172 Availability of profits for purposes of s. 171.E+W+S
(1)The reference in section 171(3)(a) to available profits of the company is to the company’s profits which are available for distribution (within the meaning of Part VIII); but the question whether a company has any profits so available and the amount of any such profits are to be determined for purposes of that section in accordance with the following subsections, instead of sections 270 to 275 in that Part.
(2)Subject to the next subsection, that question is to be determined by reference to—
(a)profits, losses, assets and liabilities,
(b)provisions of any of the kinds mentioned in paragraphs 88 and 89 of Schedule 4 (depreciation, diminution in value of assets, retentions to meet liabilities, etc.), and
(c)share capital and reserves (including undistributable reserves),
as stated in the relevant accounts for determining the permissible capital payment for shares.
(3)The relevant accounts for this purpose are such accounts, prepared as at any date within the period for determining the amount of the permissible capital payment, as are necessary to enable a reasonable judgment to be made as to the amounts of any of the items mentioned in subsection (2)(a) to (c) above.
(4)For purposes of determining the amount of the permissible capital payment for shares, the amount of the company’s available profits (if any) determined in accordance with subsections (2) and (3) is treated as reduced by the amount of any distributions lawfully made by the company after the date of the relevant accounts and before the end of the period for determining the amount of that payment.
(5)The reference in subsection (4) to distributions lawfully made by the company includes—
(a)financial assistance lawfully given out of distributable profits in a case falling within section 154 or 155,
(b)any payment lawfully made by the company in respect of the purchase by it of any shares in the company (except a payment lawfully made otherwise than out of distributable profits), and
(c)a payment of any description specified in section 168(1) lawfully made by the company.
(6)References in this section to the period for determining the amount of the permissible capital payment for shares are to the period of 3 months ending with the date on which the statutory declaration of the directors purporting to specify the amount of that payment is made in accordance with subsection (3) of the section next following.