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Companies Ordinance Cap 32

Section Num: 49A     Version Date 30/06/1997

Financing etc. of redemption

(1) Subject to subsection (2) and to sections 49I and 49P(4)-

(a) redeemable shares may only be redeemed out of distributable profits of the company or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; and

(b) any premium payable on redemption shall be paid out of distributable profits of the company.

(2) If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to-

(a) the aggregate of the premiums received by the company on the issue of the shares redeemed; or

(b) the current amount of the company's share premium account (including any sum transferred to that account in respect of premiums on the new shares), whichever is the less; and in that case the amount of the company's share premium account shall be reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made by virtue of this subsection out of the proceeds of the issue of the new shares.

(3) Subject to sections 49 to 49S, redemption of shares may be effected on such terms and in such manner as may be provided by the company's articles.  <* Note - Exp. X-Ref.: Sections 49, 49A, 49B, 49BA, 49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q, 49R, 49S *>

(4) Shares redeemed under this section shall be treated as cancelled on redemption, and the amount of the company's issued share capital shall be diminished by the nominal value of those shares accordingly; but the redemption of shares by a company is not to be taken as reducing the amount of the company's authorized share capital.

(5) Without prejudice to subsection (4) and subject to subsection

(6), where a company is about to redeem shares, it has power to issue shares up to the nominal value of the shares to be redeemed as if those shares had never been issued.

(6) Where new shares are issued before the redemption of existing shares, the new shares shall be deemed, so far as relates to the Eighth Schedule, not to have been issued under subsection (5) unless the existing shares are redeemed within 1 month of the issue of the new shares.

(Added 77 of 1991 s. 4)

[cf. 1985 c. 6 s. 160 U.K.]

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