C3C1C2Part 23Distributions
Pts. 1-39 (except for Pt. 7 and ss. 662-669), 45-47 extended (12.5.2011) by The Companies Act 2006 (Consequential Amendments and Transitional Provisions) Order 2011 (S.I. 2011/1265), art. 5(1), Sch. 1 para. 2
Pt. 23 excluded (1.10.2011) by Postal Services Act 2011 (c. 5), ss. 8, 93, Sch. 1 para. 18(a); S.I. 2011/2329, art. 3
Chapter 3Supplementary provisions
Other matters
I1848Saving for certain older provisions in articles
1
Where immediately before the relevant date a company was authorised by a provision of its articles to apply its unrealised profits in paying up in full or in part unissued shares to be allotted to members of the company as fully or partly paid bonus shares, that provision continues (subject to any alteration of the articles) as authority for those profits to be so applied after that date.
2
For this purpose the relevant date is—
a
for companies registered in Great Britain, 22nd December 1980;
b
for companies registered in Northern Ireland, 1st July 1983.
I2849Restriction on application of unrealised profits
A company must not apply an unrealised profit in paying up debentures or any amounts unpaid on its issued shares.
I3850Treatment of certain older profits or losses
1
Where the directors of a company are, after making all reasonable enquiries, unable to determine whether a particular profit made before the relevant date is realised or unrealised, they may treat the profit as realised.
2
Where the directors of a company, after making all reasonable enquiries, are unable to determine whether a particular loss made before the relevant date is realised or unrealised, they may treat the loss as unrealised.
3
For the purposes of this section the relevant date is—
a
for companies registered in Great Britain, 22nd December 1980;
b
for companies registered in Northern Ireland, 1st July 1983.
I4851Application of rules of law restricting distributions
1
Except as provided in this section, the provisions of this Part are without prejudice to any rule of law restricting the sums out of which, or the cases in which, a distribution may be made.
2
For the purposes of any rule of law requiring distributions to be paid out of profits or restricting the return of capital to members—
a
section 845 (distributions in kind: determination of amount) applies to determine the amount of any distribution or return of capital consisting of or including, or treated as arising in consequence of the sale, transfer or other disposition by a company of a non-cash asset; and
b
section 846 (distributions in kind: treatment of unrealised profits) applies as it applies for the purposes of this Part.
3
In this section references to distributions are to amounts regarded as distributions for the purposes of any such rule of law as is referred to in subsection (1).
I5852Saving for other restrictions on distributions
The provisions of this Part are without prejudice to any enactment, or any provision of a company's articles, restricting the sums out of which, or the cases in which, a distribution may be made.
I6853Minor definitions
1
The following provisions apply for the purposes of this Part.
2
References to profit or losses of any description—
a
are to profits or losses of that description made at any time, and
b
except where the context otherwise requires, are to profits or losses of a revenue or capital character.
3
“Capitalisation”, in relation to a company's profits, means any of the following operations (whenever carried out)—
a
applying the profits in wholly or partly paying up unissued shares in the company to be allotted to members of the company as fully or partly paid bonus shares, or
b
transferring the profits to capital redemption reserve.
4
References to “realised profits” and “realised losses”, in relation to a company's accounts, are to such profits or losses of the company as fall to be treated as realised in accordance with principles generally accepted at the time when the accounts are prepared, with respect to the determination for accounting purposes of realised profits or losses.
5
Subsection (4) is without prejudice to—
a
the construction of any other expression (where appropriate) by reference to accepted accounting principles or practice, or
b
any specific provision for the treatment of profits or losses of any description as realised.
6
“Fixed assets” means assets of a company which are intended for use on a continuing basis in the company's activities.
Pts. 1-39 modified (31.12.2020) by Regulation (EC) No. 2157/2001, Art. AAA1(3) (as inserted by The European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1298), regs. 1, 97 (with regs. 140-145) (as amended by S.I. 2020/523, regs. 1(2), 5(a)-(f)); 2020 c. 1, Sch. 5 para. 1(1))