Companies Act 2006

• (5) A resolution conferring, varying or renewing authority must specify a date on which it is to expire, which must not be later than five years after the date on which the resolution is passed.

• (6) A company may make a purchase of its own shares after the expiry of the time limit specified if—

• (a) the contract of purchase was concluded before the authority expired, and

• (b) the terms of the authority permitted the company to make a contract of purchase that would or might be executed wholly or partly after its expiration.

• (7) A resolution to confer or vary authority under this section may determine the maximum or minimum price for purchase by—

• (a) specifying a particular sum, or

• (b) providing a basis or formula for calculating the amount of the price (but without reference to any person's discretion or opinion).

• (8) Chapter 3 of Part 3 (resolutions affecting a company's constitution) applies to a resolution under this section.

Authority for off-market purchase

Authority for off-market purchase

694

• (1) Subject to section 693A, A company may only make an off-market purchase of its own shares in pursuance of a contract approved prior to the purchase in accordance with this section.

• (2) Either—

• (a) the terms of the contract must be authorised by a . . . resolution of the company before the contract is entered into, or

• (b) the contract must provide that no shares may be purchased in pursuance of the contract until its terms have been authorised by a . . . resolution of the company.

• (3) The contract may be a contract, entered into by the company and relating to shares in the company, that does not amount to a contract to purchase the shares but under which the company may (subject to any conditions) become entitled or obliged to purchase the shares.

• (4) The authority conferred by a resolution under this section may be varied, revoked or from time to time renewed by a . . . resolution of the company.

• (5) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than five years after the date on which the resolution is passed.

• (6) A resolution conferring, varying, revoking or renewing authority under this section is subject to—

• section 695 (exercise of voting rights), and

• section 696 (disclosure of details of contract).

Resolution authorising off-market purchase: exercise of voting rights

695

• (1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section 694 (authority for off-market purchase of own shares).

• (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member.

• (3) Where the resolution is proposed at a meeting of the company, it is not effective if—

• (a) 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

• (b) the resolution would not have been passed if he had not done so.

• (4) 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) any member of the company may demand a poll on that question;

• (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.

Resolution authorising off-market purchase: disclosure of details of contract

696

• (1) This section applies in relation to a resolution to confer, vary, revoke or renew authority for the purposes of section 694 (authority for off-market purchase of own shares).

• (2) A copy of the contract (if it is in writing) or a memorandum setting out its terms (if it is not) must be made available to members—

• (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him;

• (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—

• (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and

• (ii) at the meeting itself.

• (3) A memorandum of contract terms so made available must include the names of the members holding shares to which the contract relates.

• (4) A copy of the contract so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the contract itself.

• (5) The resolution is not validly passed if the requirements of this section are not complied with

Variation of contract for off-market purchase

697

• (1) A company may only agree to a variation of a contract authorised under section 694 (authority for off-market purchase) if the variation is approved in advance in accordance with this section.

• (2) The terms of the variation must be authorised by a . . . resolution of the company before it is agreed to.

• (3) That authority may be varied, revoked or from time to time renewed by a . . . resolution of the company.

• (4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than five years after the date on which the resolution is passed.

• (5) A resolution conferring, varying, revoking or renewing authority under this section is subject to—

• section 698 (exercise of voting rights), and

• section 699 (disclosure of details of variation).

Resolution authorising variation: exercise of voting rights

698

• (1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section 697 (variation of contract for off-market purchase of own shares).

• (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member.

• (3) Where the resolution is proposed at a meeting of the company, it is not effective if—

• (a) 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

• (b) the resolution would not have been passed if he had not done so.

• (4) 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) any member of the company may demand a poll on that question;

• (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.

Resolution authorising variation: disclosure of details of variation

699

• (1) This section applies in relation to a resolution under section 697 (variation of contract for off-market purchase of own shares).

• (2) A copy of the proposed variation (if it is in writing) or a written memorandum giving details of the proposed variation (if it is not) must be made available to members—

• (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him;

• (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—

• (i) at the company's registered office for not less than 15 days ending with the date of the meeting, and

• (ii) at the meeting itself.

• (3) There must also be made available as mentioned in subsection (2) a copy of the original contract or, as the case may be, a memorandum of its terms, together with any variations previously made.

• (4) A memorandum of the proposed variation so made available must include the names of the members holding shares to which the variation relates.

• (5) A copy of the proposed variation so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the variation itself.

• (6) The resolution is not validly passed if the requirements of this section are not complied with.

Release of company's rights under contract for off-market purchase

700

• (1) An agreement by a company to release its rights under a contract approved under section 694 (authorisation of off-market purchase) is void unless the terms of the release agreement are approved in advance in accordance with this section.

• (2) The terms of the proposed agreement must be authorised by a . . . resolution of the company before the agreement is entered into.

• (3) That authority may be varied, revoked or from time to time renewed by a . . . resolution of the company.

• (4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than five years after the date on which the resolution is passed.

• (5) The provisions of—

• section 698 (exercise of voting rights), and

• section 699 (disclosure of details of variation),

apply to a resolution authorising a proposed release agreement as they apply to a resolution authorising a proposed variation.

Authority for market purchase

Authority for market purchase

701

• (1) A company may only make a market purchase of its own shares if the purchase has first been authorised by a resolution of the company.

• (2) That authority—

• (a) may be general or limited to the purchase of shares of a particular class or description, and

• (b) may be unconditional or subject to conditions.

• (3) The authority must—

• (a) specify the maximum number of shares authorised to be acquired, and

• (b) determine both the maximum and minimum prices that may be paid for the shares.

• (4) The authority may be varied, revoked or from time to time renewed by a resolution of the company.

• (5) A resolution conferring, varying or renewing authority must specify a date on which it is to expire, which must not be later than five years after the date on which the resolution is passed.

• (6) A company may make a purchase of its own shares after the expiry of the time limit specified if—

• (a) the contract of purchase was concluded before the authority expired, and

• (b) the terms of the authority permitted the company to make a contract of purchase that would or might be executed wholly or partly after its expiration.

• (7) A resolution to confer or vary authority under this section may determine either or both the maximum and minimum price for purchase by—

• (a) specifying a particular sum, or

• (b) providing a basis or formula for calculating the amount of the price (but without reference to any person's discretion or opinion).

• (8) Chapter 3 of Part 3 (resolutions affecting a company's constitution) applies to a resolution under this section.

Supplementary provisions

Copy of contract or memorandum to be available for inspection

702

• (1) This section applies where a company has entered into—

• (a) a contract approved under section 694 (authorisation of contract for off-market purchase), or

• (b) a contract for a purchase authorised under section 701 (authorisation of market purchase).

• (2) The company must keep available for inspection—

• (a) a copy of the contract, or

• (b) if the contract is not in writing, a written memorandum setting out its terms.

• (3) The copy or memorandum must be kept available for inspection from the conclusion of the contract until the end of the period of ten years beginning with—

• (a) the date on which the purchase of all the shares in pursuance of the contract is completed, or

• (b) the date on which the contract otherwise determines.

• (4) The copy or memorandum must be kept available for inspection—

• (a) at the company's registered office, or

• (b) at a place specified in regulations under section 1136.

• (5) The company must give notice to the registrar—

• (a) of the place at which the copy or memorandum is kept available for inspection, and

• (b) of any change in that place,

unless it has at all times been kept at the company's registered office.

• (6) Every copy or memorandum required to be kept under this section must be kept open to inspection without charge—

• (a) by any member of the company, and

• (b) in the case of a public company, by any other person.

• (7) The provisions of this section apply to a variation of a contract as they apply to the original contract.

Enforcement of right to inspect copy or memorandum

703

• (1) If default is made in complying with section 702(2), (3) or (4) or default is made for 14 days in complying with section 702(5), or an inspection required under section 702(6) is refused, an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

• (3) In the case of refusal of an inspection required under section 702(6) the court may by order compel an immediate inspection.

No assignment of company's right to purchase own shares

704

The rights of a company under a contract authorised under—

• (za) section 693A (authority for off-market purchase for the purposes of or pursuant to an employees' share scheme),

• (a) section 694 (authority for off-market purchase), or

• (b) section 701 (authority for market purchase)

are not capable of being assigned.

Payments apart from purchase price to be made out of distributable profits

705

• (1) A payment made by a company in consideration of—

• (a) acquiring any right with respect to the purchase of its own shares in pursuance of a contingent purchase contract approved under section 694 (authorisation of off-market purchase),

• (b) the variation of any contract approved under that section, or

• (c) the release of any of the company's obligations with respect to the purchase of any of its own shares under a contract—

• (i) approved under section 694, or

• (ii) authorised under section 701 (authorisation of market purchase),

must be made out of the company's distributable profits.

• (2) If this requirement is not met in relation to a contract, then—

• (a) in a case within subsection (1)(a), no purchase by the company of its own shares in pursuance of that contract may be made under this Chapter;

• (b) in a case within subsection (1)(b), no such purchase following the variation may be made under this Chapter;

• (c) in a case within subsection (1)(c), the purported release is void.

Treatment of shares purchased

706

Where a limited company makes a purchase of its own shares in accordance with this Chapter, then—

• (a) if section 724 (treasury shares) applies, the shares may be held and dealt with in accordance with Chapter 6;

• (b) if that section does not apply—

• (i) the shares are treated as cancelled, and

• (ii) the amount of the company's issued share capital is diminished accordingly by the nominal value of the shares cancelled.

Return to registrar of purchase of own shares

707

• (1) Where a company purchases shares under this Chapter, it must deliver a return to the registrar within the period of 28 days beginning with the date on which the shares are delivered to it.

• (2) The return must distinguish—

• (a) shares in relation to which section 724 (treasury shares) applies and shares in relation to which that section does not apply, and

• (b) shares in relation to which that section applies—

• (i) that are cancelled forthwith (under section 729 (cancellation of treasury shares)), and

• (ii) that are not so cancelled.

• (3) The return must state, with respect to shares of each class purchased—

• (a) the number and nominal value of the shares, and

• (b) the date on which they were delivered to the company.

• (4) In the case of a public company the return must also state—

• (a) the aggregate amount paid by the company for the shares, and

• (b) the maximum and minimum prices paid in respect of shares of each class purchased.

• (5) Particulars of shares delivered to the company on different dates and under different contracts may be included in a single return.

In such a case the amount required to be stated under subsection (4)(a) is the aggregate amount paid by the company for all the shares to which the return relates.

• (6) If default is made in complying with this section an offence is committed by every officer of the company who is in default.

• (7) A person guilty of an offence under this section is liable—

• (a) on conviction on indictment, to a fine;

• (b) on summary conviction to a fine not exceeding the statutory maximum and, for continued contravention, a daily default fine not exceeding one-tenth of the statutory maximumone-tenth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences.

Notice to registrar of cancellation of shares

708

• (1) If on the purchase by a company of any of its own shares in accordance with this Part—

• (a) section 724 (treasury shares) does not apply (so that the shares are treated as cancelled), or

• (b) that section applies but the shares are cancelled forthwith (under section 729 (cancellation of treasury shares)),

the company must give notice of cancellation to the registrar, within the period of 28 days beginning with the date on which the shares are delivered to it, specifying the shares cancelled.

• (2) The notice must be accompanied by a statement of capital , except where the statement of capital would be the same as a statement of capital that is required to be delivered to the registrar under section 720B(1).

• (3) The statement of capital must state with respect to the company's share capital immediately following the cancellation—

• (a) the total number of shares of the company,

• (b) the aggregate nominal value of those shares,

• (ba) the aggregate amount (if any) unpaid on those shares (whether on account of their nominal value or by way of premium), and

• (c) for each class of shares—

• (i) prescribed particulars of the rights attached to the shares,

• (ii) the total number of shares of that class, and

• (iii) the aggregate nominal value of shares of that class, ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) If default is made in complying with this section, an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Chapter 5 — Redemption or purchase by private company out of capital

Introductory

Power of private limited company to redeem or purchase own shares out of capital

709

• (1) A private limited company may in accordance with this Chapter, but subject to any restriction or prohibition in the company's articles, make a payment in respect of the redemption or purchase of its own shares otherwise than out of distributable profits or the proceeds of a fresh issue of shares.

• (2) References below in this Chapter to payment out of capital are to any payment so made, whether or not it would be regarded apart from this section as a payment out of capital.

• (3) This Chapter is subject to section 692(1ZA) (purchase of own shares up to annual limit).

The permissible capital payment

The permissible capital payment

710

• (1) The payment that may, in accordance with this Chapter, be made by a company out of capital in respect of the redemption or purchase of its own shares is such amount as, after applying for that purpose—

• (a) any available profits of the company, and

• (b) the proceeds of any fresh issue of shares made for the purposes of the redemption or purchase,

is required to meet the price of redemption or purchase.

• (2) That is referred to below in this Chapter as “the permissible capital payment” for the shares.

Available profits

711

• (1) For the purposes of this Chapter the available profits of the company, in relation to the redemption or purchase of any shares, are the profits of the company that are available for distribution (within the meaning of Part 23).

• (2) But the question whether a company has any profits so available, and the amount of any such profits, shall be determined in accordance with section 712 instead of in accordance with sections 836 to 842 in that Part.

Determination of available profits

712

• (1) The available profits of the company are determined as follows.

• (2) First, determine the profits of the company by reference to the following items as stated in the relevant accounts—

• (a) profits, losses, assets and liabilities,

• (b) provisions of the following kinds—

• (i) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 396;

• (ii) where the relevant accounts are IAS accounts, provisions of any kind;

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

• (3) Second, reduce the amount so determined by the amount of—

• (a) any distribution lawfully made by the company, and

• (b) any other relevant payment lawfully made by the company out of distributable profits,

after the date of the relevant accounts and before the end of the relevant period.

• (4) For this purpose “other relevant payment lawfully made” includes—

• (a) financial assistance lawfully given out of distributable profits in accordance with Chapter 2,

• (b) payments lawfully made out of distributable profits in respect of the purchase by the company of any shares in the company, and

• (c) payments of any description specified in section 705 (payments other than purchase price to be made out of distributable profits) lawfully made by the company.

• (5) The resulting figure is the amount of available profits.

• (6) For the purposes of this section “the relevant accounts” are any accounts that—

• (a) are prepared as at a date within the relevant period, and

• (b) are such as to enable a reasonable judgment to be made as to the amounts of the items mentioned in subsection (2).

• (7) In this section “the relevant period” means the period of three months ending with the date on which the solvency statement is made in accordance with section 720A or the directors' statement is made in accordance with section 714.

Requirements for payment out of capital

Requirements for payment out of capital

713

• (1) A payment out of capital by a private company for the redemption or purchase of its own shares is not lawful unless the requirements of the following sections are met—

• section 714 (directors' statement and auditor's report);

• section 716 (approval by special resolution);

• section 719 (public notice of proposed payment);

• section 720 (directors' statement and auditor's report to be available for inspection).

• (2) This is subject to section 720A and to any order of the court under section 721 (power of court to extend period for compliance on application by persons objecting to payment).

Directors' statement and auditor's report

714

• (1) The company's directors must make a statement in accordance with this section.

• (2) The statement must specify the amount of the permissible capital payment for the shares in question.

• (3) It must state that, having made full inquiry into the affairs and prospects of the company, the directors have formed the opinion—

• (a) as regards its initial situation immediately following the date on which the payment out of capital is proposed to be made, that there will be no grounds on which the company could then be found unable to pay its debts, and

• (b) as regards its prospects for the year immediately following that date, that having regard to—

• (i) their intentions with respect to the management of the company's business during that year, and

• (ii) the amount and character of the financial resources that will in their view be available to the company during that year,

the company will be able to continue to carry on business as a going concern (and will accordingly be able to pay its debts as they fall due) throughout that year.

• (4) In forming their opinion for the purposes of subsection (3)(a), the directors must take into account all of the company's liabilities (including any contingent or prospective liabilities).

• (5) The directors' statement must be in the prescribed form and must contain such information with respect to the nature of the company's business as may be prescribed.

• (6) It must in addition have annexed to it a report addressed to the directors by the company's auditor stating that—

• (a) he has inquired into the company's state of affairs,

• (b) the amount specified in the statement as the permissible capital payment for the shares in question is in his view properly determined in accordance with sections 710 to 712, and

• (c) he is not aware of anything to indicate that the opinion expressed by the directors in their statement as to any of the matters mentioned in subsection (3) above is unreasonable in all the circumstances.

Directors' statement: offence if no reasonable grounds for opinion

715

• (1) If the directors make a statement under section 714 without having reasonable grounds for the opinion expressed in it, an offence is committed by every director who is in default.

• (2) A person guilty of an offence under this section is liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

• (b) on summary conviction—

• (i) in England and Wales, to imprisonment for a term not exceeding twelve months or a fine not exceeding the statutory maximum (or both);

• (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum (or both).

Payment to be approved by special resolution

716

• (1) The payment out of capital must be approved by a special resolution of the company.

• (2) The resolution must be passed on, or within the week immediately following, the date on which the directors make the statement required by section 714.

• (3) A resolution under this section is subject to—

• section 717 (exercise of voting rights), and

• section 718 (disclosure of directors' statement and auditors' report).

Resolution authorising payment: exercise of voting rights

717

• (1) This section applies to a resolution under section 716 (authority for payment out of capital for redemption or purchase of own shares).

• (2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member.

• (3) Where the resolution is proposed at a meeting of the company, it is not effective if—

• (a) 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

• (b) the resolution would not have been passed if he had not done so.

• (4) 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) any member of the company may demand a poll on that question;

• (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.

Resolution authorising payment: disclosure of directors' statement and auditor's report

718

• (1) This section applies to a resolution under section 716 (resolution authorising payment out of capital for redemption or purchase of own shares).

• (2) A copy of the directors' statement and auditor's report under section 714 must be made available to members—

• (a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him;

• (b) in the case of a resolution at a meeting, by being made available for inspection by members of the company at the meeting.

• (3) The resolution is ineffective if this requirement is not complied with.

Public notice of proposed payment

719

• (1) Within the week immediately following the date of the resolution under section 716 the company must cause to be published in the Gazette a notice—

• (a) stating that the company has approved a payment out of capital for the purpose of acquiring its own shares by redemption or purchase or both (as the case may be),

• (b) specifying—

• (i) the amount of the permissible capital payment for the shares in question, and

• (ii) the date of the resolution,

• (c) stating where the directors' statement and auditor's report required by section 714 are available for inspection, and

• (d) stating that any creditor of the company may at any time within the five weeks immediately following the date of the resolution apply to the court under section 721 for an order preventing the payment.

• (2) Within the week immediately following the date of the resolution the company must also either—

• (a) cause a notice to the same effect as that required by subsection (1) to be published in an appropriate national newspaper, or

• (b) give notice in writing to that effect to each of its creditors.

• (3) “An appropriate national newspaper” means a newspaper circulating throughout the part of the United Kingdom in which the company is registered.

• (4) Not later than the day on which the company—

• (a) first publishes the notice required by subsection (1), or

• (b) if earlier, first publishes or gives the notice required by subsection (2),

the company must deliver to the registrar a copy of the directors' statement and auditor's report required by section 714.

Directors' statement and auditor's report to be available for inspection

720

• (1) The directors' statement and auditor's report must be kept available for inspection throughout the period—

• (a) beginning with the day on which the company—

• (i) first publishes the notice required by section 719(1), or

• (ii) if earlier, first publishes or gives the notice required by section 719(2), and

• (b) ending five weeks after the date of the resolution for payment out of capital.

• (2) They must be kept available for inspection—

• (a) at the company's registered office, or

• (b) at a place specified in regulations under section 1136.

• (3) The company must give notice to the registrar—

• (a) of the place at which the statement and report are kept available for inspection, and

• (b) of any change in that place,

unless they have at all times been kept at the company's registered office.

• (4) They must be open to the inspection of any member or creditor of the company without charge.

• (5) If default is made for 14 days in complying with subsection (3), or an inspection under subsection (4) is refused, an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (6) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

• (7) In the case of a refusal of an inspection required by subsection (4), the court may by order compel an immediate inspection.

Requirements for payment out of capital: employees' share schemes

Reduced requirements for payment out of capital for purchase of own shares for the purposes of or pursuant to an employees' share scheme

720A

• (1) Section 713(1) does not apply to the purchase out of capital by a private company of its own shares for the purposes of or pursuant to an employees' share scheme when approved by special resolution supported by a solvency statement.

• (2) For the purposes of this section a resolution is supported by a solvency statement if—

• (a) the directors of the company make a solvency statement (see section 643) not more than 15 days before the date on which the resolution is passed, and

• (b) the resolution and solvency statement are registered in accordance with section 720B.

• (3) Where the resolution is proposed as a written resolution, a copy of the solvency statement must be sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to the member.

• (4) Where the resolution is proposed at a general meeting, a copy of the solvency statement must be made available for inspection by members of the company throughout that meeting.

• (5) The validity of a resolution is not affected by a failure to comply with subsection (3) or (4).

• (6) Section 717 (resolution authorising payment: exercise of voting rights) applies to a resolution under this section as it applies to a resolution under section 716.

Registration of resolution and supporting documents for purchase of own shares for the purposes of or pursuant to an employees' share scheme

720B

• (1) Within 15 days after the passing of the resolution for a payment out of capital by a private company for the purchase of its own shares for the purposes of or pursuant to an employees' share scheme the company must deliver to the registrar–

• (a) a copy of the solvency statement,

• (b) a copy of the resolution, and

• (c) a statement of capital.

• (2) The statement of capital must state with respect to the company's share capital as reduced by the resolution—

• (a) the total number of shares of the company,

• (b) the aggregate nominal value of those shares,

• (ba) the aggregate amount (if any) unpaid on those shares (whether on account of their nominal value or by way of premium), and

• (c) for each class of shares—

• (i) prescribed particulars of the rights attached to the shares,

• (ii) the total number of shares of that class, and

• (iii) the aggregate nominal value of shares of that class, ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) The registrar must register the documents delivered to him under subsection (1) on receipt.

• (4) The resolution does not take effect until those documents are registered.

• (5) The company must also deliver to the registrar, within 15 days after the resolution is passed, a statement by the directors confirming that the solvency statement was—

• (a) made not more than 15 days before the date on which the resolution was passed, and

• (b) provided to members in accordance with section 720A(3) or (4).

• (6) The validity of a resolution is not affected by—

• (a) a failure to deliver the documents required to be delivered to the registrar under subsection (1) within the time specified in that subsection, or

• (b) a failure to comply with subsection (5).

• (7) If the company delivers to the registrar a solvency statement that was not provided to members in accordance with section 720A(3) or (4), an offence is committed by every officer of the company who is in default.

• (8) If default is made in complying with this section, an offence is committed by–

• (a) the company, and

• (b) every officer of the company who is in default.

• (9) A person guilty of an offence under subsection (7) or (8) is liable–

• (a) on conviction on indictment, to a fine;

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

Objection to payment by members or creditors

Application to court to cancel resolution

721

• (1) Where a private company passes a special resolution approving a payment out of capital for the redemption or purchase of any of its shares—

• (a) any member of the company (other than one who consented to or voted in favour of the resolution), and

• (b) any creditor of the company,

may apply to the court for the cancellation of the resolution.

• (2) The application—

• (a) must be made within five weeks after the passing of the resolution, and

• (b) may be made on behalf of the persons entitled to make it by such one or more of their number as they may appoint in writing for the purpose.

• (3) On an application under this section the court may if it thinks fit—

• (a) adjourn the proceedings in order that an arrangement may be made to the satisfaction of the court—

• (i) for the purchase of the interests of dissentient members, or

• (ii) for the protection of dissentient creditors, and

• (b) give such directions and make such orders as it thinks expedient for facilitating or carrying into effect any such arrangement.

• (4) Subject to that, the court must make an order either cancelling or confirming the resolution, and may do so on such terms and conditions as it thinks fit.

• (5) If the court confirms the resolution, it may by order alter or extend any date or period of time specified—

• (a) in the resolution, or

• (b) in any provision of this Chapter applying to the redemption or purchase to which the resolution relates.

• (6) The court's order may, if the court thinks fit—

• (a) provide for the purchase by the company of the shares of any of its members and for the reduction accordingly of the company's capital, and

• (b) make any alteration in the company's articles that may be required in consequence of that provision.

• (7) The court's order may, if the court thinks fit, require the company not to make any, or any specified, amendments of its articles without the leave of the court.

Notice to registrar of court application or order

722

• (1) On making an application under section 721 (application to court to cancel resolution) the applicants, or the person making the application on their behalf, must immediately give notice to the registrar.

This is without prejudice to any provision of rules of court as to service of notice of the application.

• (2) On being served with notice of any such application, the company must immediately give notice to the registrar.

• (3) Within 15 days of the making of the court's order on the application, or such longer period as the court may at any time direct, the company must deliver to the registrar a copy of the order.

• (4) If a company fails to comply with subsection (2) or (3) an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Supplementary provisions

Time when payment out of capital to be made or shares to be surrendered

723

• (1) The payment out of capital , if made in accordance with a resolution under section 716 must be made—

• (a) no earlier than five weeks after the date on which the resolution under section 716 is passed, and

• (b) no more than seven weeks after that date.

• (1A) Shares to be purchased in accordance with a resolution under section 720A must be surrendered—

• (a) no earlier than five weeks after the date on which the resolution under section 720A is passed, and

• (b) no later than seven weeks after that date.

• (2) This is subject to any exercise of the court's powers under section 721(5) (power to alter or extend time where resolution confirmed after objection).

Chapter 6 — Treasury shares

Treasury shares

724

• (1) This section applies where–

• (a) a limited company makes a purchase of its own shares in accordance with Chapter 4, and

• (b) the purchase is made out of distributable profits.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Where this section applies the company may—

• (a) hold the shares (or any of them), or

• (b) deal with any of them, at any time, in accordance with section 727 or 729.

• (4) Where shares are held by the company, the company must be entered in its register of members ... as the member holding the shares.

• (5) In the Companies Acts references to a company holding shares as treasury shares are to the company holding shares that—

• (a) were (or are treated as having been) purchased by it in circumstances in which this section applies, and

• (b) have been held by the company continuously since they were so purchased (or treated as purchased).

Treasury shares: maximum holdings

725

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treasury shares: exercise of rights

726

• (1) This section applies where shares are held by a company as treasury shares.

• (2) The company must not exercise any right in respect of the treasury shares, and any purported exercise of such a right is void.

This applies, in particular, to any right to attend or vote at meetings.

• (3) No dividend may be paid, and no other distribution (whether in cash or otherwise) of the company's assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of the treasury shares.

• (4) Nothing in this section prevents—

• (a) an allotment of shares as fully paid bonus shares in respect of the treasury shares, or

• (b) the payment of any amount payable on the redemption of the treasury shares (if they are redeemable shares).

• (5) Shares allotted as fully paid bonus shares in respect of the treasury shares are treated as if purchased by the company, at the time they were allotted, in circumstances in which section 724(1) (treasury shares) applied.

Treasury shares: disposal

727

• (1) Where shares are held as treasury shares, the company may at any time—

• (a) sell the shares (or any of them) for a cash consideration, or

• (b) transfer the shares (or any of them) for the purposes of or pursuant to an employees' share scheme.

• (2) In subsection (1)(a) “cash consideration” means—

• (a) cash received by the company, or

• (b) a cheque received by the company in good faith that the directors have no reason for suspecting will not be paid, or

• (c) a release of a liability of the company for a liquidated sum, or

• (d) an undertaking to pay cash to the company on or before a date not more than 90 days after the date on which the company agrees to sell the shares, or

• (e) payment by any other means giving rise to a present or future entitlement (of the company or a person acting on the company's behalf) to a payment, or credit equivalent to payment, in cash.

For this purpose “cash” includes foreign currency.

• (3) The Secretary of State may by order provide that particular means of payment specified in the order are to be regarded as falling within subsection (2)(e).

• (4) If the company receives a notice under section 979 (takeover offers: right of offeror to buy out minority shareholders) that a person desires to acquire shares held by the company as treasury shares, the company must not sell or transfer the shares to which the notice relates except to that person.

• (5) An order under this section is subject to negative resolution procedure.

Treasury shares: notice of disposal

728

• (1) Where shares held by a company as treasury shares—

• (a) are sold, or

• (b) are transferred for the purposes of an employees' share scheme,

the company must deliver a return to the registrar not later than 28 days after the shares are disposed of.

• (2) The return must state with respect to shares of each class disposed of—

• (a) the number and nominal value of the shares, and

• (b) the date on which they were disposed of.

• (3) Particulars of shares disposed of on different dates may be included in a single return.

• (4) If default is made in complying with this section an offence is committed by every officer of the company who is in default.

• (5) A person guilty of an offence under this section is liable—

• (a) on conviction on indictment, to a fine;

• (b) on summary conviction, to a fine not exceeding the statutory maximum and, for continued contravention, a daily default fine not exceeding one-tenth of the statutory maximumone-tenth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences.

Treasury shares: cancellation

729

• (1) Where shares are held as treasury shares, the company may at any time cancel the shares (or any of them).

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) If company cancels shares held as treasury shares, the amount of the company's share capital is reduced accordingly by the nominal amount of the shares cancelled.

• (5) The directors may take any steps required to enable the company to cancel its shares under this section without complying with the provisions of Chapter 10 of Part 17 (reduction of share capital).

Treasury shares: notice of cancellation

730

• (1) Where shares held by a company as treasury shares are cancelled, the company must deliver a return to the registrar not later than 28 days after the shares are cancelled.

This does not apply to shares that are cancelled forthwith on their acquisition by the company (see section 708).

• (2) The return must state with respect to shares of each class cancelled—

• (a) the number and nominal value of the shares, and

• (b) the date on which they were cancelled.

• (3) Particulars of shares cancelled on different dates may be included in a single return.

• (4) The notice must be accompanied by a statement of capital.

• (5) The statement of capital must state with respect to the company's share capital immediately following the cancellation—

• (a) the total number of shares of the company,

• (b) the aggregate nominal value of those shares,

• (ba) the aggregate amount (if any) unpaid on those shares (whether on account of their nominal value or by way of premium), and

• (c) for each class of shares—

• (i) prescribed particulars of the rights attached to the shares,

• (ii) the total number of shares of that class, and

• (iii) the aggregate nominal value of shares of that class, ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) If default is made in complying with this section, an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (7) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

Treasury shares: treatment of proceeds of sale

731

• (1) Where shares held as treasury shares are sold, the proceeds of sale must be dealt with in accordance with this section.

• (2) If the proceeds of sale are equal to or less than the purchase price paid by the company for the shares, the proceeds are treated for the purposes of Part 23 (distributions) as a realised profit of the company.

• (3) If the proceeds of sale exceed the purchase price paid by the company—

• (a) an amount equal to the purchase price paid is treated as a realised profit of the company for the purposes of that Part, and

• (b) the excess must be transferred to the company's share premium account.

• (4) For the purposes of this section—

• (a) the purchase price paid by the company must be determined by the application of a weighted average price method, and

• (b) if the shares were allotted to the company as fully paid bonus shares, the purchase price paid for them is treated as nil.

Treasury shares: offences

732

• (1) If a company contravenes any of the provisions of this Chapter (except section 730 (notice of cancellation)), an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (2) A person guilty of an offence under this section is liable—

• (a) on conviction on indictment, to a fine;

• (b) on summary conviction to a fine not exceeding the statutory maximum.

Chapter 7 — Supplementary provisions

The capital redemption reserve

733

• (1) In the following circumstances a company must transfer amounts to a reserve, called the “capital redemption reserve”.

• (2) Where under this Part shares of a limited company are redeemed or purchased wholly out of the company's profits, the amount by which the company's issued share capital is diminished in accordance with—

• (a) section 688(b) (on the cancellation of shares redeemed), or

• (b) section 706(b)(ii) (on the cancellation of shares purchased),

must be transferred to the capital redemption reserve.

• (3) If—

• (a) the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue, and

• (b) the aggregate amount of the proceeds is less than the aggregate nominal value of the shares redeemed or purchased,

the amount of the difference must be transferred to the capital redemption reserve.

This does not apply in the case of a private company if, in addition to the proceeds of the fresh issue, the company applies a payment out of capital under Chapter 5 or under section 692(1ZA) in making the redemption or purchase.

• (4) The amount by which a company's share capital is diminished in accordance with section 729(4) (on the cancellation of shares held as treasury shares) must be transferred to the capital redemption reserve.

• (5) The company may use the capital redemption reserve to pay up new shares to be allotted to members as fully paid bonus shares.

• (6) Subject to that, the provisions of the Companies Acts relating to the reduction of a company's share capital apply as if the capital redemption reserve were part of its paid up share capital.

Accounting consequences of payment out of capital

734

• (1) This section applies where a payment out of capital is made in accordance with Chapter 5 (redemption or purchase of own shares by private company out of capital) or section 692(1ZA).

• (1A) In relation to a payment under section 692(1ZA) references to the permissible capital payment are to the purchase price of the shares or (if less) the part of it met out of the payment under section 692(1ZA) and any proceeds of a fresh issue used to make the purchase.

• (2) If the permissible capital payment is less than the nominal amount of the shares redeemed or purchased, the amount of the difference must be transferred to the company's capital redemption reserve.

• (3) If the permissible capital payment is greater than the nominal amount of the shares redeemed or purchased—

• (a) the amount of any capital redemption reserve, share premium account or fully paid share capital of the company, and

• (b) any amount representing unrealised profits of the company for the time being standing to the credit of any revaluation reserve maintained by the company,

may be reduced by a sum not exceeding (or by sums not in total exceeding) the amount by which the permissible capital payment exceeds the nominal amount of the shares.

• (4) Where the proceeds of a fresh issue are applied by the company in making a redemption or purchase of its own shares in addition to a payment out of capital under Chapter 5, the references in subsections (2) and (3) to the permissible capital payment are to be read as referring to the aggregate of that payment and those proceeds.

Effect of company's failure to redeem or purchase

735

• (1) This section applies where a company—

• (a) issues shares on terms that they are or are liable to be redeemed, or

• (b) agrees to purchase any of its shares.

• (2) The company is not liable in damages in respect of any failure on its part to redeem or purchase any of the shares.

This is without prejudice to any right of the holder of the shares other than his right to sue the company for damages in respect of its failure.

• (3) The court shall not grant an order for specific performance of the terms of redemption or purchase if the company shows that it is unable to meet the costs of redeeming or purchasing the shares in question out of distributable profits.

• (4) If the company is wound up and at the commencement of the winding up any of the shares have not been redeemed or purchased, the terms of redemption or purchase may be enforced against the company.

When shares are redeemed or purchased under this subsection, they are treated as cancelled.

• (5) Subsection (4) does not apply if—

• (a) the terms provided for the redemption or purchase to take place at a date later than that of the commencement of the winding up, or

• (b) during the period—

• (i) beginning with the date on which the redemption or purchase was to have taken place, and

• (ii) ending with the commencement of the winding up,

the company could not at any time have lawfully made a distribution equal in value to the price at which the shares were to have been redeemed or purchased.

• (6) There shall be paid in priority to any amount that the company is liable under subsection (4) to pay in respect of any shares—

• (a) all other debts and liabilities of the company (other than any due to members in their character as such), and

• (b) if other shares carry rights (whether as to capital or as to income) that are preferred to the rights as to capital attaching to the first-mentioned shares, any amount due in satisfaction of those preferred rights.

Subject to that, any such amount shall be paid in priority to any amounts due to members in satisfaction of their rights (whether as to capital or income) as members.

Meaning of “distributable profits”

736

In this Part (except in Chapter 2 (financial assistance): see section 683) “distributable profits”, in relation to the making of any payment by a company, means profits out of which the company could lawfully make a distribution (within the meaning given by section 830) equal in value to the payment.

General power to make further provision by regulations

737

• (1) The Secretary of State may by regulations modify the provisions of this Part.

• (2) The regulations may—

• (a) amend or repeal any of the provisions of this Part, or

• (b) make such other provision as appears to the Secretary of State appropriate in place of any of the provisions of this Part.

• (3) Regulations under this section may make consequential amendments or repeals in other provisions of this Act, or in other enactments.

• (4) Regulations under this section are subject to affirmative resolution procedure.

Part 19 — Debentures

General provisions

Meaning of “debenture”

738

In the Companies Acts“debenture” includes debenture stock, bonds and any other securities of a company, whether or not constituting a charge on the assets of the company.

Perpetual debentures

739

• (1) A condition contained in debentures, or in a deed for securing debentures, is not invalid by reason only that the debentures are made—

• (a) irredeemable, or

• (b) redeemable only—

• (i) on the happening of a contingency (however remote), or

• (ii) on the expiration of a period (however long),

any rule of equity to the contrary notwithstanding.

• (2) Subsection (1) applies to debentures whenever issued and to deeds whenever executed.

Enforcement of contract to subscribe for debentures

740

A contract with a company to take up and pay for debentures of the company may be enforced by an order for specific performance.

Registration of allotment of debentures

741

• (1) A company must register an allotment of debentures as soon as practicable and in any event within two months after the date of the allotment.

• (2) If a company fails to comply with this section, an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (3) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

• (4) For the duties of the company as to the issue of the debentures, or certificates of debenture stock, see Part 21 (certification and transfer of securities)

Debentures to bearer (Scotland)

742

Notwithstanding anything in the statute of the Scots Parliament of 1696, chapter 25, debentures to bearer issued in Scotland are valid and binding according to their terms.

Register of debenture holders

Register of debenture holders

743

• (1) Any register of debenture holders of a company that is kept by the company must be kept available for inspection—

• (a) at the company's registered office, or

• (b) at a place specified in regulations under section 1136.

• (2) A company must give notice to the registrar of the place where any such register is kept available for inspection and of any change in that place.

• (3) No such notice is required if the register has, at all times since it came into existence, been kept available for inspection at the company's registered office.

• (4) If a company makes default for 14 days in complying with subsection (2), an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

• (6) References in this section to a register of debenture holders include a duplicate—

• (a) of a register of debenture holders that is kept outside the United Kingdom, or

• (b) of any part of such a register.

Register of debenture holders: right to inspect and require copy

744

• (1) Every register of debenture holders of a company must, except when duly closed, be open to the inspection—

• (a) of the registered holder of any such debentures, or any holder of shares in the company, without charge, and

• (b) of any other person on payment of such fee as may be prescribed.

• (2) Any person may require a copy of the register, or any part of it, on payment of such fee as may be prescribed.

• (3) A person seeking to exercise either of the rights conferred by this section must make a request to the company to that effect.

• (4) The request must contain the following information—

• (a) in the case of an individual, his name and address;

• (b) in the case of an organisation, the name and address of an individual responsible for making the request on behalf of the organisation;

• (c) the purpose for which the information is to be used; and

• (d) whether the information will be disclosed to any other person, and if so—

• (i) where that person is an individual, his name and address,

• (ii) where that person is an organisation, the name and address of an individual responsible for receiving the information on its behalf, and

• (iii) the purpose for which the information is to be used by that person.

• (5) For the purposes of this section a register is “duly closed” if it is closed in accordance with provision contained—

• (a) in the articles or in the debentures,

• (b) in the case of debenture stock in the stock certificates, or

• (c) in the trust deed or other document securing the debentures or debenture stock.

The total period for which a register is closed in any year must not exceed 30 days.

• (6) References in this section to a register of debenture holders include a duplicate—

• (a) of a register of debenture holders that is kept outside the United Kingdom, or

• (b) of any part of such a register.

Register of debenture holders: response to request for inspection or copy

745

• (1) Where a company receives a request under section 744 (register of debenture holders: right to inspect and require copy), it must within five working days either—

• (a) comply with the request, or

• (b) apply to the court.

• (2) If it applies to the court it must notify the person making the request.

• (3) If on an application under this section the court is satisfied that the inspection or copy is not sought for a proper purpose—

• (a) it shall direct the company not to comply with the request, and

• (b) it may further order that the company's costs (in Scotland, expenses) on the application be paid in whole or in part by the person who made the request, even if he is not a party to the application.

• (4) If the court makes such a direction and it appears to the court that the company is or may be subject to other requests made for a similar purpose (whether made by the same person or different persons), it may direct that the company is not to comply with any such request.

The order must contain such provision as appears to the court appropriate to identify the requests to which it applies.

• (5) If on an application under this section the court does not direct the company not to comply with the request, the company must comply with the request immediately upon the court giving its decision or, as the case may be, the proceedings being discontinued.

Register of debenture holders: refusal of inspection or default in providing copy

746

• (1) If an inspection required under section 744 (register of debenture holders: right to inspect and require copy) is refused or default is made in providing a copy required under that section, otherwise than in accordance with an order of the court, an offence is committed by—

• (a) the company, and

• (b) every officer of the company who is in default.

• (2) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

• (3) In the case of any such refusal or default the court may by order compel an immediate inspection or, as the case may be, direct that the copy required be sent to the person requesting it.

Register of debenture holders: offences in connection with request for or disclosure of information

747

• (1) It is an offence for a person knowingly or recklessly to make in a request under section 744 (register of debenture holders: right to inspect and require copy) a statement that is misleading, false or deceptive in a material particular.

• (2) It is an offence for a person in possession of information obtained by exercise of either of the rights conferred by that section—

• (a) to do anything that results in the information being disclosed to another person, or

• (b) to fail to do anything with the result that the information is disclosed to another person,

knowing, or having reason to suspect, that person may use the information for a purpose that is not a proper purpose.

• (3) A person guilty of an offence under this section is liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

• (b) on summary conviction—

• (i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);

• (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).

Time limit for claims arising from entry in register

748

• (1) Liability incurred by a company—

• (a) from the making or deletion of an entry in the register of debenture holders, or

• (b) from a failure to make or delete any such entry,

is not enforceable more than ten years after the date on which the entry was made or deleted or, as the case may be, the failure first occurred.

• (2) This is without prejudice to any lesser period of limitation (and, in Scotland, to any rule that the obligation giving rise to the liability prescribes before the expiry of that period).

Supplementary provisions

Right of debenture holder to copy of deed

749

• (1) Any holder of debentures of a company is entitled, on request and on payment of such fee as may be prescribed, to be provided with a copy of any trust deed for securing the debentures.

• (2) If default is made in complying with this section, an offence is committed by every officer of the company who is in default.

• (3) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

• (4) In the case of any such default the court may direct that the copy required be sent to the person requiring it.

Liability of trustees of debentures

750

• (1) Any provision contained in—

• (a) a trust deed for securing an issue of debentures, or

• (b) any contract with the holders of debentures secured by a trust deed,

is void in so far as it would have the effect of exempting a trustee of the deed from, or indemnifying him against, liability for breach of trust where he fails to show the degree of care and diligence required of him as trustee, having regard to the provisions of the trust deed conferring on him any powers, authorities or discretions.

• (2) Subsection (1) does not invalidate—

• (a) a release otherwise validly given in respect of anything done or omitted to be done by a trustee before the giving of the release;

• (b) any provision enabling such a release to be given—

• (i) on being agreed to by a majority of not less than 75% in value of the debenture holders present and voting in person or, where proxies are permitted, by proxy at a meeting summoned for the purpose, and

• (ii) either with respect to specific acts or omissions or on the trustee dying or ceasing to act.

• (3) This section is subject to section 751 (saving for certain older provisions).

Liability of trustees of debentures: saving for certain older provisions

751

• (1) Section 750 (liability of trustees of debentures) does not operate—

• (a) to invalidate any provision in force on the relevant date so long as any person—

• (i) then entitled to the benefit of the provision, or

• (ii) afterwards given the benefit of the provision under subsection (3) below,

remains a trustee of the deed in question, or

• (b) to deprive any person of any exemption or right to be indemnified in respect of anything done or omitted to be done by him while any such provision was in force.

• (2) The relevant date for this purpose is—

• (a) 1st July 1948 in a case where section 192 of the Companies Act 1985 (c. 6) applied immediately before the commencement of this section;

• (b) 1st July 1961 in a case where Article 201 of the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) then applied.

• (3) While any trustee of a trust deed remains entitled to the benefit of a provision saved by subsection (1) above the benefit of that provision may be given either—

• (a) to all trustees of the deed, present and future, or

• (b) to any named trustees or proposed trustees of it,

by a resolution passed by a majority of not less than 75% in value of the debenture holders present in person or, where proxies are permitted, by proxy at a meeting summoned for the purpose.

• (4) A meeting for that purpose must be summoned in accordance with the provisions of the deed or, if the deed makes no provision for summoning meetings, in a manner approved by the court.

Power to re-issue redeemed debentures

752

• (1) Where a company has redeemed debentures previously issued, then unless—

• (a) provision to the contrary (express or implied) is contained in the company's articles or in any contract made by the company, or

• (b) the company has, by passing a resolution to that effect or by some other act, manifested its intention that the debentures shall be cancelled,

the company may re-issue the debentures, either by re-issuing the same debentures or by issuing new debentures in their place.

This subsection is deemed always to have had effect.

• (2) On a re-issue of redeemed debentures the person entitled to the debentures has (and is deemed always to have had) the same priorities as if the debentures had never been redeemed.

• (3) The re-issue of a debenture or the issue of another debenture in its place under this section is treated as the issue of a new debenture for the purposes of stamp duty.

It is not so treated for the purposes of any provision limiting the amount or number of debentures to be issued.

• (4) A person lending money on the security of a debenture re-issued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp duty or any penalty in respect of it, unless he had notice (or, but for his negligence, might have discovered) that the debenture was not duly stamped.

In that case the company is liable to pay the proper stamp duty and penalty.

Deposit of debentures to secure advances

753

Where a company has deposited any of its debentures to secure advances from time to time on current account or otherwise, the debentures are not treated as redeemed by reason only of the company's account having ceased to be in debit while the debentures remained so deposited.

Priorities where debentures secured by floating charge

754

• (1) This section applies where debentures of a company registered in England and Wales or Northern Ireland are secured by a charge that, as created, was a floating charge.