Companies Act 2014 section 1153

Common draft terms of division

Section 1153 sets out the requirements for preparing and approving common draft terms when a company division is proposed, including the minimum information that must be included and rules for signing and dating the document.

• Directors of all companies involved in a division must draw up and approve in writing common draft terms that include prescribed details about the transferor company, each successor company, share exchange ratios, asset and liability allocations, and relevant financial statement dates
• The draft terms must not provide for shares in any successor company to be exchanged for shares in the transferor company that are held by the successor companies themselves, the transferor company, or their respective nominees
• Any unallocated assets of the transferor company — whether existing at the date of the draft terms or acquired afterwards — must be distributed among the successor companies in proportion to each company's share of the net assets under the draft terms, unless the court orders otherwise
• The common draft terms must be signed on the same date by two directors of each company involved (or by a sole director where applicable), and that signing date is treated as the official date of the common draft terms of division