Companies Ordinance Cap 32

Section Num: 79F     Version Date 30/06/1997

Distribution to be justified by reference to company's accounts

Relevant Accounts

(1) This section and sections 79G to 79L are for determining the question whether a distribution may be made by a company without contravening section 79B or 79C.  <* Note - Exp. X-Ref.: Sections 79G, 79H, 79I, 79J, 79K, 79L *>

(2) The amount of a distribution which may be made is determined by reference to the following items as stated in the company's accounts-

(a) profits, losses, assets and liabilities;

(b) provisions within the meaning of paragraph 30(1) of the Tenth Schedule (depreciation, renewals, diminution in value of assets, retentions to meet liabilities, etc.); and

(c) share capital and reserves (including undistributable reserves).

(3) Except in a case falling within subsection (4), the company's accounts which are relevant for this purpose are its last annual accounts, that is to say, those prepared under Part IV which were laid in respect of the last preceding financial year in respect of which accounts so prepared were laid; and for this purpose accounts are laid if section 122 has been complied with in relation to them.

(4) In the following 2 cases-

(a) where the distribution would be found to contravene the relevant section if reference were made only to the company's last annual accounts; or

(b) where the distribution is proposed to be declared before any accounts are laid in compliance with section 122, the accounts relevant under this section (called "interim accounts" in the first case, and "initial accounts" in the second) are those necessary to enable a reasonable judgment to be made as to the amounts of the items mentioned in subsection (2).

(5) The relevant section is treated as contravened in the case of a distribution unless the statutory requirement about the relevant accounts (that is, the requirement of this section and sections 79G, 79H and 79I, as and where applicable) are complied with in relation to that distribution.

[cf. 1985 c. 6 s. 270 U.K.]

(Part IIA added 77 of 1991 s. 6)