars of the extent of the beneficial interest held during the three years preceding the date of the notice.

(8) The information required in terms of subsections (6) and (7) shall be furnished within a reasonable time specified in the notice, but not later than 14 days from the date of receipt of the notice.

(9) All issuers of securities shall establish and maintain a register of substantial shareholders in terms of this section and shall

(a) publish in their annual financial statements a list of the persons who are substantial shareholders together with the extent of the beneficial interests held by those persons;

(b) enter in such register the following particulars

(i) the name and address of the substantial shareholder,

(ii) the number, class and nominal value of the share in which the substantial shareholder has an interest,

(iii) the name of the holder of the share if the substantial shareholder is not the holder, (iv) the nature of the substantial shareholder’s interest and its duration if it is limited in duration,

(v) the date of the acquisition of the interest by the substantial shareholder,

(vi) the date of the disposal of the interest by the substantial shareholder or of any change in the nature of the interest held by him; and

(10) Every person in respect of whom an entry is required to be made in the register of substantial shareholders, by reason of the fact that the person holds beneficial interests equal to or in excess of five per cent of the total number of securities of that class issued by the issuer, shall within 14 days after that person becomes a substantial shareholder, or after any other matter which requires an entry occurs or arises, give to the issuer and to the Exchange written notice of the fact together with a statement of the particulars specified in subsection (9).

(11) Where a substantial shareholder who has made disclosure under subsection (10) ceases to be a substantial shareholder, or there is a change in the nature and extent of his beneficial interest that person shall forthwith give notice of that fact and in the case of any change in the particulars of that change to the issuer and to the Exchange.

(12) A person who fails to comply with any provision of this section or to make a disclosure as required by this section or who makes a false disclosure shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(3).

PART XXIII - Removal from the Register (ss 330-343)

330. Removal from the register

A company is removed from the register of companies when an entry is made in the register at the direction of the Registrar recording that the company is removed from the register.

331. Grounds for removal from register

(1) Subject to this section, the Registrar shall remove a company from the register of companies if

(a) the company is an amalgamating company, other than an amalgamated company, on the day on which the Registrar issues a certificate of amalgamation under section 228; or

(b) the Registrar is satisfied that

(i) the company has ceased to carry on business, and

(ii) there is no other reason for the company to continue in existence; or

(i) no liquidator is acting, or

(ii) the notice referred to in section 427 has not been given to the Registrar within six months after the liquidation of the company is completed; or

(d) there is sent or delivered to the Registrar a request in the prescribed form made by

(i) a shareholder authorised to make the request by a special resolution of shareholders entitled to vote and voting on the question,

(ii) the board of directors or a request by any other person, if the constitution of the company so requires or permits, or

(iii) the Master, that the company be removed from the register of companies on either of the grounds specified in subsection (2); or

(e) a liquidator sends or delivers to the Master the notice referred to in section 426(3) that no quorum was present at any meeting to confirm the final account.

(2) A request that a company be removed from the register under subsection (1)(d) may be made on the grounds

(a) that the company has ceased to carry on business, has discharged in full its liabilities to all its known creditors, and has distributed its surplus assets in accordance with its constitution and this Act; or

(b) that the company after paying its debts in full or in part has no surplus assets, and no creditor has applied to the court under section 369 for an order putting the company into liquidation.

(3) A request that a company be removed from the register under subsection (1)(d) shall be accompanied by a written notice from the Commissioner of Taxes stating that the Commissioner has no objection to the company being removed from the register.

(4) The Registrar shall remove a company from the register under subsection (1)(b) only if

(a) the Registrar has complied with section 332; and

(b) the company has not satisfied the Registrar that it is carrying on business or that reason exists for the company to continue in existence; and

(i) is satisfied that no person has objected to the removal under section 334, or

(ii) if an objection to the removal has been received, has complied with section 335.

(5) The Registrar shall remove a company from the register under paragraphs (c), (d), or (e) of subsection (1) only if

(a) the Registrar is satisfied that notice has been given in accordance with section 332; and

(b) the Registrar

(i) is satisfied that no person has objected to the removal under section 334, or

(ii) has complied with section 335, where an objection to the removal has been received.

332. Notice of intention to remove where company has ceased to carry on business

(1) Before a company can be removed from the register of companies under section 331(1)(b), the Registrar shall give

(a) notice to the company in accordance with subsection (2);

(b) notice of the matters set out in subsection (3) to any person who is entitled to a charge registered under section 125; and

(2) The notice to be given under subsection (1)(a) shall state

(a) the section under, and the grounds on which, it is intended to remove the company from the register; and

(b) that, unless

(i) by the date specified in the notice, which shall not be less than 20 working days after the date of the notice, the company satisfies the Registrar by notice in writing that it is still carrying on business or there is other reason for it to continue in existence, or

(ii) the Registrar does not in accordance with section 335, proceed to remove the company from the register, the company will be removed from the register.

(3) The notice to be given under paragraphs (b) and (c) of subsection (1) of this section shall specify

(a) the name of the company and its registered office;

(b) the section under, and the grounds on which, it is intended to remove the company from the register; and

(c) the date by which an objection to the removal under section 334 shall be delivered to the Registrar, which shall not be less than 20 working days after the date of the notice.

333. Notice of intention to remove in other cases

(1) If a company is to be removed from the register under section 331(1)(c), the Registrar shall give notice in the Gazette of the matters set out in subsection (4).

(2) If a company is to be removed from the register under section 331(1)(d) or (e), the applicant, or liquidator, as the case may be, shall, by notice published in a newspaper of general circulation, make known the matters set out in subsection (4).

(3) If a company is to be removed from the register under section 331(1)(c), the Registrar, or, if it is to be removed from the register under section 331(1)(d) of this Act, the applicant, as the case may be, shall also give notice of the matters set out in subsection (4) to

(a) the company; and

(b) a person who is entitled to a charge registered under section 125.

(4) The notice to be given under this section shall specify

(a) the name of the company and its registered office; and

(b) the section under, and the grounds on which, it is intended to remove the company from the register; and

(c) the date by which an objection to the removal under section 334 shall be delivered to the Registrar, which shall not be less than 20 working days after the date of notice.

334. Objection to removal from register

(1) Where a notice is given of an intention to remove a company from the register, any person may deliver to the Registrar, no later than the date specified in the notice, an objection to the removal on any one or more of the following grounds

(a) that the company is still carrying on business or there is other reason for it to continue in existence;

(b) that the company is party to legal proceedings;

(d) that the person is a creditor, or shareholder, or a person who has an undischarged claim against the company;

(e) that the person believes that there exists, and intends to pursue, a right of action on behalf of the company under Part XI; or

(f) that, for any other reason, it would not be just and equitable to remove the company from the register.

(2) For the purposes of subsection (1)(d)

(a) a claim by a creditor against a company is not an undischarged claim if

(i) the claim has been paid in full,

(ii) the claim has been paid in part under a compromise entered into under Part XV or by being otherwise compounded to the reasonable satisfaction of the creditor,

(iii) the claim has been paid in full or in part by a liquidator in the course of a completed liquidation, or

(iv) a liquidator has notified the creditor that the assets of the company are not sufficient to enable any payment to be made to the creditor; and

(b) a claim by a shareholder or any other person against a company is not an undischarged claim if

(i) payment has been made to the shareholder or that person in accordance with a right under the company’s constitution or this Act to receive or share in the company’s surplus assets, or

(ii) a liquidator has notified the shareholder or that person that the company has no surplus assets.

Duties of Registrar if objection received

(1) If an objection to the removal of a company from the register is made on a ground specified in section 334(1)(a), (b), or (c), he shall not proceed with the removal unless the Registrar is satisfied that

(a) the objection has been withdrawn;

(b) any facts on which the objection is based are not, or are no longer, correct; or

(2) If an objection to the removal of a company from the register is made on a ground specified in section 334(1)(d), (e), or (f), the Registrar shall give notice to the person objecting that, unless notice of an application to the court by that person for an order

(a) under section 371 that the company be put into liquidation; or

(b) under section 336, that, on any ground specified in section 334, the company not be removed from the register, is served on the Registrar not later than 20 working days after the date of the notice, the Registrar intends to proceed with the removal.

(3) If

(a) notice of such an application to the court is not served on the Registrar; or

(b) the application is withdrawn; or

(c) on the hearing of such an application, the court refuses to grant either an order putting the company into liquidation or an order that the company not be removed from the register, the Registrar shall proceed with the removal.

(4) Every person who makes such an application shall give the Registrar notice in writing of the decision of the court within five working days of the decision being given.

(5) The Registrar shall send

(a) a copy of an objection under section 334;

(b) a copy of a notice given by or served on the Registrar under this section; and

(c) if the company is removed from the register, notice of the removal, to a person who sent or delivered to the Registrar a request that the company be removed from the register under section 331(1)(d) or, while acting as liquidator, sent or delivered to the Registrar the documents referred to in section 331(1)(e).

336. Powers of Court

(1) A person who gives notice objecting to the removal of a company from the register of companies on a ground specified in section 334(1)(d),(e), or (f) may apply to the court for an order that the company not be removed from the register on any ground set out in that subsection.

(2) On an application for an order under subsection (1), the court may, if it is satisfied that the company should not be removed from the register on any of these grounds, make an order that the company is not removed from the register.

337. Property of company removed from the register

(1) Property that, immediately before the removal of a company from the register of companies, had not been distributed or disclaimed, vests in the Consolidated Fund with effect from the removal of the company from the register.

(2) For the purposes of this section, property of the former company includes leasehold property and all other rights vested in or held on behalf of or on trust for the former company, but does not include property held by the former company on trust for any other person.

(3) The Registrar shall, forthwith on becoming aware of the vesting of the property, inform the office of the Minister responsible for finance and development planning and give public notice of the vesting, setting out the name of the former company and particulars of the property.

(4) Where property is vested in the Consolidated Fund under this section, a person who would have been entitled to receive all or part of the property, or payment from the proceeds of its realisation, if it had been in the hands of the company immediately before the removal of the company from the register of companies, or any other person claiming through that person may apply to the court for an order

(a) vesting all or part of the property in that person; or

(b) for payment to that person from out of the Consolidated Fund of compensation of an amount not greater than the value of the property.

(5) On an application made under subsection (4), the court may

(a) decide any question concerning the value of the property, the entitlement of any applicant to the property or to compensation, and the apportionment of the property or compensation among two or more applicants;

(b) order that the hearing of two or more applications be consolidated;

(c) order that an application be treated as an application on behalf of all persons, or all members of a class of persons, with an interest in the property; or

(d) make an ancillary order.

(6) Compensation ordered to be paid under subsection (4) shall be paid out of the Consolidated Fund without further appropriation than this section.

338. Disclaimer of property by the State

(1) The Minister responsible for finance and development planning may, by notice in writing, disclaim the State’s title to property vesting in the Consolidated Fund under section 337 if the property is onerous property.

(2) The Minister responsible for finance and development planning shall forthwith give notice in the Gazette of the disclaimer.

(3) Property that is disclaimed under this section shall be deemed not to have vested in the Consolidated Fund under section 337.

(4) Subject to any order of the court, the Minister responsible for finance and development planning is not entitled to disclaim property unless

(a) the property is disclaimed within 12 months after the vesting of the property in the Consolidated Fund first comes to the notice of the office of the Minister; or

(b) if any person gives notice in writing to the Minister requiring the Minister to elect, before the close of such date as is stated in the notice, not being a date that is less than 60 working days after the date on which the notice is received by the Minister, whether to disclaim the property, the property is disclaimed before the close of that date, whichever occurs first.

(5) A statement in a notice disclaiming property under this section that the vesting of the property in the Consolidated Fund first came to the notice of the Minister on a specified date shall, in the absence of proof to the contrary, be evidence of the fact stated.

339. Liability of directors, shareholders and others to continue

The removal of a company from the register of companies does not affect the liability of any former director or shareholder of the company or any other person in respect of any act or omission that took place before the company was removed from the register and that liability continues and may be enforced as if the company had not been removed from the register.

340. Liquidation of company removed from register of companies

(1) Notwithstanding the fact that a company has been removed from the register of companies, the Master may appoint a liquidator under section 381 as if the company continued in existence.

(2) If a liquidator is appointed under subsection (1)

(a) Part XXVI applies to the liquidation with such modifications as may be necessary; and

(b) the provisions of section 343(3) shall apply, with such modifications as may be necessary, to property of the company that is vested in the Consolidated Fund under section 337 as if the company has been restored to the register of companies.

341. Registrar may restore company to register of companies

(1) Subject to this section, the Registrar shall, on the application of a person referred to in subsection (2), and may, on his own motion, restore a company that has been removed from the register of companies to the register if the Registrar is satisfied that, at the time the company was removed from the register

(a) the company was still carrying on business or other reason existed for the company to continue in existence;

(b) the company was a party to legal proceedings; or

(2) Any person who, at the time the company was removed from the register, was

(a) a shareholder or director of the company;

(b) a creditor of the company;

(d) the Master, may make an application under subsection (1).

(3) Before the Registrar restores a company to the register, the Registrar shall by notice in the Gazette set out

(a) the name of the company;

(b) the name and address of the applicant;

(c) the section under, and the grounds on which, the application is made or the Registrar proposes to act, as the case may be; and

(d) the date by which an objection to restoring the company to the register shall be delivered to the Registrar, not being less than 20 working days after the date of notice.

(4) The Registrar shall not restore a company to the register if the Registrar receives an objection to the restoration within the period stated in the notice.

(5) Before the Registrar restores a company to the register under this section, the Registrar may require any of the provisions of this Act or any regulations made under this Act, being provisions with which the company had failed to comply before it was removed from the register, to be complied with.

(6) The court may, on the application of the Registrar or the applicant, give such directions or make such orders as may be necessary or desirable for the purpose of placing a company that is restored to the register under this section and any other persons as nearly as possible in the same position as if the company had not been removed from the register.

(7) Nothing in this section limits or affects section 342.

342. Court may restore company to register of companies

(1) The court may, on the application of a person referred to in subsection (2), order that a company that has been removed from the register of companies be restored to the register if it is satisfied that

(a) at the time the company was removed from the register

(i) the company was still carrying on business or other reason existed for the company to continue in existence, or

(ii) the company was a party to legal proceedings,

(iii) the company was in liquidation,

(iv) the applicant was a creditor, or a shareholder, or a person who had an undischarged claim against the company, or

(v) the applicant believed that a right of action existed, or intended to pursue a right of action, on behalf of the company under Part XI; or

(b) for any other reason it is just and equitable to restore the company to the register.

(2) The following persons may make an application under subsection (1)

(a) any person who, at the time the company was removed from the register

(i) was a shareholder or director of the company,

(ii) was a creditor of the company,

(iii) was a party to any legal proceedings against the company,

(iv) had an undischarged claim against the company, or

(v) was the liquidator, or a receiver of the property of, the company; (b) the Registrar; (c) the Master; or (d) with the leave of the court, any other person.

(3) Before the court makes an order restoring a company to the register under this section, it may require any provisions of this Act or any regulations made under this Act, being provisions with which the company had failed to comply before it was removed from the register, to be complied with.

(4) The court may give such directions or make such orders as may be necessary or desirable for the purpose of placing the company and any other persons as nearly as possible in the same position as if the company had not been removed from the register.

343. Restoration to register

(1) A company is restored to the register of companies when a notice signed by the Registrar stating that the company is restored to the register is published in the Gazette by the Registrar.

(2) A company that is restored to the register shall be deemed to have continued in existence as if it had not been removed from the register.

(3) Subject to this section, property of a company that is, at the time the company is restored to the register, vested in the Consolidated Fund pursuant to section 337, shall, on the restoration of the company to the register, vest in the company as if the company had not been removed from the register.

(4) Nothing in subsection (3) applies to any property vested in the Consolidated Fund pursuant to section 337 if the Court has made an order for the payment of compensation to any person pursuant to section 337(4)(b) in respect of that property.

(5) Nothing in subsection (3) applies to land or any estate or interest in land that has vested in the Consolidated Fund pursuant to section 337 if transmission to the State of the land or interest in land has been registered under any statute providing for the registration of such land or interest.

(6) Where transmission to the State of land or any interest in land that has vested in the Consolidated Fund pursuant to section 337 has been registered, the court may, on the application of the company, make an order

(a) for the transfer of the land or interest to the company; or

(b) for the payment from out of the Consolidated Fund to the company of compensation

(i) of an amount not greater than the value of the land or interest as at the date of registration of the transmission, or

(ii) if the land or interest has been sold or contracted to be sold, of an amount equal to the net amount received or receivable from the sale.

(7) On an application under subsection (6), the court may decide any question concerning the value of the land or the estate or interest.

(8) Compensation ordered to be paid under subsection (6) shall be paid out of the Consolidated Fund without further appropriation than this section.

PART XXIV - External Companies (ss 344-354)

344. Application of this Part and meaning of "carrying on business"

(1) This part applies to an external company only if it has a place of business or is carrying on business in Botswana.

(2) For the purposes of this Part

(a) a reference to an external company carrying on business in Botswana includes a reference to the external company

(i) establishing or using a share transfer office or a share registration office in Botswana; or

(ii) administering, managing, or dealing with property in Botswana as an agent, or personal representative, or trustee, and whether through its employees or an agent or in any other manner;

(b) an external company does not carry on business in Botswana merely because in Botswana it

(i) is or becomes a party to a legal proceeding or settles a legal proceeding or claim or dispute, or (ii) holds meetings of its directors or shareholders or carries on other activities concerning its internal affairs,

(iii) maintains a bank account,

(iv) effects a sale of property through an independent contractor,

(v) solicits or procures an order for delivery in Botswana or elsewhere that becomes a binding contract only if the order is accepted outside Botswana,

(vi) creates evidence of a debt or creates a charge on property,

(vii) secures or collects any of its debts or enforces its rights in relation to securities relating to those debts,

(viii) conducts an isolated transaction that is completed within a period of 31 days, not being one of a number of similar transactions repeated from time to time, or

(ix) invests its funds or holds property.

345. Registration of external companies

(1) Every external company shall, within one month after it establishes a place of business or commences to carry on business in Botswana, lodge with the Registrar

(a) a duly authenticated copy of the certificate of its incorporation or registration in its place of incorporation or origin or a document of similar effect;

(b) a duly authenticated copy of its constitution, charter, statute or memorandum and articles or other instrument constituting or defining its constitution;

(c) a list of its directors containing similar particulars with respect to directors as are by this Act required to be contained in the register of the directors, managers and secretaries of the company;

(d) where the list includes directors resident in Botswana who are members of the local board of directors of the company, a memorandum duly executed by or on behalf of the external company stating the powers of the local directors;

(e) the name and address of a person resident in Botswana, not including an external company, who is appointed by the external company to

(i) have responsibility for the management of the business of the external company in Botswana,

(ii) accept on its behalf service of process and any notices required to be served on the company, and

(iii) be answerable for all such acts, matters and things as are required to be done by the company under this Act referred to in this Part as the "authorised agent";

(f) notice of the situation of its registered office in Botswana and, unless the office is open and accessible to the public during ordinary business hours on each working day, the days and hours during which it is open and accessible to the public.

(2) Where an external company has complied with subsection (1), the Registrar shall, subject to section 12(2), register the company under this Part and shall issue a certificate in the prescribed form.

346. Registered office and authorised

(1) An external company shall have a registered office in Botswana to which all communications and notices may be addressed and which shall be open and accessible to the public for not less than four hours on every working day.

(2) An authorised agent shall, until he ceases to be such in accordance with subsection (4) continue to be the authorised agent of the company.

(3) An external company or its authorised agent may lodge with the Registrar a written notice stating that the authorised agent has ceased to be the authorised agent or will cease to be the authorised agent on a date specified in the notice.

(4) The authorised agent in respect of whom the notice has been lodged shall cease to be an authorised agent

(a) on the expiry of a period of 21 days after the date of lodging of the notice or on the date of the appointment of another authorised agent the memorandum of whose appointment has been lodged in accordance with subsection (5), whichever is earlier; or

(b) if the notice states a date on which he is to so cease and the date is later than the expiry of that period, on that date.

(5) Where an authorised agent ceases to be an authorised agent and the company is then without an authorised agent in Botswana, within 21 days after the authorised agent ceased to be one, the company shall appoint an authorised agent.

347. Return of alteration

(1) Where any change or alteration is made in

(a) the constitution, charter, statutes, memorandum or articles or other instrument lodged;

(b) the directors;

(d) the situation of the registered office in Botswana or of the days or hours during which it is open and accessible to the public;

(e) the address of the registered office and its place of incorporation or origin;

(f) the name of the company; or

(g) the powers of any directors resident in Botswana who are members of the local board of directors, the external company, shall within one month, lodge with the Registrar particulars of the change or alteration.

(2) Where an order is made by a court under any law in force in the country in which an external company is incorporated which corresponds with orders made under Parts XIV, XV an XVI, the company shall, within one month, lodge with the Registrar a copy of the order.

348. Registrar’s certificate and validity of transactions

(1) On the registration of an external company under this Part or the lodging with the Registrar of particulars of the change or alteration in a matter referred to in section 347 (c) or (f) the Registrar shall issue a certificate to that effect.

(2) A failure by an external company to comply with this Part does not affect the validity or the enforceability of any transaction entered into by the external company.

349. Financial statements

Every external company, other than a private company, shall in every year make out a balance sheet and profit and loss account and, if the external company is a holding company, group accounts, in such form, and containing such particulars and including such documents as under the provisions of this Act it would, had it been a company within the meaning of this Act, have been required to make out and lay before the company in general meeting, and lodge a copy of such balance sheet, profit and loss account and group accounts, if any, with the Registrar; and if such balance sheet and other documents are in a foreign language there shall be annexed a certified translation thereof.

350. Publication of name by company

(1) An external company shall

(a) conspicuously exhibit outside its registered office and every place of business established by it in Botswana, its name and the place where it is formed or incorporated;

(b) cause its name and the place where it is formed or incorporated to be stated in legible characters in all

(i) business letters, notices and other official publications of the company,

(ii) bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on behalf of the company, and

(iii) delivery notes, invoices, receipts letters of credit and prospectuses of the company;

(c) where the liability of its members is limited, unless the last word of its name is the word "Limited" or the abbreviation "Ltd." cause notice of the fact

(i) to be stated in legible characters in every prospectus issued by it and in all other forms of publication referred to in paragraph (b); and

(ii) except in the case of a banking company, to be exhibited outside its registered office and every place of business established by it in Botswana.

(2) Where the name of an external company is indicated on the outside of its registered office or any place of business established by it in Botswana or on any of the documents referred to in subsection (3) in characters or in any other way than by the use of romanised letters, the name of the company shall also be exhibited outside such office or place of business or stated on such document in romanised letters not smaller than any of the characters so exhibited or stated on the relevant office, place of business or document.

351. Service of notices

Any document required to be served on an external company shall be deemed to have been served

(a) if addressed to the external company and left at or sent by post to its registered office in Botswana;

(b) if addressed to an authorised agent and left at or sent by post to his registered address; or

(c) in the case of an external company which has ceased to maintain a place of business in Botswana, if addressed to the external company and left at or sent by registered post to its registered office in the place of its incorporation.

352. Cessation of business in Botswana

(1) Where an external company ceases to have a place of business or to carry on business in Botswana, it shall within seven days lodge with the Registrar a notice to that effect,and as from the day on which the notice is lodged its obligation to lodge any document other than a document that ought to have been lodged shall cease, and the Registrar shall on the expiry of three months after the lodging of the notice remove the name of the company from the register.

(2) Where an external company goes into liquidation or is dissolved in its place of incorporation or origin

(a) every person who immediately before the commencement of the liquidation proceedings was an authorised agent shall within one month after the commencement of the liquidation or the dissolution lodge or cause to be lodged with the Registrar a notice to that effect and, where a liquidator is appointed, notice of the appointment; and

(b) the liquidator shall, until a liquidator for Botswana is appointed by the court, have powers and functions of a liquidator for Botswana.

(3) A liquidator of an external company appointed for Botswana by the court or a person exercising the powers and functions of such a liquidator shall

(a) before any distribution of the external company’s assets is made, by advertisement in a newspaper circulating generally in each country where the overseas company had been carrying on business before the liquidation and where no liquidator has been appointed for that place, invite all creditors to make their claims against the foreign company within a reasonable time before the distribution;

(b) not, subject to subsection (7), without leave of the court, pay out any creditor to the exclusion of any other creditor;

(c) unless the court otherwise directs, only recover and realize the assets of the overseas company in Botswana and shall, subject to paragraph (b) and to subsection (7), pay the net amount so recovered and realized to the liquidator of that overseas company for the place where it was formed or incorporated after paying any debts and satisfying any liabilities incurred in Botswana by the external company.

(4) Where an overseas company has been wound up so far as its assets in Botswana are concerned and there is no liquidator for the place of its incorporation or origin, the liquidator may apply to the court for directions as to the disposal of the net amount recovered under subsection (3).

(5) On receipt of a notice from an authorised agent that the company has been dissolved the Registrar shall remove the name of the company from the register.

(6) Where the Registrar has reasonable cause to believe that an external company has ceased to carry on business or to have a place of business in Botswana, Part XXIII shall, with such adaptations and modification as may be necessary, apply to an external company as they apply to a company.

(7) Part XIII shall, with such adaptations and modifications as may be necessary, apply to an external company.

353. Exemption in respect of transfer duty

(1) Notwithstanding anything contained in any law an external company may satisfy the court that

(a) it carries on its principal business within Botswana;

(b) the company is about to be or is being wound up voluntarily in its country of incorporation for the purpose of transferring the whole of its business and property wherever situate to a company which will be or has been registered under this Act (hereinafter referred to as "the new company") for the purpose of acquiring such business and property;

(c) the sole consideration for such transfer is the issue to the members of the external company of shares in the new company in proportion to their shareholdings in the external company; and

(d) no shares in the new company will be available for issue to any persons other than the members of the external company.

(2) Where the court has been satisfied in terms of subsection (1) it may, subject to the certificate of the Registrar that

(a) the external company is being wound up voluntarily for the said purpose;

(b) a company has been registered under this Act for the said purpose; and

(c) the members of the external company have had issued to them the shares in the new company to which they are entitled, order that no transfer duty shall be payable in respect of the transfer of immovable property from the external company to the company so registered.

354. Power of external company to hold land in Botswana

Except as may be expressly provided in any other written law, an external company to which section 345 applies and which has lodged with the Registrar the documents and particulars therein mentioned shall have the same power to own immovable property in Botswana as if it were a company incorporated in Botswana.

PART XXV - Transfer of Registration and Registration of Statutory Corporations as Companies (ss 355-363)

355. Registration and continuation of foreign company and statutory corporation

(1) A foreign company incorporated under the laws of any country other than Botswana, may where it is so authorised by the laws of that country apply to the Registrar to be registered and continued in Botswana as if it had been incorporated in Botswana under this Act.

(2) An application under subsection (1) shall be supported by

(a) a certified copy of the certificate of incorporation or other similar document that evidences its incorporation;

(b) a copy of the resolution authorising the continuation of the company in Botswana;

(c) a statement whether the company applies to be registered as a company limited by shares or by guarantee and whether as a public company or a private company;

(d) a certified copy of the documents defining its constitution;

(e) a statement of the charges on the company’s assets;

(f) evidence acceptable to the Registrar that the company is not prevented from being registered as a company under this Act by either section 356 or section 357;

(g) the documents and information that are required to register a company under Part II; and

(h) any other documents and information the Registrar may require.

(3) The Registrar may direct that a document that has been delivered to the Registrar or registered under Part XXIV need not accompany the application.

(4) A statutory corporation may, where it is authorised by an Act of Parliament, apply to the Registrar to be registered and continued as if it had been incorporated under this Act.

(5) An application under subsection (4) shall be supported by

(a) a copy of the law under which the statutory corporation was established;

(b) a copy of the law authorising the continuation of the statutory corporation under this Act;

(c) a statement whether the statutory corporation applies to be registered as a company limited by shares or by guarantee and whether as a public company or a private company;

(d) a certified copy of the documents defining its constitution;

(e) a statement of the charges on the statutory corporation’s assets;

(f) the documents and information that are required to register a company under Part II; and

(g) any other documents or information the Registrar may require.

356. Foreign companies shall be authorised to register

A foreign company shall not be registered as a company under this Act unless

(a) the company is authorised to transfer its incorporation under the law of the country in which it is incorporated;

(b) the company had complied with the requirements of that law in relation to the transfer of its incorporation; and

(c) if that law does not require its shareholders or members, or a specified proportion of them, to consent to the transfer of its incorporation, the transfer has been consented to by not less than 75 per cent of its shareholders or members entitled to vote and voting in person or by proxy at a meeting of which not less than 21 days notice had been given specifying the intention to transfer the company’s incorporation.

357. Foreign companies that cannot be registered

(1) A foreign company shall not be registered as and continue as a company under this Act if

(a) the company is in the process of winding up or liquidation;

(b) a receiver or a manager has been appointed, whether by a court or not, in relation to the property of the company; or

(c) there is any scheme or order in force in relation to the company whereby the rights of creditors are suspended or restricted.

(2) A foreign company shall not be registered as a company under this Act unless the foreign company would, immediately after becoming registered under this Act, satisfy the solvency test.

358. Registration

(1) As soon as the Registrar receives a properly completed application for a foreign company or a statutory corporation for registration as a company under this Act, and in the case of a foreign company, is satisfied that the type of company named in the application in accordance with paragraph (c) of section 355(2) is an appropriate type of company for continuation of the company in Botswana, and in the case of a statutory corporation, is satisfied that the type of company named in the application in accordance with paragraph (c) of section 355(5) is an appropriate company for registration and continuation of the company, the Registrar shall

(a) enter on the register of companies the particulars of the company required under section 21; and

(b) issue a certificate of registration in the prescribed form.

(2) A certificate of registration of a company issued under this section is conclusive evidence that

(a) all the requirements of this Act as to registration have been complied with; and

(b) on and from the date of registration stated in the certificate, the company is registered under this Act.

359. Effect of registration

(1) The registration of a foreign company or a statutory corporation under this Act does not

(a) create a new legal entity;

(b) prejudice or affect the identity of the body corporate constituted by the company or its continuity as a legal entity;

(d) affect proceedings by or against the company.

(2) Proceedings that could have been commenced or continued by or against the foreign company or the statutory corporation before registration under this Act may be commenced or continued by or against the company after registration.

(3) Upon registration of a foreign company or a statutory corporation under this Act all the provisions of this Act shall apply to that company or statutory corporation as if it were a company registered under this Act as a company limited by shares or by guarantee and as a public company or private company, as the case may be.

360. Companies may transfer incorporation

(1) Subject to this Part, a company may be removed from the register of companies in connection with becoming incorporated under the law in force, or in any part of, another country.

(2) An application by a company for removal from the register of companies in connection with becoming incorporated under the law in force in, or in any part of, another country shall be in the prescribed form and shall be accompanied by (a) evidence acceptable to the Registrar that subsection (3) and section 361 have been complied with;

(b) evidence acceptable to the Registrar that the removal of the company from the register is not prevented by section 362;

(c) written notice from the Commissioner of Taxes that the Commissioner has no objection to the company being removed from the register;

(d) evidence acceptable to the Registrar that the company is incorporated under the law; and

(e) any other documents or information the Registrar may require.

(3) A company shall not apply to be removed from the register of companies under section 363 unless the making of the application has been approved by a special resolution.

361. Company to give public notice

A company shall not apply to be removed from the register of companies under section 331(1)(d) unless

(a) the company gives public notice

(i) stating that it intends, after the date specified in the notice, which shall not be less than 20 working days after the date of the notice, to apply under section 360 for the company to be removed from the register in connection with the company becoming incorporated under the law in force in, or in any part of, another country, and

(ii) specifying the country or part of the country under the law of which it is proposed that the company will be incorporated; and

(b) the application is made after that date.

362. Companies that cannot transfer incorporation

(1) A company shall not be removed from the register of companies under section 363 if -

(a) the company is in liquidation or an application has been made to the court under section 370 to put the company into liquidation;

(b) the company has entered into a compromise with creditors or a class of creditors under Part XIV or a compromise has been proposed under that Part in relation to that company; or

(c) a compromise has been approved by the court under Part XV in relation to the company or an application has been made to the court to approve a compromise under that Part.

(2) A company shall not be removed from the register under section 363 unless the company would, immediately before it is removed from the register, satisfy the solvency test.

363. Removal from register

(1) As soon as the Registrar receives a properly completed application under section 360(2) to remove a company from the register, the Registrar shall remove the company from the register.

(2) A company is removed from the register when a notice signed by the Registrar stating that the company is removed from the register is registered under this Act.

(3) The removal of a company from the register of companies under this section does not

(a) prejudice or affect the identity of the body corporate that was constituted under this Act or its continuity as a legal person;

(b) affect the property, rights, or obligations of that body corporate; or

(4) Proceedings that could have been commenced or continued by or against a company before the company was removed from the register under this section may be commenced or continued by or against the body corporate that continues in existence after the removal of the company from the register.

PART XXVI - Winding up and Judicial Management (ss 364-482)

364. Modes of winding up

(1) The winding up of a company may be either

(a) by the court; or

(b) voluntary.

(2) Unless the contrary appears, the provisions of this Act with respect to winding up apply to the winding up of a company by either of those modes.

365. Jurisdiction of Master

For the purposes of the winding up or judicial management of companies the Master shall have the jurisdiction conferred on him by this Part.

366. Liability as contributories of present and past members

In the event of a company being wound up, every present and past shareholder shall, subject to the provisions of this section, be liable to contribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, subject to the following qualifications

(a) in the case of a company limited by shares no contribution shall be required from any shareholder exceeding the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member;

(b) in the case of a company limited by guarantee no contribution shall be required from any member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up;

(c) a past shareholder or member shall not be liable to contribute if he has ceased to be a shareholder or member for a period exceeding one year before the commencement of the winding up;

(d) a past shareholder or member shall not be liable to contribute unless at the commencement of the winding up there is unsatisfied debt or liability of the company contracted before he ceased to be a shareholder or member;

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