Corporate Insolvency Act, 2017

This section gives the Act’s short title and says it starts on a date appointed by the Minister for the Companies Act, 2017 commencement.

This section defines key terms used in the Act, including control, shareholder, and business rescue proceedings.

This provision says that references to appointing a receiver under powers in an instrument also cover appointments made under powers implied by law as if they were vested in that instrument.

The Court may appoint a receiver in certain charge enforcement cases, and a person may appoint a receiver under a deed of appointment.

People who get or appoint a receiver must file notice with the Registrar within 14 days; a receiver must also notify the Registrar and Official Receiver within 14 days, and a person who stops being receiver must notify the Registrar within 7 days.

If a receiver is appointed over a company’s assets, the directors must prepare and submit a statement of the company’s affairs to the receiver within three months, unless the Court directs otherwise.

A person or officer who contravenes section 6, or who gives false or misleading information about a statement of affairs under section 6, commits an offence and may be fined or imprisoned.

If a receiver is appointed, or possession is taken, for a debenture secured by a floating charge while the company is not being wound up, preferential debts must be paid from the assets first.

Rules for who may be appointed receiver, how to get accredited, and when accreditation or acting as receiver is forbidden.

A body corporate or firm cannot be appointed as a receiver; if it acts as receiver, it may be fined up to 200,000 penalty units.

A receiver is entitled to a fee from receivership proceeds, but the fee cannot exceed a prescribed amount unless the Court fixes or changes the remuneration.

A court-appointed receiver must follow the Court’s directions and is treated as an officer of the Court, not of the company, for the property or undertaking.

A receiver appointed under a deed of appointment must follow the deed and any Court directions. The Court may make orders on the receiver’s application to give directions or declare rights.

Receivers may be indemnified for liabilities from contracts they properly enter into, but a receiver is personally liable for contracts made in contravention of the Act.

If a receiver has been appointed, invoices, orders, and business letters issued by or for the company or receiver must state that a receiver has been appointed.

A receiver must manage charged assets to recover secured debt, sell for the highest possible amount if selling, notify the Registrar at least 21 days before disposal, and use public tender or the most transparent method unless directed otherwise.

If a receiver is appointed over all or substantially all of a company’s undertaking, sections 73, 118 and 126 apply as if the company were being wound up and the receiver were the liquidator.

A receiver must file periodic receipts-and-payments abstracts with the Registrar (and sometimes the Official Receiver), and the Registrar may require documents or information. Breach is an offence with a daily fine.

A receiver must report certain compliance issues in writing to the Registrar or Official Receiver as soon as practicable.

This section says when a receiver’s office ends, how a receiver may resign, who may seek removal, and who must give notice and update the Register.

A member may resolve to start business rescue proceedings, but the company must file notices and appoint an administrator within set time limits, and it cannot start liquidation proceedings while business rescue is in effect unless an exception applies.

An affected person may ask the Court to set aside a business rescue resolution or administrator appointment, or to require security, but a director who voted for the resolution is generally barred from applying unless good faith and false or misleading information are shown.

An affected person may ask the Court to put the company under supervision and start business rescue, unless the company has already resolved to commence business rescue under section 21.

Business rescue proceedings start when the Court places the company under supervision, and they end on any of several specified events.

During business rescue proceedings, certain enforcement and timing rules are paused or restricted, subject to listed exceptions.

During business rescue, a company may only dispose of property in limited ways, and people’s rights over company property are restricted unless the business rescue administrator consents.

During business rescue, a company may obtain financing, and certain unpaid employee-related amounts become post-commencement finance and are paid by the stated priority rules.

During business rescue, existing employees keep their jobs on the same terms unless attrition or a lawful new agreement changes them; an administrator may cancel or suspend non-employment contract terms with court leave.

During business rescue proceedings, directors must keep performing their roles under the administrator’s control, respond to the administrator, and provide company information; boards and directors may not act for the company without approval. Changes to issued securities’ classification or status are invalid unless the court directs otherwise or the change is in an approved business rescue plan.

A person may be appointed as a business rescue administrator if qualified as a receiver or otherwise prescribed. Accreditation lasts one year from the date of accreditation and must be renewed annually.

If a business rescue administrator dies, resigns, or is removed from office, the appointing company or creditor must appoint a replacement within 21 days.

A business rescue administrator has control and key powers during business rescue, must prepare and carry out the plan and notices, must report to the Court, and cannot make conflicted appointments without Court approval.

A business rescue administrator must investigate the company and, if rescue is not viable or the company is not financially distressed, notify the Court and others and take the required steps. The administrator must also not be appointed liquidator if the rescue process ends in liquidation.

Directors and the board must assist the business rescue administrator by handing over records, sharing record locations, and filing a statement of affairs on time.

A business rescue administrator is entitled to a fee set by the Minister, but must repay any excess remuneration knowingly collected and may face criminal penalties.

Creditors have notice, participation, voting, committee, and court-review rights in business rescue proceedings; the administrator must determine independence, arrange valuation, and give written notice on time.

During business rescue proceedings, a company’s security holder is entitled to notice, participation, and certain voting and proposal rights.

Shareholders have participation and voting rights during business rescue proceedings, and the business rescue administrator must convene and preside over a first creditors’ meeting within 30 days of appointment.

The business rescue administrator must tell creditors whether rescuing the company still looks reasonably possible, may receive creditors’ proof of claims, and must give seven days’ notice of the first creditors’ meeting to known creditors. Creditors may appoint a committee of creditors, and a non-section-42 creditors’ meeting decides by simple majority of independent creditors voting.

A committee of creditors may consult the business rescue administrator, but it must not direct or instruct that administrator. It must also receive and consider reports and act independently for creditors’ interests.

The administrator must prepare a business rescue plan, the company must publish it within 30 days, and the administrator must then convene and preside over a meeting of affected persons within 21 days after publication.

A business rescue administrator must give all affected persons at least 10 days’ notice of the meeting and include the meeting details, agenda, and a summary of affected persons’ rights to participate and vote.

This section sets out how a business rescue administrator must present and put a business rescue plan to a vote, when the plan is preliminarily approved, and how the company must implement an adopted plan.

After a business rescue plan is rejected, the administrator and affected persons have specific options to seek a revised plan, go to court, adjourn the meeting, or end the proceedings if no action is taken.

A creditor may lose the right to enforce a debt under an approved business rescue plan, and may not enforce pre-proceedings debts except as the plan allows.

This section lets a company, creditor, member, or liquidator ask the Court to convene meetings to consider a compromise or arrangement, and it sets filing, voting, approval, and offence consequences.

A company involved in a compromise or arrangement meeting must prepare and circulate a statement about the arrangement, and a failure to comply is an offence.

If the Court approves a compromise or arrangement for reconstruction or amalgamation, it may order transfers, share allotments, continuation of proceedings, dissolution without winding-up, and related matters. Companies covered by such an order must lodge a copy with the Registrar within 15 days, and failure is an offence with a daily fine.

This provision expands the meaning of “member” for this Part to include certain people alleged or claiming to be liable to contribute to a company’s assets in a winding up.

A company wound up under this Part must be wound up either by the Court or voluntarily.

This section says which companies are covered and requires members to contribute on winding-up.

Members of certain companies do not have to contribute more than the specified limit.

A member’s liability becomes a specially accruing debt once that liability starts, and payment is due when calls are made to enforce it.

If a member dies or becomes bankrupt, the personal representative or trustee in bankruptcy takes on the member’s liability in the winding-up process.

The Court may wind up certain bodies corporate under this Act, including those incorporated in Zambia and certain foreign companies linked to Zambia.

Section 56 sets out who may petition for a company to be wound up by the Court and when the Court may refuse to hear or make a winding-up order.

The Court may order a company to be wound up if certain grounds are met, including insolvency, unlawful purpose, fraud, reduced membership, expiry of duration, or if it is just and equitable.

This section sets when a company’s winding-up is treated as having started, depending on whether a special resolution for voluntary winding-up was passed before the court petition.

In a winding-up, certain persons must continue the proceedings at their own cost until a liquidator is appointed, and the liquidator must usually reimburse the petitioner and taxed costs from company assets unless the Court orders otherwise.

The Court may grant, dismiss, adjourn, or otherwise manage a winding-up petition, and may make related procedural orders.

A person covered by section 56(1) may ask the Court to halt or restrict proceedings against a company after a winding-up petition is presented and before a winding-up order is made.

After a court winding-up has started, certain company dispositions and share transfers are void unless the Court orders otherwise.

After a court winding-up starts, attachment, sequestration, distress, or execution against a company’s estate or assets is void.

After a winding-up order is made, the petitioner must file and serve copies of the order within 14 days, and the Registrar must publish notice in the Gazette after receiving the lodged copy.

The Court may appoint a provisional liquidator before a winding-up order is made, and that person may act with a liquidator’s powers subject to limits. A non-Official Receiver provisional liquidator must be accredited by the Registrar.

If a winding-up order is made or a provisional liquidator is appointed, proceedings against the company cannot continue or start unless the Court gives leave and sets terms.

This section says who acts as liquidator when one is not appointed, how a provisional liquidator keeps functioning, and what the Court and Registrar must do about vacancies and notices.

A court-appointed liquidator who is not the Official Receiver must lodge notice with the Official Receiver, give any security directed, and assist the Official Receiver with company information and access.

The Official Receiver must look into a court winding-up and may take appropriate action if the liquidator is not performing properly or someone complains.

A liquidator may be paid remuneration, but the amount is limited and can be set or reviewed by agreement, creditors, or the Court.

A liquidator or provisional liquidator must take company property into custody or control, and the Court can order property to vest in them.

A company must prepare and give the liquidator a statement about its affairs within three months of a liquidator being appointed, unless the Court directs otherwise.

A liquidator must file a report on the company’s property and affairs within three months after receiving the statement of affairs, unless the Court allows more time.

A liquidator may carry on the company’s business for up to four weeks after a winding-up order, and may take listed steps to wind up the company and distribute assets, subject to stated authorities and conditions.

A liquidator must follow creditor or member directions in managing and distributing company assets, may call meetings of creditors or members, may ask the Court for directions, and must use sound judgment.

A liquidator may call separate meetings of creditors and members, and must do so if a creditor or member asks. The Court decides disputes between those meetings and may make any appropriate order.

This section sets how a committee of inspection meets, acts, loses members, and fills vacancies.

A liquidator may apply to the Court for an order releasing the liquidator and dissolving the company once the listed winding-up steps are done, or if the liquidator resigns or is removed.

The Court may release a liquidator and dissolve the company if the winding-up requirements are satisfied, and the liquidator must file a copy of the order within 21 days.

The court may stay winding-up proceedings and may require a liquidator’s report; copies of orders must be lodged and published on a timetable, and failure to comply is an offence.

A court may appoint a special manager on a liquidator’s application, and the manager must give security, take court-approved remuneration, give one month’s written notice to resign, and may be removed by the court.

The Court may set a deadline for creditors to prove their claims, adjust members’ rights, distribute any surplus, and decide the order of payment for winding-up costs if assets are insufficient.

After a winding-up order, the Court may order inspection of the company’s records by creditors and members, and they may inspect records in line with that order.

The Court may summon, examine, and require documents from people connected with a company, and may order a non-appearing summoned person to be brought before the Court.

The Court may order certain people to attend and be examined after a liquidator reports suspected fraud, concealment, or misconduct.

The Court may order the arrest and detention of a member, officer, or former member/officer of a company in winding-up situations if there is probable cause to believe the person is about to leave or abscond from Zambia, or hide property to avoid paying money due or being examined.

The Court’s powers under this Act are additional to, and do not limit, existing powers to start proceedings to recover debts or other sums.

A company may be voluntarily wound up by special resolution, but if the company’s term has expired or dissolution has occurred, it stands dissolved. After a voluntary winding-up resolution, the company must file a copy with the Registrar within 14 days, and the Registrar must publish notice in the Gazette within 7 days.

A voluntary winding-up starts when the special resolution for it is passed in accordance with section 88.

During winding-up, the company must stop doing business except what the liquidator considers necessary, and members’ shares cannot be transferred or changed without the liquidator’s approval.

Directors may make a written solvency declaration before voluntary winding-up, but they must attach a company affairs statement and the declaration only works if timing and lodging requirements are met.

After winding-up starts, the company must appoint liquidator(s), set their pay, file the resolution with the Registrar within 14 days, and the Registrar must publish notice.

If a liquidator cannot pay the company’s debts in full within the solvency-declaration period, the liquidator must call a creditors’ meeting right away and file a statement later; failure can trigger an offence and daily fines.

A company in voluntary winding-up may resolve to stay the winding-up, and certain people may apply to court for orders and take part in the hearing. Notice, filing, and publication deadlines apply, and non-compliance can be an offence with a fine.

This section requires a company in a creditors’ voluntary winding-up process to notify and meet creditors, disclose key information, and nominate a liquidator.

Creditors must appoint a committee of inspection for the winding-up of a company by resolution.

The committee of inspection must set the liquidator’s remuneration, within the limit set by ministerial regulations. When a liquidator is appointed, directors’ powers pass to the liquidator and directors stop exercising them unless the committee of inspection authorises otherwise.

After a creditor’s voluntary winding-up begins, most actions or proceedings against the company must stop unless the Court allows them.

On a company’s voluntary winding-up, its assets must be distributed first to satisfy liabilities with equal priority, and then among members according to their rights and interests in the articles, subject to this Act and other preferential-payments law.

The Court may appoint a liquidator during winding-up, and may remove and replace a liquidator during a voluntary winding-up if cause is shown.

During a voluntary winding-up, a member, creditor, or liquidator may apply to the Court to review the liquidator’s remuneration.

During a voluntary winding-up, a liquidator may exercise certain powers, convene company meetings, and, if there are multiple liquidators, act according to the appointment terms or with at least two liquidators if no terms are set.

A liquidator may take shares, cash, debentures, or similar interests as payment for selling a company’s property, and may make other profit-sharing arrangements for members.

If a voluntary winding-up lasts more than a year, the liquidator must convene the required meetings and present an account each year.

After a company’s affairs are fully wound up, the liquidator must report on the winding-up, convene the required meeting(s), and file returns; the Registrar then strikes the company off the register and publishes notice, after which the company is dissolved.

An arrangement made with creditors during voluntary winding-up is binding if approved by the required resolutions, but it can be appealed to court.

A liquidator, member, or creditor may ask the Court to decide a question in a company’s voluntary winding-up or to use powers the Court would have in a court winding-up.

In a voluntary winding-up, the company’s assets must first pay the winding-up costs, charges, expenses, and the liquidator’s remuneration.

A company cannot resolve to be voluntarily wound up without the Court’s leave when a petition has been filed on the ground that it failed the solvency test.

The Court may direct a creditors’ meeting during a winding-up and decide how it is convened and conducted.

A company must give notice of a creditors’ meeting within 14 days of the order, and creditors generally vote in proportion to the balance owed to them unless the Court orders otherwise.

A person may act as a liquidator only if eligible; several disqualifications apply, and breach is an offence.

A liquidator’s acts remain valid even if there is a defect in the liquidator’s appointment or qualification.

Liquidators must keep proper records, and creditors or members may inspect those records. The Court can investigate liquidators and make orders, including requiring delivery of company property or records.

A liquidator must dispose of company assets by public tender or the most transparent method available, and must notify the Registrar at least seven days before disposal.

If there is no committee of inspection, the Official Receiver may perform committee functions in a liquidation.

A person aggrieved by a liquidator’s act or decision may apply to the Court, and the Court may confirm, reverse, or modify it.

A liquidator must file notice of appointment and office/postal address details with the Registrar and Official Receiver within 21 days, and report any later changes within 21 days.

Liquidators must file periodic accounts and related statements, keep copies available for inspection, and may face penalties for non-compliance.

After a company starts winding up, any company document showing the company name must include the words “in liquidation” after the name.

When a company is dissolved, the liquidator must keep the company’s records for 10 years unless the Court orders otherwise.

If a company in liquidation has surplus funds, the committee of inspection or, if there is no committee, the liquidator may direct payment to members, unless the Court orders otherwise on a creditor’s application.

In a liquidation, the liquidator must put certain unclaimed funds and dividends into the Company’s Liquidation Account, and the Official Receiver and Court have related payment, audit, and appeal powers.

A liquidator must not incur winding-up expenses unless the Official Receiver expressly directs it and there are sufficient available assets.

In company winding-up matters, the Court may consider relief sought by members or creditors, order a meeting, appoint a chairperson, and require the chairperson to report the meeting result to the Court.

In a winding-up, debts and claims can be proved against the company, and the liquidator must make a just estimate of any debt or claim without a certain value.

In a winding-up, certain debts are paid first, including liquidation costs, some employee claims, taxes and rates, and some other priority amounts.

Certain acts affecting a wound-up company’s property are void or voidable if they would be void or voidable in bankruptcy law; a transfer of all property to trustees made to defraud creditors is void.

A floating charge created within one year before winding-up is void unless it is proved the company was solvent immediately after the charge was created.

If a company bought property or an undertaking from a director-related seller within two years before winding-up, and a valuation report shows the price was higher than the property’s value, the liquidator must recover the difference from the director or company.

A liquidator may disclaim certain onerous company property only with court leave or written committee consent, and the court/committee can set conditions.

A creditor generally cannot keep the benefit of execution or attachment once the company is wound up, unless execution or attachment was completed before the relevant notice or commencement notice. A good-faith buyer at a sheriff’s sale gets good title, and the Court may vary this rule in the creditor’s favour.

This section tells the sheriff how to handle company assets and sale proceeds when winding-up notices are served, and gives the liquidator and Court limited control over the balance.

An officer of a company commits an offence if they help contract a company debt while having no reasonable ground to believe the company can pay it.

During a winding-up, the Court may investigate a promoter, liquidator, or officer and may order repayment, restoration, or compensation if misconduct is found.

During a court or voluntary winding-up, suspected offences by company officers or members must be reported to the Director of Public Prosecutions and the investigative wing.

An officer of a company being wound up must not use false pretences, fraudulent means, or conceal or remove company property to defraud creditors. Breach is an offence.

This section applies the Part, with necessary modifications, to certain incorporated bodies in Zambia, except where local law already provides specific winding-up rules. A court winding-up under this section can be made only on the body corporate’s petition.

This section lets a foreign company in Zambia be wound up, and lets the Court validate certain Zambia transactions in a winding-up order or on a liquidator’s application.

This section lets an insolvency practitioner be appointed for this Act or to supervise an approved voluntary winding up, but bars companies and body corporates from being appointed or accredited as insolvency practitioners.

A person must not be appointed or continue acting as an insolvency practitioner if any listed disqualification applies.

A person who wants to be an insolvency practitioner must apply to the Registrar for accreditation, pay the prescribed fee, and follow the prescribed form and process.

The Registrar must keep a register of insolvency practitioners, notify the recognised professional body about misconduct or removals, and publish removal notices within 14 days. The Registrar may remove a person for up to five years on specified grounds, and continued practice in breach of the section is an offence.

An insolvency practitioner may be appointed to work on or take part in an insolvency proceeding in a foreign State, if this Act and the foreign law allow it.

A person may be eligible for accreditation as an insolvency practitioner if they are a chartered accountant or a legal practitioner.

This Part applies only in specified cross-border insolvency situations, and it does not apply to registered banks or financial institutions.

The Court must perform the Part’s functions on recognition of foreign proceedings and co-operation with foreign courts, and it may direct other persons to do so.

The Court may refuse to act or participate in a matter if doing so would be contrary to the public policy of Zambia.

This section says the Court or an insolvency practitioner may provide assistance to a foreign representative, so long as it is in accordance with other laws of Zambia.

The Court’s jurisdiction is limited: foreign representatives and a debtor’s foreign assets and affairs are not subject to the Court except for an application under this Part, and creditors or foreign representatives cannot directly access, start, or join Court proceedings in an insolvency proceeding under this Part.

A creditor or foreign representative must appoint an insolvency practitioner and may take part in the insolvency proceeding only with the Court’s leave.

An insolvency practitioner may apply to the Court for recognition of a foreign proceeding, but the application must include supporting foreign-court confirmation, a statement of known related foreign proceedings, and English or certified-translated documents.

The Court must recognise a foreign proceeding as either a foreign main or foreign non-main proceeding if the stated conditions are met.

If urgent relief is needed to protect a debtor’s assets or creditors’ interests, the Court may grant interim relief on application by an appointed insolvency practitioner.

After recognition of a foreign proceeding, an insolvency practitioner may ask the Court for relief, and the Court may grant, limit, modify, or end that relief if the statutory conditions are met.

The Court must cooperate and communicate with a foreign court or foreign representative in proceedings under this Part. An insolvency practitioner may do the same directly, but only under the Court’s supervision.

Cooperation and communication under this Part may be carried out by appropriate means, including appointing a person or body to act at the Court’s direction, transmitting and receiving information, and coordinating the administration and supervision of a debtor’s assets or property.

After recognition of a foreign main proceeding, an insolvency proceeding may be started only if the debtor has assets in Zambia.

When foreign and insolvency proceedings run at the same time for the same debtor, the Court must coordinate them and keep or change relief so it fits the insolvency proceeding.

A creditor who has already received part payment in a foreign proceeding may not get payment again for the same claim in an insolvency proceeding, unless other creditors of the same class are paid proportionately less.

The Minister may make regulations by statutory instrument for cross-border insolvency matters.

This section allows certain documents and processes to be handled electronically, including lodging documents with the Registrar, using electronic means for compliance, keeping an electronic share register, and dealing with Registrar documents in electronic form.

On sequestration of either party’s estate, an unperformed obligation tied to transferred collateral security ends automatically, is valued at market value on that date, netted off, and the net amount paid.

The Registrar must not use a discretionary or other power adversely or arbitrarily, and a person challenging the Registrar’s decision may apply to the Court.

The Registrar must provide a certificate or copies of certain documents when any person requests them and pays the prescribed fee.

The Registrar must register filed documents in the required form and manner, and companies must lodge separate documents or particulars when required; the Registrar can refuse non-compliant filings and impose extra filing requirements.

The Registrar may extend a lodgement period before it ends, accept late documents on payment of a prescribed additional fee, and may reduce or waive that fee in limited circumstances.

If this Act requires a document or register to be prepared, kept, maintained, or lodged, it must be in English. The Registrar may also require a certified English translation for a lodged document or part of a document in another language.

The Registrar may impose an administrative penalty for non-compliance with the Act, capped at the amount set by the Minister per day, and the penalty must be paid to the Agency within the time set by the Registrar.

Company officers and certain other persons commit offences if they conceal, falsify, fail to disclose, or improperly deal with company property or records during winding-up or related proceedings.

A person must not give or help give consideration to secure or prevent someone’s appointment or nomination as an insolvency practitioner.

An officer or member who acts with intent to defraud in the listed ways commits an offence and may be fined, imprisoned, or both.

If a company fails to keep proper books of account in the relevant period, defaulting officers commit an offence and face a fine or imprisonment. An officer who helped contract a debt without reasonable grounds to believe the company could pay its liabilities also commits an offence.

If a company is carried on fraudulently, the Court can make knowingly involved الأشخاص personally liable for the company’s debts or liabilities.

If an offence is committed by a body corporate or unincorporated body, a suspected and charged director, manager, or shareholder may be liable on conviction to the penalty for the offence, unless a director or manager proves the offence happened without their knowledge, consent, or connivance, or that they took reasonable steps to prevent it.

If a person is convicted of an offence under this Act and no penalty is provided, they are liable to a fine up to 100,000 penalty units, imprisonment up to one year, or both.

The Chief Justice may make rules, by statutory instrument, to regulate appeals under this Act.

The Minister may make regulations by statutory instrument for carrying out this Act.

People who were company receivers or liquidators when this Act started continue in that role as if accredited under the Act.