- (1) For the purposes of determining by reference to any particular accounts whether any proposed distribution may be made in accordance with section 43 of the 1980 Act (determination of amount of distributable profits) subsection (7) of that section (reduction of distributable profits by amount of earlier distributions) shall apply if it would not otherwise to—
- any financial assistance lawfully given by a public company out of its distributable profits in any case where the assistance is required to be so given by section 40(5) of this Act;
- any financial assistance lawfully given by a private company out of its distributable profits in any case where the assistance is required to be so given by section 41(2) of this Act;
- any financial assistance given by any company in contravention of section 40 of this Act in any case where the giving of that assistance reduces the company's net assets or increases its net liabilities;
- any payment made by any company in respect of the purchase by the company of any shares in the company except any payment lawfully made otherwise than out of distributable profits; and
- any payment of a description specified in section (Payments apart from purchase price to be made out of distributable profits) of this Act;
§ being financial assistance given or payment made since those accounts were prepared, as if any such financial assistance or payment were a distribution already made in pursuance of a determination made by reference to those accounts.
§ (2) Section 44 of the 1980 Act (consequences of unlawful distributions) shall not apply in relation to—
- any financial assistance given by any company in contravention of section 40 of this Act; or
- any payment made by a company in respect of the redemption or purchase by the company of any shares in the company.
§
(3) In this section—
financial assistance" has the meaning given by section 40(6) of this Act;
net assets" has the meaning given by section 40(7) of this Act; and
net liabilities" in relation to the giving of financial assistance by any company means the amount by which the aggregate amount of the company's liabilities (within the meaning of section 40(7)(b) of this Act) exceeds the aggregate amount of its assets taking the amount of the assets and liabilities to be as stated in the company's accounting records immediately before the financial assistance is given.'.—[Mr. Peter Rees.]
§ Brought up, and read the First time.
§ The Minister for Trade (Mr. Peter Rees)I beg to move, That the clause be read a Second time.
The new clause makes clear how part III of the 1980 Act, which is concerned with what a company may lawfully distribute, applies to payments to companies in respect of the purchase or redemption of their own shares and the giving of financial assistance for the purpose of acquisition of their own shares.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.