HL Deb 27 October 1981 vol 424 cc992-3

81 After Clause 46, insert the following new clause—

("Payments apart from purchase price to be made out of distributable profits.

.—(1) Any payment made by a company in consideration of—

  1. (a) acquiring any right with respect to the purchase of any of its own shares in pursuance of a contract approved under section (Contingent purchase contracts) of this Act;
  2. (b) the variation of any contract approved under section 45 or (Contingent purchase contracts) of this Act; or
  3. (c) the release of any of the company's obligations with respect to the purchase of any of its own shares under any contract approved under section 45 or (Contingent purchase contracts) or under any contract 993 for a purchase authorised under section 46 of this Act;
must be made out of distributable profits of the company.

(2) If the requirements of subsection (1) above are not satisfied in relation to any contract—

  1. (a) in a case within subsection (l)(a), no purchase by the company of any of its own shares in pursuance of that contract shall be lawful by virtue of this Part of this Act;
  2. (b) in a case within subsection (1)(b), no such purchase following the variation shall be lawful by virtue of this Part of this Act; and
  3. (c) in a case within subsection (1)(c), the purported release shall be void.").

Lord Mackay of Clashfern

My Lords, I should like to speak to Amendment No. 92 at the same time as I move Amendment No. 81. The new clause embodied in Amendment No. 81 requires that any payment made by a company in consideration of acquiring a right to purchase its own shares under a contingent purchase contract, or varying a contract of purchase, or obtaining a release from any of its obligations with respect to a purchase, must be found from distributable profits. If this requirement is not satisfied the clause makes the related purchase of shares unlawful in the case of a payment for a right to purchase or a variation, and the release of an obligation void. Amendment No. 92 is a consequential drafting amendment. I beg to move that this House doth agree with the Commons in their Amendment No. 81.

Moved, That this House doth agree with the Commons in the said amendment.—(Lord Mackay of Clashfern.)

On Question, Motion agreed to.