§ Amendment made: No. 51, in page 58, line 43 leave out from 'the' to end of line 44 and insert—
'price of redemption or purchase'.—[Mr. Eyre.]
§ Mr. Eyre
I beg to move amendment No. 179, in page 59, leave out lines 31 to 46 and insert—
- The reference in subsection (2)(a) above to available profits of the company is a reference to the company's profits which are available for distribution (within the meaning of Part III of the 1980 Act), but the question whether a company has any profits so available and the amount of any such profits shall be determined for the purposes of this section in accordance with the following provisions of this section instead of in accordance with section 43 of the 1980 Act.
- Subject to subsection (9) below, that question shall be determined by reference to the relevant items (within the meaning of section 43 of the 1980 Act) as stated in the relevant accounts for determining the permissible capital payment for any shares under this section; and those accounts are such accounts, prepared as at any date within the period for determining the amount of that payment, as are necessary to enable a reasonable judgment to be made as to the amounts of any of those items.
- For the purposes of determining the amount of the permissible capital payment for any shares under this section, the amount of the company's available profits (if any) determined in accordance with subsection (8) above shall be treated as reduced by the amount of any distributions lawfully made by the company after the date of the relevant accounts and before the end of the period for determining the amount of that payment.The reference above in this subsection to distributions lawfully made by the company shall be read as including any financial assistance given by the company as mentioned in subsection (1)(a) or (b) of section (Supplementary provisions relating to Part III of the 1980 Act) of this Act and any payment of a description within subsection (1)(d) or (e) of that section lawfully made by the company.
- References in this section to the period for determining the amount of the permissible capital payment for any shares are references to the period of three months ending with the date on which the statutory declaration of the directors purporting to specify the amount of that payment is made in accordance with section 51(3) of this Act.'
§ Mr. Eyre
These amendments replace subsections (7) and (8) of clause 50 with provisions that are much clearer and easier to understand. The existing provisions, and those which replace them, provide a method for determining the amount, if any, of a company's distributable profits as these must be used in a purchase or redemption of its own shares before it may draw upon capital reserves. The amendment makes only one change of policy of any significance. It requires the accounts by reference to which available profits are determined to be 221 such as to enable a reasonable—rather than a proper, as at present—judgment of the amount to be made. This imposes a less rigorous but reasonable standard by which the matter can be judged.
Amendment agreed to.