(1) Unless the register kept under section 808 (register of interests disclosed) is kept in such a form as itself to constitute an index, the company must keep an index of the names entered in it.
(2) The company must make any necessary entry or alteration in the index within ten days after the date on which any entry or alteration is made in the register.
(3) The index must contain, in respect of each name, a sufficient indication to enable the information entered against it to be readily found.
(4) The index must be at all times kept available for inspection at the same place as the register.
(5) 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.
(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.
(1) The register required to be kept under section 808 (register of interests disclosed), and any associated index, must be open to inspection by any person without charge.
(2) Any person is entitled, on request and on payment of such fee as may be prescribed, to be provided with a copy of any entry in the register.
(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.
812 Court supervision of purpose for which rights may be exercised
(1) Where a company receives a request under section 811 (register of interests disclosed: right to inspect and require copy), it must—
(a) comply with the request if it is satisfied that it is made for a proper purpose, and
(b) refuse the request if it is not so satisfied.
(2) If the company refuses the request, it must inform the person making the request, stating the reason why it is not satisfied.
(3) A person whose request is refused may apply to the court.
(4) If an application is made to the court—
(a) the person who made the request must notify the company, and
(b) the company must use its best endeavours to notify any persons whose details would be disclosed if the company were required to comply with the request.
(5) If the court is not satisfied that the inspection or copy is sought for a proper purpose, it shall direct the company not to comply with the request.
(6) 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.
(7) If 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.
813 Register of interests disclosed: refusal of inspection or default in providing copy
(1) If an inspection required under section 811 (register of interests disclosed: 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 section 812, 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.
814 Register of interests disclosed: offences in connection with request for or disclosure of information
(1) It is an offence for a person knowingly or recklessly to make in a request under section 811 (register of interests disclosed: right to inspect or 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).
(1) Entries in the register kept under section 808 (register of interests disclosed) must not be deleted except in accordance with—
section 816 (old entries), or
section 817 (incorrect entry relating to third party).
(2) If an entry is deleted in contravention of subsection (1), the company must restore it as soon as reasonably practicable.
(3) If default is made in complying with subsection (1) or (2), an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(4) 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 of subsection (2), a daily default fine not exceeding one-tenth of level 3 on the standard scale.
A company may remove an entry from the register kept under section 808 (register of interests disclosed) if more than six years have elapsed since the entry was made.
817 Removal of entries from register: incorrect entry relating to third party
(1) This section applies where in pursuance of an obligation imposed by a notice under section 793 (notice requiring information about interests in company's shares) a person gives to a company the name and address of another person as being interested in shares in the company.
(2) That other person may apply to the company for the removal of the entry from the register.
(3) If the company is satisfied that the information in pursuance of which the entry was made is incorrect, it shall remove the entry.
(4) If an application under subsection (3) is refused, the applicant may apply to the court for an order directing the company to remove the entry in question from the register.
The court may make such an order if it thinks fit.
818 Adjustment of entry relating to share acquisition agreement
(1) If a person who is identified in the register kept by a company under section 808 (register of interests disclosed) as being a party to an agreement to which section 824 applies (certain share acquisition agreements) ceases to be a party to the agreement, he may apply to the company for the inclusion of that information in the register.
(2) If the company is satisfied that he has ceased to be a party to the agreement, it shall record that information (if not already recorded) in every place where his name appears in the register as a party to the agreement.
(3) If an application under this section is refused (otherwise than on the ground that the information has already been recorded), the applicant may apply to the court for an order directing the company to include the information in question in the register.
The court may make such an order if it thinks fit.
(1) If a company ceases to be a public company, it must continue to keep any register kept under section 808 (register of interests disclosed), and any associated index, until the end of the period of six years after it ceased to be such a company.
(2) 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.
(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.
(1) This section applies to determine for the purposes of this Part whether a person has an interest in shares.
(2) In this Part—
(a) a reference to an interest in shares includes an interest of any kind whatsoever in the shares, and
(b) any restraints or restrictions to which the exercise of any right attached to the interest is or may be subject shall be disregarded.
(3) Where an interest in shares is comprised in property held on trust, every beneficiary of the trust is treated as having an interest in the shares.
(4) A person is treated as having an interest in shares if—
(a) he enters into a contract to acquire them, or
(b) not being the registered holder, he is entitled—
(i) to exercise any right conferred by the holding of the shares, or
(ii) to control the exercise of any such right.
(5) For the purposes of subsection (4)(b) a person is entitled to exercise or control the exercise of a right conferred by the holding of shares if he—
(a) has a right (whether subject to conditions or not) the exercise of which would make him so entitled, or
(b) is under an obligation (whether subject to conditions or not) the fulfilment of which would make him so entitled.
(6) A person is treated as having an interest in shares if—
(a) he has a right to call for delivery of the shares to himself or to his order, or
(b) he has a right to acquire an interest in shares or is under an obligation to take an interest in shares.
This applies whether the right or obligation is conditional or absolute.
(7) Persons having a joint interest are treated as each having that interest.
(8) It is immaterial that shares in which a person has an interest are unidentifiable.
821 Interest in shares: right to subscribe for shares
(1) Section 793 (notice by company requiring information about interests in its shares) applies in relation to a person who has, or previously had, or is or was entitled to acquire, a right to subscribe for shares in the company as it applies in relation to a person who is or was interested in shares in that company.
(2) References in that section to an interest in shares shall be read accordingly.
(1) For the purposes of this Part a person is taken to be interested in shares in which—
(a) his spouse or civil partner, or
(b) any infant child or step-child of his,
is interested.
(2) In relation to Scotland “infant” means a person under the age of 18 years.
(1) For the purposes of this Part a person is taken to be interested in shares if a body corporate is interested in them and—
(a) the body or its directors are accustomed to act in accordance with his directions or instructions, or
(b) he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of the body.
(2) For the purposes of this section a person is treated as entitled to exercise or control the exercise of voting power if—
(a) another body corporate is entitled to exercise or control the exercise of that voting power, and
(b) he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that body corporate.
(3) For the purposes of this section a person is treated as entitled to exercise or control the exercise of voting power if—
(a) he has a right (whether or not subject to conditions) the exercise of which would make him so entitled, or
(b) he is under an obligation (whether or not subject to conditions) the fulfilment of which would make him so entitled.
824 Interest in shares: agreement to acquire interests in a particular company
(1) For the purposes of this Part an interest in shares may arise from an agreement between two or more persons that includes provision for the acquisition by any one or more of them of interests in shares of a particular public company (the “target company” for that agreement).
(2) This section applies to such an agreement if—
(a) the agreement includes provision imposing obligations or restrictions on any one or more of the parties to it with respect to their use, retention or disposal of their interests in the shares of the target company acquired in pursuance of the agreement (whether or not together with any other interests of theirs in the company's shares to which the agreement relates), and
(b) an interest in the target company's shares is in fact acquired by any of the parties in pursuance of the agreement.
(3) The reference in subsection (2) to the use of interests in shares in the target company is to the exercise of any rights or of any control or influence arising from those interests (including the right to enter into an agreement for the exercise, or for control of the exercise, of any of those rights by another person).
(4) Once an interest in shares in the target company has been acquired in pursuance of the agreement, this section continues to apply to the agreement so long as the agreement continues to include provisions of any description mentioned in subsection (2).
This applies irrespective of—
(a) whether or not any further acquisitions of interests in the company's shares take place in pursuance of the agreement;
(b) any change in the persons who are for the time being parties to it;
(c) any variation of the agreement.
References in this subsection to the agreement include any agreement having effect (whether directly or indirectly) in substitution for the original agreement.
(5) In this section—
(a) “agreement” includes any agreement or arrangement, and
(b) references to provisions of an agreement include—
(i) undertakings, expectations or understandings operative under an arrangement, and
(ii) any provision whether express or implied and whether absolute or not.
References elsewhere in this Part to an agreement to which this section applies have a corresponding meaning.
(6) This section does not apply—
(a) to an agreement that is not legally binding unless it involves mutuality in the undertakings, expectations or understandings of the parties to it; or
(b) to an agreement to underwrite or sub-underwrite an offer of shares in a company, provided the agreement is confined to that purpose and any matters incidental to it.
825 Extent of obligation in case of share acquisition agreement
(1) For the purposes of this Part each party to an agreement to which section 824 applies is treated as interested in all shares in the target company in which any other party to the agreement is interested apart from the agreement (whether or not the interest of the other party was acquired, or includes any interest that was acquired, in pursuance of the agreement).
(2) For those purposes an interest of a party to such an agreement in shares in the target company is an interest apart from the agreement if he is interested in those shares otherwise than by virtue of the application of section 824 (and this section) in relation to the agreement.
(3) Accordingly, any such interest of the person (apart from the agreement) includes for those purposes any interest treated as his under section 822 or 823 (family or corporate interests) or by the application of section 824 (and this section) in relation to any other agreement with respect to shares in the target company to which he is a party.
(4) A notification with respect to his interest in shares in the target company made to the company under this Part by a person who is for the time being a party to an agreement to which section 824 applies must—
(a) state that the person making the notification is a party to such an agreement,
(b) include the names and (so far as known to him) the addresses of the other parties to the agreement, identifying them as such, and
(c) state whether or not any of the shares to which the notification relates are shares in which he is interested by virtue of section 824 (and this section) and, if so, the number of those shares.
(1) Information in respect of which a company is for the time being entitled to any exemption conferred by regulations under section 409(3) (information about related undertakings to be given in notes to accounts: exemption where disclosure harmful to company's business)—
(a) must not be included in a report under section 805 (report to members on outcome of investigation), and
(b) must not be made available under section 811 (right to inspect and request copy of entries).
(2) Where any such information is omitted from a report under section 805, that fact must be stated in the report.
827 Reckoning of periods for fulfilling obligations
Where the period allowed by any provision of this Part for fulfilling an obligation is expressed as a number of days, any day that is not a working day shall be disregarded in reckoning that period.
828 Power to make further provision by regulations
(1) The Secretary of State may by regulations amend—
(a) the definition of shares to which this Part applies (section 792),
(b) the provisions as to notice by a company requiring information about interests in its shares (section 793), and
(c) the provisions as to what is taken to be an interest in shares (sections 820 and 821).
(2) The regulations may amend, repeal or replace those provisions and make such other consequential amendments or repeals of provisions of this Part as appear to the Secretary of State to be appropriate.
(3) Regulations under this section are subject to affirmative resolution procedure.
(1) In this Part “distribution” means every description of distribution of a company's assets to its members, whether in cash or otherwise, subject to the following exceptions.
(2) The following are not distributions for the purposes of this Part—
(a) an issue of shares as fully or partly paid bonus shares;
(b) the reduction of share capital—
(i) by extinguishing or reducing the liability of any of the members on any of the company's shares in respect of share capital not paid up, or
(ii) by repaying paid-up share capital;
(c) the redemption or purchase of any of the company's own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with Chapter 3, 4 or 5 of Part 18;
(d) a distribution of assets to members of the company on its winding up.
830 Distributions to be made only out of profits available for the purpose
(1) A company may only make a distribution out of profits available for the purpose.
(2) A company's profits available for distribution are its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made.
(3) Subsection (2) has effect subject to sections 832 , 833A and 835 (investment companies and Solvency 2 insurance companies).
831 Net asset restriction on distributions by public companies
(1) A public company may only make a distribution—
(a) if the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves, and
(b) if, and to the extent that, the distribution does not reduce the amount of those assets to less than that aggregate.
(2) For this purpose a company's “net assets” means the aggregate of the company's assets less the aggregate of its liabilities.
(3) “Liabilities” here includes—
(a) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 396;
(b) where the relevant accounts are IAS accounts, provisions of any kind.
(4) A company's undistributable reserves are—
(a) its share premium account;
(b) its capital redemption reserve;
(c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital duly made);
(d) any other reserve that the company is prohibited from distributing—
(i) by any enactment (other than one contained in this Part), or
(ii) by its articles.
The reference in paragraph (c) to capitalisation does not include a transfer of profits of the company to its capital redemption reserve.
(5) A public company must not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.
(6) Subsection (1) has effect subject to sections 832 and 835 (investment companies etc: distributions out of accumulated revenue profits).
832 Distributions by investment companies out of accumulated revenue profits
(1) An investment company may make a distribution out of its accumulated, realised revenue profits if the following conditions are met.
(2) It may make such a distribution only if, and to the extent that, its accumulated, realised revenue profits, so far as not previously utilised by a distribution or capitalisation, exceed its accumulated revenue losses (whether realised or unrealised), so far as not previously written off in a reduction or reorganisation of capital duly made.
(3) It may make such a distribution only—
(a) if the amount of its assets is at least equal to one and a half times the aggregate of its liabilities to creditors, and
(b) if, and to the extent that, the distribution does not reduce that amount to less than one and a half times that aggregate.
(4) For this purpose a company's liabilities to creditors include—
(a) in the case of Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 396;
(b) in the case of IAS accounts, provisions for liabilities to creditors.
(5) The following conditions must also be met—
(a) the company's shares must be shares admitted to trading on a UK regulated market;
(b) during the relevant period it must not have—
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii) applied any unrealised profits . . . in paying up debentures or amounts unpaid on its issued shares;
(c) it must have given notice to the registrar under section 833(1) (notice of intention to carry on business as an investment company)—
(i) before the beginning of the relevant period, or
(ii) as soon as reasonably practicable after the date of its incorporation.
(6) For the purposes of this section—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) the “relevant period” is the period beginning with—
(i) the first day of the accounting reference period immediately preceding that in which the proposed distribution is to be made, or
(ii) where the distribution is to be made in the company's first accounting reference period, the first day of that period,
and ending with the date of the distribution.
(7) The company must not include any uncalled share capital as an asset in any accounts relevant for purposes of this section.
(1) In this Part an “investment company” means a public company that—
(a) has given notice (which has not been revoked) to the registrar of its intention to carry on business as an investment company, and
(b) since the date of that notice has complied with the following requirement.
(2) The requirement is—
(a) that the business of the company consists of investing its funds in shares, land or other assets, with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) Notice to the registrar under this section may be revoked at any time by the company on giving notice to the registrar that it no longer wishes to be an investment company within the meaning of this section.
(5) On giving such a notice, the company ceases to be such a company.
833A Distributions by insurance companies authorised under the Solvency 2 Directive
(1) This section applies in relation to any authorised insurance company carrying on long-term business that is authorised in accordance with Article 14 of the Solvency 2 Directive.
(2) For the purposes of section 830(2), the realised profit or loss of the company for the period in respect of which its relevant accounts (within the meaning of section 836) are prepared is taken to be the amount given by the formula in subsection (4) (with a positive figure taken to be a realised profit and a negative figure taken to be a realised loss).
(3) But the company’s profits available for distribution are limited to an amount that does not exceed its accumulated profits (whether realised or not), so far as not previously utilised by distribution or capitalisation, less its accumulated losses (whether realised or not), so far as not previously written off in a reduction or reorganisation of capital duly made.
(4) The formula isA−L−D,
where—
“A” is the total value of the company’s assets;
“L” is the total value of the company’s liabilities; and
“D” is the total value of the items within subsection (5) relating to the company;
and, in each case, the value is to be determined as at the date of the company’s balance sheet that forms part of the accounts mentioned in subsection (2).
(5) The items within this subsection are—
(a) if the value of shares held by the company in a qualifying investment subsidiary exceeds the value of the consideration given by it for their acquisition, the amount of that excess;
(b) any asset of the company representing a surplus in a defined benefit pension scheme;
(c) if the value of the assets held by the company in a ring-fenced fund exceeds the value of the liabilities incurred by the company in respect of that fund, the amount of that excess;
(d) the amount of any liability of the company in respect of deferred tax shown in the company’s balance sheet that relates to any asset within paragraph (a), (b) or (c);
(e) if—
(i) the company has permission to disapply or modify its rules in accordance with section 138BA of the Financial Services and Markets Act 2000, such that the company may apply a matching adjustment to a relevant risk-free interest rate term structure to calculate the best estimate of a portfolio of the company’s life insurance or reinsurance obligations, and
(ii) the value of the portfolio of the company’s assets assigned by the company to cover the best estimate exceeds the value of the portfolio of the company’s life insurance or reinsurance obligations,
the amount of that excess; and
(f) the following capital items of the company—
(i) paid-in ordinary share capital together with any related share premium account;
(ii) paid-in preference shares which are not liabilities of the company together with any related share premium account;
(iii) capital redemption reserve; and
(iv) any other reserve that the company is prohibited from distributing (ignoring this Part for this purpose).
(6) So far as anything falls within more than one of the above paragraphs of subsection (5), its value is to be taken into account only once.
(7) The company’s assets and liabilities must be valued in accordance with—
(a) Part 2 of the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 (prudential requirements),
(b) rules made by the Prudential Regulation Authority under Part 9A of the Financial Services and Markets Act 2000 in relation to the matching adjustment referred to in subsection (5)(e)(i),
(c) other rules made by the Authority under that Part implementing Articles 75 to 85 and 308b to 308e of the Solvency 2 Directive, and
(d) Articles 7 to 52 and 55 to 61 of Commission Delegated Regulation (EU) 2015/35 supplementing that Directive.
(8) If the company carries on both long-term business and other insurance business—
(a) this section is to be applied on the assumption that the company carries on only the long-term business; and
(b) the remainder of this Part is to be applied on the assumption that the company carries on only that other insurance business;
and, in applying paragraph (a) or (b), such apportionments of amounts referable to the long-term business or other insurance business are to be made as are just and reasonable.
(9) In this section—
“best estimate”, “paid-in ordinary share capital”, “paid-in preference shares”, “relevant risk-free interest rate term structure” and “ring-fenced fund” have the same meaning as in rules made by the Prudential Regulation Authority under Part 9A of the Financial Services and Markets Act 2000, as they have effect from time to time;
“defined benefit pension scheme” means a pension scheme (as defined by section 1(5) of the Pension Schemes Act 1993) which is a defined benefits scheme within the meaning given by section 2 of the Pension Schemes Act 2015;
“long-term business” means business that consists of effecting or carrying out contracts of long-term insurance (and this definition must be read with section 22 of the Financial Services and Markets Act 2000, any relevant order under that section and Schedule 2 to that Act);
“qualifying investment subsidiary” means an undertaking in which the company holds a participation within the meaning given by Article 13(20) of the Solvency 2 Directive and which is not held by the company as part of its portfolio of investments;
“Solvency 2 Directive” means Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).
836 Justification of distribution by reference to relevant accounts
(1) Whether a distribution may be made by a company without contravening this Part is determined 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).
(2) The relevant accounts are the company's last annual accounts, except that—
(a) where the distribution would be found to contravene this Part by reference to the company's last annual accounts, it may be justified by reference to interim accounts, and
(b) where the distribution is proposed to be declared during the company's first accounting reference period, or before any accounts have been circulated in respect of that period, it may be justified by reference to initial accounts.
(3) The requirements of—
section 837 (as regards the company's last annual accounts),
section 838 (as regards interim accounts), and
section 839 (as regards initial accounts),
must be complied with, as and where applicable.
(4) If any applicable requirement of those sections is not complied with, the accounts may not be relied on for the purposes of this Part and the distribution is accordingly treated as contravening this Part.
(1) The company's last annual accounts means the company's individual accounts—
(a) that were last circulated to members in accordance with section 423 (duty to circulate copies of annual accounts and reports), or
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) The accounts must have been properly prepared in accordance with this Act, or have been so prepared subject only to matters that are not material for determining (by reference to the items mentioned in section 836(1)) whether the distribution would contravene this Part.
(3) Unless the company is exempt from audit and the directors take advantage of that exemption, the auditor must have made his report on the accounts.
(4) If that report was qualified—
(a) the auditor must have stated in writing (either at the time of his report or subsequently) whether in his opinion the matters in respect of which his report is qualified are material for determining whether a distribution would contravene this Part, and
(b) a copy of that statement must—
(i) in the case of a private company, have been circulated to members in accordance with section 423, or
(ii) in the case of a public company, have been laid before the company in general meeting.
(5) An auditor's statement is sufficient for the purposes of a distribution if it relates to distributions of a description that includes the distribution in question, even if at the time of the statement it had not been proposed.
(1) Interim accounts must be accounts that enable a reasonable judgment to be made as to the amounts of the items mentioned in section 836(1).
(2) Where interim accounts are prepared for a proposed distribution by a public company, the following requirements apply.
(3) The accounts must have been properly prepared, or have been so prepared subject to matters that are not material for determining (by reference to the items mentioned in section 836(1)) whether the distribution would contravene this Part.
(4) “Properly prepared” means prepared in accordance with sections 395 to 397 (requirements for company individual accounts), applying those requirements with such modifications as are necessary because the accounts are prepared otherwise than in respect of an accounting reference period.
(5) The balance sheet comprised in the accounts must have been signed in accordance with section 414.
(6) A copy of the accounts must have been delivered to the registrar.
Any requirement of Part 35 of this Act as to the delivery of a certified translation into English of any document forming part of the accounts must also have been met.
(1) Initial accounts must be accounts that enable a reasonable judgment to be made as to the amounts of the items mentioned in section 836(1).
(2) Where initial accounts are prepared for a proposed distribution by a public company, the following requirements apply.
(3) The accounts must have been properly prepared, or have been so prepared subject to matters that are not material for determining (by reference to the items mentioned in section 836(1)) whether the distribution would contravene this Part.
(4) “Properly prepared” means prepared in accordance with sections 395 to 397 (requirements for company individual accounts), applying those requirements with such modifications as are necessary because the accounts are prepared otherwise than in respect of an accounting reference period.
(5) The company's auditor must have made a report stating whether, in his opinion, the accounts have been properly prepared.
(6) If that report was qualified—
(a) the auditor must have stated in writing (either at the time of his report or subsequently) whether in his opinion the matters in respect of which his report is qualified are material for determining whether a distribution would contravene this Part, and
(b) a copy of that statement must have been laid before the company in general meeting.
(7) A copy of the accounts, of the auditor's report and of any auditor's statement must have been delivered to the registrar.
Any requirement of Part 35 of this Act as to the delivery of a certified translation into English of any of those documents must also have been met.
840 Successive distributions etc by reference to the same accounts
(1) In determining whether a proposed distribution may be made by a company in a case where—
(a) one or more previous distributions have been made in pursuance of a determination made by reference to the same relevant accounts, or
(b) relevant financial assistance has been given, or other relevant payments have been made, since those accounts were prepared,
the provisions of this Part apply as if the amount of the proposed distribution was increased by the amount of the previous distributions, financial assistance and other payments.
(2) The financial assistance and other payments that are relevant for this purpose are—
(a) financial assistance lawfully given by the company out of its distributable profits;
(b) financial assistance given by the company in contravention of section 678 or 679 (prohibited financial assistance) in a case where the giving of that assistance reduces the company's net assets or increases its net liabilities;
(c) payments made by the company in respect of the purchase by it of shares in the company, except a payment lawfully made otherwise than out of distributable profits;
(d) payments of any description specified in section 705 (payments apart from purchase price of shares to be made out of distributable profits).
(3) In this section “financial assistance” has the same meaning as in Chapter 2 of Part 18 (see section 677).
(4) For the purpose of applying subsection (2)(b) in relation to any financial assistance—
(a) “net assets” means the amount by which the aggregate amount of the company's assets exceeds the aggregate amount of its liabilities, and
(b) “net liabilities” means the amount by which the aggregate amount of the company's liabilities exceeds the aggregate amount of its assets,
taking the amount of the assets and liabilities to be as stated in the company's accounting records immediately before the financial assistance is given.
(5) For this purpose a company's liabilities include any amount retained as reasonably necessary for the purposes of providing for any liability—
(a) the nature of which is clearly defined, and
(b) which is either likely to be incurred or certain to be incurred but uncertain as to amount or as to the date on which it will arise.
841 Realised losses and profits and revaluation of fixed assets
(1) The following provisions have effect for the purposes of this Part.
(2) The following are treated as realised losses—
(a) in the case of Companies Act accounts, provisions of a kind specified for the purposes of this paragraph by regulations under section 396 (except revaluation provisions);
(b) in the case of IAS accounts, provisions of any kind (except revaluation provisions).
(3) A “revaluation provision” means a provision in respect of a diminution in value of a fixed asset appearing on a revaluation of all the fixed assets of the company, or of all of its fixed assets other than goodwill.
(4) For the purpose of subsections (2) and (3) any consideration by the directors of the value at a particular time of a fixed asset is treated as a revaluation provided—
(a) the directors are satisfied that the aggregate value at that time of the fixed assets of the company that have not actually been revalued is not less than the aggregate amount at which they are then stated in the company's accounts, and
(b) it is stated in a note to the accounts—
(i) that the directors have considered the value of some or all of the fixed assets of the company without actually revaluing them,
(ii) that they are satisfied that the aggregate value of those assets at the time of their consideration was not less than the aggregate amount at which they were then stated in the company's accounts, and
(iii) that accordingly, by virtue of this subsection, amounts are stated in the accounts on the basis that a revaluation of fixed assets of the company is treated as having taken place at that time.
(5) Where—
(a) on the revaluation of a fixed asset, an unrealised profit is shown to have been made, and
(b) on or after the revaluation, a sum is written off or retained for depreciation of that asset over a period,
an amount equal to the amount by which that sum exceeds the sum which would have been so written off or retained for the depreciation of that asset over that period, if that profit had not been made, is treated as a realised profit made over that period.
842 Determination of profit or loss in respect of asset where records incomplete
In determining for the purposes of this Part whether a company has made a profit or loss in respect of an asset where—
(a) there is no record of the original cost of the asset, or
(b) a record cannot be obtained without unreasonable expense or delay,
its cost is taken to be the value ascribed to it in the earliest available record of its value made on or after its acquisition by the company.
843 Realised profits and losses of long-term insurance business of certain insurance companies
(1) The provisions of this section have effect for the purposes of this Part as it applies in relation to an authorised insurance company carrying on long-term business, other than—
(a) a person to whom section 833A applies; or
(b) an insurance special purpose vehicle.
(2) An amount included in the relevant part of the company's balance sheet that—
(a) represents a surplus in the fund or funds maintained by it in respect of its long-term business, and
(b) has not been allocated to policy holders or, as the case may be, carried forward unappropriated in accordance with asset identification rules made under Part 9A of the Financial Services and Markets Act 2000 (c. 8),
is treated as a realised profit.
(3) For the purposes of subsection (2)—
(a) the relevant part of the balance sheet is that part of the balance sheet that represents accumulated profit or loss;
(b) a surplus in the fund or funds maintained by the company in respect of its long-term business means an excess of the assets representing that fund or those funds over the liabilities of the company attributable to its long-term business, as shown by an actuarial investigation.
(4) A deficit in the fund or funds maintained by the company in respect of its long-term business is treated as a realised loss.
For this purpose a deficit in any such fund or funds means an excess of the liabilities of the company attributable to its long-term business over the assets representing that fund or those funds, as shown by an actuarial investigation.
(5) Subject to subsections (2) and (4), any profit or loss arising in the company's long-term business is to be left out of account.
(6) For the purposes of this section an “actuarial investigation” means an investigation made into the financial condition of an authorised insurance company in respect of its long-term business—
(a) carried out once in every period of twelve months in accordance with rules made under Part 9A of the Financial Services and Markets Act 2000, or
(b) carried out in accordance with a requirement imposed under section 166 of that Act,
by an actuary appointed as actuary to the company.
(7) In this section “long-term business” means business that consists of effecting or carrying out contracts of long-term insurance.
This definition must be read with section 22 of the Financial Services and Markets Act 2000, any relevant order under that section and Schedule 2 to that Act.
(8) In this section “ insurance special purpose vehicle ” means a special purpose vehicle within the meaning of Article 13(26) of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) .
(1) Where development costs are shown or included as an asset in a company's accounts, any amount shown or included in respect of those costs is treated—
(a) for the purposes of section 830 (distributions to be made out of profits available for the purpose) as a realised loss, and
(b) for the purposes of section 832 (distributions by investment companies out of accumulated revenue profits) as a realised revenue loss.
This is subject to the following exceptions.
(2) Subsection (1) does not apply to any part of that amount representing an unrealised profit made on revaluation of those costs.
(3) Subsection (1) does not apply if—
(a) there are special circumstances in the company's case justifying the directors in deciding that the amount there mentioned is not to be treated as required by subsection (1),
(b) it is stated—
(i) in the case of Companies Act accounts, in the note required by regulations under section 396 as to the reasons for showing development costs as an asset, or
(ii) in the case of IAS accounts, in any note to the accounts,
that the amount is not to be so treated, and
(c) the note explains the circumstances relied upon to justify the decision of the directors to that effect.
845 Distributions in kind: determination of amount
(1) This section applies for determining the amount of a distribution consisting of or including, or treated as arising in consequence of, the sale, transfer or other disposition by a company of a non-cash asset where—
(a) at the time of the distribution the company has profits available for distribution, and
(b) if the amount of the distribution were to be determined in accordance with this section, the company could make the distribution without contravening this Part.
(2) The amount of the distribution (or the relevant part of it) is taken to be—
(a) in a case where the amount or value of the consideration for the disposition is not less than the book value of the asset, zero;
(b) in any other case, the amount by which the book value of the asset exceeds the amount or value of any consideration for the disposition.
(3) For the purposes of subsection (1)(a) the company's profits available for distribution are treated as increased by the amount (if any) by which the amount or value of any consideration for the disposition exceeds the book value of the asset.
(4) In this section “book value”, in relation to an asset, means—
(a) the amount at which the asset is stated in the relevant accounts, or
(b) where the asset is not stated in those accounts at any amount, zero.
(5) The provisions of Chapter 2 (justification of distribution by reference to accounts) have effect subject to this section.
846 Distributions in kind: treatment of unrealised profits
(1) This section applies where—
(a) a company makes a distribution consisting of or including, or treated as arising in consequence of, the sale, transfer or other disposition by the company of a non-cash asset, and
(b) any part of the amount at which that asset is stated in the relevant accounts represents an unrealised profit.
(2) That profit is treated as a realised profit—
(a) for the purpose of determining the lawfulness of the distribution in accordance with this Part (whether before or after the distribution takes place), and
(b) for the purpose of the application, in relation to anything done with a view to or in connection with the making of the distribution, of any provision of regulations under section 396 under which only realised profits are to be included in or transferred to the profit and loss account.
(1) This section applies where a distribution, or part of one, made by a company to one of its members is made in contravention of this Part.
(2) If at the time of the distribution the member knows or has reasonable grounds for believing that it is so made, he is liable—
(a) to repay it (or that part of it, as the case may be) to the company, or
(b) in the case of a distribution made otherwise than in cash, to pay the company a sum equal to the value of the distribution (or part) at that time.
(3) This is without prejudice to any obligation imposed apart from this section on a member of a company to repay a distribution unlawfully made to him.
(4) This section does not apply in relation to—
(a) financial assistance given by a company in contravention of section 678 or 679, or
(b) any payment made by a company in respect of the redemption or purchase by the company of shares in itself.
848 Saving for certain older provisions in articles
(1) Where immediately before the relevant date a company was authorised by a provision of its articles to apply its unrealised profits in paying up in full or in part unissued shares to be allotted to members of the company as fully or partly paid bonus shares, that provision continues (subject to any alteration of the articles) as authority for those profits to be so applied after that date.
(2) For this purpose the relevant date is—
(a) for companies registered in Great Britain, 22nd December 1980;
(b) for companies registered in Northern Ireland, 1st July 1983.