C1Part 18Acquisition by limited company of its own shares

Annotations:
Modifications etc. (not altering text)

Chapter 3Redeemable shares

687Financing of redemption

1

A private limited company may redeem redeemable shares out of capital in accordance with Chapter 5.

2

Subject to that, redeemable shares in a limited company may only be redeemed out of—

a

distributable profits of the company, or

b

the proceeds of a fresh issue of shares made for the purposes of the redemption.

3

Any premium payable on redemption of shares in a limited company must be paid out of distributable profits of the company, subject to the following provision.

4

If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to—

a

the aggregate of the premiums received by the company on the issue of the shares redeemed, or

b

the current amount of the company's share premium account (including any sum transferred to that account in respect of premiums on the new shares),

whichever is the less.

5

The amount of the company's share premium account is reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made under subsection (4).

6

This section is subject to section 735(4) (terms of redemption enforceable in a winding up).