COMPANIES ACT 1981 No. 89 of 1981 - SECT 168 Covenants to be included in deeds

COMPANIES ACT 1981 No. 89 of 1981 - SECT 168

168. (1) Subject to sub-section (2), a deed shall, for the purposes of
paragraph 166 (2) (a), contain covenants to the following effect:

   (a)  a covenant binding the management company that it will use its best
        endeavours to carry on and conduct its business in a proper and
        efficient manner and to ensure that any undertaking, scheme or
        enterprise to which the deed relates is carried on and conducted in a
        proper and efficient manner;

   (b)  covenants binding the management company-

        (i)    that the management company will pay to the trustee or
               representative, within 30 days after their receipt by the
               company, any moneys that, under the deed, are payable by the
               company to the trustee or representative;

        (ii)   that the management company will not sell or issue, or permit
               to be sold or issued, a prescribed interest to which the deed
               relates otherwise than at a price calculated in accordance with
               the provisions of the deed;

        (iii)  that the management company will, at the request of the holder
               of a prescribed interest, purchase, or cause to be purchased,
               that prescribed interest from the holder and that the purchase
               price will be a price calculated in accordance with the
               provisions of the deed; and

        (iv)   that the management company will not, without the approval of
               the trustee or representative, publish or cause to be published
               any advertisement, circular or other document containing any
               statement with respect to the sale price of
               prescribed interests to which the deed relates or the yield
               from those prescribed interests or containing any invitation to
               buy prescribed interests;

   (c)  covenants binding the trustee or representative that it will-

        (i)    exercise all due diligence and vigilance in carrying out its
               functions and duties and in watching the rights and interests
               of the holders of the prescribed interests to which the deed
               relates;

        (ii)   keep or cause to be kept proper books of account in relation to
               those prescribed interests;

        (iii)  cause those accounts to be audited at the end of each financial
               year by a registered company auditor; and

        (iv)   send or cause to be sent by post a statement of the accounts
               with the report of the auditor on those accounts within 2
               months of the end of the financial year to each of the holders
               of those prescribed interests;

   (d)  a covenant binding the management company and the trustee or
        representative, respectively, that no moneys available for investment
        under the deed will be invested in or lent to the management company,
        or to the trustee or representative, or to any company (other than a
        banking corporation or a corporation declared pursuant to paragraph 97
        (7) (b) to be an authorized dealer in the short term money market)
        that is related to the management company or to the trustee or
        representative;

   (e)  a covenant binding the management company that the company will-

        (i)    make available to the trustee or representative, or to any
               registered company auditor appointed by it, for inspection all
               the books of the company whether kept at the registered office
               or elsewhere; and

        (ii)   give to the trustee or representative or to any such auditor
               such oral or written information as it or he requires with
               respect to all matters relating to the undertaking, scheme or
               enterprise of the company or any property (whether acquired
               before or after the date of the deed) of the company or
               otherwise relating to the affairs of the company;

   (f)  a covenant binding the management company that the management company
        will make available, or ensure that there is made available, to the
        trustee or representative such details as the trustee or
        representative requires with respect to all matters relating to the
        undertaking, scheme or enterprise to which the deed relates;

   (g)  covenants binding the management company and the trustee or
        representative, respectively, that the management company or the
        trustee or representative, as the case may be, will not exercise the
        right to vote in respect of any shares relating to the
        prescribed interests to which the deed relates held by the
        management company, trustee or representative at any election for
        directors of a corporation shares in which are so held, without the
        consent of the majority of the holders of the prescribed interests to
        which the deed relates present in person and voting given at a meeting
        of those holders convened in the manner provided for in paragraph (h)
        for the purpose of authorizing the exercise of the right at the next
        election; and

   (h)  a covenant binding the management company that the management company
        will, within 21 days after an application is delivered to the company
        at its registered office, being an application by not less than 50, or
        one-tenth in number, whichever is the less, of the holders of the
        prescribed interests to which the deed relates, by sending notice by
        post of the proposed meeting at least 7 days before the proposed
        meeting to each of the holders of the prescribed interests to which
        the deed relates at his last known address or, in the case of joint
        holders, to the joint holder whose name appears first in the company's
        records, convene a meeting of the holders for the purpose of laying
        before the meeting the accounts and balance-sheet that were laid
        before the last preceding annual general meeting of the
        management company or the last audited statement of accounts of the
        trustee or representative, and for the purpose of giving to the
        trustee or representative such directions as the meeting thinks
        proper.

(2) The Commission may, by notice published in the Gazette, declare that,
subject to such terms and conditions as are specified in the notice, a
specified deed that makes provision for the appointment of a specified company
as trustee for or representative of the holders of the prescribed interests to
which the deed relates is not required to contain covenants to the effect of
such of the matters referred to in sub-section (1) or to contain such of the
matters provided for in regulations made for the purposes of paragraph 166 (2)
(b), as are specified in the notice and the Commission may, by notice so
published, revoke such a notice or vary it in such manner as it thinks fit.

(3) A meeting convened for the purposes of a covenant contained in a deed
pursuant to paragraph (1) (g) or (h) shall be held at the time and place
specified in the notice, being a time not later than 2 months after the giving
of the notice, under the chairmanship of-

   (a)  such person as is appointed for that purpose by the holders of the
        prescribed interests to which the deed relates present at the meeting;
        or

   (b)  where no such appointment is made, a nominee of the trustee or
        representative approved by the Commission, and shall be conducted in
        accordance with the provisions of the deed or, in so far as the deed
        makes no provision, as directed by the chairman of the meeting.

(4) Notwithstanding anything to the contrary contained in an approved deed,
the undertaking, scheme, enterprise, contract or arrangement to which the deed
relates may be continued in operation or existence if it appears to be in the
interests of the holders of the prescribed interests to which the deed relates
during such period as is, or such periods as are, agreed upon by the trustee
or representative and the management company.

(5) Where a direction is given to the trustee or representative at a meeting
convened pursuant to a covenant complying with paragraph (l) (h), the trustee
or representative-

   (a)  shall comply with the direction unless it is inconsistent with the
        deed or this Act; and

   (b)  is not liable for anything done or omitted to be done by it by reason
        only of its following that direction.

(6) Where the trustee or representative is of the opinion that a direction so
given is inconsistent with the deed or this Act or is otherwise objectionable,
the trustee or representative may apply to the Court for an order confirming,
setting aside or varying the direction and the Court may make such order as it
thinks fit.