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Companies Act 2006
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Changes over time for: Section 734
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Companies Act 2006, Section 734 is up to date with all changes known to be in force on or before 27 November 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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734Accounting consequences of payment out of capitalU.K.
This section has no associated Explanatory Notes
(1)This section applies where a payment out of capital is made in accordance with Chapter 5 (redemption or purchase of own shares by private company out of capital) [F1or section 692(1ZA)].
[F2(1A)In relation to a payment under section 692(1ZA) references to the permissible capital payment are to the purchase price of the shares or (if less) the part of it met out of the payment under section 692(1ZA) and any proceeds of a fresh issue used to make the purchase.]
(2)If the permissible capital payment is less than the nominal amount of the shares redeemed or purchased, the amount of the difference must be transferred to the company's capital redemption reserve.
(3)If the permissible capital payment is greater than the nominal amount of the shares redeemed or purchased—
(a)the amount of any capital redemption reserve, share premium account or fully paid share capital of the company, and
(b)any amount representing unrealised profits of the company for the time being standing to the credit of any revaluation reserve maintained by the company,
may be reduced by a sum not exceeding (or by sums not in total exceeding) the amount by which the permissible capital payment exceeds the nominal amount of the shares.
(4)Where the proceeds of a fresh issue are applied by the company in making a redemption or purchase of its own shares in addition to a payment out of capital under [F3Chapter 5], the references in subsections (2) and (3) to the permissible capital payment are to be read as referring to the aggregate of that payment and those proceeds.
Textual Amendments
F1Words in s. 734(1) inserted (6.4.2015) by The Companies Act 2006 (Amendment of Part 18) Regulations 2015 (S.I. 2015/532), regs. 1(2), 9(2)
F2S. 734(1A) inserted (6.4.2015) by The Companies Act 2006 (Amendment of Part 18) Regulations 2015 (S.I. 2015/532), regs. 1(2), 9(3)
F3Words in s. 734(4) substituted (6.4.2015) by The Companies Act 2006 (Amendment of Part 18) Regulations 2015 (S.I. 2015/532), regs. 1(2), 9(4)
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