(1)This section applies if—
(a)a company issues, or has issued, any share capital (“the bonus share capital”) as paid up otherwise than by the receipt of new consideration, and
(b)an amount paid up as mentioned in paragraph (a) does not fall to be treated as a qualifying distribution.
(2)Distributions made afterwards by the company in respect of shares representing the bonus share capital are not treated as repayments of share capital for the purposes of this Chapter.
But this is subject to section 1027 and any other contrary provision in the Corporation Tax Acts.
(3)Except where the company is a relevant company for the purposes mentioned in section 739 (certain companies not included in the official UK list etc), subsection (2) does not prevent a distribution being treated as a repayment of share capital if it is made—
(a)more than 10 years after the issue of the share capital mentioned in subsection (1)(a), and
(b)in respect of share capital other than redeemable share capital.
(4)For the purposes of this section and section 1027—
(a)all shares of the same class are treated as representing the same share capital, and
(b)if shares are issued in respect of other shares, or are (directly or indirectly) converted into or exchanged for other shares, all such shares are treated as representing the same share capital.
(5)This section is to be read with section 1049(3)(b) (stock dividends).