PART VISHARE CAPITAL, ITS INCREASE, MAINTENANCE AND REDUCTION
CHAPTER VIIREDEEMABLE SHARES; PURCHASE BY A COMPANY OF ITS OWN SHARES
Supplementary
Effect of company's failure to redeem or purchase188 F2
1
This Article has effect where a company has, on or after 1st July 1983—
a
issued shares on terms that they are or are liable to be redeemed, or
b
agreed to purchase any of its own shares.
2
The company is not liable in damages in respect of any failure on its part to redeem or purchase any of the shares.
3
Paragraph (2) is without prejudice to any right of the holder of the shares other than his right to sue the company for damages in respect of its failure; but the court shall not grant an order for specific performance of the terms of redemption or purchase if the company shows that it is unable to meet the costs of redeeming or purchasing the shares in question out of distributable profits.
4
If the company is would up and at the commencement of the winding up any of the shares have not been redeemed or purchased, the terms of redemption or purchase may be enforced against the company; and when shares are redeemed or purchased under this paragraph they are treated as cancelled.
5
However, paragraph (4) does not apply if—
a
the terms provided for the redemption or purchase to take place at a date later than that of the commencement of the winding up, or
b
during the period beginning with the date on which the redemption or purchase was to have taken place and ending with the commencement of the winding up the company could not at any time have lawfully made a distribution equal to value to the price at which the shares were to have been redeemed or purchased.
6
There shall be paid in priority to any amount which the company is liable under paragraph (4) to pay in respect of any shares—
a
all other debts and liabilities of the company (other than any due to members in their character as such),
b
if other shares carry rights (whether as to capital or as to income) which are preferred to the rights as to capital attaching to the first-mentioned shares, any amount due in satisfaction of those preferred rights;
but, subject to that, any such amount shall be paid in priority to any amounts due to members in satisfaction of their rights (whether as to capital or income) as members.
Para. (7) rep. by 1989 NI 19
Power of Department to modify this Chapter189 F3
1
The Department may by regulations modify the provisions of this Chapter with respect to any of the following matters—
a
the authority required for a purchase by a company of its own shares,
b
the authority required for the release by a company of its rights under a contract for the purchase of its own shares or a contract under which the company may (subject to any conditions) become entitled or obliged to purchase its own shares,
c
the information to be included in a return delivered by a company to the registrar in accordance with Article 179(1),
d
the matters to be dealt with in the statutory declaration of the directors under Article 183 with a view to indicating their opinion of their company's ability to make a proposed payment out of capital with due regard to its financial situation and prospects, and
e
the contents of the auditors' report required by that Article to be annexed to that declaration.
2
The Department may also by regulations make such provision (including modification of the provisions of this Chapter) as appears to it to be appropriate—
a
for wholly or partly relieving companies from the requirement of Article 181(3)(a) that any available profits must be taken into account in determining the amount of the permissible capital payment for shares under that Article, or
b
for permitting a company's share premium account to be applied, to any extent appearing to the Department to be appropriate, in providing for the premiums payable on the redemption or purchase by the company of any of its own shares.
3
Regulations under this Article may make such further modification of any provisions of this Chapter as appears to the Department to be reasonably necessary in consequence of any provision made under such regulations by virtue of paragraph (1) or (2).
4
No regulations shall be made under this Article unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.
Transitional cases arising under this Chapter; and savings190 F4
1
Any preference shares issued by a company before 1st July 1983 which could but for the repeal by the Order of 1982 of section 58 of the Act of 1960 (power to issue redeemable preference shares) have been redeemed under that section are subject to redemption in accordance with the provisions of this Chapter.
2
In a case to which Articles 169 and 170 apply by virtue of this Article, any premium payable on redemption may, notwithstanding the repeal by the Order of 1982 of any provision of the Act of 1960, be paid out of the share premium account instead of out of profits, or partly out of that account and partly out of profits (but subject to the provisions of this Chapter so far as payment is out of profits).
3
Any capital redemption reserve fund established before 1st July 1983 by a company for the purposes of section 58 of the Act of 1960 is to be known as the company's capital redemption reserve and to be treated as if it had been established for the purposes of Article 180; and accordingly, a reference in any statutory provision or in the articles of any company, or in any other instrument, to a company's capital redemption reserve fund is to be construed as a reference to the company's capital redemption reserve.
Interpretation for Chapter VII191 F5
In this Chapter—
a
“distributable profits”, in relation to the making of any payment by a company, means those profits out of which it could lawfully make a distribution (within the meaning given by F6section 829 of the Companies Act 2006), equal in value to the payment, and
b
“permissible capital payment” means the payment permitted by Article 181;
and references to payment out of capital are to be construed in accordance with Article 181.