Section 297 — Companies Act 1993: Transactions at undervalue

297 Transactions at undervalue (1) Under subsection (2) the liquidator may recover from a person ( X ) the amount C in the formula A − B = C, where— (a) A is the value that X received from a company under a transaction to which the company was or is a party; and (b) B is the value (if any) that the company received from X under the transaction. (2) The liquidator may recover the difference in value (that is, C in the formula in subsection (1)) from X if— (a) the company entered into the transaction within the specified period; and (b) either— (i) the company was unable to pay its due debts when it entered into the transaction; or (ii) the company became unable to pay its due debts as a result of entering into the transaction. (3) For the purposes of this section,— (a) transaction has the same meaning as in section 292(3) : (b) Specified period means— (i) The period of 2 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and (ii) In the case of a company that was put into liquidation by the Court, the period of 2 years before the making of the application to the Court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order of the Court was made; and (iii) If— (A) An application was made to the Court to put a company into liquidation; and (B) After the making of the application to the Court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),— the period of 2 years before the making of the application to the Court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation. Section 297(1): substituted, on 1 November 2007, by section 32(1) of the Companies Amendment Act 2006 (2006 No 56). Section 297(2): substituted, on 1 November 2007, by section 32(1) of the Companies Amendment Act 2006 (2006 No 56). Section 297(3)(a): substituted, on 1 November 2007, by section 32(2) of the Companies Amendment Act 2006 (2006 No 56). Subsection (3)(b)(i) was substituted, as from 26 April 1999, by section 10(1) Companies Amendment Act 1999 (1999 No 19). Section 297(3)(b)(i): amended, on 1 November 2007, by section 32(3) of the Companies Amendment Act 2006 (2006 No 56). Section 297(3)(b)(ii): amended, on 1 November 2007, by section 32(3) of the Companies Amendment Act 2006 (2006 No 56). Subsection (3)(b)(ii) was amended, as from 3 June 1998, by section 14 Companies Amendment Act 1998 (1998 No 31) by inserting the word “ ; and ” . Subsection (3)(b)(ii) was further amended, as from 26 April 1999, by section 10(2)(a) Companies Amendment Act 1999 (1999 No 19) by inserting the words “ , and at the time at which, ” . Subsection (3)(b)(iii) was inserted, as from 3 June 1998, by section 14 Companies Amendment Act 1998 (1998 No 31). Section 297(3)(b)(iii): amended, on 1 November 2007, by section 32(3) of the Companies Amendment Act 2006 (2006 No 56). Subsection (3)(b)(iii) was amended, as from 26 April 1999, by section 10(2)(b) Companies Amendment Act 1999 (1999 No 19) by inserting the words “ and at the time ” .