Companies Act 2006

General rules U.K.

830 Distributions to be made only out of profits available for the purpose U.K.

(1) A company may only make a distribution out of profits available for the purpose.

(2) A company's profits available for distribution are its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made.

(3) Subsection (2) has effect subject to sections 832 [F1 , 833A] and 835 (investment companies [F2 and Solvency 2 insurance companies]).

Textual Amendments

F1 Word in s. 830(3) inserted (30.12.2016) by The Companies Act 2006 (Distributions of Insurance Companies) Regulations 2016 (S.I. 2016/1194), regs. 1(2), 2(2)(a)

F2 Words in s. 830(3) substituted (30.12.2016) by The Companies Act 2006 (Distributions of Insurance Companies) Regulations 2016 (S.I. 2016/1194), regs. 1(2), 2(2)(b)

Commencement Information

I1 S. 830 wholly in force at 6.4.2008; s. 830 not in force at Royal Assent see s. 1300; s. 830 in force at 6.4.2008 by S.I. 2007/3495, art. 3(1)(k) (with savings in arts. 7, 12 and subject to transitional adaptations in Sch. 1 paras. 14-20 and with savings in Sch. 4 paras. 33-35)

831 Net asset restriction on distributions by public companies U.K.

(1) A public company may only make a distribution—

(a) if the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves, and

(b) if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.

(2) For this purpose a company's “net assets” means the aggregate of the company's assets less the aggregate of its liabilities.

(3) “Liabilities” here includes—

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

(b) where the relevant accounts are IAS accounts, provisions of any kind.

(4) A company's undistributable reserves are—

(a) its share premium account;

(b) its capital redemption reserve;

(c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital duly made);

(d) any other reserve that the company is prohibited from distributing—

(i) by any enactment (other than one contained in this Part), or

(ii) by its articles.

The reference in paragraph (c) to capitalisation does not include a transfer of profits of the company to its capital redemption reserve.

(5) A public company must not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.

(6) Subsection (1) has effect subject to sections 832 and 835 (investment companies etc: distributions out of accumulated revenue profits).

Commencement Information

I2 S. 831 wholly in force at 6.4.2008; s. 831 not in force at Royal Assent see s. 1300; s. 831 in force at 6.4.2008 by S.I. 2007/3495, art. 3(1)(k) (with savings in arts. 7, 12 and subject to transitional adaptations in Sch. 1 paras. 14-20 and with savings in Sch. 4 paras. 33-35)