Companies Act 2006

Yn ddilys o 01/10/2009

The permissible capital payment U.K.

710 The permissible capital payment U.K.

(1) The payment that may, in accordance with this Chapter, be made by a company out of capital in respect of the redemption or purchase of its own shares is such amount as, after applying for that purpose—

(a) any available profits of the company, and

(b) the proceeds of any fresh issue of shares made for the purposes of the redemption or purchase,

is required to meet the price of redemption or purchase.

(2) That is referred to below in this Chapter as “the permissible capital payment” for the shares.

711 Available profits U.K.

(1) For the purposes of this Chapter the available profits of the company, in relation to the redemption or purchase of any shares, are the profits of the company that are available for distribution (within the meaning of Part 23).

(2) But the question whether a company has any profits so available, and the amount of any such profits, shall be determined in accordance with section 712 instead of in accordance with sections 836 to 842 in that Part.

712 Determination of available profits U.K.

(1) The available profits of the company are determined as follows.

(2) First, determine the profits of the company by reference to the following items as stated in the relevant accounts—

(a) profits, losses, assets and liabilities,

(b) provisions of the following kinds—

(i) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 396;

(ii) where the relevant accounts are IAS accounts, provisions of any kind;

(c) share capital and reserves (including undistributable reserves).

(3) Second, reduce the amount so determined by the amount of—

(a) any distribution lawfully made by the company, and

(b) any other relevant payment lawfully made by the company out of distributable profits,

after the date of the relevant accounts and before the end of the relevant period.

(4) For this purpose “other relevant payment lawfully made” includes—

(a) financial assistance lawfully given out of distributable profits in accordance with Chapter 2,

(b) payments lawfully made out of distributable profits in respect of the purchase by the company of any shares in the company, and

(c) payments of any description specified in section 705 (payments other than purchase price to be made out of distributable profits) lawfully made by the company.

(5) The resulting figure is the amount of available profits.

(6) For the purposes of this section “the relevant accounts” are any accounts that—

(a) are prepared as at a date within the relevant period, and

(b) are such as to enable a reasonable judgment to be made as to the amounts of the items mentioned in subsection (2).

(7) In this section “the relevant period” means the period of three months ending with the date on which the directors' statement is made in accordance with section 714.