HL Deb 27 October 1981 vol 424 c1029

137 After Clause 57, insert the following new clause:

("Distributions in kind

The following section shall be inserted after section 43 of the 1980 Act— Distributions in kind.

43A. Where a company makes a distribution of or including any non-cash asset and any part of the amount at which that asset is stated in the accounts relevant for the purposes of that distribution in accordance with section 43 of this Act represents an unrealised profit, that profit shall be treated as a realised profit—

  1. (a) for the purpose of determining the lawfulness of that distribution in accordance with this Part of this Act (whether before or after it takes place); and
  2. (b) for the purpose of the application of paragraphs 12(a) and 34(4)(b) of Schedule 8 to the 1948 Act (only realised profits to be included in or transferred to the profit and loss account) in relation to anything done with a view to or in connection with making that distribution.".").

Lord Mackay of Clashfern

My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 137. This clause was inserted at Report stage in another place. It provides that, where a company distributes an asset in kind which contains an element of unrealised profit, the amount of that unrealised profit should be treated as a realised profit on distribution. In other words—I think that this is common sense—the act of distribution is effectively an act of realisation.

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

On Question, Motion agreed to.