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Companies Act 1993

Schedule 5: Proceedings at meetings of creditors

You could also call this:

“How creditors' meetings are run and decisions are made”

This schedule outlines how meetings of creditors should be conducted. You can hold these meetings in person, through audio or video communication, or by postal ballot. The person organising the meeting must send a written notice to all creditors at least 5 working days before the meeting. This notice should explain what will be discussed and include voting papers.

At the meeting, a liquidator or their nominee usually acts as the chairperson. If they’re not present, the creditors choose someone to lead the meeting. For the meeting to be valid, at least three creditors (or all creditors if there are three or fewer) must attend or vote by post. Decisions are made by a majority vote, with each creditor’s vote weighted based on how much the company owes them.

Creditors can vote in person, by proxy (someone voting on their behalf), or by postal vote. If you want to use a proxy or postal vote, you need to follow specific rules about appointing proxies and submitting voting papers on time. The person running the meeting must keep accurate minutes, which serve as an official record of what happened.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM323523.

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5Proceedings at meetings of creditors

1Methods of holding meetings

  1. A meeting of creditors may be held—

  2. by assembling together those creditors entitled to take part and who choose to attend at the place, date, and time appointed for the meeting; or
    1. by means of audio, or audio and visual, communication by which all creditors participating can simultaneously hear each other throughout the meeting; or
      1. by conducting a postal ballot in accordance with clause 7 of those creditors entitled to take part.

        2Notice of meeting

        1. Written notice of—

        2. the time and place of every meeting to be held under clause 1(a); or
          1. the time and method of communication for every meeting to be held under clause 1(b); or
            1. the time and address for the return of voting papers for every meeting to be held under clause 1(a) or (b) or (c)—
                1. must be sent to every creditor entitled to attend the meeting, and to any liquidator not less than 5 working days before the meeting.

              1. The notice must—

              2. state the nature of the business to be transacted at the meeting in sufficient detail to enable a creditor to form a reasoned judgment in relation to it; and
                1. set out the text of any resolution to be submitted to the meeting; and
                  1. include a voting paper in respect of each such resolution and voting and mailing instructions; and
                    1. state that if a creditor votes by casting a postal vote in respect of a resolution that is to be submitted to the meeting and a different resolution is submitted to the meeting,—
                      1. the creditor's postal vote is invalid in respect of that different resolution; but
                        1. the creditor may vote, in respect of that different resolution, either by being present in person or by proxy.

                        2. An irregularity in or a failure to receive a notice of meeting of creditors does not invalidate anything done by a meeting of creditors if—

                        3. the irregularity or failure is not material; or
                          1. all the creditors entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity or failure; or
                            1. all such creditors agree to waive the irregularity or failure.

                              1. If the meeting of creditors agrees, the chairperson may adjourn the meeting from time to time and from place to place.

                              2. An adjourned meeting must be held in the same place unless another place is specified in the resolution for the adjournment.

                              3. If a meeting of creditors under clause 1(a) or (b) is adjourned for less than 30 days, it is not necessary to give notice of the time and place of the adjourned meeting other than by announcement at the meeting which is adjourned.

                              Notes
                              • Schedule 5 clause 2(2)(c): amended, on , by section 21(1) of the Companies Amendment Act 1998 (1998 No 31).
                              • Schedule 5 clause 2(2)(d): inserted, on , by section 21(1) of the Companies Amendment Act 1998 (1998 No 31).

                              3Chairperson

                              1. If a liquidator has been appointed and is present, or if the liquidator has appointed a nominee and the nominee is present, he or she must act as chairperson of a meeting held in accordance with clause 1(a) or (b).

                              2. At any meeting of creditors, not being a meeting held for the purposes of section 230, where neither the liquidator nor any nominee of the liquidator is present, the creditors participating must choose one of their number to act as chairperson of the meeting.

                              3. At any meeting of creditors held for the purposes of section 230 where there is no liquidator or neither the liquidator nor any nominee of the liquidator is present, the proponent of the compromise or the proponent's nominee must act as chairperson of the meeting; but if neither the proponent nor any nominee of the proponent is present, the creditors participating must choose one of their number to act as chairperson of the meeting.

                              4. The person convening a meeting under clause 1(c) must do everything necessary that would otherwise be done by the person chairing a meeting.

                              Notes
                              • Schedule 5 clause 3(2): replaced, on , by section 21(2) of the Companies Amendment Act 1998 (1998 No 31).
                              • Schedule 5 clause 3(2A): inserted, on , by section 21(2) of the Companies Amendment Act 1998 (1998 No 31).

                              4Quorum

                              1. A quorum for a meeting of creditors is present if—

                              2. 3 creditors who are entitled to vote or their proxies are present or have cast postal votes; or
                                1. if the number of creditors entitled to vote does not exceed 3, the creditors who are entitled to vote or their proxies are present or have cast postal votes.

                                  1. If a quorum is not present within 30 minutes after the time appointed for the meeting, the meeting is adjourned to the same day in the following week at the same time and place, or to such other date, time, and place as the chairperson may appoint, and if, at the adjourned meeting, a quorum is not present within 30 minutes after the time appointed for the meeting, the creditors present or their proxies are a quorum.

                                  5Voting

                                  1. At any meeting of creditors or a class of creditors, not being a meeting held for the purposes of section 230, a resolution is adopted if a majority in number and value of the creditors or the class of creditors voting in person or by proxy vote or by postal vote in favour of the resolution.

                                  2. At any meeting of creditors or a class of creditors held for the purposes of section 230, a resolution is adopted if a majority in number representing 75% in value of the creditors or class of creditors voting in person or by proxy vote or by postal vote in favour of the resolution.

                                  3. A creditor chairing the meeting does not have a casting vote.

                                  Notes
                                  • Schedule 5 clause 5(1): amended, on , by section 23(1) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).
                                  • Schedule 5 clause 5(2): amended, on , by section 23(1) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

                                  6Proxies

                                  1. A creditor may exercise the right to vote either by being present in person or by proxy.

                                  2. A proxy for a creditor is entitled to attend and be heard at a meeting of creditors as if the proxy were the creditor.

                                  3. A proxy must be appointed by notice in writing signed by the creditor and the notice must state whether the appointment is for a particular meeting or a specified term not exceeding 12 months.

                                  4. No proxy is effective in relation to a meeting unless a copy of the notice of appointment is delivered to the liquidator or, if no liquidator is acting, to the person by whom the notice convening the meeting was given, not less than 2 working days before the start of the meeting.

                                  Notes
                                  • Schedule 5 clause 6(4): amended, on , by section 23(2) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

                                  7Postal votes

                                  1. A creditor entitled to vote at a meeting of creditors held in accordance with clause 1(a) or (b) or (c) may exercise the right to vote by casting a postal vote in relation to a matter to be decided at that meeting.

                                  2. If a creditor votes by casting a postal vote in respect of a resolution that is to be submitted to the meeting and a different resolution is submitted to the meeting,—

                                  3. the creditor's postal vote is invalid in respect of that different resolution; but
                                    1. the creditor may vote, in respect of that different resolution, either by being present in person or by proxy.

                                      1. The notice of meeting must state the name of the person authorised to receive and count postal votes in relation to that meeting.

                                      2. If no person has been authorised to receive and count postal votes in relation to a meeting, or if no person is named as being so authorised in the notice of the meeting, every director, or if the company is in liquidation, the liquidator, is deemed to be so authorised.

                                      3. A creditor may cast a postal vote on all or any of the matters to be voted on at the meeting by sending a marked voting paper to a person authorised to receive and count postal votes in relation to that meeting, so as to reach that person not less than 2 working days before the start of the meeting or, if the meeting is held under clause 1(c), not later than the date named for the return of the voting paper.

                                      4. It is the duty of a person authorised to receive and count postal votes in relation to a meeting—

                                      5. to collect together all postal votes received by him or her; and
                                        1. in relation to each resolution to be voted on,—
                                          1. to count the number of creditors or creditors belonging to a class of creditors, as the case may be, voting in favour of the resolution and determine the total amount of the debts owed by the company to those creditors; and
                                            1. to count the number of creditors or creditors belonging to a class of creditors, as the case may be, voting against the resolution and determine the total amount of the debts owed by the company to those creditors; and
                                            2. to sign a certificate—
                                              1. that he or she has carried out the duties set out in paragraphs (a) and (b); and
                                                1. stating the results of the counts and determinations required by paragraph (b); and
                                                2. to ensure that the certificate required by paragraph (c) is presented to the person chairing or convening the meeting.

                                                  1. If a vote is taken at a meeting held under clause 1(a) or (b) on a resolution on which postal votes have been cast, the person chairing the meeting must include the results of voting by all creditors who have sent in a voting paper duly marked as for or against the resolution.

                                                  2. A certificate given under subclause (5) in relation to the postal votes cast in respect of a meeting of creditors must be annexed to the minutes of the meeting.

                                                  Notes
                                                  • Schedule 5 clause 7(1A): inserted, on , by section 21(3) of the Companies Amendment Act 1998 (1998 No 31).
                                                  • Schedule 5 clause 7(4): amended, on , by section 23(3) of the Companies Act 1993 Amendment Act 1997 (1997 No 27).

                                                  8Minutes

                                                  1. The person chairing a meeting of creditors, or in the case of a meeting held under clause 1(c), the person convening the meeting, must ensure that minutes are kept of all proceedings.

                                                  2. Minutes which have been signed correct by the person chairing or convening the meeting are prima facie evidence of the proceedings.

                                                  9Corporations may act by representatives

                                                  1. A body corporate which is a creditor may appoint a representative to attend a meeting of creditors on its behalf.

                                                  10Other proceedings

                                                  1. Except as provided in this schedule and in any regulations made under this Act, a meeting of creditors may regulate its own procedure.

                                                  11Effect of irregularity or defect

                                                  1. An irregularity or defect in the proceedings at a meeting of creditors does not invalidate anything done by a meeting of creditors, unless the court orders otherwise.

                                                  2. The court may, on the application of the liquidator or a creditor of the company, make an order under subclause (1) if it is satisfied that substantial injustice would be caused if the order were not made.

                                                  Notes
                                                  • Schedule 5 clause 11: inserted, on , by section 21(4) of the Companies Amendment Act 1998 (1998 No 31).