Part 23Company distributions
Chapter 2Matters which are distributions
Distributions in respect of non-commercial securities
1005Meaning of “non-commercial securities”
For the purposes of paragraph E in section 1000(1) securities of a company are non-commercial securities if the consideration given by the company under the securities for the use of the principal secured by them represents more than a reasonable commercial return for the use of that principal.
1006Distributions exceeding consideration received for issue of security
No amount is to be regarded for the purposes of paragraph E in section 1000(1) as representing the principal secured by a security so far as it exceeds any new consideration which has been received by the company for the issue of the security.
1007Securities issued at premium representing new consideration
1
This section applies if any security of a company is issued at a premium representing new consideration (but see also section 1008).
2
In relation to a distribution in respect of the security, the reference in paragraph E in section 1000(1) to however much of the distribution represents the principal secured by the security is to be read as a reference to the sum of—
a
however much of the distribution represents the principal, and
b
however much of it represents the premium.
3
In relation to a distribution in respect of the security, the reference in paragraph E in section 1000(1) to however much of the distribution represents a reasonable commercial return for the use of the principal secured by the security is to be read as a reference to the sum of—
a
however much of the distribution represents a reasonable commercial return for the use of the principal, and
b
however much of it represents (when regard is had to the extent to which distributions represent the premium) a reasonable commercial return for the use of the premium.
1008Consideration for issue of security exceeding amount of principal
1
This section applies if—
a
a company issues a security, and
b
the amount of new consideration received by the company for the issue of the security exceeds the amount of the principal secured by the security.
2
The amount of the principal is treated for the purposes of paragraph E in section 1000(1) as increased to the amount of that new consideration.
3
Section 1007 does not have effect in relation to the security.
4
This section is subject to sections 1009 and 1012.