Bill: Proposed The Companies Act

[Asqii]

Author: Omegabiebel
Sponsor: Jebediah Crumplesnatch, MP
Type: Act of Parliament

A
BILL
TO
Provide for Companies​

Preamble:
1. Whereas the current framework is missing a large amount of statutes that make certain actions legally uncertain;
2. Whereas company formation is currently extremely expensive;
3. Whereas it is currently impossible to have multiple share classes;
4. Whereas there are insufficient protections for shareholders, creditors and other related parties against fraud and other destructive practices that lower trust between parties in the economy;
5. Whereas the above stated reasons create an environment that is inhibitive for investment and subsequent economic growth, this Act seeks to solve these problems;
6. Whereas the author understands that this bill is long, but hopes that MPs will understand that this is a complex topic where ambiguity can lead to scams, fraud and other destructive practices;
7. Whereas in real life, the length of this legislation is much worse, with the UK legislation 761 pages, the guernsey legislation 835 pages, the Jersey legislation 299 pages (excluding several hundred pages in default governance documents), the Delaware legislation 144 pages (although this is basically a wall of small text);
8. Whereas this legislation is the most condensed it can be, and removal of certain provisions are almost guaranteed to lead to ambiguity and harm;

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PART I — PRELIMINARIES
1. Definitions
In this Act, unless the context otherwise requires:
(a) Issued shares means all shares of a company that have been allotted, whether held by a shareholder or held by the company as treasury shares.
(b) Outstanding shares means all issued shares other than treasury shares.
(c) Authorised shares means all shares authorised by the Certificate of incorporation.
(d) Person means an individual or undertaking.
(e) Member means a shareholder or a guarantor member.
(f) Shareholder means a person holding a share of a company.
(g) Guarantor member means a person who is part of a guarantor class and who undertakes to contribute the guaranteed amount to the assets of the company.
(h) Registered Shares means the shares registered to a person in the share register.
(i) Agent means a person, including other entities, directors, officers, and employees, directly acting on behalf of the company. This does not include legal representation or members of the company.
(j) Undertaking means a company or a sole proprietorship.
(k) A company shall be limited by shares if it has at least one share class and no guarantor classes.
(l) A company shall be limited by guarantee if it has at least one guarantor class and no share classes.
(m) A company shall be of mixed liability if it has at least one share class and at least one guarantor class.
(n) Characteristic means the voting powers, full or limited, or without voting powers, and the designations, preferences and relative, participating, optional or special rights and qualifications, powers, conditions, obligations, limitations or restrictions attached to a class.
(o) Distribution has the meaning given in section 77.
(p) Solvency statement has the meaning given in section 125, and a company satisfies the solvency test where its directors are able to make a solvency statement.
(q) Member register means the share register and the guarantor register.
(r) Limited life company means a company whose Certificate of incorporation limits its existence under section 24(c)(iv), whether by reference to a date, to the expiry of a period, or to the occurrence of an event; and the limitation so specified is its limited life.
(s) MEA means the Ministry of Economic Affairs.
(t) In-game company, in-game corporation or in-game business shall have the same meaning and shall mean the “corporation” in the CityCorp plugin
2. Meaning of "Subsidiary", "Wholly-Owned Subsidiary" and "Holding Body"
(a) A company is a subsidiary of another company if the second company:
(i) holds a majority of the voting rights in the first company;
(ii) is a member of the first company and has the right to appoint or remove a majority of the board of directors of the first company;
(iii) is a member of the first company and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the first company; or
(iv) has a subsidiary of which the first company is a subsidiary.
(b) A company is a wholly-owned subsidiary of another company if the first company has no members except:
(i) the second company; and
(ii) wholly-owned subsidiaries of, or persons acting on behalf of, the second company or the second company's wholly-owned subsidiaries.
(c) A company is the holding body of another company if the second company is a subsidiary of the first company.
(d) A holding company is a company that is a holding body.
3. Further Provisions Relating to Subsidiaries and Holding Bodies
The provisions of this section explain expressions used in section 2 and otherwise supplement that section.
(a) In section 2(a)(i) and (iii), the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares, or (in the case of a company not having a share capital) on members, to vote at general meetings of the company on all or substantially all matters.
(b) In section 2(a)(ii), the reference to the right to appoint or remove a majority of a board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all or substantially all matters; and for the purposes of that provision:
(i) a company shall be treated as having the right to appoint to a directorship if:
(1) a person's appointment to it follows necessarily from the person's appointment as director of the company; or
(2) the directorship is held by the company itself;
(ii) a right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship.
(c) In relation to rights which are exercisable only in certain circumstances:
(i) they shall be taken into account only when the circumstances have arisen and for so long as they continue to obtain, or when the circumstances are within the control of the person having the rights; and
(ii) rights which are normally exercisable but are temporarily incapable of exercise shall continue to be taken into account.
(d) Rights held by a person in a fiduciary capacity shall be treated as not held by the person.
(e) Rights held by a person as nominee for another shall be treated as held by the other; and rights shall be regarded as held as nominee for another if they are exercisable only on their instructions or with their consent or concurrence.
(f) Rights attached to shares held by way of security shall be treated as held by the person providing the security:
(i) where, apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with the person's instructions; and
(ii) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in the person's interests.
(g) Rights shall be treated as held by a company if they are held by any of its subsidiaries; and nothing in subsections (d) to (f) shall be construed as requiring rights held by a company to be treated as held by any of its subsidiaries.
(h) For the purposes of subsection (f), rights shall be treated as being exercisable in accordance with the instructions or in the interests of a company if they are exercisable in accordance with the instructions of, or in the interests of:
(i) any subsidiary or holding body of the first company; or
(ii) any subsidiary of a holding body of the first company.
(i) The voting rights in a company shall be reduced by any rights held by the company itself.
(j) References in any of subsections (d) to (i) to rights held by a person include rights falling to be treated as held by the person by virtue of any other provision of those subsections, but do not include rights which by virtue of any such provision are to be treated as not held by the person.
4. Relationship with Other Laws
(a) This Act applies subject to any other law of Azalea that regulates a particular class of undertaking, or that requires an undertaking to be constituted, governed, or wound up in a particular manner; and in any conflict between this Act and such a law, that law prevails to the extent of the inconsistency.
(b) Without limiting subsection (a), this Act is subject to the Banking Foundations Act in respect of financial institutions, and to the Seizure Act in respect of a company that has been seized.
(c) Where another law of Azalea requires or permits a company to be structured otherwise than as this Act provides, including as to the creation of shares or the composition of its governing body, that requirement or permission has effect and this Act applies subject to it.
(d) A company is not subject to the company requisition process under the Inactive Requisition Act, and the assets of a company may not be requisitioned under that Act; but shares and other membership interests held in a company by a person are assets of that person and may be requisitioned as such.
(e) A sole proprietorship, and its assets, remain subject to the Inactive Requisition Act.

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PART II — NATURE AND TYPES OF COMPANIES
5. Nature of a Company
(a) A company is a legal person, separate and distinct from its members and agents, which comes into existence upon incorporation and continues until it is dissolved; and it has legal personality with rights, assets and liabilities of its own.
6. Types of Company
(a) An undertaking is either:
(i) a company; or
(ii) a sole proprietorship.
(b) In respect of the liability of its members, a company is:
(i) limited by shares;
(ii) limited by guarantee; or
(iii) of mixed liability.
7. Company Limited by Shares
(a) A company limited by shares shall have a share capital.
(b) A company limited by shares shall have members whose liability for the company's debts is limited to the amount, if any, unpaid on the shares held by them.
8. Company Limited by Guarantee
(a) A company limited by guarantee shall have members whose liability for the company's debts is limited to the guaranteed amount.
(b) Guaranteed amount means the amount a guarantor member undertakes to contribute to the assets of the company in the event of its insolvency.
(c) If the guaranteed amounts are different for different members, the different amounts shall not of themselves create differing interests in the company as between those guarantor members.
9. Mixed Liability Company
(a) A mixed liability company may have members of both types.
(b) Unless otherwise provided by the Certificate of incorporation, a person may be a member of more than one type of class in the same company.
10. Sole Proprietorship
(a) Sole proprietorships shall be the in-game companies without an associated registration.
(b) Sole proprietorships shall still be regarded as a legal entity.
(c) All assets and liabilities of the sole proprietorship shall be regarded as assets and liabilities of the owner of the in-game company.
(d) The director of a sole proprietorship shall always be the owner of the in-game company.
(e) The MEA shall effect the disbandment of a sole proprietorship within reasonable time if requested by the owner.
(f) A provision of this Act applies to a sole proprietorship only where it is expressed to apply to sole proprietorships or to undertakings, or where the context so requires; and a provision expressed to apply to companies does not otherwise apply to a sole proprietorship.
(g) A sole proprietorship may not publicly trade ownership or equity in the undertaking.

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PART III — CORPORATE CAPACITY
11. Powers of a Company
(a) In addition to the powers enumerated in this section, every company, its members, and agents shall possess and may exercise all the powers and privileges granted by this Act or by any other law or by its Certificate of incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion, or attainment of the business or purposes of the company set forth in its Certificate of incorporation, irrespective of benefit to the company.
(b) Subject to any limitations provided in this Act, any other law of Azalea, or its Certificate of incorporation, a company shall, in furtherance of its purposes irrespective of benefit to the company and whether or not enumerated in its Certificate of incorporation, have power to:
(i) have perpetual succession;
(ii) have a seal, and to alter such seal at its pleasure, and to use it by causing it or a facsimile to be affixed, impressed, or reproduced in any other manner;
(iii) sue and be sued in all courts and participate, as a party or otherwise, in any judicial, administrative, or other proceeding, in its name as company;
(iv) purchase, receive, take by grant, gift, or otherwise, lease or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated;
(v) sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, or create a security interest in, all or any of its real or personal property, or any interest therein;
(vi) purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, employ, sell, lend, lease, exchange, transfer, or otherwise dispose of, mortgage, and pledge, bonds and other obligations, shares, or other securities or interests issued by others, whether engaged in similar or different business, governmental, or other activities;
(vii) make contracts, give guarantees and incur liabilities, borrow money at such rates of interest as the company may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its real or personal property or any interest therein, wherever situated, in any currency;
(viii) lend money, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds so loaned or invested, in any currency;
(ix) do business, carry on its operations, and have offices and exercise the powers granted by this Act in any jurisdiction within or outside of the Azalea Isles;
(x) elect, appoint or remove agents of the company, define their duties, set their compensation and indemnify such personnel;
(xi) be an incorporator, member, or agent of any company;
(xii) renounce any interest or expectancy of the company in, or in being offered an opportunity to participate in, specified business opportunities or specified classes or categories of business opportunities that are presented to the company or one (1) or more of its agents or members;
(xiii) participate with others in a company, or in any transaction, undertaking or arrangement which the participating company would have power to conduct by itself, whether or not such participation involves sharing or delegation of control with or to others;
(xiv) make donations for the public welfare or for charitable, educational, scientific, sporting, health, civic, or similar purposes;
(xv) pay profit sharing plans, stock bonus plans, stock option plans and other incentive plans for any or all of its agents;
(xvi) wind up and dissolve itself; and
(xvii) purchase, receive, take, or otherwise acquire, own, hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own shares.
12. Ultra Vires
(a) No act of a company and no transfer of real or personal property to or by a company, otherwise lawful, shall be invalid by reason of the fact that the company was without capacity or power to do such act or to make or receive such transfer.
(b) Such lack of capacity or power may be asserted:
(i) in an action by a member against the company to enjoin the doing of any act or the transfer of real or personal property by or to the company.
(1) If the unauthorised act or transfer sought to be enjoined is being, or is to be, performed or made under any contract to which the company is a party, the court may, if it deems the same to be equitable, set aside and enjoin the performance of such contract.
(2) The court may also revert the performance of the contract if this has no or low impact on those relying on the performance of the contract.
(3) Where the contract is being enjoined, set aside or reverted, the court may grant such compensation for the loss or damage sustained by any party of the contract; anticipated profits to be derived from the performance of the contract shall not be regarded by the court as a loss or damage sustained.
(ii) in an action by the company against incumbent or former agents of the company for loss or damage due to their unauthorised act.
13. Power to Bind the Company
(a) In favour of a person dealing with a company in good faith, the power of an agent to bind the company, or to authorise others to do so, is presumed to be free of any limitation imposed by or deriving from:
(i) the Certificate of incorporation or the Bylaws;
(ii) any resolution of the company; or
(iii) any agreement between the company's members.
(b) A person dealing with a company:
(i) is not bound to enquire as to any limitation on the power of an agent to bind the company or to authorise others to do so; and
(ii) is presumed to have acted in good faith unless the contrary is proved.
(c) For the purposes of this section:
(i) a director or officer is presumed to have the power to bind the company; and
(ii) any other agent, including an employee, is assumed to have the power to bind the company where they represent to the person that they have it.
(d) A person does not deal in good faith in respect of an act where they knew, or had been sent notice, that the agent did not have the power to bind the company to that act; and to the extent a person does not deal in good faith, the company is not bound.
(e) Where the company is bound under this section notwithstanding that the agent lacked the power to bind it, the agent may be sued civilly by the company for any damage resulting.
(f) This section does not affect any liability incurred by reason of an agent having exceeded their powers.
(g) A document is executed for and in the name of a company by the signature of a director or officer of the company, or by such other means as may be authorised by its Certificate of incorporation or Bylaws.
14. Pre-incorporation Contracts
(a) A person who makes a pre-incorporation contract is bound by it and entitled to its benefits.
(b) A pre-incorporation contract may be ratified by a company, by a resolution of the directors, within the period specified in the contract or, if no period is so specified, within a reasonable period after the incorporation of the company on whose behalf it was made.
(c) Where the company ratifies a pre-incorporation contract and gives notice of that fact to the other party, the company is bound by and entitled to the benefits of the contract and the person who made it ceases to be so bound and entitled.
(d) A pre-incorporation contract means a contract purporting to be made by a company before its incorporation, or a contract made by a person on behalf of a company before and in contemplation of its incorporation.
15. Miscellaneous
(a) The owner of the in-game company shall be set by the company. Ownership of an in-game company in the business plugin associated with a company shall, subject to rebuttal by balance of probabilities, not be used to presume that the in-game owner is a member or agent of that company.
(b) The company may request the MEA to forcefully change the owner of the in-game company at its pleasure.
16. Liability
(a) A company shall be solely liable for its own debts, obligations and liabilities.
(b) Unless liability for a company's debts, obligations or liabilities has been assumed by the person against whom liability is asserted, no members or agents of a company, or other person, shall be liable for the company's debts, obligations or liabilities, whether arising in contract, tort or otherwise:
(i) solely by reason of being a member or agent of the company; or
(ii) by the acts or omissions of any other member or agent of the company.
(c) The failure of a company to observe the usual formalities or requirements, including minor administrative or procedural faults, relating to the exercise of its powers or management of its business is not a ground for imposing personal liability on the members and agents for the liabilities of the company.
(d) Any person may voluntarily assume liability for any or all debts and obligations of the company.
(e) Acts, omissions, decisions, or resolutions of members acting in their capacity as such shall be attributable exclusively to the company and shall not be attributed, individually nor collectively, to any member.
(f) In discharging their duties, a member or agent shall be fully protected in relying in good faith upon the records of the company and upon such information, opinions, reports, or statements presented to the company by any of the company's agents or by any other person, in each case only as to matters which the person relying reasonably believes are within that agent's or other person's professional or expert competence and where that agent or other person has been selected with reasonable care by or on behalf of the company.
(g) Nothing in this section shall be construed as to indemnify anyone from or reduce any criminal liability.
(h) This section applies except where this Act or another law of Azalea specifically provides otherwise.
17. Plot Ownership
(a) Plots held by a sole proprietorship count toward the plot limits of its owner.
(b) Plots held by a company count toward the plot limits of the company only, and never toward those of any member or agent, regardless of whether there is a justifiable reason for the company to hold them.
(c) Where the reason the company holds a plot is unclear, the Ministry of Urban Development may require the company to state the reason; the company shall do so within 3 days of the request.
(d) The following are justifiable reasons for a company to hold a plot:
(i) the plot is used as a factory, workshop, or production site for the company;
(ii) the plot is rented out or otherwise let by the company to a third party;
(iii) the plot is used for company chestshops or other retail operations of the company;
(iv) the plot is used as a farm operated by or for the company;
(v) the plot is being refurbished, developed, or otherwise improved by or for the company;
(vi) the plot is held as security or in escrow in connection with a transaction to which the company is a party or an intermediate;
(vii) the plot is used as a company office, headquarters, meeting space, or administrative premises;
(viii) the plot is used as a warehouse, storage facility, or depot for goods held by or for the company;
(ix) the plot is held pending development or use by the company for a stated purpose;
(x) the plot forms part of a company project or development under active construction;
(xi) any other good reason; or
(xii) any reason designated by the Ministry of Urban Development by regulation as a justifiable reason.
(e) Where the company does not provide a reason within 3 days of a request under subsection (c), or where the reason provided is not a justifiable reason within the meaning of subsection (d), the Ministry of Urban Development may evict the holder and reassign the plot in accordance with its ordinary procedures.

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PART IV — COMPANY NAMES
18. Required Components in a Company's Name
(a) A company shall have at the end of its name the word or words appropriate to its type:
(i) in the case of a company limited by shares: "Limited", "Ltd.", or "Ltd";
(ii) in the case of a company limited by guarantee: "Limited by Guarantee" or "LBG";
(iii) in the case of a mixed liability company: "Mixed Liability" or "ML".
(b) The word or words required by this section shall form part of the company's name.
(c) For the purposes of this Part, the case of letters, accents, spaces between letters and punctuation marks are to be disregarded.
19. Prohibited Names
(a) An undertaking shall not have the word or words referred to in section 18 at the end of its name if it is not a company of the type so required to have that word or those words.
(b) An undertaking must not have a name which is the same as a name currently appearing on the Company Register.
(c) An undertaking must not have a name which, in the opinion of the MEA:
(i) is likely to cause the public to confuse the undertaking with some other person or undertaking already established in Azalea, unless that other person or undertaking has consented;
(ii) gives so misleading an indication of its activity as to be likely to cause confusion;
(iii) would constitute a criminal offence, or be contrary to public policy or to accepted principles of morality; or
(iv) implies, or might be taken to imply, a connection with the government of Azalea that does not exist, unless permission has been given by the MEA.
20. Change of Name
(a) A company may change its name by special resolution, or by any other means specified in its Certificate of incorporation.
(b) A change of name takes effect upon the filing of the change in the Company Docket and the updating of the Company Summary, and the thread title of the Company Docket shall be updated accordingly.
(c) Where a company changes its name:
(i) all property and rights to which it was entitled immediately before the change remain its property and rights;
(ii) it remains subject to all criminal and civil liabilities, and all contracts, debts and other obligations to which it was subject; and
(iii) all legal proceedings extant or pending by or against it may be continued by or against it in the new name.
21. MEA powers over Names
(a) The MEA may direct an undertaking to change its name within a reasonable period, where the name breaches this Part.
(b) An undertaking which fails to comply with a direction under subsection (a) shall be in violation of this Act.
(c) The naming of companies may be further regulated by the MEA in accordance with section 150.

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PART V — CORPORATE REGISTRATION
22. Company Docket
(a) It shall be the function of the Company Docket to keep a record of filings of the company.
(b) The Company Docket shall be a thread in the Company Register.
(c) All Company Dockets in the Company Register shall be public.
(d) The title of the thread shall be the registered company name.
(e) Information recorded in the Company Docket shall be immutable and permanent, even if the company does not exist anymore.
(i) Immaterial mistakes (such as typographical errors) may be corrected shortly after posting, but may not alter the meaning or the spirit of the record.
(ii) The underlying medium for documents and other files must also reflect immutability and permanence. Every document and file recorded in the Company Docket must be contained within the Company Docket itself.
(1) For the avoidance of doubt, a link or reference to a document or file held elsewhere, including in any cloud storage or document service such as Google Drive or Google Docs, does not satisfy this requirement and may not be used to record or store a document in the Company Docket.
(iii) The Company Summary is exempt from the requirement of immutability and permanence in this subsection, except that paragraphs (ii) and (ii)(1) continue to apply to it.
(f) The Company Docket may be used for resolutions, votes, announcements, the service of documents and notices, and other communication related to the company.
(g) The following filings shall at least be filed in the Company Docket:
(i) any amendments, where the amendment filing must contain the version of the document before and after the amendment, of:
(1) the Certificate of incorporation; or
(2) the Bylaws;
(ii) any summons of the company;
(iii) any verdicts on cases where the company is a Plaintiff or Defendant; and
(iv) the appointment, election, removal or resignation of a director or officer, which must mention their name and title.
(h) Any action for which a filing in the Company Docket is needed shall only come into effect from the point the filing is posted unless otherwise provided by law.
(i) This shall not be construed as preventing provision in the filing where the action goes into effect after filing.
(ii) It shall be the responsibility of the company to ensure that filings required under subsections (g)(i)(1), (g)(i)(2), and (g)(iv) are duly posted.
(i) The Company Register shall be maintained on the forums.
23. Company Summary
(a) The Company Summary shall be the first post in the Company Docket and shall be updated without undue delay by the company to contain the most recent information listed below:
(i) the registered name of the company;
(ii) the name of the in-game company;
(iii) the type of company, within the meaning of section 6;
(iv) the Secretary of the company;
(v) the directors;
(vi) the officers and their title;
(vii) the latest version of the Certificate of incorporation, and bylaws if applicable;
(viii) the share register and guarantor register, as applicable; and
(ix) any ongoing court cases.
24. Certificate of incorporation
(a) Subject to the provisions of this Act, the Certificate of incorporation and Bylaws bind the company, its members and its agents as if they were comprised in an agreement duly executed by the company and each member, and contained covenants on the part of the company and each member to observe all provisions thereof.
(b) The Certificate of incorporation shall set forth all of the following:
(i) the registered name of the company, which must comply with sections 18 to 21;
(ii) the name of the company in the business plugin;
(iii) the name(s) of the incorporator(s);
(iv) the type of company, within the meaning of section 6;
(v) the nature of the business to be conducted or promoted;
(1) It shall be sufficient to state, either alone or with other businesses or purposes, that the purpose of the company is to engage in any lawful act or activity for which companies may be organized under the Laws of Azalea, and by such statement all lawful acts and activities shall be within the purposes of the company, except for express limitations, if any.
(vi) for each share class:
(1) where the company has more than one class of members, the name of the class;
(2) the amount of shares in each share class;
(3) the par value of each share, or that the shares are of no par value; and
(4) the characteristics (within the meaning of section 1(n)) of the class, if any, that vary from the rights conferred by section 66(b);
(vii) for each guarantor member class:
(1) where the company has more than one class of members, the name of the class; and
(2) the guaranteed amount.
(c) The Certificate of incorporation may set forth:
(i) any provision for the management of the business and for the conduct of the affairs of the company;
(ii) any provision creating, defining, limiting and regulating the powers of the company, the agents, the third parties, and the members, or any class of the members;
(iii) provisions requiring the vote of a larger portion of the voting power, or of any class thereof, or of any other instruments having voting power, or a larger number of the directors, than is required by this Act;
(iv) a provision limiting the company's existence, otherwise the company shall have perpetual existence;
(v) a provision imposing personal liability for the company on its members to a specified extent and upon specified conditions;
(vi) a provision setting the conditions for forfeiture of the shares by shareholders or by the company from the shareholder;
(vii) a provision setting the characteristics of the share classes and agents;
(viii) a provision setting the first directors;
(ix) a provision setting any of the matters that may be regulated by the Bylaws under section 26(a);
(x) a provision setting any other matter this Act allows it to set; and
(xi) a provision for entrenchment in accordance with section 28.
25. Formation
(a) To form a company, a Corporate Service Provider (CSP) must create a Company Docket, a Company Summary and file at least:
(i) the Certificate of incorporation, signed by the incorporators; and
(ii) an initial member register, which shall state, in respect of each incorporator who is to be a member on formation:
(1) for a company having a share capital, the class and number of shares taken by that incorporator on formation, and the amount (if any) unpaid on those shares; and
(2) for a guarantor member, the guarantor class.
(b) At least one person must be entered in the initial member register as a member on formation.
(c) The existence of the company shall begin upon the filing of the Certificate of incorporation in the Company Docket.
(d) A company may not be incorporated for an unlawful purpose.
26. Bylaws
(a) The Bylaws of a company may regulate the following matters, subject to the Certificate of Incorporation:
(i) the powers of the company and its agents;
(ii) the calling, notice, quorum, and conduct of meetings of the board of directors and of the members, and the proposing of, voting on, and recording of resolutions, consistent with this Act;
(iii) the creation of offices, and the titles, duties, appointment, election, and removal of officers;
(iv) the delegation of the board's powers to bodies or to agents, and the authority to execute documents on behalf of the company;
(v) the filling of casual vacancies among the directors and officers;
(vi) procedures for the disclosure of interests and recusal, supplementing section 89;
(vii) record dates, payment methods, and rounding in respect of distributions;
(viii) the appointment of a chair and any casting vote; and
(ix) the channels by which notices and communications may validly be given.
(b) The Bylaws may not regulate the name of the company, nor any matter which this Act requires to be contained in the Certificate of incorporation.
(c) Any reference by the law to the Certificate of incorporation shall include the Bylaws if the subject matter is delegated to the Bylaws.
(d) In case of conflict between the Bylaws and the Certificate of incorporation, the Certificate of incorporation shall prevail.
(e) Unless otherwise provided by the Certificate of incorporation, the Bylaws may be amended by resolution of the board of directors, or by ordinary resolution of the members.
27. Amendment of the Certificate of incorporation
(a) A company may amend its Certificate of incorporation by special resolution, unless the Certificate of incorporation requires a higher threshold.
(b) An amendment shall not affect any existing cause of action in favour of or against the company, nor any pending legal action to which it is a party.
(c) No member shall be bound by an amendment increasing personal liability, unless they have agreed in writing to be bound by it.
28. Entrenched Provisions
(a) The Certificate of incorporation may contain provision (a "provision for entrenchment") to the effect that specified provisions may be amended or repealed only if conditions are met, or procedures complied with, that are more restrictive than those otherwise applicable.
(b) A provision for entrenchment may only be made:
(i) on formation; or
(ii) by unanimous resolution.
(c) A provision for entrenchment does not prevent amendment:
(i) by unanimous resolution; or
(ii) by order of a court or other authority having power to alter the instrument.
29. Share Register
(a) All companies that have share classes shall have a share register.
(b) The share register shall be in the Company Summary and shall keep a record of all shares.
(i) Where shares are owned through an exchange, then the exchange shall be listed as custodian in the share register, and the share register may be considered incorporated by reference.
(ii) The share register shall have a rebuttable presumption of containing actual share ownership.
(iii) All share transfers of registered shares, except where the shares stay in the custodianship of an Exchange, must be filed in the Company Docket and state:
(1) share class;
(2) share amount;
(3) transferor; and
(4) transferee.
(c) An entry of registered shares must contain:
(i) the class name of the shares (if more than one (1) class);
(ii) the amount of shares;
(iii) the name of the shareholder; and
(iv) if the entry contains unpaid shares, the amount of unpaid shares and the amount unpaid on those shares.
(d) An entry of shares held by certificate must contain:
(i) the class name of the shares (if more than one (1) class);
(ii) the amount of shares; and
(iii) the unique serial number of the certificate.
30. Guarantor Register
(a) All companies that have a Guarantor class shall have a Guarantor register.
(b) Membership to a Guarantor class shall not go into effect until the Guarantor register is updated.
(c) The Guarantor register shall be put into the Company Summary and shall keep a record of all guarantor members.
(i) The Guarantor register shall give the rebuttable presumption of membership.
(ii) The entry for each guarantor member shall state the member class.
(iii) All membership admittance, resignation or removal must be filed in the Company Docket and state:
(1) the action;
(2) the name of the member; and
(3) the member class.

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PART VI — CONVERSION BETWEEN COMPANY TYPES
31. Conversion
(a) A company may convert from one type within the meaning of section 6 to another type by special resolution, subject to this Part.
32. Requirements
(a) A conversion requires:
(i) a special resolution approving the conversion and the consequential amendments to the Certificate of incorporation;
(ii) where the conversion would introduce or increase the liability of any member, the written consent of that member, in accordance with section 27(c); and
(iii) where the company has share classes or guarantor classes whose rights would be varied by the conversion, approval by special resolution of each affected class under section 141.
(b) The directors shall make a solvency statement under section 125, and the resolution and amended Certificate of incorporation shall be filed in the Company Docket.
33. Effect
(a) On the filing of the conversion in the Company Docket:
(i) the company continues in existence as the same legal person, of the new type;
(ii) its property, rights, liabilities, and legal proceedings are unaffected; and
(iii) its name is altered as required by sections 18 to 21 to reflect its new type.
(b) A conversion does not of itself release any member from a liability incurred before the conversion.

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PART VII — SHAREHOLDER AGREEMENTS
34. Validity
(a) An agreement between some or all of the members of a company (a "shareholder agreement") regulating the exercise of their rights as members, including voting, the transfer of shares, or the management of the company, is valid and enforceable between the parties to it in accordance with its terms, provided it satisfies the requirements for a valid contract under the Contract Establishment Act.
35. Company Not Bound
(a) A shareholder agreement does not bind the company, and the company is not obliged to give effect to it, unless its terms are also reflected in the Certificate of incorporation or the Bylaws.
(b) In particular, the company is not obliged to refuse to register a transfer of shares, or to withhold a distribution, solely because doing so would be consistent with, or required by, a shareholder agreement to which the company is not a party.
36. Relationship with the Certificate of Incorporation
(a) Where a shareholder agreement conflicts with the Certificate of incorporation or the Bylaws, the Certificate of incorporation or the Bylaws prevail as between the company and its members; this does not affect the rights of the parties to the shareholder agreement as between themselves.
37. Remedies
(a) A breach of a shareholder agreement is enforceable by the parties to it in accordance with the general law of Azalea, and this Act does not limit the remedies available for such a breach.

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[Asqii]

PART VIII — WINDING UP AND DISSOLUTION



38. Modes of Winding Up



(a) A company is wound up and dissolved either:



(i) voluntarily, by the company under section 42;



(ii) by the MEA for inactivity under section 43; or



(iii) on the expiry of its limited life, under section 47.



(b) In each case the winding up procedure in section 41 applies.



(c) A sole proprietorship is not wound up under this Part but is disbanded under section 44.



39. Appointment of a Liquidator



(a) The appointment of a liquidator is optional. Where no liquidator is appointed, the directors of the company shall conduct the winding up and have the powers and duties of a liquidator under this Part.



(b) A company being wound up may appoint one or more liquidators to conduct the winding up. A liquidator is appointed:



(i) in a voluntary winding up, by the special resolution that commences the dissolution, or by a subsequent ordinary resolution of the members; and



(ii) in a winding up by the MEA under section 43 or section 47, by the MEA.



(c) A liquidator may be a director, a member, the MEA, or any other person.



(d) On the appointment of a liquidator, the powers of the directors cease, except so far as the liquidator or the members by ordinary resolution sanction their continuance.



(e) A liquidator may be removed:



(i) by the person or body that appointed them, and where the liquidator was appointed by the members, by ordinary resolution of the members; or



(ii) by the court, on the application of a member, creditor, or the MEA, for cause.



(f) Where a liquidator is removed, resigns, dies, or is otherwise unable to act, the person or body that appointed them shall appoint a replacement; and until a replacement is appointed, the directors shall conduct the winding up.



40. Powers and Duties of a Liquidator



(a) The liquidator shall:



(i) take control of the assets of the company;



(ii) settle the claims of the company's creditors in accordance with section 41; and



(iii) realise and distribute the remaining assets to the members according to their rights.



(b) For the purpose of winding up the company, the liquidator may:



(i) sell or otherwise realise the company's assets into cash, by any means;



(ii) bring or defend legal proceedings in the name and on behalf of the company;



(iii) carry on the business of the company so far as necessary for its beneficial winding up;



(iv) pay any class of creditors in full, or make a compromise or arrangement with creditors or with persons claiming to be creditors;



(v) call up any amount unpaid on shares;



(vi) appoint any person to assist in the winding up and delegate them powers;



(vii) execute documents and do all other acts in the name and on behalf of the company; and



(viii) do all other things incidental to the winding up.



(c) The liquidator shall keep proper records of the winding up, and submit them to the directors and members:



(i) at the end of winding up; or



(ii) upon request of the directors or members.



41. Winding Up Procedure



(a) A winding up proceeds as follows:



(i) first, the liquidator shall post a Notice to Creditors in the Company Docket, calling on any person with a claim against the company to notify the claim, in writing, to the MEA or to a director, officer, or the liquidator, within 14 days of the notice being posted;



(ii) the Notice to Creditors shall state that a claim not notified within the 14-day period is barred;



(iii) second, once the 14-day period has ended, the liquidator shall determine the claims against the company and settle them in the order set out in subsection (b), realising such of the company's assets as is necessary to do so;



(iv) third, the liquidator shall realise the remaining assets of the company into cash, except to the extent an asset is instead distributed to members in its existing form under subsection (f); and



(v) fourth, the liquidator shall distribute that cash, and any asset distributed in its existing form under subsection (f), among the members according to their rights.



(b) The assets of the company shall be applied in the following order:



(i) first, in payment of the costs and expenses of the winding up, including the liquidator's reasonable remuneration;



(ii) second, in payment of the claims of creditors that are notified in accordance with subsection (a), or of which the liquidator, the MEA, or a director or officer already has actual knowledge; and



(iii) third, in distribution of the remainder among the members according to their rights.



(c) A claim that is not notified within the 14-day period, and of which no actual knowledge is held under subsection (b)(ii), is extinguished, save for a secured claim to the extent of its security.



(d) Where the assets available are insufficient to pay the creditors in full, the creditors shall be paid rateably in proportion to their claims, save for any claim secured or given priority by another law of Azalea; and the members shall receive nothing until the creditors have been paid in full.



(e) Where a member cannot be paid a distribution after reasonable efforts to do so, the liquidator may pay the amount to the MEA, which shall hold it for that member.



(f) With the approval of the members by ordinary resolution, or of the court, the liquidator may distribute an asset of the company to the members in its existing form, instead of realising it into cash, provided that each member of the same class is treated proportionately.



(g) Where a claim notified under subsection (a) is not yet due, or is contingent or unascertained, the liquidator shall make reasonable provision for it before distributing to members, by estimating its value or retaining an amount to meet it.



(h) In the winding up of a company having guarantor members, the liquidator shall call up the guaranteed amount of each guarantor member to the extent necessary to pay the costs of the winding up and the claims of creditors; and a guarantor member's liability for the guaranteed amount is discharged only to the extent it is so applied.



(i) Nothing in this section prevents the company or the liquidator from making a distribution to members during the winding up, in accordance with section 78, provided that adequate provision has first been made for the claims of creditors under subsection (b) and for contingent or unascertained claims under subsection (g).



(j) Where another law of Azalea prescribes a different order of application of a company's assets on a dissolution or liquidation under that law, that order prevails over subsection (b) to the extent of the inconsistency.



42. Voluntary Dissolution



(a) A company may dissolve itself by the following procedure:



(i) the members pass a special resolution to commence the dissolution of the company;



(ii) the company is wound up in accordance with section 41; and



(iii) upon completion of the winding up, the liquidator posts a Notice of Dissolution in the Company Docket.



(b) The special resolution commencing the dissolution may appoint a liquidator under section 39.



(c) The company ceases to exist upon the posting of the Notice of Dissolution.



(d) A company may not commence a voluntary dissolution under this section while a notice of impending seizure under the Seizure Act is in effect against it.



43. Strike Off for Inactivity



(a) The MEA may wind up and dissolve a company for inactivity in accordance with this section. Where it does so, the MEA is appointed as liquidator.



(b) General inactivity. The MEA may apply to the court for an order that a company be wound up and dissolved on the ground that the company and its members are persistently inactive.



(i) On such an application the MEA must:



(1) present all of the evidence on which it relies, together with any evidence in its possession or knowledge that tends to show that the company or its members are not persistently inactive;



(2) present at least the playtime of each director and officer of the company; and



(3) show that it has made reasonable attempts to contact each director and officer of the company.



(ii) the MEA must prove, by clear and convincing evidence, that the company and its members are persistently inactive.



(iii) The company, and each of its directors, officers, and members, must be given notice of the application and an opportunity to be heard before the court determines it.



(iv) If the court is so satisfied, it may order that the company be wound up and dissolved under this Part.



(c) Inactivity with notice. The MEA may post a Notice of Inactivity Strike Off in the Company Docket, stating:



(i) that the MEA intends to wind up and dissolve the company for inactivity;



(ii) that a member, director, or officer of the company must respond in the Company Docket within 14 days of the notice being posted; and



(iii) that, if no response is posted within that period, the MEA will wind up and dissolve the company.



(d) Where no member, director, or officer responds in the Company Docket within the 14-day period, the MEA may wind up and dissolve the company under this Part.



(e) Where a company is wound up under this section, the MEA as liquidator shall conduct the winding up procedure in section 41, and upon its completion shall post a Notice of Dissolution in the Company Docket, whereupon the company ceases to exist.



44. Disbandment of Sole Proprietorships



(a) The dissolution of a sole proprietorship is called disbandment.



(b) A sole proprietorship may be disbanded:



(i) at the request of its owner; or



(ii) by the MEA where the sole proprietorship is inactive.



(c) Before disbanding a sole proprietorship, the MEA shall notify the owner through in-game mail, stating that the sole proprietorship is to be disbanded, the reason for the disbandment, and the date on or after which it will take effect. The owner shall be given at least 14 days from the notification to respond before the disbandment takes effect.



(d) Notification under subsection (c) is not required where the owner has requested the disbandment.



(e) On disbandment:



(i) the sole proprietorship ceases to exist; and



(ii) all assets and liabilities of the sole proprietorship are transferred to, and become the assets and liabilities of, its owner.



(f) The MEA shall effect a disbandment requested by the owner within a reasonable time.



45. Restoration



(a) A company that has been struck off and dissolved under this Part may be restored to the Company Register in accordance with this section.



(b) An application for restoration may be made by:



(i) a former member, director, or officer of the company;



(ii) a creditor of the company;



(iii) a former liquidator of the company; or



(iv) any other person the court considers to have a sufficient interest.



(c) An application must be made within 30 days of the dissolution.



(d) An application for restoration is made to the court; but where the company was struck off by the MEA under section 43 or section 47, the MEA may itself restore the company where it is satisfied that the strike off was made in error.



(e) The court, or the MEA under subsection (d), may order restoration where satisfied that:



(i) the strike off or dissolution was made in error;



(ii) the company was in fact active or carrying on business at the time it was struck off for inactivity; or



(iii) it would otherwise be just to restore the company, including where undistributed assets or unresolved liabilities of the company have come to light.



(f) In deciding whether to restore a company, regard shall be had to:



(i) whether the company would satisfy the solvency test if restored, unless the application is made by a creditor;



(ii) whether the persons who were directors, or the liquidator, at the time of dissolution consent to resuming that role if the company is restored;



(iii) the circumstances of the strike off or dissolution; and



(iv) whether the company was used for a fraudulent purpose, or was subject to persistent or gross violations of this Act, either of which weighs against restoration.



(g) A restoration may be made on such terms as the court or the MEA thinks fit, including a condition that any property or funds of the company that were distributed, held by the MEA, or otherwise dealt with on dissolution be returned or re-vested, and that any defect that led to the strike off be remedied.



(h) On restoration, the company is deemed to have continued in existence as if it had not been struck off or dissolved; and its name, Company Docket, property, and any legal proceedings by or against it are restored accordingly.



(i) The restoration shall have effect upon Notice in the Company Docket.



46. Dormant Status



(a) A company may declare itself dormant by filing a Notice of Dormancy in the Company Docket, approved by its board.



(b) A company is dormant while the declaration stands and it enters into no significant accounting transaction in the ordinary course of its business. The following do not end dormancy and are disregarded for this purpose:



(i) the payment of fees to the MEA or a CSP;



(ii) the payment of mandatory or statutory fees, fines, or taxes;



(iii) the payment of legal, accounting, or other professional fees; and



(iv) any other transaction that is not in the ordinary course of the company's business and is not material to it.



(c) While a company is dormant:



(i) it may not be struck off for inactivity under section 43;



(ii) it remains bound by all other provisions of this Act; and



(iii) it is not thereby protected from eviction, requisition, or any other consequence of inactivity under another law of Azalea.



(d) A dormant company shall confirm its dormancy by filing a Notice of Continued Dormancy in the Company Docket at least once every 3 months; if it fails to do so, the declaration lapses and the company ceases to be dormant.



(e) Dormancy ends when the company files a Notice Ending Dormancy, enters into a significant accounting transaction other than one disregarded under subsection (b), or the declaration lapses under subsection (d).



47. Limited Life Companies



(a) A limited life company is not dissolved by the expiry of its limited life. It continues in existence, as a company under this Act, until it is dissolved in accordance with this Part.



(b) No company is dissolved otherwise than by the posting of a Notice of Dissolution in the Company Docket under this Part, or under another law of Azalea that expressly provides for the dissolution or liquidation of a company; and a provision of a Certificate of incorporation purporting to dissolve a company automatically, or otherwise than in accordance with this Part or such other law, is void to that extent.



(c) The expiry of a limited life does not of itself:



(i) affect the company's legal personality, property, rights, liabilities, or capacity;



(ii) affect the validity of any act done by or on behalf of the company; or



(iii) affect any legal proceeding by or against the company.



(d) Where the limited life of a limited life company has expired, the directors shall, without undue delay:



(i) file a notice of that expiry in the Company Docket; and



(ii) commence the winding up of the company in accordance with section 41.



(e) Upon completion of that winding up, the liquidator shall post a Notice of Dissolution in the Company Docket, whereupon the company ceases to exist.



(f) A special resolution under section 42(a)(i) is not required where a winding up is commenced under subsection (d); the expiry of the limited life stands in its place.



(g) A limited life company may extend or remove its limited life by amending its Certificate of incorporation under section 27.



(h) An amendment under subsection (g) may be made either before or after the expiry of the limited life, provided the company has not yet been dissolved; and where it is made after expiry, any duty under subsection (d) ceases and any winding up commenced under that subsection may be discontinued by ordinary resolution of the members.



(i) Where the limited life of a limited life company has expired and the company has not commenced winding up in accordance with subsection (d), the MEA may wind up and dissolve the company under this subsection. Where it does so, the MEA is appointed as liquidator.



(j) Where the limited life is defined by reference to a date or to the expiry of a period, the MEA may proceed under subsection (i) of its own motion.



(k) Where the limited life is defined by reference to the occurrence of an event, the MEA may proceed under subsection (i) only with the leave of the court.



(i) The court shall not grant leave unless satisfied that the event has occurred.



(ii) The company, and each of its directors, officers, and members, must be given notice of the application for leave and an opportunity to be heard before the court determines it.



(l) Before winding up a company under subsection (i), the MEA shall post a Notice of Forced Dissolution in the Company Docket, stating:



(i) that the MEA intends to wind up and dissolve the company on the ground that its limited life has expired;



(ii) the date or event by reference to which the limited life is said to have expired, and, where leave of the court was required under subsection (k), that leave has been granted;



(iii) that a member, director, or officer of the company may respond in the Company Docket within 14 days of the notice being posted; and



(iv) that, if the company does not commence winding up itself, extend or remove its limited life under subsection (g), or otherwise satisfy the MEA within that period, the MEA will wind up and dissolve the company.



(m) The MEA may not wind up the company under subsection (i) before the end of the 14-day period.



(n ) Where the company, within the 14-day period, commences winding up under subsection (d), or extends or removes its limited life under subsection (g), the MEA shall not proceed under subsection (i) in respect of that expiry.



(o) Where the MEA winds up a company under subsection (i), it shall conduct the winding up procedure in section 41, and upon its completion shall post a Notice of Dissolution in the Company Docket, whereupon the company ceases to exist.



(p) A company dissolved under this section may be restored under section 45.

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PART IX — MERGERS



48. Merger and Consolidation



(a) Two or more companies may:



(i) merge, whereby they continue as one of the existing companies (the "surviving company"); or



(ii) consolidate, whereby they continue as a new company incorporated by the consolidation (the "consolidated company").



(b) In this Part, a "constituent company" is a company participating in the merger or consolidation, and "resulting company" means the surviving company or the consolidated company, as the case may be.



49. Merger Proposal



(a) The directors of the constituent companies shall prepare a merger proposal setting out the terms of the merger or consolidation, including:



(i) the name of each constituent company and the name of the resulting company;



(ii) in the case of a merger, any amendment to the Certificate of incorporation of the surviving company;



(iii) in the case of a consolidation, the Certificate of incorporation of the consolidated company;



(iv) the manner and basis of converting the shares or membership interests of each constituent company into shares, membership interests, or other securities of the resulting company, or into cash or other consideration; and



(v) any other terms of the merger or consolidation.



(b) Where shares of one constituent company are held by another constituent company, the proposal shall provide for the cancellation of those shares without consideration, and shall not provide for their conversion into shares of the resulting company.



50. Approval



(a) The directors of each constituent company must resolve that:



(i) the merger or consolidation is in the best interests of the company; and



(ii) they are satisfied on reasonable grounds that the resulting company will satisfy the solvency test immediately after the merger or consolidation becomes effective, and shall make a solvency statement to that effect under section 125.



(b) The merger proposal must be approved by special resolution of the members of each constituent company, and, where the proposal would vary the rights of a class, by special resolution of that class.



(c) The proposal, the directors' resolutions, and the solvency statements shall be filed in the Company Docket of each constituent company.



51. Notice to Creditors and Protection



(a) Where the merger proposal has been approved under section 50, the directors of each constituent company shall give notice of the approved merger or consolidation to the creditors of the company, by posting it in the Company Docket for at least 7 days.



(b) A creditor or member who would be unfairly prejudiced by the merger or consolidation may, before it becomes effective, apply to the court, which may make such order as it thinks fit, including an order modifying the proposal or directing that effect not be given to it.



(c) A merger or consolidation may not become effective while it is under investigation by the Azalea Isles Trade Commission under the Fair Competition Act, or where that Commission has blocked it; and nothing in this Part limits the power of that Commission to block or reverse a merger, consolidation, or acquisition.



52. Effect of Merger or Consolidation



(a) The merger or consolidation becomes effective upon the filing of a Certificate of Merger or Consolidation in the Company Docket of each constituent company, on or after the date stated in the proposal, and in any case after the notice period under section 51 has elapsed.



(b) On the effective date:



(i) all the property, rights, and assets of each constituent company vest in the resulting company without further act or deed;



(ii) the resulting company assumes and becomes liable for all the debts, liabilities, and obligations of each constituent company;



(iii) no legal proceeding pending by or against any constituent company is abated, but may be continued by or against the resulting company;



(iv) in the case of a merger, the Certificate of incorporation of the surviving company is amended to the extent set out in the proposal;



(v) in the case of a consolidation, the consolidated company is incorporated and its Certificate of incorporation is that set out in the proposal; and



(vi) each constituent company that is not the resulting company ceases to exist and is dissolved, without winding up.



(c) A merger or consolidation under this Part is not a breach of contract, a civil wrong, or an event of default, and does not give rise to any right of termination, solely by reason of the merger or consolidation.



(d) Subsection (c) does not prevent a company from agreeing, by contract, not to merge or consolidate; and a breach of such an agreement is actionable as a breach of contract, but does not affect the validity or effectiveness of a merger or consolidation carried out under this Part.



(e) A charge or other security interest over the assets of a constituent company continues, on and after the effective date, as a charge or security interest over those assets in the hands of the resulting company, with the same priority it had before the merger or consolidation; and the merger or consolidation does not release, discharge, or subordinate any such security interest.



53. Short-Form Merger



(a) A company and one or more of its wholly-owned subsidiaries, or two or more wholly-owned subsidiaries of the same holding company, may merge without approval by special resolution of the members, if:



(i) the merger is approved by resolution of the directors of each constituent company;



(ii) the shares of each merging subsidiary are cancelled without consideration, or converted only into shares of the surviving company held by the holding company; and



(iii) the directors make a solvency statement in accordance with section 50(a)(ii).



(b) Sections 4 and 5 apply to a merger under this section.



54. Certificate of Merger or Consolidation



(a) The Certificate of Merger or Consolidation filed under section 52(a) shall state:



(i) the name of each constituent company and the name of the resulting company;



(ii) that the merger proposal was approved by each constituent company in accordance with section 50, or, in the case of a short-form merger, section 53;



(iii) the date on which the merger or consolidation is to become effective;



(iv) in the case of a merger, any amendment to the Certificate of incorporation of the surviving company; and



(v) in the case of a consolidation, the Certificate of incorporation of the consolidated company.



(b) The Certificate of Merger or Consolidation shall be signed by a director of each constituent company and filed by a CSP.

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PART X — TAKEOVERS



55. Application



(a) This Part applies where a person (the "offeror") makes an offer to acquire some or all of the shares, or of a class of shares, of a company (the "target"), with the object of acquiring control of the target or of that class.



(b) This Part does not apply to an offer made by the target itself for its own shares.



(c) This Part does not apply to guarantor classes or guarantor members.



56. Terms of the Offer



(a) An offer to which this Part applies must be made to every holder of the shares, or of the class of shares, to which it relates.



(b) An offer may provide for the consideration to take one or more forms, and may allow a holder a choice between them.



(c) An offer must specify the period during which it may be accepted (the "offer period"), which shall not exceed 30 days.



57. Right to Compel Acquisition



(a) In this Part, the shares to which an offer relates means the shares, or the shares of the class, stated in the offer as being subject to it.



(b) The eligible shares, for the purposes of this section, are the shares to which the offer relates, excluding:



(i) any shares held as treasury shares, unless the offeror elects that the offer shall extend to them;



(ii) any shares held by the offeror, or by a company that is a holding company or subsidiary of the offeror within the meaning of sections 2 and 3;



(iii) any shares which the offeror has contracted to acquire otherwise than under the offer; and



(iv) any shares acquired by the offeror during the offer period at a price higher than the offer price, unless the offer price is raised to match it.



(c) Where, within the offer period, the offer is accepted by holders of eligible shares representing at least 90% of the voting power of the eligible shares (the "threshold"), the offeror may, within 14 days after the threshold is reached, give notice to any dissenting shareholder that it intends to acquire their shares (a "Notice to Acquire").



(d) For the avoidance of doubt, the threshold is met where the voting power of the eligible shares whose holders have accepted the offer, divided by the total voting power of all eligible shares, is not less than 90%; and shares excluded from the eligible shares under subsection (b) are counted in neither figure.



(e) The offeror is only entitled to give a Notice to Acquire under this section where the offer relates to all of the shares in the target, or, as the case may be, to all of the shares of the class to which the dissenting shareholder belongs, subject to the exclusion in subsection (b)(i).



58. Notice to Acquire



(a) A Notice to Acquire may be served on the dissenting shareholder by any means reasonably likely to bring it to their attention. Posting the notice in the Company Docket is presumed to be sufficient service, but is not required.



(b) Where the offer provided a choice of consideration, the Notice to Acquire shall state:



(i) the period within which, and the manner in which, the dissenting shareholder may notify the offeror of their choice; and



(ii) which form of consideration will apply if they do not do so.



(c) Within 14 days of being served a Notice to Acquire (the "response period"), the dissenting shareholder shall:



(i) accept the Notice to Acquire, by notice to the offeror or by posting their acceptance in the Company Docket; or



(ii) apply to the court under section 60 to cancel the notice.



(d) A dissenting shareholder who does neither within the response period is presumed to have accepted the Notice to Acquire on the terms it states.



(e) Subject to section 60, where a dissenting shareholder accepts a Notice to Acquire, or is presumed under subsection (d) to have accepted it, the offeror is entitled and bound to acquire the dissenting shareholder's shares on the terms of the offer.



(f) The terms of the offer bind the offeror, and bind the dissenting shareholder upon acceptance or presumed acceptance under this section, only as to the transfer of the shares and the payment or transfer of the consideration. Nothing in this section imposes on the dissenting shareholder any other obligation, warranty, or personal liability that the terms of the offer may purport to impose.



59. Compulsory Acquisition



(a) Within 14 days of giving a Notice to Acquire, the offeror shall:



(i) send a copy of the notice to the target; and



(ii) pay or transfer to the target the consideration required under the notice.



(b) The target shall not register the offeror as the holder of the shares to which the notice relates unless and until the offeror has paid or transferred the consideration under subsection (a)(ii). Where the offeror does not do so, the shares are not transferred and the offeror does not become entitled to them.



(c) Once the consideration has been received, the target shall register the offeror as the holder of the shares, and pay or transfer the consideration to the shareholder entitled to it.



(d) Where a shareholder entitled to consideration under subsection (c) cannot be paid, or the consideration cannot be transferred to them, after reasonable efforts, the target shall pay the amount to the MEA, which shall hold it on trust for that shareholder.



60. Application to Court by Dissenting Shareholder



(a) A dissenting shareholder may, within the response period defined in section 58(c), apply to the court on the ground that the Notice to Acquire, the offer, or the proposed acquisition is unfairly prejudicial to them under section 142, or on any other ground available to them under this Act or under any other law of Azalea.



(b) This section does not create a cause of action additional to those already available under this Act or under any other law of Azalea. Its effect is to shorten, to the response period, the time within which a claim of the kind described in subsection (a) may be brought in respect of a Notice to Acquire.



(c) On an application under subsection (a), the court may make any order available to it under the provision relied upon, including an order cancelling or confirming the Notice to Acquire, or as to the consideration to be paid.



(d) A Notice to Acquire has no effect against a dissenting shareholder who has made an application under subsection (a) until the application is determined or withdrawn.



61. Effect of Acceptance



(a) Where a shareholder accepts the offer, their shares are transferred to the offeror in accordance with the terms of the offer, and this Part does not otherwise apply to those shares.



62. Meaning of "Dissenting Shareholder"



(a) In this Part, dissenting shareholder means a shareholder who has not accepted the offer.

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PART XI — MEMBERSHIP



63. Members of a Company



(a) A company shall have at least one member.



(b) An incorporator who signs the Certificate of incorporation is, by that signature, deemed to have agreed to become a member of the company and, on its incorporation, becomes a member holding the shares, or belonging to the guarantor class, allocated to them in the initial member register, and must be entered as such in the relevant register.



(c) A person is also a member of the company if they:



(i) hold a share in the company, including where the share is held by share certificate or to bearer, whether or not they are entered in the share register; or



(ii) are a guarantor member entered in the guarantor register.



(d) Unless otherwise provided in the Certificate of incorporation, guarantor members shall be admitted by unanimous vote of the guarantor class.



64. Membership of Holding Company



(a) Except as specified by law:



(i) a company cannot be a member of a company which is its holding company; and



(ii) a transfer of shares in a company to its subsidiary is void.



65. Cessation of Membership



(a) A person does not cease to be a guarantor member of a company except:



(i) by the dissolution of the company;



(ii) by resignation, in accordance with such formalities as may be set out by the company's Certificate of incorporation or Bylaws, or, where no such formalities are set out, by notice in writing addressed to the directors; or



(iii) by the cancellation of their membership in the company by operation of law.



(b) A cessation of membership does not prejudice any liability a member may have to the company or its creditors under this Act, any other enactment or any other rule of law.

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[Asqii]

PART XII — SHARES AND CAPITAL



66. Legal Nature and Rights of Shares



(a) The shares of any shareholder in a company are personal property, transferable in the manner provided by the Certificate of incorporation.



(b) Subject to the Certificate of incorporation and the terms on which the share is issued, a share confers on the shareholder:



(i) the right to vote on resolutions of the company;



(ii) the right to an equal share, within its class, in distributions authorised by the board of directors; and



(iii) the right to an equal share, within its class, in the distribution of the surplus assets of the company.



(c) There shall not be fractional shares.



(d) Authorised shares that have not been issued are not outstanding, confer no rights, and are not property of the company.



67. Share Classes



(a) Subject to the Certificate of incorporation, different classes of share may be authorised with such characteristics as the Certificate of incorporation provides.



(b) Shares with different characteristics shall be considered different share classes.



(c) Without prejudice to the generality of subsection (a), shares may be authorised which:



(i) are redeemable;



(ii) confer preferential rights to distributions;



(iii) do not entitle the holder to voting rights; or



(iv) entitle the holder to restricted voting rights.



(d) A class of shares is created and defined by the Certificate of incorporation, which shall give each class a distinct name.



(i) Shares are of the same class only if they are created as, and remain, part of the same class named in the Certificate of incorporation.



(ii) Shares created as part of the same class shall have characteristics that are in all respects uniform.



(iii) Shares created as part of different classes are different classes, notwithstanding that the characteristics attached to them are, in whole or in part, identical; and the Certificate of incorporation may create two or more classes with identical characteristics, distinguished only by name.



(iv) No two classes may share the same name.



(e) A company may, if so authorised by its Certificate of incorporation, distinguish between shareholders of the same class, by the terms of issue of their shares, only as to the amount and timing of payment for their shares, including the amount and timing of any call.



(i) A call is a demand by the company that a shareholder pay all or part of the amount unpaid on their shares.



(f) The characteristics attached to shares are not regarded as different from the characteristics attached to other shares of the same class by reason only that:



(i) they do not carry the same rights to dividends in the 3 months immediately following the date of their issue; or



(ii) they were issued on terms of issue authorised under subsection (e).



(g) For the avoidance of doubt, the terms of issue of a share may not be used to confer or deny voting rights, to confer a preferential or different right to a dividend or other distribution, or to confer a different right on a distribution of capital, as between shares of the same class; and any difference in such rights, however arising, causes the shares to be of a different class.



(h) A share class may only be created by the Certificate of incorporation. The directors may not create a share class, and a purported issue by the directors of shares of a class not authorised by the Certificate of incorporation is an Overissue within the meaning of section 146.



68. Par Value and No-Par-Value Shares



(a) Subject to subsection (b), shares shall have a par value as set in the Certificate of incorporation.



(b) A company may issue shares which have no par value if it is authorised to do so by its Certificate of incorporation.



(c) The shareholder shall be liable for the part of the par value of the share that has not been paid up yet.



(d) The par value of a share may be expressed as an amount which is less than the smallest unit of legal tender.



69. Issue of Shares



(a) The directors of a company may, to the extent authorised by the Certificate of incorporation or by ordinary resolution of the company, exercise any power of the company to issue share securities; and share securities consist of shares, or the right to subscribe for, or to convert any security into, shares.



(b) An authorisation under subsection (a):



(i) may be given for a particular exercise of the power or for its exercise generally;



(ii) may be unconditional or subject to conditions;



(iii) may state a maximum number or aggregate value of shares, or be unlimited;



(iv) may specify when it expires or be of unlimited duration; and



(v) may be varied, revoked or renewed by ordinary resolution of the company.



(c) No issue of share securities may cause the outstanding shares to exceed the authorised shares; any purported issue in excess thereof is an Overissue within the meaning of section 146.



70. Consideration for Issue



(a) The consideration for which a share security is issued may take any form including, without limitation, cash, promissory notes, contracts for future services, real or personal property, or other securities of the company.



(b) Before a company issues a share security, the board of directors must decide the consideration for and terms of the issue, and resolve that, in its opinion, the consideration for and terms of the issue are fair and reasonable to the company.



(c) Where a share security is issued otherwise than for cash, the fair value of the consideration shall be recorded.



(d) It is not unlawful to issue share securities at a discount.



(e) Subsection (b) does not apply to the issue of shares on the conversion of any security into shares, or on the exercise of any right to subscribe for shares.



71. Share Certificates



(a) A company may issue share certificates to its shareholders, unless otherwise provided in the Certificate of incorporation.



(b) A share certificate must:



(i) be issued as an in-game original written book;



(ii) have the registered name of the company, or an abbreviation where too long, as the title of the written book;



(iii) be signed by the Secretary or any director at the time of its issue; and



(iv) contain at least the following:



(1) the full name of the company;



(2) the unique serial number of the certificate;



(3) the class of the shares; and



(4) the name of the shareholder, or to bearer.



(c) Where shares are issued under a share certificate, the unique serial number of the certificate, amount of shares and share class shall be recorded in the share register.



(d) This section shall not apply to purely decorative and non-binding share certificates. The share certificate shall state that it is decorative and non-binding.



(e) The creation and destruction of share certificates and subsequent amendments in the share register must be filed in the Company Docket without undue delay by the company, and must mention:



(i) the class name of the shares (if more than one (1) class);



(ii) the amount of shares;



(iii) the unique serial number of the certificate; and



(iv) the action.



(f) It shall be forbidden to double-issue share certificates for the same shares.



72. Treasury Shares



(a) A company may hold as treasury shares any of its own shares that it has redeemed or repurchased only if authorised to do so by:



(i) its Certificate of incorporation; or



(ii) subject to any provision to the contrary in its Certificate of incorporation, an ordinary resolution.



(b) A company that holds shares as treasury shares may:



(i) cancel the shares;



(ii) transfer the shares for any purpose, for or without consideration; or



(iii) hold the shares without cancelling or transferring them.



(c) While shares are held by a company as treasury shares:



(i) the company shall not be treated as a member of itself by reason of holding those shares;



(ii) the company shall not exercise any voting rights attaching to those shares;



(iii) the treasury shares shall not be taken into account in determining the total number of shares held in the company, or whether any required proportion of voting rights has been attained, for the purposes of any resolution or consent requirement under this Act;



(iv) the company shall not receive any dividend or any other distribution in respect of those shares; and



(v) any purported exercise of a right, or enforcement of an obligation, referred to in paragraphs (ii) to (iv) is void.



(d) The share register shall record the company as the holder of any treasury shares.



73. Redemption and Acquisition of Own Shares



(a) Subject to its Certificate of incorporation, a company may issue shares that are to be redeemed, or are liable to be redeemed at the option of the company or the shareholder, on such terms and in such manner as the Certificate of incorporation or the terms of issue provide.



(b) Subject to its Certificate of incorporation, a company may acquire its own shares, including by purchase from a shareholder.



(c) A redemption or acquisition under this section is a distribution and may only be made in compliance with the procedure for distributions in section 78.



(d) Shares redeemed or acquired may be cancelled in accordance with section 74 or held as treasury shares.



74. Cancellation of Shares



(a) Where shares of a company are cancelled under this Act:



(i) the shares cease to exist;



(ii) if the shares were outstanding, they cease to be outstanding, the person who held them ceases to hold them, and all rights and obligations attaching to them are extinguished, save for any right or liability that accrued before cancellation; and



(iii) the shares revert to the status of authorised but unissued shares.



75. Reduction of Authorised Shares



(a) A company may reduce the number of authorised shares of a class by special resolution of the members amending the Certificate of incorporation, subject to this section.



(b) A reduction under this section may only be made to the extent that the shares to be removed from authorisation are, at the time of the resolution:



(i) unissued; and



(ii) not reserved under any subsisting right, granted under section 69, to subscribe for or convert any security into shares of that class.



(c) A member may propose a resolution under subsection (a) in accordance with section 102.



(d) Before a resolution proposed under subsection (a) is put to a vote, the board of directors shall, by resolution of the board, certify on reasonable grounds whether the requirements of subsection (b) are satisfied in respect of the shares to be removed from authorisation.



(e) A resolution proposed under subsection (a) may not be put to a vote of the members unless the board has certified under subsection (d) that the requirements of subsection (b) are satisfied.



(f) The certification under subsection (d) shall be filed in the Company Docket before the resolution is put to a vote.



(g) Where the resolution is passed, the certification, the resolution, and the amended Certificate of incorporation shall be filed in the Company Docket.



(h) A director who certifies under subsection (d) without reasonable grounds is liable for any loss caused by the reduction to a person holding a right of the kind described in subsection (b)(ii).



76. Conversion Between Share Classes



(a) Shares of one class ("the original class") may be converted into shares of another class already authorised by the Certificate of incorporation ("the target class") only where:



(i) a right of conversion was reserved in the terms of issue of the original class under section 69 or in the Certificate of Incorporation; or



(ii) the conversion is approved by special resolution of the members and by special resolution of the original class and the target class under section 141.



(b) The Certificate of incorporation, the terms of issue, or the resolution approving the conversion under subsection (a)(ii) shall state the ratio or basis on which shares of the original class convert into shares of the target class.



(c) On conversion:



(i) the converted shares cease to be shares of the original class and become shares of the target class, carrying the rights of the target class from the date of conversion;



(ii) the number of outstanding shares of the original class is reduced, and the number of outstanding shares of the target class is increased, accordingly; and



(iii) the share register shall be updated to reflect the conversion without undue delay.



(d) A conversion under this section does not require the shares to be cancelled and reissued, and is not an issue of shares for the purposes of section 69, but the requirement in subsection (c)(ii) that outstanding shares of the target class increase is subject to the target class having sufficient authorised but unissued shares to accommodate the conversion, or the Certificate of incorporation being amended to authorise them.



(e) This section does not affect any right of a class to object to the conversion as a variation of class rights under section 141, to the extent the conversion affects the rights of the original class or the target class otherwise than as contemplated by this section.



(f) Before a resolution proposed under subsection (a)(ii) is put to a vote, the board of directors shall, by resolution of the board, certify on reasonable grounds whether the target class has, or on the amendment of the Certificate of incorporation will have, sufficient authorised but unissued shares to accommodate the conversion.



(g) A resolution proposed under subsection (a)(ii) may not be put to a vote of the members unless the board has so certified.



(h) The certification under subsection (f) shall be filed in the Company Docket before the resolution is put to a vote.



(i) A director who certifies under subsection (f) without reasonable grounds is liable for any loss caused by the conversion to a person prejudiced by an insufficiency of authorised shares in the target class.

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PART XIII — DISTRIBUTIONS



77. Meaning of Distribution and Dividend



(a) Distribution means a direct or indirect transfer of money or property, other than the company's own shares, to or for the benefit of a member in respect of their membership, and includes:



(i) the payment of a dividend;



(ii) the redemption or acquisition by the company of its own shares; and



(iii) a reduction of a member's liability on a partly paid share otherwise than by payment.



(b) Dividend means a distribution made by reference to a share or class of shares.



(c) The following are not distributions:



(i) a discount given to a member in the ordinary course of business, including a discount given by virtue of membership, where the discount is not unreasonable; and



(ii) a payment of reasonable remuneration to an agent in their capacity as such.



78. Procedure for Distributions



(a) A company may make a distribution only if its directors are satisfied, on reasonable grounds, that the company satisfies the solvency test immediately after the distribution.



(b) The directors authorising a distribution shall make a solvency statement in accordance with section 125 and file it in the Company Docket.



(c) A dividend is paid by the company in accordance with the rights of the shares, as authorised by the board of directors.



(d) Where shares are not fully paid up, dividends may be paid in proportion to the amount paid up on each share, unless the Certificate of incorporation provides otherwise.



79. Prohibition of Unauthorised Distributions



(a) A distribution made otherwise than in accordance with section 78 is unlawful.



(b) A director who authorises a distribution without reasonable grounds for the opinion that the company satisfies the solvency test shall be liable.



80. Recovery of Unlawful Distributions



(a) Where a distribution, or part of a distribution, is made to a member in contravention of this Part, the member is liable to repay the distribution, or that part of it, to the company if, at the time of the distribution, they knew or ought reasonably to have known that it was made in contravention of this Part.



(b) This section is without prejudice to any other liability of a director or member.



81. Financial Assistance



(a) A company may give financial assistance, directly or indirectly, for the purpose of the acquisition of its own shares or the shares of its holding body.



(b) Where such financial assistance amounts to a distribution, it may only be given in compliance with the procedure for distributions in section 78.



(c) Financial assistance given in breach of subsection (b) does not of itself render the assistance, or any transaction connected with it, void.

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PART XIV — AGENTS: DIRECTORS AND OFFICERS



82. Directors



(a) The business and affairs of every company shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this Act or in its Certificate of incorporation or Bylaws. If any such provision is made in the Certificate of incorporation or Bylaws, the powers and duties conferred or imposed upon the board of directors shall be exercised or performed to such extent and by such persons or bodies as shall be provided in the Certificate of incorporation or Bylaws.



(b) 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, subject to this Act, the Certificate of incorporation and the Bylaws.



(c) The following powers of the board may not be delegated to any person, whether to a committee of directors, a body, or an agent:



(i) submit to the members any matter requiring their approval;



(ii) fill a vacancy among the directors or appoint an auditor;



(iii) issue share securities except in the manner and on the terms authorised by the board, the Bylaws or the Certificate of Incorporation;



(iv) authorise a distribution;



(v) approve financial statements; or



(vi) adopt, amend, or repeal Bylaws.



(d) A purported delegation of a power listed in subsection (c) is void, and the power remains exercisable only by the board.



(e) A committee of directors is subject to this Part as it applies to the board, with the necessary modifications.



(f) In this Act, "director" includes any person occupying the position of director, by whatever name called.



(g) Where the company has only one (1) director, that director constitutes the board.



(h) Unless otherwise restricted by the Certificate of incorporation or Bylaws, the board of directors shall have the authority to set the compensation of directors.



(i) The incorporators shall be the first directors until directors are appointed, if there are no first directors set in the Certificate of incorporation.



(j) Unless otherwise provided by the Certificate of incorporation or Bylaws, a resolution of the board of directors is passed by a majority of the directors voting on it.



83. Shadow Directors



(a) Shadow director means a person in accordance with whose directions or instructions the directors of the company are accustomed to act.



(b) A person is not a shadow director by reason only that the directors act on advice given by them in a professional capacity.



(c) For the purposes of the provisions of this Act relating to fiduciary duty, conflicts of interest, and fraudulent trading, a shadow director is treated as a director.



84. Eligibility and Appointment



(a) A person prohibited by law from acting as a director shall not be appointed or hold office as a director; any such appointment is void.



(b) The persons named as first directors hold office from the date of incorporation until ceasing to hold office in accordance with this Part.



(c) Subsequent directors are appointed by ordinary resolution, unless the Certificate of incorporation or Bylaws otherwise provide.



85. Validity of Acts of Directors



(a) The acts of a person acting as a director are valid notwithstanding that it is afterwards discovered that:



(i) there was a defect in their appointment;



(ii) they were not eligible to be a director;



(iii) they had ceased to hold office; or



(iv) they were not entitled to vote on the matter in question.



86. Directors Ceasing to Hold Office



(a) A person ceases to be a director if they:



(i) resign by written notice to the company, effective when received or at a later time specified in the notice;



(ii) are removed under section 117, or otherwise in accordance with the Certificate of incorporation or Bylaws;



(iii) become ineligible to be a director; or



(iv) otherwise vacate office in accordance with the Certificate of incorporation or Bylaws.



(b) Notwithstanding the vacation of office, a person who held office as a director remains liable in respect of acts, omissions and decisions made while they were a director.



87. Officers



(a) Subject to the Certificate of incorporation, the Bylaws and to section 82(c), the board may designate the offices of the company, appoint officers, specify their duties, and delegate to them powers to manage the business and affairs of the company.



(b) Subject to the Certificate of incorporation and the Bylaws, an officer need not be a director, and two or more offices may be held by the same person.



(c) Officers are appointed and removed at the pleasure of the board, unless the Certificate of incorporation or Bylaws provide otherwise.



(d) The appointment, removal, or resignation of an officer shall be filed in the Company Docket in accordance with section 22(g)(iv).



88. Fiduciary Duty



(a) An agent of a company must act:



(i) in good faith;



(ii) on an informed basis;



(iii) with the care that a reasonable person in a similar position and circumstance would exercise; and



(iv) in a manner that is in the best interest of the company and by extension the members.



(b) An agent shall have the rebuttable presumption of acting in a manner that is in the best interest of the company where they have a conflict of interest and have disclosed this conflict or this conflict is known to the relevant parties.



(c) The court shall presume that the fiduciary duty has been met subject to rebuttal by clear and convincing evidence proving a breach with damages.



(d) Only the contractual parties, or members of the company, may use breach of fiduciary duty as a claim in legal action.



(e) A court shall not substitute its own judgement in matters of business judgement, except where there has been a breach of fiduciary duty or criminal or illegal conduct or conduct in contravention with the Certificate of Incorporation or Bylaws.



89. Conflicts of Interest



(a) An agent who is interested in a transaction or proposed transaction with the company must, immediately after becoming aware of their interest, disclose the nature and extent of that interest to the board of directors.



(b) Subsection (a) does not apply where the transaction is entered into in the ordinary course of the company's business and on usual terms and conditions.



(c) A general disclosure to the board that an agent has an interest in a party, and is to be regarded as interested in any transaction with that party, is sufficient disclosure of interest in relation to that transaction.



(d) A transaction in which an agent is interested is voidable by the company within a reasonable time after it is disclosed, unless:



(i) the interest was disclosed before the company entered into the transaction, or was not required to be disclosed;



(ii) the transaction is ratified by the members; or



(iii) the company received fair value for the transaction.



(e) The avoidance of a transaction under this section does not affect the right, title or interest of a person who acquired property in good faith, for valuable consideration, and without knowledge of the agent's failure to disclose.



(f) Subject to the Certificate of incorporation and Bylaws, an interested director may vote on, and be counted in the quorum for, a matter relating to the transaction.



(g) An agent is interested in a transaction if they, or a person connected with them, are a party to it or may derive a material benefit from it, or are otherwise directly or indirectly materially interested in it.



90. Exemption from Liability and Indemnities



(a) Any provision that purports to exempt a director from any liability that would otherwise attach to them in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.



(b) Subsection (a) does not prevent a company from:



(i) indemnifying a director against liability incurred to a person other than the company, except liability to pay a fine in criminal proceedings, or costs incurred in proceedings in which the director is convicted or has judgment given against them by the company; or



(ii) purchasing and maintaining insurance for a director against such liability.



91. Ratification of Acts



(a) A company may, by ordinary resolution of the members, ratify conduct by an agent which exceeds their powers or amounts to negligence, default, breach of duty or breach of trust in relation to the company, subject to any higher threshold in the Certificate of incorporation.



(b) Where the conduct does not merely exceed the agent's powers, votes in favour by members with a personal interest in the ratification are disregarded, but such members may attend, be counted towards quorum, and take part in the proceedings.



(c) This section does not affect the validity of a decision taken by unanimous resolution, nor any rule of law as to acts that are incapable of being ratified.



(d) This section is distinct from, and does not limit, the ratification of Defective Corporate Acts under section 146.



92. Related-Party Transactions



(a) In this section, connected person, in relation to an agent, has the same meaning as in section 89(g), and includes, without limitation:



(i) a company of which the agent is also an agent;



(ii) a company in which the agent holds, directly or indirectly, at least one-third of the voting power;



(iii) a holding company or subsidiary of the company, within the meaning of sections 2 and 3; or



(iv) another agent of the company acting in concert with the first agent in respect of the transaction.



(b) An agent who knows, or ought reasonably to know, that a connected person is interested in a transaction or proposed transaction with the company must, immediately after becoming so aware, disclose the nature and extent of the connected person's interest to the board of directors, as if the agent were themselves interested in the transaction.



(c) Section 8(b) to (g) apply to a transaction in which a connected person is interested as they apply to a transaction in which an agent is interested, with the necessary modifications.



(d) This section does not affect any duty an agent owes in respect of a transaction with a connected person under section 88 (fiduciary duty).

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PART XV — GENERAL MEETINGS, RESOLUTIONS AND VOTING



93. Application



(a) This Part applies to all meetings and resolutions of the members of a company, and to meetings and resolutions of a class of members, unless otherwise provided by this Act, the Certificate of incorporation, or the Bylaws.



94. Types of Resolution



(a) A resolution of the members, or of a class of members, of a company shall be either:



(i) an ordinary resolution, passed by a simple majority of the voting power voting on the resolution;



(ii) a special resolution, passed by a majority of not less than two-thirds of the voting power voting on the resolution;



(iii) a waiver resolution, agreed to by members holding at least 90% of the voting power voting on the resolution; or



(iv) a unanimous resolution, agreed to by all of the voting power voting on the resolution.



(b) Anything that may be done by ordinary resolution may also be done by special or unanimous resolution; anything that may be done by special resolution may also be done by unanimous resolution; and anything that may be done by waiver resolution may also be done by unanimous resolution.



(c) A waiver resolution may only be used where this Act or the Certificate of incorporation expressly provides for it, and only to waive, shorten, or dispense with a requirement of this Act, the Certificate of incorporation, or the Bylaws that is expressed to be capable of waiver.



(d) Subject to subsection (b), where this Act or the Certificate of incorporation requires a resolution of a particular type, the resolution must be proposed as such, and may only be passed as such.



(e) The Certificate of incorporation may require any resolution to be passed by a larger proportion of the voting power than is required by this Act, but may not require a proportion greater than that required for a unanimous resolution.



95. Voting Power



(a) Subject to the Certificate of Incorporation, the counting of votes shall be by voting power, not by individual shares or membership.



(b) Subject to the Certificate of incorporation:



(i) in the case of a company having a share capital, every member has one (1) vote in respect of each share; and



(ii) in any other case, every member has one (1) vote.



(c) A company shall at all times have one or more members — whether shareholders, guarantor members, or both — who, alone or together, are entitled to vote on all matters requiring a vote of the members (full voting power).



(d) A member entitled to more than one (1) vote need not, if they vote, use all their votes or cast all the votes they use in the same way.



96. Calling of General Meetings



(a) The board of directors may call a general meeting of the company at any time.



(b) The directors must call a general meeting if required to do so by members holding at least 10% of the voting power; the directors must call the meeting within 7 days and hold it within a reasonable time thereafter.



(c) If the directors fail to call a meeting required under subsection (b), the requesting members may call it themselves.



(d) The court may, on the application of a director or member, order a general meeting to be called and conducted in such manner as it thinks fit where it is otherwise impracticable to call or conduct one.



97. Notice of Meetings



(a) Notice of a general meeting shall be given to every member entitled to vote, to every director, to every officer and to the Secretary.



(b) Notice shall be given at least 48 hours before the meeting and shall state:



(i) the date, time, and place, or the electronic means, of the meeting;



(ii) the general nature of the business to be transacted; and



(iii) the text and type of any resolution to be proposed.



(c) Notice is irrefutably presumed to be duly given if posted in the Company Docket; a company may additionally give notice by any means provided in the Bylaws.



(d) The accidental omission to give notice to, or the non-receipt of notice by, any person does not invalidate the proceedings, unless the omission was in bad faith.



(e) A meeting may be held on shorter notice, or without notice, if the members agree by waiver resolution.



98. Quorum and Chair



(a) The quorum for a general meeting is 70% of all voting power, where explicit, affirmative abstentions are counted towards the quorum.



(b) Where a quorum is not present, the members shall be notified and the meeting may be called again after at least 72 hours. At the meeting so called again, no quorum is required for the business that was to be transacted at the original meeting, and quorum requirements are suspended for that business for 10 days thereafter.



(c) The directors may appoint a chair for the meeting; failing which, the members present may elect one.



(d) The Certificate of incorporation or Bylaws may provide that, in the case of an equality of votes on a resolution, the chair of the meeting has a second or casting vote. In the absence of such a provision, the chair has no casting vote and a resolution on which the votes are equal is not passed.



99. Conduct and Participation



(a) A meeting may be held in person, in-game, or by any electronic means, including a forum thread or a voice or text channel, by which the participants can communicate with one another.



(b) A member participating by any such means is treated as present at the meeting.



(c) The chair is responsible for the orderly conduct of the meeting and for ascertaining the sense of the meeting on any resolution.



(d) A director or officer of the company is entitled to attend and speak at a general meeting, whether or not they are a member, but may not vote unless they are otherwise entitled to vote.



(e) The Certificate of Incorporation or Bylaws may permit any other person to attend and speak at a general meeting, but no such person may vote unless they are otherwise entitled to vote.



100. Resolutions at Meetings



(a) A resolution put to a meeting is decided by the voting power cast on it, in accordance with this Part.



(b) A vote is cast by the member, or by their proxy, indicating their assent to, dissent from, or abstention on the resolution, by the means stated in the notice of the meeting or, where no means is stated, by the means determined by the chair.



(c) A resolution may be decided during the meeting, or by a poll opened at the meeting and closed at a time determined by the chair.



(d) A member entitled to vote may demand a poll on any resolution; where a poll is demanded, the resolution is decided by the voting power cast on the poll.



(e) A declaration by the chair of the result of a resolution, recorded in the minutes, is conclusive evidence of the result unless a poll is demanded.



(f) Any member, officer, or director may call for a resolution to be voted upon.



(g) The persons eligible to vote on a resolution are those entitled to vote at the time the meeting is called or the resolution is proposed.



101. Adjournment



(a) The chair may, with the consent of the meeting, adjourn it, and shall adjourn it if so directed by the meeting.



(b) Only business left unfinished may be transacted at an adjourned meeting.



(c) No fresh notice is required for an adjourned meeting unless it is adjourned for more than 7 days, in which case notice of the adjourned meeting shall be given.



102. Written Resolutions



(a) A resolution may be proposed as a written resolution by the directors of a company or by the members of a company; and anything which may be done by resolution of the members in a general meeting, or by resolution of a class of members, may be done by written resolution.



(b) The members eligible to vote on a written resolution are those who would have been entitled to vote on the circulation date of the resolution, and "eligible members" shall be construed accordingly.



(c) The circulation date of a written resolution is the date on which it is posted in the Company Docket or otherwise circulated under subsection (e).



(d) Where a written resolution is circulated by the company, it shall be circulated together with a statement informing members how to signify their agreement under subsection (h) and the date (if any) by which it must be passed if it is not to lapse under subsection (j).



(e) A written resolution may be circulated by posting it in the Company Docket, or by any other means that reaches every eligible member. Circulation by posting in the Company Docket has the irrefutable presumption to have reached every eligible member.



(f) The members may require the company to circulate a resolution that may properly be moved as a written resolution, together with a statement of not more than 1,000 words on its subject matter, where the requirement is made by members representing not less than 5% of the total voting rights of all members entitled to vote on the resolution, or such lower percentage as the Certificate of incorporation or Bylaws specify.



(i) The company may refuse to circulate a resolution or statement under this subsection where the resolution clearly would, if passed, be ineffective, or where the resolution or statement is defamatory of any person, or is frivolous or vexatious.



(ii) A refusal to circulate under paragraph (i) does not prevent the resolution from being moved by any other means available under this Act.



(g) Where the members require circulation under subsection (f) and the company does not refuse under subsection (f)(i), the company must circulate the resolution and any accompanying statement within 3 days of becoming subject to the requirement.



(h) A member signifies agreement to a proposed written resolution when the company receives from them, or from a person acting on their behalf, a communication identifying the resolution and indicating their agreement to it. Agreement once signified may not be revoked.



(i) A written resolution is passed when the requisite majority of eligible members have signified their agreement to it.



(j) A proposed written resolution lapses if it is not passed before the end of the period specified for that purpose in the Certificate of incorporation or the Bylaws, or, if none is specified, the period of 7 days beginning with the circulation date. Agreement signified after the expiry of that period is ineffective.



(k) A provision of the Certificate of incorporation or the Bylaws is void in so far as it would have the effect that a resolution provided for in this Act could not be proposed and passed as a written resolution.



103. Records of Resolutions



(a) Minutes shall be made of every general meeting, which shall contain each resolution put to the meeting and its result, and shall be sent to the members, directors and officers. The posting of minutes in the Company Docket always satisfies the requirement to send them.



(b) A written resolution, and the fact of its passing or lapsing, shall be sent to the members, directors and officers, or be posted in the Company Docket which shall satisfy this notice requirement.



(c) Where there is a record of a resolution under this section, the requirements of this Act in respect of the passing of the resolution are deemed to be complied with unless the contrary is proven.



104. Class Meetings and Resolutions



(a) This Part applies, with any necessary modifications, to a meeting or written resolution of a class of members; and references to members and to voting power are to the members and voting power of that class.



105. Proxies



(a) A member entitled to vote at a general meeting may appoint another person as their proxy to attend, speak, and vote on their behalf.



(b) A proxy is appointed by notice to the company, identifying the member, the proxy, and the meeting or meetings to which the appointment relates. Appointment by posting the notice in the Company Docket is always sufficient.



(c) A proxy has the same rights as the member to speak at the meeting and to vote, whether on a show of voting power or on a poll, and need not cast all the member's votes, or cast them all the same way.



(d) An appointment of a proxy may be revoked by the member by notice to the company before the proxy votes; and a member who attends and votes in person revokes any proxy for that meeting.



(e) A provision of the Certificate of incorporation or Bylaws that would prevent a member from appointing a proxy is void.



106. Quarterly General Meeting



(a) A company shall hold a general meeting at least once in every 3 months, unless the members dispense with it by waiver resolution.



(b) The Certificate of incorporation or Bylaws may require general meetings to be held more frequently.



(c) A failure to hold a quarterly general meeting does not invalidate any act of the company, but the court may, on the application of a member, order that a meeting be held.



(d) Anything required to be done at a quarterly general meeting may instead be done by written resolution under section 102.



107. Special Notice



(a) Where this Act or the Certificate of incorporation requires special notice of a resolution, notice of the intention to move it must be given to the company at least 3 days before the meeting at which it is to be moved.



(b) The company shall give members notice of any such resolution at the same time and in the same manner as it gives notice of the meeting or, if that is not practicable, by posting it in the Company Docket at least 48 hours before the meeting.



(c) Where a meeting has already been called before notice of intention under subsection (a) is given to the company, and there is insufficient time remaining before the meeting for subsection (a) to be satisfied, the resolution may not be moved at that meeting; it may instead be moved at a subsequent meeting once notice has been duly given under subsection (a), or as a written resolution under section 102.



(d) Special notice is required for a resolution to remove a director under section 117.



(e) Special notice may be waived by waiver resolution.



108. Admissibility of Votes



(a) An objection to the qualification of a person to vote, or to the validity of a vote, may only be raised at the meeting or during the voting period at which the vote is tendered.



(b) An objection not raised in time is barred, and every vote not disallowed at the meeting or during the voting period is valid.



(c) An objection raised in time shall be determined by the chair, whose decision, recorded in the minutes, is final unless the meeting resolves otherwise or a court orders otherwise.



(d) Nothing in this section prevents a court from invalidating a vote or a resolution, whether or not an objection was raised in time.



(e) Where it is impossible to determine how a person voted, and that vote could affect the result of the resolution, the resolution shall be put to a vote again.

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[Asqii]

PART XVI — MEETINGS OF THE BOARD AND BOARD RESOLUTIONS



109. Calling and Notice of Board Meetings



(a) Unless the Certificate of incorporation or Bylaws otherwise provide, a director may call a meeting of the board at any time, upon reasonable notice to every director.



(b) Notice of a meeting of the board need not specify the purpose of, or the business to be transacted at, the meeting, unless the Certificate of incorporation or Bylaws otherwise require.



(c) Notice is duly given if posted in the Company Docket, or sent by any means to which the director has consented or which the Certificate of incorporation or Bylaws permit.



(d) A director may waive notice of a meeting of the board in any manner; and attendance at a meeting of the board is a waiver of notice, except where the director attends for the express purpose of objecting that the meeting was not lawfully called.



(e) The accidental omission to give notice to, or the non-receipt of notice by, a director does not invalidate the proceedings, unless the omission was in bad faith.



110. Quorum



(a) Unless the Certificate of incorporation or Bylaws otherwise provide, a majority of the directors then in office constitutes a quorum for a meeting of the board.



(b) A quorum of directors may exercise all the powers of the board, notwithstanding any vacancy among the directors.



111. Conduct and Participation



(a) A meeting of the board may be held in person, in-game, or by any electronic means, including a forum thread or a voice or text channel, by which the participants can communicate with one another.



(b) A director participating by any such means is treated as present at the meeting.



112. Adjournment



(a) Notice of an adjourned meeting of the board need not be given if the time and place of the adjourned meeting is announced at the original meeting.



113. Minutes



(a) Minutes shall be made of every meeting of the board, recording each resolution put to the meeting and its result.



(b) A director who is present at a meeting of the board is presumed to have consented to a resolution passed at that meeting, unless their dissent is recorded in the minutes, or notified in writing to the board, without undue delay.



(c) Minutes of board meetings are not required to be filed in the Company Docket, and form part of the books and records of the company under section 123.



114. Resolution in Writing



(a) A resolution of the board may be proposed as a written resolution, and anything which may be done by resolution of the board at a meeting may be done by written resolution.



(b) A written resolution shall be circulated to every director then in office before it may be voted on, and the circulation date is the date on which it is so circulated.



(c) A written resolution is passed where it is agreed to by the proportion of the directors then in office required to pass a resolution of that kind; and for the purposes of this section that proportion is calculated by reference to all directors then in office, and not only those voting on it.



(d) A written resolution may not be declared lapsed before the end of 48 hours from the circulation date.



(e) A written resolution lapses if it is not passed before the end of the period specified for that purpose in the Certificate of incorporation or the Bylaws, or, if none is specified, the period of 7 days beginning with the circulation date; and agreement signified after the expiry of that period is ineffective.



(f) A written resolution passed in accordance with this section is as valid as if it had been passed at a meeting of the board, and satisfies all requirements of this Act relating to meetings of the board.



(g) A copy of a resolution under this section, and the fact of its passing or lapsing, shall be kept with the minutes of the board.



115. Alternate Directors



(a) Subject to the Certificate of Incorporation and the Bylaws, the members may, by ordinary resolution, elect a person to act as a director in the alternative to a director of the company, or may authorise the board to appoint such alternate directors as are necessary for the proper conduct of the affairs of the company.



(b) An alternate director may act, and exercise the rights and powers, of the director for whom they act only in the absence of that director, and only to the extent that director has not already acted, voted, or signified their agreement or dissent in the matter in question.



(c) Without limiting subsection (b):



(i) an alternate director may not attend or vote at a meeting of the board where the director for whom they act is present; and



(ii) an alternate director may not vote on, or signify agreement to, a written resolution of the board where the director for whom they act has already voted on, or signified agreement to, that resolution.



(d) An alternate director is not an additional director. For every purpose under this Act, the Certificate of incorporation, or the Bylaws, including quorum and any calculation of a majority or other proportion of directors, an alternate director acting for an absent director is counted, and votes, only in the place of that absent director, and not otherwise.



116. Cumulative Voting



(a) Where the Certificate of incorporation provides for cumulative voting in the election of directors, the following rules apply:



(i) the Certificate of incorporation shall require a fixed number of directors, and not a minimum and maximum number;



(ii) a member entitled to vote at an election of directors has the right to cast a number of votes equal to the voting power held by them, multiplied by the number of directors to be elected, and may cast all those votes in favour of one candidate, or distribute them among the candidates in any manner;



(iii) a separate vote shall be taken with respect to each candidate nominated for director, unless a unanimous resolution permits two or more candidates to be elected by a single resolution;



(iv) a member who votes for more than one candidate without specifying the distribution of their votes among the candidates distributes their votes equally among the candidates for whom they vote;



(v) where the number of candidates nominated exceeds the number of positions to be filled, the candidates receiving the fewest votes are eliminated, one at a time, until the number of remaining candidates equals the number of positions to be filled;



(vi) a director may not be removed from office under section 117 if the votes cast against their removal would have been sufficient to elect them, had those votes been cast cumulatively at an election for the same total number of directors; and



(vii) the number of directors required by the Certificate of incorporation may not be decreased if the votes cast against the decrease would have been sufficient to elect a director, had those votes been cast cumulatively at an election for the same total number of directors.



(b) This section does not apply unless the Certificate of incorporation expressly provides for cumulative voting.



(c) Where this section applies, a resolution to elect a director shall state the total number of director seats being filled by that resolution.



(d) Where this section applies, every director seat that is vacant, or is due to become vacant, at the time notice of a meeting is given shall be filled by a single combined election at that meeting under subsection (a), and may not instead be filled across separate elections at that meeting or at other meetings, except to the extent it is not reasonably practicable to combine them.



(e) A member may apply to the court on the ground that an election of directors has been divided into separate meetings or resolutions with the purpose or effect of defeating cumulative voting under this section, notwithstanding subsection (d). On such an application, the court may declare that a director so elected was not validly elected, or make such other order as it thinks fit.



117. Removal of Directors



(a) Except as provided in the Certificate of incorporation or Bylaws, or as restricted by section 116(a)(vi) where cumulative voting applies, the members may remove a director from office by ordinary resolution, subject to special notice under section 107.



(b) Where the holders of a class of shares or a guarantor class have an exclusive right to elect one or more directors, a director so elected may only be removed by ordinary resolution of that class.



(c) A vacancy created by the removal of a director may be filled at the same meeting at which the director is removed, or, if not so filled, in accordance with section 118.



118. Filling Vacancies



(a) A vacancy among the directors is filled by ordinary resolution of the members.



(b) Where the Certificate of incorporation or Bylaws so provide, a quorum of the board may fill a vacancy among the directors, other than a vacancy resulting from an increase in the number of directors required by the Certificate of incorporation; and this subsection does not apply unless the Certificate of incorporation or Bylaws expressly so provide.



(c) Where a vacancy is to be filled by the members, the directors then in office shall without undue delay call a general meeting to fill it; and if they fail to do so, or there are no directors in office, the meeting may be called by any member.



(d) Where the Certificate of incorporation reserves the right to elect one or more directors to the holders of a class, a vacancy among those directors is filled by a meeting of the holders of that class called for the purpose, or, where subsection (b) applies, by the remaining directors elected by that class.



(e) A director appointed or elected to fill a vacancy holds office for the unexpired term, if any, of their predecessor.

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PART XVII — SECRETARY



119. Secretary



(a) All companies must have a Secretary at all times.



(b) A company may change its Secretary by filing a Notice to Replace Secretary.



(i) This Notice shall contain the name of the replaced Secretary and the name of the new Secretary.



(c) A Secretary must give at least 7 days' notice before resigning as Secretary of the company, and shall file such notice of resignation containing a statement that they are resigning and the resignation date from which the notice duration starts running in the Company Docket.



(d) Subject to subsection (e), where the company does not have a Secretary, it shall be in violation of this Act and the MEA shall act as its Secretary.



(e) Where there is no available CSP, the company shall not be in violation of this Act and the MEA shall act as its Secretary until such time as a Secretary can be appointed.



120. Duties



(a) Every filing in the Company Docket must be verified and filed by a CSP.



(b) Verification is not required for a communication, announcement, vote, resolution, or similar filing that does not effect or record a change to the Certificate of incorporation, the Bylaws, the ownership, the membership, or the directors or officers of the company. Such a filing must still be filed by a CSP.



(c) The Secretary shall accept and forward, without undue delay and in any case within 24 hours, to the directors, officers, and other persons set in the Certificate of incorporation or Bylaws, all:



(i) legal process;



(ii) summons;



(iii) court orders;



(iv) warnings sent by a governmental institution, or other enforcement or compliance communications and actions; and



(v) communications directed to the company.



121. Fees



(a) A CSP shall not request fees in excess of the amounts set out in the fee schedule maintained by the MEA.



(b) Any action not listed in the fee schedule shall be free from a fee cap.



(c) The Secretary may require a deposit of up to 500 dollars to secure payment of the fees for forwarding and for acting as Secretary.



(d) No fee shall be payable for a filing that is retracted by the Secretary by reason of an act or omission of the Secretary under section 145(g) or section 145(h), and any fee already paid for that filing shall be refunded.



(e) No fee shall be payable for a filing made to correct, replace, or complete an earlier filing where the defect being corrected was caused by an act or omission of the Secretary, and any fee already paid for that filing shall be refunded.



122. Powers on the Forums



(a) CSPs shall be able to edit the Company Summary without being the poster of that Company Summary.



(b) CSPs shall be able to file filings in the Company Docket, as well as create Company Dockets.

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PART XVIII — BOOKS AND RECORDS



123. Recordkeeping



(a) A company shall keep proper books and records including, where applicable, material underlying documentation including contracts and invoices, and such records must reflect details of:



(i) all sums of money received and expended by the company, and the matters in respect of which the receipt and expenditure takes place; and



(ii) all sales and purchases and other transactions of the assets and liabilities of the company.



(b) The books and records must:



(i) correctly explain all transactions;



(ii) enable the financial position of the company to be determined with reasonable accuracy at any time; and



(iii) allow financial statements to be prepared.



(c) The books and records which a company is required to keep shall be preserved by it for a minimum period of one (1) year from the date on which they are prepared.



124. Access to Information



(a) Each director shall have unrestricted and absolute access to information regarding the status of the business, financial condition of the company and other information regarding the affairs of the company as is just and reasonable.



(i) This includes the right to make extracts and copies.



(ii) This access shall be free.



(b) Members shall have reasonable access to information regarding the status of the business, financial condition of the company and other information regarding the affairs of the company as is just and reasonable.



(i) The directors and officers of a company shall have the right to keep confidential from members, for such period of time as the director or officer deems reasonable, any information which the director or officer:



(1) reasonably believes to be in the nature of trade secrets;



(2) in good faith believes that the disclosure of such information is not in the best interest of the company, or could damage the company or its business; or



(3) is required by law or by agreement with a third party to keep confidential.



(ii) The company may require reasonable fees to be paid solely to cover reasonable costs.



(c) The Certificate of incorporation or bylaws may require returned information to be kept confidential.



125. Solvency Statement



(a) A solvency statement is a statement in which the directors making it have formed the opinion:



(i) that, as at the date of the statement, the company is able to discharge its liabilities as they fall due; and



(ii) that, having regard to the matters set out in subsection (b), the company will be able to continue to carry on business and discharge its liabilities as they fall due for the period of 30 days immediately following the date of the statement.



(b) The matters referred to in subsection (a)(ii) are:



(i) the prospects of the company and the intentions of the directors with respect to the management of the company's business; and



(ii) the amount and character of the financial resources that will in the directors' view be available to the company.



(c) Where a solvency statement is required to be made under this Act, it shall be filed in the Company Docket.



(d) A director who makes a solvency statement without having reasonable grounds for the opinion expressed in it shall be liable.



126. Inspection by the MEA



(a) The MEA may inspect the books and records a company is required to keep under section 123, and may require a director or officer to produce them and to provide such explanation of them as the MEA reasonably requires.



(b) A right to withhold information under section 124(b)(i) does not apply against the MEA acting under this section.



(c) The MEA may share information obtained under this section with any other government entity.



(d) Save as provided in subsection (c), the MEA shall not disclose anything obtained under this section except so far as is necessary for the exercise of its functions or for legal proceedings.

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PART XIX — COMPANY AND GROUP SIZE CLASSIFICATION



127. Definitions



(a) Group means a holding company together with all of its subsidiaries, within the meaning of sections 2 and 3.



(b) Financial period means:



(i) a period of three calendar months, aligned to the calendar quarters (January to March, April to June, July to September, and October to December);



(ii) in the case of a company's first financial period, the period beginning with its incorporation and ending at the close of the calendar quarter in which it was incorporated; and



(iii) in the case of a company's last financial period, the period beginning with the start of the calendar quarter in which it is dissolved and ending on its dissolution.



(c) Financial filing means, in respect of a company or group and a financial period, the balance sheet, profit and loss account, notes, directors' report, and any other report or statement required to be prepared under this Part in respect of that period.



(d) The size conditions for a company, in respect of a financial period, are:



(i) a balance sheet total not exceeding the amount prescribed by the MEA for the relevant size; and



(ii) a turnover not exceeding the amount prescribed by the MEA for the relevant size.



(e) A company is a micro company, a small company, or a medium company in respect of a financial period only where every size condition in subsection (d) is satisfied for that size, applying the amounts the MEA has prescribed for it; and where the size conditions indicate different sizes, the company is of the largest size so indicated.



(f) A company is a large company in respect of a financial period if it is not a micro company, a small company, or a medium company.



(g) A group is a small group, a medium group, or a large group in respect of a financial period according to whether the aggregate figures for the holding company and all of its subsidiaries, taken together, satisfy the size conditions in subsection (d), applying subsection (e) and the amounts the MEA has prescribed for the equivalent company size; and a group that would otherwise be a micro group is treated as a small group.



128. Rulemaking by the MEA



(a) The MEA shall by regulation prescribe:



(i) the amounts applicable to each size condition in section 127(d), for each of micro, small, medium, and large;



(ii) accounting standards and principles applicable to companies and groups under this Part, including the method of calculating a balance sheet total and a turnover;



(iii) the form and content of any financial filing; and



(iv) the period within which a financial filing must be filed in the Company Docket after the end of the financial period to which it relates.



(b) All regulations under this section must suit a legitimate government purpose and be reasonably tailored to achieve such a purpose.



(c) This Part shall not come into force until MEA by regulation orders it to come into force.



129. Determination and Stability of Classification



(a) The balance sheet total and turnover of a company or group are determined in accordance with its books and records kept under section 123, and any accounting standards prescribed by the MEA under section 128.



(b) A company's or group's size classification for a financial period is determined by reference to the qualifying conditions in section 127 as they apply to that period and, where applicable, the immediately preceding financial period.



(c) Except as provided in subsection (d), a company or group qualifies for, or ceases to qualify for, a given size classification only where the relevant conditions are met, or fail to be met, for two consecutive financial periods.



(d) In its first financial period, a company's or group's classification is determined by reference to that period alone.



130. Financial Filings by Company Size



(a) Every company shall keep accounting records in accordance with section 123, regardless of its size classification.



(b) A micro company shall prepare, in respect of each financial period, an abridged balance sheet, and is not required to prepare a profit and loss account, notes to the accounts, or a directors' report.



(c) A small company shall prepare, in respect of each financial period, a balance sheet and a profit and loss account, which may be abridged, together with such notes as are necessary to give a true and fair view; a directors' report is not required.



(d) A medium company shall prepare, in respect of each financial period, a full balance sheet, a full profit and loss account, notes to the accounts, and a directors' report in accordance with section 132.



(e) A large company shall prepare, in respect of each financial period, a full balance sheet, a full profit and loss account, notes to the accounts, a directors' report in accordance with section 132, and, in addition, a report addressing the company's principal risks and the performance of its business over the period.



(f) A company may prepare and file any part of a financial filing that this Part requires only of a company of a larger size, and a financial filing is not defective by reason only that it contains more than this Part requires.



(g) Notwithstanding subsections (b) to (e), a company that is dormant under section 46 for the whole of a financial period shall prepare, in respect of that period, an abridged balance sheet only.



(h) The financial filing for a financial period shall be filed in the Company Docket within the period prescribed by the MEA under section 128(a)(iv).



(i) A company may apply to the MEA for an extension of the period under subsection (h), and the MEA may grant an extension where it considers it reasonable to do so; no administrative sanction shall be assessed in respect of a filing made within an extension so granted.



131. Financial Filings by Group Size



(a) A holding company shall prepare consolidated financial filings for its group in respect of each financial period, to the extent required by this section.



(b) A small group is not required to prepare consolidated financial filings, and each company within the group shall instead prepare a financial filing under section 130 according to its own individual size classification.



(c) A medium group shall prepare consolidated financial filings comprising a consolidated balance sheet and a consolidated profit and loss account, which may be presented in an abridged form, together with such notes as are necessary to give a true and fair view of the group as a whole.



(d) A large group shall prepare consolidated financial filings comprising a full consolidated balance sheet, a full consolidated profit and loss account, notes to the accounts, a consolidated directors' report in accordance with section 132, and a report addressing the group's principal risks and the performance of its business over the period.



(e) Consolidated financial filings prepared under this section shall be filed in the Company Docket within the period prescribed by the MEA under section 128(a)(iv), and section 130(i) applies to that period as it applies to a period under section 130(h).



(f) A group may prepare and file any part of a consolidated financial filing that this Part requires only of a group of a larger size, and a consolidated financial filing is not defective by reason only that it contains more than this Part requires.



(g) This section does not relieve a subsidiary of its own obligations under section 130 in respect of its individual financial filing, except as provided in subsection (b).



132. Directors' Report



(a) The directors of a company required to prepare a directors' report under section 130(d) or (e), or the directors of a holding company required to prepare a consolidated directors' report under section 131(d), shall prepare that report for each financial period to which the requirement applies, unless the company is exempt under subsection (d).



(b) A directors' report shall state the principal activities of the company during the financial period, and may be in summary form.



(c) The directors of two or more companies that are associated within the meaning of sections 2 and 3 may combine their directors' reports; and where the combined report states the principal activities of all the associated companies, the requirement under this section is satisfied for each of them.



(d) The members of a company may, by waiver resolution, exempt the company's directors from the duty under subsection (a) in respect of one or more specified financial periods.



(e) A waiver resolution under subsection (d) is rescinded, and the duty under subsection (a) revives for the financial period or periods concerned, where the company receives a request to that effect, before the last 14 days of the financial period in question, from members holding more than 10% of the voting power of the company or of the affected class.



(f) A company may also rescind a waiver resolution under subsection (d) by ordinary resolution of the members, taking effect for the financial period in question if passed before the last 14 days of that period.



(g) Except as provided in subsection (d), a directors' report shall be filed in the Company Docket together with the company's or group's financial filing for the period, in accordance with section 130(h) or section 131(e), as applicable.

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PART XX — AUDITORS



133. Appointment of Auditor



(a) A company is not required to appoint an auditor unless:



(i) its Certificate of incorporation or Bylaws so require; or



(ii) the members resolve by ordinary resolution.



(b) Where an auditor is to be appointed, the auditor is appointed by ordinary resolution of the members, unless the Certificate of incorporation provides otherwise.



(c) An auditor holds office until the conclusion of the matter for which they were appointed, or until they resign or are removed.



(d) The appointment of an auditor shall be filed in the Company Docket.



134. Eligibility



(a) A person is eligible to be an auditor of a company only if they are independent of the company; a person is not independent if they are:



(i) a director or officer of the company; or



(ii) a person whose connection with the company would reasonably compromise their independence.



(b) An appointment made in contravention of this section is void.



135. Functions of the Auditor



(a) The auditor shall examine the books and records of the company, and any financial statements prepared by it, and shall report to the members whether, in the auditor's opinion, those financial statements give a true and fair view of the financial position of the company.



(b) The auditor's report shall state the matters considered, the auditor's opinion, and any qualification to that opinion, and shall be filed in the Company Docket or provided to the members, as the appointment or the Certificate of incorporation requires.



136. Rights to Information



(a) The auditor has a right of access at all reasonable times to the books and records of the company.



(b) The auditor may require any director, officer, or employee of the company to provide such information and explanation as the auditor thinks necessary for the performance of their duties.



(c) A person who knowingly or recklessly provides the auditor with information or an explanation that is false or misleading in a material particular commits a violation of this Act.



137. Remuneration



(a) Subject to the Certificate of Incorporation and the Bylaws, the remuneration of an auditor appointed by the members shall be fixed by ordinary resolution; the remuneration of an auditor appointed otherwise shall be fixed by the board of directors.



138. Removal and Resignation



(a) The members may remove an auditor by ordinary resolution at any time.



(b) An auditor may resign by written notice filed in the Company Docket; the notice may include a statement of any circumstances connected with the resignation that the auditor considers should be brought to the attention of the members or creditors.



(c) The removal or resignation of an auditor shall be filed in the Company Docket.



(d) Special notice under section 107 is required for a resolution to remove an auditor before the end of their appointment.



(e) On receipt of notice of an intended resolution to remove an auditor, the company shall send a copy to the auditor, who may make written representations to the members and require them to be circulated in the Company Docket; and the auditor is entitled to be heard at the meeting at which the resolution is considered.



139. Reliance and Liability



(a) An auditor is entitled to rely in good faith on records, information, and explanations provided to them, and on the work of any expert selected with reasonable care.



(b) An auditor is liable for loss caused by their failure to exercise the care, diligence, and skill that a reasonably prudent auditor would exercise in the circumstances.



140. Access to Meetings



(a) An auditor is entitled to receive notice of, attend, and be heard at any general meeting on any part of the business of the meeting that concerns them as auditor.

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PART XXI — PROTECTION OF MEMBERS



141. Variation of Class Rights



(a) The rights of a class of shareholders, or of a class of members who are not shareholders, may only be varied:



(i) in accordance with any provision in the Certificate of incorporation for the variation of those rights; or



(ii) where there is no such provision, with the consent of the holders of at least two-thirds of the outstanding shares of that class, or of at least two-thirds of the members of that class, as applicable, or by a special resolution passed at a separate meeting of that class.



(b) Any amendment of a provision for the variation of the rights of a class, and any insertion of such a provision, is itself to be treated as a variation of those rights.



(c) References to the variation of class rights include references to their abrogation.



(d) Members holding not less than 15% of the voting power of a class, who did not consent to or vote in favour of a variation made under subsection (a)(ii), may apply to the court within 14 days to have the variation cancelled; and where such an application is made, the variation has no effect unless and until confirmed by the court, which may disallow it if satisfied it would unfairly prejudice the members of the class.



(e) An increase in the number of authorised shares of a class is a variation of the rights of that class.



142. Unfair Prejudice



(a) A member of a company may apply to the court for an order under subsection (c) on the ground that:



(i) the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members (including at least the member); or



(ii) an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.



(b) The MEA may apply to the court for an order under subsection (c) on the ground that:



(i) the company's affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members; or



(ii) an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial;



provided that:



(iii) this subsection shall not apply to any company where all members are also directors;



(iv) any action under this subsection shall be subordinate to, and shall if necessary make way for, any action brought under subsection (a);



(v) any damages and compensation shall be granted to those negatively affected by the unfair prejudice, and shall not be granted to the Government; and



(vi) where the members subject to unfair prejudice give notice of their disapproval of any action brought or about to be brought under this subsection, the MEA must show the court cause that the public interest overrides their concern, the bar for which shall be higher where the proportion of members in disapproval increases.



(c) Without prejudice to the generality of subsections (a) and (b), the court's order may:



(i) regulate the conduct of the company's affairs in the future;



(ii) require the company to refrain from doing or continuing an act complained of by the applicant or to do an act which the applicant has complained it has omitted to do;



(iii) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct; and



(iv) provide for the purchase of the rights or shares of any members of the company by other members or by the company itself.



143. Deadlock



(a) A company is deadlocked if, for a continuous period of at least 30 days, it is unable to pass a resolution, or its board is unable to reach a decision that is necessary for the company to carry on its affairs.



(b) Unless the Certificate of incorporation or Bylaws provide a mechanism for resolving deadlock, a member or director may apply to the court, which may make any order it thinks fit, including an order:



(i) directing that a casting vote be exercised by a specified person;



(ii) providing for the purchase of one member's shares by another, or by the company, at a value determined by the court;



(iii) appointing a person to break the deadlock on specified matters; or



(iv) that the company be wound up under section 38, where no other remedy is appropriate.



(c) The Certificate of incorporation or Bylaws may provide their own deadlock mechanism which applies in place of an application under subsection (b).



(d) Where a mechanism provided under subsection (c) fails to resolve the deadlock, cannot be operated, or itself results in a deadlock, a member or director may apply to the court under subsection (b) as if no such mechanism had been provided.



144. Derivative Actions



(a) A member may, with the permission of the court, bring or continue legal proceedings in the name and on behalf of the company in respect of a cause of action vested in the company (a "derivative action").



(b) A derivative action may be brought against a director, officer, member, or any other person.



(c) The court may grant permission for a derivative action only if satisfied that:



(i) the company itself has not brought, and does not intend to bring, the proceedings;



(ii) the member is acting in good faith; and



(iii) it is in the interests of the company for the action to be brought.



(d) In deciding whether to grant permission, the court shall have regard to whether the act complained of has been, or could be, validly authorised or ratified by the company under section 91 or section 146.



(e) A derivative action may not be discontinued, settled, or compromised without the permission of the court.



(f) The court may order the company to indemnify the member for the reasonable costs of the derivative action, whether or not it succeeds.



(g) Any damages or other relief recovered in a derivative action belong to the company, not to the member who brought it.

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[Asqii]

PART XXII — CORRECTIONS AND VALIDATION



145. Correction and Retraction of Filings



(a) Where a filing in the Company Docket is defective because it:



(i) contains an inaccurate, incomplete, or erroneous statement;



(ii) omits information required by this Act, the Certificate of incorporation, or the Bylaws; or



(iii) was erroneously executed, dated, or filed,



the company may correct it by filing a Notice of Correction in the Company Docket.



(b) A filing may be corrected under this section only where the corrected content can be reasonably ascertained from:



(i) the defective filing itself;



(ii) one or more other filings already filed in the Company Docket;



(iii) the Certificate of incorporation or the Bylaws; or



(iv) for the avoidance of doubt:



(1) where a share transfer filing omits the share amount but the amount is ascertainable from the share register or the authorising resolution, it may be corrected under this section; and



(2) where a filing omits the name of a person whose identity is ascertainable from the Certificate of incorporation or a prior filing, it may be corrected under this section.



(c) A Notice of Correction shall:



(i) identify the defective filing and the date on which it was filed;



(ii) describe the inaccuracy, omission, or defect; and



(iii) set forth the filing as corrected.



(d) A correction under this section shall not be used to alter the meaning or substance of the original filing, nor to effect any change that would otherwise require a resolution, an amendment, or a vote. Such a change must be made through the procedure otherwise provided by this Act.



(e) A filing corrected under this section shall be regarded as having been filed in its corrected form as of the date of the original filing.



(f) Notwithstanding subsection (e), a correction shall not prejudice any person who, before the Notice of Correction was filed, relied on the uncorrected filing without knowledge of the inaccuracy, omission, or defect and who would be adversely affected by the correction. As to such a person, the filing shall be regarded as corrected only from the time the Notice of Correction is filed.



(g) Within 30 minutes of a filing being posted in the Company Docket, a filing made by or on behalf of the company may be voided by the posting of a Notice of Retraction.



(i) A Notice of Retraction shall identify the filing being retracted.



(ii) A filing retracted under this subsection shall be of no force or effect and shall be regarded as never having been filed, but shall remain recorded in the Company Docket in accordance with section 22(e).



(iii) Subsection (f) applies to a retraction under this subsection as it applies to a correction, with the necessary modifications; and a court may make any order necessary to protect a person so prejudiced.



(h) The MEA may, within 24 hours of a filing being posted in the Company Docket, forcibly retract that filing by posting a Notice of Forceful Retraction, but only where the retraction is necessary to prevent harm arising from a fault, error, or defect in the filing.



(i) A Notice of Forceful Retraction shall state:



(1) the filing being retracted and the date and time on which it was posted;



(2) the fault, error, or defect relied on;



(3) the harm that the retraction is intended to prevent; and



(4) that it is issued under this subsection.



(ii) Only a filing made by or on behalf of a person or a company may be forcefully retracted under this subsection.



(iii) A filing retracted under this subsection shall be of no force or effect and shall be regarded as never having been filed, but shall remain recorded in the Company Docket in accordance with section 22(e).



(iv) Subsection (f) applies to a retraction under this subsection as it applies to a correction, with the necessary modifications; and a court may make any order necessary to protect a person so prejudiced, including an order reversing the retraction.



(i) This section is in addition to, and does not limit, the correction of immaterial mistakes permitted under section 22(e)(i).



146. Ratification of Defective Corporate Acts



(a) For the purposes of this Part:



(i) Failure of Authorization means the failure to authorise or effect an act or transaction in compliance with this Act, the Certificate of incorporation, the Bylaws, or any plan, agreement, or resolution of the company, where such failure would render the act or transaction void or voidable; and includes an act or transaction that was outside the power of the company (ultra vires).



(ii) Defective Corporate Act means any act or transaction purportedly taken by or on behalf of the company that is void or voidable due to a Failure of Authorization, and includes:



(1) an Overissue;



(2) an election, appointment, removal, or resignation of a director, or officer that is void or voidable due to a Failure of Authorization; and



(3) any act or transaction outside the power of the company.



(iii) Overissue means the purported issuance of shares in excess of the shares authorised, or the purported issuance of shares of a class not authorised.



(iv) Putative Holding means shares or memberships purportedly issued, created, or admitted as a result of a Defective Corporate Act, which are void or voidable.



(v) Validation Time means the time at which a ratification under this section, or a validation under section 147, takes effect.



(b) Any Defective Corporate Act may be ratified in accordance with this section. No Defective Corporate Act shall be void or voidable solely because it was a Defective Corporate Act once it has been ratified under this section or validated under section 147.



(c) Unless otherwise provided by the Certificate of incorporation, to ratify a Defective Corporate Act the board of directors shall adopt a resolution stating:



(i) the Defective Corporate Act to be ratified;



(ii) the date on which the Defective Corporate Act occurred;



(iii) where the act involved a Putative Holding, the number and class of the Putative Holding;



(iv) the nature of the Failure of Authorization; and



(v) that the board approves the ratification of the Defective Corporate Act.



(d) Where the Defective Corporate Act would, at the time it was taken, have required approval by a member resolution (or by a class), the ratification must additionally be approved by such a resolution.



(i) The Defective Corporate Act shall be ratified by reference to the law, the Certificate of incorporation, the Bylaws, and the voting requirements and procedures that were in force at the time the Defective Corporate Act was taken, and the validity of the act being ratified shall be determined by reference to those in force at that time.



(ii) Notwithstanding paragraph (i), the Certificate of incorporation may set out voting requirements and procedures specifically for the retroactive ratification of Defective Corporate Acts, in which case those requirements and procedures shall apply in place of those referred to in paragraph (i).



(iii) A Putative Holding shall neither be entitled to vote on, nor be counted towards quorum for, any resolution under this subsection.



(e) A ratification under this section shall be filed in the Company Docket, and the Validation Time shall be the time at which the ratification is filed.



(f) Where the Defective Corporate Act being ratified would have required a filing or an amendment to the Certificate of incorporation or the Bylaws, the company shall file a Certificate of Ratification in the Company Docket setting forth the matters in subsection (c).



(g) From the Validation Time, and unless otherwise ordered by a court under section 147:



(i) each Defective Corporate Act so ratified shall no longer be void or voidable as a result of the Failure of Authorization, and shall be regarded as a valid and effective act of the company retroactive to the time the act was originally taken;



(ii) each Putative Holding shall no longer be void or voidable and shall be regarded as validly issued, created, or admitted retroactive to the time it was originally issued, created, or admitted; and



(iii) the ratification shall relate back to the time of the Defective Corporate Act.



(h) Ratification under this section does not, of itself, replace any other approval or consent required by law for the act, and is without prejudice to the protections in section 147(c) and 3(d).



147. Validation by the Court



(a) Upon application by the company, a director or officer, a person who is or was a member, or any other person claiming to be substantially and adversely affected, a court may:



(i) determine the validity and effectiveness of any Defective Corporate Act;



(ii) determine the validity and effectiveness of any ratification under section 146;



(iii) determine the validity of any Putative Holding;



(iv) validate and declare effective any Defective Corporate Act or Putative Holding, whether or not it has been ratified under section 146, and whether or not the procedures of that section were or could have been complied with;



(v) modify or waive any of the procedures of section 146; and



(vi) make such further orders as it deems just, including orders as to notice and as to the rights and remedies of any person affected.



(b) In determining whether and how to validate a Defective Corporate Act, the court may consider:



(i) whether the act was originally approved, or would at the time have been approved, by the body whose approval was required;



(ii) whether the company and its board treated the act as valid, and whether any person has acted in reliance on the validity of the act;



(iii) whether any person would be harmed by the validation, or would be harmed if the act were instead held void;



(iv) whether the act was taken, or the Putative Holding issued, in good faith and for a legitimate purpose of the company; and



(v) any other factor the court deems just and equitable.



(c) When validating any Defective Corporate Act, the court shall take such measures as are necessary or appropriate to protect any person who, in good faith and without knowledge of the defect:



(i) relied on the validity of the Defective Corporate Act and would be harmed if it were held void; or



(ii) relied on the invalidity of the Defective Corporate Act and would be harmed by its validation.



(d) For the purposes of subsection (c), the court may, among other measures, condition the validation, fashion equitable remedies, award compensation, or limit the retroactive effect of the validation as it applies to a particular person, so that no such person is unfairly prejudiced.



(e) From the Validation Time, a Defective Corporate Act validated under this section, or ratified under section 146 and not successfully challenged, together with any related Putative Holding, shall be regarded as a valid and effective act of the company retroactive to the time it was originally taken, and shall not thereafter be void or voidable on account of the Failure of Authorization, save to the extent the court orders otherwise under subsections (c) and (d).



(f) Any action asserting that a ratification under section 146 is void or ineffective, or otherwise challenging the validity of a ratification or validation under this Part, must be brought within 14 days of the Validation Time.



(i) After that period, the validity and effectiveness of the ratification or validation shall be conclusive and may not be challenged on the ground of the Failure of Authorization.



148. Rectification of the Company Register by the Court



(a) The court may, on the application of any person aggrieved, or of the MEA, order that an entry in the Company Register or a Company Docket be corrected, where satisfied that the entry:



(i) was made without sufficient cause;



(ii) is inaccurate or incomplete; or



(iii) was omitted, or unreasonably delayed, without sufficient cause.



(b) An order under this section shall set forth the entry or document as corrected; and, upon the order being filed in the Company Docket, the entry or document is thereafter to be read as so corrected.



(c) No entry or document in the Company Docket may be deleted or removed under this section. A correction under this section takes effect in the same manner as a correction under section 145, and the original entry or document remains recorded in the Company Docket in accordance with section 22(e).



(d) The court may, in addition to an order under subsection (b), make such further order as it thinks fit, including as to the payment of costs and as to compensation for any damage sustained by a party by reason of the error, omission, or defect being corrected.



(e) This section applies in addition to, and does not limit, any other provision of this Act for the correction of the Company Register, a Company Docket, or an entry therein, including section 22(e)(i) and section 145.



(f) An order under this section binds the company and, unless the court otherwise directs, is conclusive against all persons.

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PART XXIII — REGULATION AND ENFORCEMENT



149. Administrative Sanctions



(a) Administrative sanctions must be coercive and strictly not punitive.



(b) To compel compliance with this Act, the MEA may:



(i) issue public warnings, censures and reprimands; or



(ii) fine such individuals and undertakings up to 1000 dollars per begun 24 hours of noncompliance.



(c) A warning shall be given at least 24 hours before any administrative sanction is assessed, unless there is a clear and justified reason not to do so.



(i) The warning does not have to contain the administrative sanction that might or will be assessed, but must cite this Act, this Part and this section.



(ii) A warning must only be given per matter and not per offence or administrative sanction to be applied.



(iii) Such warnings shall contain the matter about which an administrative sanction shall be assessed, including steps to remedy the issue.



(d) Nothing in this section shall be construed to prevent transparent communication to the public.



150. Rulemaking by the MEA



(a) The MEA shall have rulemaking power to regulate:



(i) procedures and filings in the Company Docket;



(ii) the naming of companies;



(iii) the format of filings.



(b) All rules must suit a legitimate government purpose and be reasonably tailored to achieve such a purpose.



151. Fraudulent Trading



(a) If any business of a company is carried on with intent to defraud the creditors or members of the company, or the creditors or members of any other person, or for any fraudulent purpose, every person who is knowingly a party to the carrying on of the business in that manner commits a violation of this Act.



(b) Where it appears that any business of a company has been carried on as described in subsection (a), the court, on the application of the company, a creditor, or a member, may declare that any persons who were knowingly parties to the carrying on of the business in that manner are personally liable, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court directs.



(c) Where the business was carried on with intent to defraud members, the court may in addition order any person who was knowingly a party to the carrying on of the business in that manner to compensate the members defrauded for the loss they have suffered.



(d) This section has effect notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which the declaration is made.

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PART XXIV — SERVICE OF DOCUMENTS AND NOTICES



152. Service on a Company



(a) A document or notice is validly served on a company if it is:



(i) posted in the company's Company Docket;



(ii) delivered to a director, officer, or the Secretary of the company; or



(iii) sent by any means the company has stated it accepts, whether in its Certificate of incorporation, its Bylaws, or the Company Summary.



(b) Service in the Company Docket is effective when the document is posted, and the company is presumed to have received it.



153. Service by a Company



(a) A company serves a document or notice on a member, director, or officer if it is sent by a means to which that person has consented, or which the Certificate of incorporation or Bylaws permit, and in any case if it is posted in the Company Docket.



154. Timing



(a) Where a period runs from the service of a document, it runs from the time the document is served under this Part.



(b) The accidental failure to serve a person, or that person's non-receipt, does not invalidate the proceedings to which the document relates, unless the failure was in bad faith.

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PART XXV — CORPORATE SERVICE PROVIDERS



155. Licensing



(a) A person may act as a Corporate Service Provider (CSP) only if licensed to do so by the MEA.



(b) The MEA may grant, and may refuse to grant, a license under this section.



(c) A CSP must be an individual; a company or other undertaking may not be licensed as, or act as, a CSP.



(d) There shall at all times be a public register of CSPs and no person shall be a CSP until duly registered in that register.



156. Examination



(a) The MEA may require an applicant for a license under section 155 to pass an examination testing the applicant's knowledge of corporate law, as a condition of the license.



(b) The MEA may set the form, content, and passing standard of an examination under this section, and may vary them from time to time.



(c) The MEA may require a licensed CSP to pass a further examination under this section as a condition of retaining their license, but not more often than once every 3 months.



157. Minimum Activity Requirement



(a) A CSP shall maintain at least 4 hours monthly playtime.



(b) A CSP who fails to meet the requirement in subsection (a) in any month is liable to have their license suspended or revoked under section 159.



158. Duty to Verify and File



(a) A CSP has a duty to verify and file, in accordance with section 120, any filing properly submitted to them for filing in the Company Docket.



(b) A CSP may decline to verify and file a filing where:



(i) the CSP is overloaded with other pending filings or duties; or



(ii) there is other good cause making it not reasonably possible for the CSP to do so.



(c) A CSP who declines under subsection (b) shall, where reasonably possible, inform the person seeking the filing without undue delay, so that the filing may be sought from another CSP.



(d) A decline under subsection (b) is not a breach of the duty in subsection (a) and does not of itself expose the CSP to liability.



(e) A CSP shall have no liability where they reasonably and in good faith reviewed and verified a filing.



159. Suspension and Revocation



(a) The MEA may suspend or revoke the license of a CSP for:



(i) failure to meet the requirement in section 157(a);



(ii) a violation of this Act in the CSP's capacity as such; or



(iii) other good cause.



(b) A suspension or revocation under this section is an administrative sanction for the purposes of section 149, and that section applies accordingly.



160. MEA as Backup CSP



(a) Where no CSP is available to verify and file a filing, the MEA shall act as CSP for that filing.



(b) This section applies in addition to, and does not limit, section 119(e).

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PART XXVI — TRANSITION



161. Interim Status of Limited Companies



(a) A limited company existing under the Business Reform Act at the commencement date is not automatically converted to a company under this Act.



(b) Until it converts under section 162 or is seized and dissolved under section 163, a limited company continues to be governed by the Business Reform Act as it stood at the commencement date, as if that Act had not been repealed, save that the provisions of this Act relating to fraudulent trading (section 151), the protection of members (sections 141 to 144), and the jurisdiction of the courts shall apply to it.



(c) In this Part, commencement date means the date this Act comes into force.



(d) The Business Reform Act (cited in that Act as the Corporate Reform Act) is repealed in full, including section 7 of that Act.



(e) A reference in any other enactment to the Business Reform Act, to a limited company, or to a private enterprise shall be read, respectively, as a reference to this Act, to a company under this Act, and to a sole proprietorship under this Act, as the context requires.



162. Voluntary Conversion



(a) A limited company may convert to a company under this Act by:



(i) filing a Certificate of incorporation in accordance with sections 24 and 25, in the form required for a company limited by shares, together with an initial member register reflecting the company's existing shareholders; and



(ii) passing a written special resolution of its shareholders supporting the conversion.



(b) Both steps under subsection (a) must be completed within 14 days of the commencement date.



(c) On conversion:



(i) the company continues in existence as the same legal entity without interruption; its property, rights, liabilities, and legal proceedings are unaffected;



(ii) its shareholders remain members of the company, holding shares in the proportions they held immediately before conversion;



(iii) its directors under the Business Reform Act are deemed to be directors under this Act; if there are no directors, the highest executive under the Business Reform Act shall be regarded as director; and



(iv) the provisions of this Act apply to it in full from the date the passed special resolution is filed.



163. Failure to Convert: Seizure and Dissolution



(a) A limited company that has not completed conversion under section 162 within 14 days of the commencement date shall be dissolved by the MEA.



(b) On dissolution under this section, the MEA shall:



(i) post a public Notice of Dissolution in respect of the company; and



(ii) distribute any assets remaining after the settlement of the company's debts and liabilities to its shareholders in proportion to their shareholding, or, where assets cannot be so distributed, retain them on behalf of the shareholders.



(c) A company dissolved under this section may not be restored under section 45.



164. Transition of Private Enterprises



(a) All private enterprises existing under the Business Reform Act at the commencement date are converted to sole proprietorships under this Act on that date, without any further act required.



(b) All in-game businesses not registered as a limited company under the Business Reform Act are likewise treated as sole proprietorships under this Act from the commencement date.



165. Consequential Amendments



(a) Section 2(a)(i) of the Plot Regulation Act is repealed.



(b) In section 162(a) of the Plot Regulation Act, the words "but must be fully registered and compliant with the Business Reform Act" are replaced by "but must be registered and compliant with the Company Act".



(c) In section 162(b) of the Plot Regulation Act, the words "as outlined in the Business Reform Act" are replaced by "as outlined in the Company Act".



(d) In section 165(e) of the Banking Foundations Act, the words "Credit unions with less than $200,000 in deposits shall elect a President, while credit unions with $200,000 or more in deposits shall elect a Board of Directors. This process, and credit unions more broadly, shall be subject to the Business Reform Act, and credit unions shall be treated as limited companies." are replaced by "Credit unions shall be companies under the Company Act."



(e) Section 6(f) of the New Criminal Code Act (Unauthorized Company Land Transfer) is repealed.



(f) At the end of section 6 of the Inactive Requisition Act, there is added:



(g) This section does not apply to a company within the meaning of the Company Act, or to the assets of such a company; but shares and other membership interests held by the individual in such a company are assets of the individual and may be requisitioned as such."; and



(h) This section applies to a sole proprietorship within the meaning of the Company Act, and to its assets."