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Companies Ordinance Cap 32

Section Num: 48B       Version Date 11/11/1999

Application of premiums received on issue of shares

Issue of Shares at Premium, Redeemable Preference

Shares, and Shares at Discount

(Replaced 80 of 1974 s. 5)

(1) Where a company issues shares at a  premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account, to be called "the share premium account", and the provisions of this Ordinance relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company.

(2) Where shares are issued for a consideration other than cash and the value of the consideration, as estimated by the directors having regard to all relevant information, is in excess of the amount credited as paid up on the shares so issued, the shares shall be deemed to have been issued at a premium equal to the difference between the value so estimated and the amount credited as paid up on the shares so issued.

(3) The share premium account may, notwithstanding anything in subsection (1), be applied by the company-

(a) in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares; or  (Amended 30 of 1999 s. 4)

(b) in writing off-

(i) the preliminary expenses of the company; or

(ii) the expenses of, or the commission paid or discount allowed on, any issue of shares of the company.  (Amended 30 of 1999 s. 4)

(c) (Repealed 30 of 1999 s. 4)+

(4) For the purposes of subsection (3), the expenses of the issue of any shares shall be deemed to include such portion of the ad valorem fee paid under the Eighth Schedule by the company upon its registration or upon any increase thereafter in its nominal share capital as is attributable to the nominal amount of the shares issued.

(5) Where a company has before the commencement of the Companies (Amendment) (No. 4) Ordinance 1974 (80 of 1974) issued any shares at a premium, this section shall apply as if the shares had been issued after the commencement of that Ordinance:

Provided that any part of the premiums which has been so applied that it does not at the commencement of that Ordinance form an identifiable part of the company's reserves within the meaning of the Tenth Schedule shall be disregarded in determining the sum to be included in the share premium account.

(6) Sections 48C and 48D give relief from the requirements of this section, and in those sections references to the issuing company are to the company issuing shares as mentioned in this section.  (Added 30 of 1999 s. 4)

(Added 80 of 1974 s. 6)

[cf. 1948 c. 38 s. 56 U.K.]

___________________________________________________________________________

___

Note:

+ Section 48B(3)(c) was repealed by section 4(a) of the Companies (Amendment) Ordinance 1999 (30 of 1999).  Section 42 of that Ordinance provides as follows-"42. Validation of certain applications of share premium accountsWhere, at any time before the commencement* of section 4(a), a share premium account has been applied by a company pursuant to section 48B(3)(c) of the principal Ordinance, then, notwithstanding section 49A(1)(b) of the principal Ordinance, that application of that account shall, by virtue of this section, be as valid and effectual as if that section had never been enacted.".

Before its repeal, section 48B(3)(c) read-

"(c) in providing for the premium payable on redemption of any redeemable preference shares of the company.".

* Commencement date: 11 November 1999.

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