Part 23Distributions

Chapter 3Supplementary provisions

Consequences of unlawful distribution

847Consequences of unlawful distribution

1

This section applies where a distribution, or part of one, made by a company to one of its members is made in contravention of this Part.

2

If at the time of the distribution the member knows or has reasonable grounds for believing that it is so made, he is liable—

a

to repay it (or that part of it, as the case may be) to the company, or

b

in the case of a distribution made otherwise than in cash, to pay the company a sum equal to the value of the distribution (or part) at that time.

3

This is without prejudice to any obligation imposed apart from this section on a member of a company to repay a distribution unlawfully made to him.

4

This section does not apply in relation to—

a

financial assistance given by a company in contravention of section 678 or 679, or

b

any payment made by a company in respect of the redemption or purchase by the company of shares in itself.