Insolvency Law at Samoa
Samoa's insolvency framework is primarily governed by the Companies Act 2001, the Receiverships Act 2006, and the Companies Amendment Act 2006. These laws establish procedures for corporate insolvency, including liquidation, receivership, and director responsibilities. (Legislation | Ministry of Commerce, Industry & Labour - Samoa)
🏛️ Legal Framework
Companies Act 2001
The Companies Act 2001 provides the legal foundation for corporate operations in Samoa. Key provisions include:
Director's Duty in Insolvency: Directors must call a meeting within 10 working days if the company is insolvent, to decide on appointing an administrator or liquidator. (Companies (Samoa))
Solvency Test: A company is solvent if it can pay its debts as they fall due and if its assets exceed its liabilities. (Learn about being a company director | Ministry of Commerce, Industry & Labour - Samoa)
Director's Liability: Failure to act in accordance with insolvency provisions can result in personal liability for directors. (Companies (Samoa))
Receiverships Act 2006
The Receiverships Act 2006 outlines the process for appointing a receiver to manage a company's assets. Key aspects include: (Legislation | Ministry of Commerce, Industry & Labour - Samoa)
Appointment of Receiver: A receiver can be appointed by a secured creditor or the court. (Constitution of the Independent State of Samoa 1960 (as consolidated on June 20, 2016), Samoa, WIPO Lex)
Powers and Duties: The receiver has the authority to take control of the company's assets, manage them, and distribute proceeds to creditors.
Liabilities: Receivers are liable for their actions and must act in the best interests of creditors.
Companies Amendment Act 2006
The Companies Amendment Act 2006 introduces additional provisions to enhance corporate governance and accountability. Notable provisions include: (Legislation | Ministry of Commerce, Industry & Labour - Samoa)
Director's Responsibility for Accounting Records: Directors are required to ensure proper accounting records are maintained. (Companies Amendment Act (Samoa))
Court's Power to Declare Personal Liability: The court can declare directors personally liable for debts if they fail to comply with accounting record requirements. (Companies Amendment Act (Samoa))
⚖️ Insolvency Process Overview
1. Initiation of Insolvency
Insolvency proceedings can be initiated through:
Voluntary Liquidation: Initiated by the company's directors or shareholders.
Compulsory Liquidation: Initiated by a creditor through a court application.
Receivership: Appointed by a secured creditor to manage the company's assets.
2. Appointment of Administrator or Liquidator
Upon initiation:
Administrator: Appointed to manage the company's affairs and attempt to rescue the company. (Angela Barkhouse (Liquidator of Aabar Investments PJS Ltd ((in Liquidation))) v Aabar Investments PJS Ltd ((in Liquidation)) - Case Law - VLEX 1044668507)
Liquidator: Appointed to wind up the company's affairs, sell assets, and distribute proceeds to creditors.
3. Distribution of Assets
In liquidation:
Secured Creditors: Paid first from the proceeds of the sale of secured assets.
Preferential Creditors: Paid next, including employees and tax authorities. (Companies Amendment Act (Samoa))
Unsecured Creditors: Paid from any remaining funds.
Shareholders: Paid last, if any funds remain.
4. Director's Responsibilities
Directors must: (Learn about being a company director | Ministry of Commerce, Industry & Labour - Samoa)
Monitor Solvency: Regularly assess the company's ability to pay debts. (Companies (Samoa))
Act Promptly: If insolvency is suspected, call a directors' meeting within 10 working days. (Learn about being a company director | Ministry of Commerce, Industry & Labour - Samoa)
Maintain Records: Ensure proper accounting records are kept. (Companies Amendment Act (Samoa))
Failure to fulfill these duties can result in personal liability for directors. (Companies (Samoa))
📚 Further Reading
Ministry of Commerce, Industry & Labour - Samoa
RELATED Blog
0 comments