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Companies Ordinance Cap 32

Section Num: 49D  Version Date 01/07/2000

Authority for purchase by unlisted company

(1) An unlisted company may only purchase its own shares under a contract approved in advance in accordance with this section or under section 49E.

(2) The terms of the proposed contract shall be authorized by a special resolution of the company before the contract is entered into; and this section applies with respect to that authority and to resolutions conferring it.

(3) The authority to enter into a contract to purchase an unlisted company's own shares may be varied, revoked or from time to time renewed by special resolution of the company.

(4) A special resolution to confer, vary, revoke or renew authority under subsection (3) is not effective if any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he had not done so and for this purpose-

(a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;

(b) notwithstanding anything in the company's articles, any member of the company may demand a  poll on  that question; and

(c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.

(5) A special resolution to confer, vary, revoke or renew authority under subsection (3) is not effective for the purposes of this section unless (if the proposed contract is in writing) a copy of the contract or (if not) a written memorandum of its terms is available for inspection by members of the company both-

(a) at the company's registered office for not less than 15 days ending with the date of the meeting at which the resolution is passed; and

(b) at the meeting itself.

A memorandum of contract terms so made available shall include the names of any members holding shares to which the contract relates; and a copy of the contract so made available shall have annexed to it a written memorandum specifying any such names which do not appear in the contract itself.

(6) An unlisted company may agree to a variation of an existing contract so approved, but only if the variation is authorized by a special resolution of the company before it is agreed to; and subsections (3), (4) and (5) apply to the authority for a proposed variation as they apply to the authority for a proposed contract, save that a copy of the original contract or (as the case may require) a memorandum of its terms, together with any variations previously made, shall also be available for inspection in accordance with subsection (5).

(7) In relation to a resolution agreed to, or proposed to be agreed to, in accordance with section 116B-

(a) conferring authority to make a purchase of the company's shares under subsection (2);

(b) varying, revoking or renewing an authority under subsection (3); or

(c) conferring authority to vary a contract for a purchase of the company's shares under subsection (6),

then-

(i) subsection (4) shall not apply but, for the purposes of section 116B(1), a member holding shares to which the resolution relates shall not be regarded as a member who would be entitled to attend and vote;

(ii) subsection (5) shall not apply but the documents referred to in that subsection and, where that subsection applies by virtue of subsection (6), the further documents referred to in subsection (6), shall be supplied-

(A) to each member by whom, or on whose behalf, the resolution is required to be signed in accordance with section 116B; and

(B) at or before the time at which the resolution is supplied to the member for signature.  (Added 46 of 2000 s. 5)

(8) Subsection (7) shall also have effect in relation to a resolution agreed to, or proposed to be agreed to, in accordance with section 116B in relation to which the provisions of subsections (3) to (6) apply by virtue of section 49E(3) or 49F(2).  (Added 46 of 2000 s. 5)

[cf. 1985 c. 6 Sch. 15A, Pt. II, item 5, U.K.]

(Added 77 of 1991 s. 4)

[cf. 1985 c. 6 s. 164 U.K.]

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