Section 537 CAMA 2020

Section 537 Companies and Allied Matters Act is about Charges and liabilities on vacation of office. It is under Chapter 18 (Administration of companies: nature of administration) of the Act.

(1) This section applies where a person ceases to be the administrator of a company, whether by reason of resignation, removal from office, cessation of appointment, death or otherwise.

(2) The former administrator’s remuneration and expenses shall be—

(a) charged on and payable out of property of which he had custody or control immediately before cessation ; and

(b) payable in priority to any security to which section 510 of this Act applies.

(3) A sum payable in respect of a debt or liability arising out of a contract,including a contract for post-commencement financing, entered into by the former Administrator or a predecessor before cessation shall be—

(a) charged on and payable out of property of which the former Administrator had custody or control immediately before cessation ; and

(b) payable in priority to any charge arising under subsection (2).

(4) In this section—

(a) “cessation” means the time when he ceases to be the company’s Administrator ;

(b) “former Administrator” means the person referred to in subsection (1) ;

(c) subsection (3) applies to a liability arising under a contract of employment which was adopted by the former administrator or a predecessor before cessation; and for that purpose—

(i) action taken within 14 days after an Administrator’s appointment shall not be taken to amount or contribute to the adoption of a contract,

(ii) no account shall be taken of a liability which arises, by reference to anything which is done or which occurs before the adoption of the contract of employment, and

(iii) no account shall be taken of a liability to make a payment other than wages or salary.

(5) In subsection (4) (c) (iii), “wages or salary” includes—

(a) a sum payable in respect of a period of holiday, for which purpose,the sum shall be treated as relating to the period by reference to which the entitlement to holiday accrued ;

(b) a sum payable in respect of a period of absence through illness orother good cause ;

(c) a sum payable in lieu of holiday ;

(d) in respect of a period, a sum which would be treated as earnings for that period for the purposes of an enactment on social security ; and

(e) a contribution to an occupational pension scheme.